Energy Conservation Program: Energy Conservation Standards and Test Procedures for General Service Fluorescent Lamps and Incandescent Reflector Lamps

Note: EPA no longer updates this information, but it may be useful as a reference or resource.
PDF Version (101 pp, 841K, About PDF)

[Federal Register: July 14, 2009 (Volume 74, Number 133)]
[Rules and Regulations]
[Page 34129-34179]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr14jy09-11]

Energy Conservation Program: Energy Conservation Standards and Test Procedures
for General Service Fluorescent Lamps and Incandescent Reflector Lamps

[[Continued from page 34128]]

[[Page 34129]]

    DOE agrees with the CA Stakeholders that the markup strategy is the
primary driver of INPV for GSFL manufacturers. Therefore, to capture
the full range of potential impacts of energy conservation standards on
the GSFL INPV, DOE used the two markup scenarios for the April 2009
NOPR. For today's final rule, DOE continues to use both the Flat Markup
and the Four-Tier markup scenarios to bound the potential impacts of
energy conservation standards on the GSFL INPV.
    The CA Stakeholders and ACEEE commented that the base cases
overestimated the margins that manufacturers will be able to maintain
for high-lumen T8 lamps as the market naturally shifts to more-
efficient products. (CA Stakeholders, No. 63 at p. 4) (ACEEE, No. 76 at
p. 4) Additionally, the CA Stakeholders commented that as products
become more efficient, absent standards and in a competitive market,
higher-efficacy products will not maintain their current margins. (CA
Stakeholders, No. 63 at p. 12) The CA Stakeholders also argued that
DOE's Four-Tier markup analysis for the four-foot medium bi-pin lamps
appears to show manufacturers will maintain the estimated markup for
800 series high-lumen T8 lamps meeting TSL 5 indefinitely. According to
the CA Stakeholders, high-lumen T8s have been available for several
years and are already being commoditized. However, DOE's own analysis
has shown that the market is shifting to higher-efficacy products
without energy conservation standards. (CA Stakeholders, No. 63 at p. 12)
    For the April 2009 NOPR, DOE modeled two different markup
scenarios. 74 FR 16920, 16977 (April 13, 2009). The first scenario
applies a single markup to all products regardless of their efficacy.
The second markup scenario applies a different markup to four tiers of
product efficacies that correspond to the four phosphor series. As the
CA Stakeholders correctly stated, DOE assumed these two markup
structures would be maintained throughout the analysis period. The CA
Stakeholders also correctly stated that markups are the primary driver
of INPV for GSFL. The CA Stakeholders believe that higher-efficacy
lamps are already being commoditized and that non-covered, emerging
technology will command high margins for manufacturers. While this
assumption is not certain, DOE agrees that the premium GSFL covered in
this rulemaking will likely follow a typical product life cycle, in
which the average margins decrease over time in the base case, thereby
resulting in a lower INPV than quantified by the Four-Tier markup
scenario presented in the April 2009 NOPR. DOE also agrees that it is
likely that as more-efficacious lighting products enter or replace GSFL
in the market, premium products which currently command higher markups
will become commoditized over time, and margins will erode. As non-
covered emerging technologies reduce the size of the GSFL market, the
overall margins of the GSFL market will also be reduced. Based on these
additional assumptions, DOE has revised the Four-Tier markup scenario
for today's final rule as previously described. DOE estimates that this
commoditization reduces the base-case industry value and, to a lesser
degree, the INPV impacts in the standards case. For further explanation
of the Four-Tier markup scenario and the revised INPV results, see
chapter 13 of the TSD.
    NRDC commented that commoditization of features and margin
reduction will occur regardless of the standard set for the GSFL
industry, but technological innovation will result in the introduction
of new premium products as well. NRDC added that DOE has forecasted two
scenarios and compared them to determine the manufacturer impact.
According to NRDC's comments, the reality will certainly be somewhere
in between a no-standards situation and the product commoditization
scenario. NRDC concluded that the MIA results are likely to be
significantly overstated because the true impacts will be in between
these two situations (NRDC, No. 82 at p. 3).
    In the April 2009 NOPR, DOE requested comment on the ability of
GSFL manufacturers to maintain margins through differentiation by other
means and how the ability to differentiate products might vary over
time. 74 FR 16920, 17001 (April 13, 2009). At TSL 5, DOE believes that
the ability for manufacturers to differentiate products by means other
than efficacy by the year 2012 is limited. Currently, only the most
efficient lamps available meet this efficacy level. This ability could
improve in later years as other features and higher efficacy products
are introduced. However, given the discounting of future cash flows,
the effect of this gradual improvement will be small. For this reason,
DOE believes that the INPV results would be greater than the midpoint
of the range of impacts. At TSL 4, manufacturers maintain some ability
to create tiers of efficacy, which will mitigate some of the effects of
commoditization of premium GSFL. However, DOE disagrees with the
statement that the impacts on manufacturers are likely to be
significantly overstated. DOE believes the revisions to the Four-Tier
markup scenario have addressed the Advocates' concerns regarding an
unrealistic change in profitability in the standards cases.
    The CA Stakeholders commented that DOE should conduct its own
research and/or seek alternate sources of information to calculate the
manufacturer margins and conversion costs for T12 and T8 lamps. The CA
Stakeholders argued that because manufacturer margins and conversion
costs are two of the most significant GRIM inputs, to preserve the
transparency of its analysis, DOE should not rely primarily on
confidential data provided by one set of stakeholders (CA Stakeholders,
No. 63 at p. 14).
    In response, DOE understands the need for transparent and accurate
data on which to base its analysis. Profit margin data at the product-
line level are possibly the most sensitive data for any company, and
therefore, are not readily available to the public. DOE attempts to
validate any sensitive data provided by manufacturers, including
information about profit margins, by first requesting any documentary
evidence. DOE also compares the data submittals for each manufacturer
for consistency. To the extent possible DOE has developed and will
continue to develop its own estimates of key parameters for the MIA,
such as manufacturing costs and pricing, by researching published
sources, contacting tooling suppliers, and retaining the services of
industry consultants. To maintain confidentiality and transparency at
the same time, DOE makes its estimates of manufacturer margins and
conversion costs available for public comment in an industry-aggregated
form. This process allows DOE to further refine its assumptions and
estimates based on the responses provided by interested parties.
    The CA Stakeholders commented that the MIA's assumptions should not
be revised to consider the current economic recession. The CA
Stakeholders argued that such revisions would not add any practical
value, given that it is impossible to accurately predict the direction
of short-term economic cycles. (CA Stakeholders, No. 63 at p. 8)
    As previously stated, for today's final rule, DOE has updated the
GSFL and IRL GRIMs with revised NIA shipments and scenarios and used
the updated product price determination inputs. DOE also revised the
conversion costs using the appropriate PPI. These changes are typical
revisions for energy conservation rulemakings and are not

[[Page 34130]]

specifically attributable to current economic conditions. DOE agrees
with CA Stakeholders and has not made revisions to the MIA specifically
in response to the current near-term economic downturn. For additional
information on the updates to the NIA and product price determination,
see section V.D of today's notice, respectively. For further
explanation of inputs and updates to the GSFL and IRL GRIMs, see
chapter 13 of the TSD.
    The CA Stakeholders commented that the effective date of today's
final rule for GSFL and IRL energy conservation standards has a
significant impact on the reported INPVs, and that any prorogation of
the effective date would help mitigate impacts on the industry due to
energy conservation standards. The CA Stakeholders recommended that DOE
should establish an effective date for GSFL for their proposed Tier 1
standards (TSL4) in 2012 and for Tier 2 (TSL5) in 2016. (CA
Stakeholders, No. 63 at p. 2, 14). Similarly, ACEEE argued that a
phase-in standard would allow additional lead time for manufacturers
and capture maximum energy savings. However, ACEEE requested expedited
phase-in dates for GSFL standards at Tier 1 (July 2012) and Tier 2
(July 2015) (ACEEE, No. 76 at p. 2). ACEEE presented the alternative of
a later effective date for choosing TSL 5 for all covered GSFL (2013 or
2014), because it provides manufacturers additional time to spread
conversion cost, thereby minimizing the impacts on INPV (ACEEE, No. 76
at pp. 2-3). Similar to ACEEE's alternative effective date, OSI
requested a one-year extension of the effective date for IRL products
only. OSI commented that the extension would allow sufficient time to
replace its capital base for covered IRL and allow for manufacturing of
the higher-efficacy products to stabilize (OSI, No. 84 at p. 1).
    DOE agrees that the effective date of energy conservation standards
(i.e., compliance date) has a significant impact on INPV. In the GRIM
cashflow analyses, the conversion costs are implemented in the years
between the announcement of the final rule and the effective date of
the standards. By delaying the effective date and the required capital
and product conversion costs, it would in theory be possible to reduce
the negative impacts on INPV calculated for the proposed standards
case, due to discounting the negative cash flows for conversion costs
in later years. However, for the reasons discussed in section VI.I, for
today's final rule, DOE is not using a tiered approach to set energy
conservation standards. Similarly, for the reasons discussed in section
VI.I, DOE is not considering a later effective date for either the GSFL
or the IRL energy conservation standard. The implications of a later
effective date on the GSFL and IRL INPV are not being considered.
    For a detailed discussion of the MIA, see chapter 13 of the TSD
accompanying this notice.

G. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one
factor in setting energy conservation standards. Employment impacts
include direct and indirect impacts. Direct employment impacts are
changes in the number of employees for manufacturers of the appliance
products that are subject to standards, their suppliers, and related
service firms. The MIA addresses these impacts. Indirect employment
impacts from standards consist of the net jobs created or eliminated in
the national economy, other than in the manufacturing sector being
regulated, due to: (1) Reduced spending by end users on energy; (2)
reduced spending on new energy supply by the utility industry; (3)
increased consumer spending on the purchase of new products; and (4)
the effects of those three factors throughout the economy. DOE expects
the net monetary savings from standards to be redirected to other forms
of economic activity. DOE also expects these shifts in spending and
economic activity to affect the demand for labor in the short term.
    In developing the April 2009 NOPR and today's final rule, DOE
estimated indirect national employment impacts using an input/output
model of the U.S. economy called Impact of Sector Energy Technologies
(ImSET \44\). ImSET is a spreadsheet model of the U.S. economy that
focuses on 188 sectors most relevant to industrial, commercial, and
residential building energy use. ImSET is a special-purpose version of
the ``U.S. Benchmark National Input-Output'' (I-O) model designed to
estimate the national employment and income effects of energy-saving
technologies. The ImSET software includes a computer-based I-O model
with structural coefficients to characterize economic flows among the
188 sectors. ImSET's national economic I-O structure is based on a 1997
U.S. benchmark table, especially aggregated to those sectors. For
further details, see chapter 15 of the TSD accompanying this notice.
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    \44\ Roop, J. M., M. J. Scott, and R. W. Schultz, ImSET: Impact
of Sector Energy Technologies (PNNL-15273 Pacific Northwest National
Laboratory) (2005). Available at http://www.pnl.gov/main/
publications/external/technical_reports/PNNL-15273.pdf.
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    As described in section V.G, DOE uses ImSet to consider indirect
employment impacts when evaluating alternative standard levels. Direct
employment impacts on the manufacturers that produce IRL and GSFL are
analyzed in the manufacturer impact analysis, as discussed in section V.F.

 H. Utility Impact Analysis

    The utility impact analysis determines the changes to energy supply
and demand (and forecasted power generation capacity) that result from
the end-use energy savings due to new or amended energy conservation
standards. DOE used a version of EIA's National Energy Modeling System
(NEMS) for this utility impact analysis. NEMS, which is available in
the public domain, is a large, multisectoral, partial-equilibrium model
of the U.S. energy sector. EIA uses NEMS to produce its AEO, a widely-
recognized baseline energy forecast for the United States. The version
of NEMS used for appliance standards analysis is called NEMS-BT \45\
and is primarily based on the April Update of the AEO 2009 \46\ with
minor modifications. The analysis output includes a forecast of the
total electricity generation capacity at each TSL.
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    \45\ EIA approves the use of the name NEMS to describe only an
official AEO version of the model without any modification to code
or data. Because the present analysis entails some minor code
modifications and runs the model under various policy scenarios that
deviate from AEO assumptions, the name NEMS-BT refers to the model
as used here. (``BT'' stands for DOE's Building Technologies
Program.) For more information on NEMS, refer to ``The National Energy
Modeling System: An Overview,'' DOE/EIA-0581 (98) (Feb. 1998). Available
at http://tonto.eia.doe.gov/ftproot/forecasting/058198.pdf.
    \46\ An Updated Annual Energy Outlook 2009 Reference Case
Reflecting Provisions of the American Recovery and Reinvestment Act
and Recent Changes in the Economic Outlook, April 2009.
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    DOE obtained the energy savings inputs associated with electricity
consumption savings from the NIA. These inputs reflect the effects on
electricity of efficiency improvements due to the deployment of GSFL
and IRL that would meet the energy conservation standards set forth in
this rulemaking. Chapter 14 of the TSD accompanying this notice
presents details on the utility impact analysis.
    DOE received comments to the ANOPR requesting that DOE report gas
and electricity price impacts, and the economic benefits of reduced
need for new electric power plants and infrastructure. The expectation
is that lower electricity demand will lead to

[[Page 34131]]

lower prices for both electricity and natural gas that would benefit consumers.
    DOE considered reporting gas and electricity price impacts but
found that the uncertainty of price projections, together with the
fairly small impact of the standards relative to total electricity
demand, makes these price changes highly uncertain. As a result, DOE
believes that they should not be weighed heavily in the decision
concerning the standard level. Given the current complexity of utility
regulation in the United States (with significant variances among
States), it does not seem appropriate to attempt to measure impacts on
infrastructure costs and prices where there is likely to be significant overlap.

 I. Environmental Assessment

    Pursuant to the National Environmental Policy Act of 1969 (NEPA)
(42 U.S.C. 4321 et seq.) 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE prepared
an environmental assessment (EA) of the potential impacts of the
proposed standards it considered for today's final rule which it has
included as chapter 16 of the TSD for the final rule. DOE found the
environmental effects associated with the standards for GSFL and IRL to
be insignificant. Therefore, DOE is issuing a Finding of No Significant
Impact (FONSI), pursuant to NEPA, the regulations of the Council on
Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations
for compliance with NEPA (10 CFR part 1021). The FONSI is available in
the docket for this rulemaking.
    In the EA, DOE estimated the reduction in total emissions of
CO₂ and NO_X using the NEMS-BT computer model. DOE
also calculated a range of estimates for reduction in mercury (Hg)
emissions using power sector emission rates. The EA does not include
the estimated reduction in power sector impacts of sulfur dioxide
(SO₂), because DOE has determined that any such reduction
resulting from an energy conservation standard would not affect the
overall level of SO₂ emissions in the United States due to
the presence of national caps on SO₂ emissions. These topics
are addressed further below; see chapter 16 of the TSD for additional detail.
    EEI commented that DOE should consider the environmental impacts of
the production processes especially if higher efficiency standards
would result in more manufacturing overseas. (EEI, No. 45 at p. 4) As
discussed in the manufacturer impact analysis (see section V.F), DOE
does not expect a migration of production of IRL overseas as a result
of this rule. In addition, as the migration of GSFL production overseas
is highly speculative, DOE does not feel it appropriate to incorporate
the environmental impacts of production processes if moved overseas.
    Earthjustice stated that DOE must calculate the amount of
reductions in emissions of particulate matter (PM) that will result
from standards for GSFLs and IRLs (and monetize the value).
Earthjustice stated that even if DOE believes that the impacts on
secondary PM emissions were physically impossible to estimate due to
their complexity, it would not justify DOE ignoring the impact of
standards on primary emissions of PM from power plants. (Earthjustice,
No. 60 at pg 8) PM emissions reductions are much more difficult to
estimate than other emissions due to the wide range of power plant
controls and individual plant operations that impact PM emissions. DOE
is not currently able to run a model that can make these estimates
reliably at the national level.
    NEMS-BT is run similarly to the AEO2009 NEMS, except that lighting
energy use is reduced by the amount of energy saved (by fuel type) due
to the trial standard levels. The inputs of national energy savings
come from the NIA analysis. For the EA, the output is the forecasted
physical emissions. The net benefit of a standard is the difference
between emissions estimated by NEMS-BT and the Updated AEO2009
Reference Case. The NEMS-BT tracks CO₂ emissions using a
detailed module that provides results with broad coverage of all
sectors and inclusion of interactive effects.
    The Clean Air Act sets an emissions cap on SO₂ for all
affected Electric Generating Units. The attainment of the emissions cap
is flexible among generators and is enforced through the use of
emissions allowances and tradable permits. In other words, with or
without a standard, total cumulative SO₂ emissions will
always be at or near the ceiling, and there may be some timing
differences among yearly forecasts. Thus, it is unlikely that there
will be reduced overall SO₂ emissions from standards as long
as the emissions ceilings are enforced. Although there may be no actual
reduction in SO₂ emissions, there still may be an economic
benefit from reduced demand for SO₂ emission allowances.
Electricity savings decrease the generation of SO₂ emissions
from power production, which can lessen the need to purchase
SO₂ emissions allowance credits, and thereby decrease the
costs of complying with regulatory caps on emissions.
    NO_X emissions from 28 eastern States and the District of
Columbia (DC) are limited under the Clean Air Interstate Rule (CAIR),
published in the Federal Register on May 12, 2005.\47\ Although CAIR
has been remanded to EPA by the DC Circuit, it will remain in effect
until it is replaced by a rule consistent with the Court's July 11,
2008 opinion in North Carolina v. EPA.\48\ Because all States covered
by CAIR opted to reduce NO_X emissions through participation
in cap-and-trade programs for electric generating units, emissions from
these sources are capped across the CAIR region.
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    \47\ 70 FR 25162 (May 12, 2005).
    \48\ 531 F.3d 896 (D.C. Cir. 2008); see also North Carolina v.
EPA, 550 F.3d 1176 (D.C. Cir. 2008).
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    For the 28 eastern States and D.C. where CAIR is in effect, no
NO_X emissions reductions will occur due to the permanent
cap. Under caps, physical emissions reductions in those States would
not result from the energy conservation standards under consideration
by DOE, but standards might have produced an environmentally-related
economic impact in the form of lower prices for emissions allowance
credits, if they were large enough. However, DOE determined that in the
present case, such standards would not produce an environmentally-
related economic impact in the form of lower prices for emissions
allowance credits, because the estimated reduction in NO_X
emissions or the corresponding allowance credits in States covered by
the CAIR cap would be too small to affect allowance prices for
NO_X under the CAIR. In contrast, new or amended energy
conservation standards would reduce NO_X emissions in those
22 States that are not affected by CAIR. As a result, the NEMS-BT does
forecast emissions reductions from the proposed amended standards
considered in today's final rule.
    In the April 2009 NOPR, however, DOE provided a different estimate
of NO_X reductions, because DOE assumed that the CAIR had
been vacated. 74 FR 16920, 17009-14 (April 13, 2009). This is because
the CAIR rule was vacated by the U.S. Court of Appeals for the District
of Columbia Circuit (DC Circuit) in its July 11, 2008 decision in North
Carolina v. Environmental Protection Agency.\49\ Although the DC
Circuit, in a December 23, 2008 opinion,\50\ decided to allow the CAIR
rule to remain in effect until it is replaced by a rule consistent with the

[[Page 34132]]

Court's earlier opinion, DOE retained its analysis of NO_X
emissions reductions based on an assumption that the CAIR rule was not
in effect, because: (1) The NOPR was so advanced at the time that the
December 23, 2008 opinion was issued that revisiting the analysis would
have caused undue delay; and (2) neither the July 11, 2008, nor the
December 23, 2008 decisions of the D.C. Circuit changed the standard-
setting proposals offered in the NOPR.
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    \49\ 531 F.3d 896 (D.C. Cir. 2008).
    \50\ See 550 F.3d 1176 (D.C. Cir. 2008).
---------------------------------------------------------------------------

    Thus, for the April 2009 NOPR, DOE established a range of
NO_X reductions based on low and high emissions rates (in
metric kilotons of NO_X emitted per terawatt-hour (TWh) of
electricity generated) derived from the AEO2008. DOE anticipated that,
in the absence of the CAIR's trading program, the new or amended energy
conservation standards would reduce NO_X emissions
nationwide, not just in 22 States.
    Similar to SO₂ and NO_X, future emissions of
Hg would have been subject to emissions caps under the Clean Air
Mercury Rule \51\ (CAMR), which would have permanently capped emissions
of mercury for new and existing coal-fired plants in all States by
2010, but the CAMR was vacated by the DC Circuit in its decision in New
Jersey v. Environmental Protection Agency \52\ prior to publication of
the April 2009 NOPR. However, the NEMS-BT model DOE initially used to
estimate the changes in emissions for the proposed rule assumed that Hg
emissions would be subject to CAMR emission caps.
---------------------------------------------------------------------------

    \51\ 70 FR 28606 (May 18, 2005).
    \52\ 517 F 3d 574 (D.C. Cir. 2008).
---------------------------------------------------------------------------

    After CAMR was vacated, DOE was unable to use the NEMS-BT model to
estimate any changes in the quantity of mercury emissions (anywhere in
the country) that would result from standard levels it considered for
the proposed rule. Instead, DOE used an Hg emissions rate (in metric
tons of Hg per energy produced) based on the AEO2008 for the April 2009
NOPR. Because virtually all mercury emitted from electricity generation
is from coal-fired power plants, DOE based the emissions rate on the
metric tons of mercury emitted per TWh of coal-generated electricity.
To estimate the reduction in mercury emissions, DOE multiplied the
emissions rate by the reduction in coal-generated electricity
associated with the standards considered. Because the CAMR remains
vacated, DOE continued to use the approach it used for the April 2009
NOPR to estimate the Hg emission reductions due to standards for
today's final rule.
    EEI commented that, ``if the standard leads to more use of compact
fluorescent technology as replacements for incandescent reflector
lamps, there will be an increase in mercury use and disposal issues
compared to the baseline technologies.'' (EEI, No. 45 at p. 4). DOE
estimates that any increase in use of CFLs, as compared to having no
new or amended GSFL and IRL standards, would be minimal and any related
mercury releases would be environmentally insignificant and
speculative, particularly since only a fraction of CFLs are improperly
disposed of and only a small fraction of the mercury in those CFLs
leaches into the environment.
    Earthjustice and NRDC argue that DOE should incorporate the value
of CO₂ emissions reductions into the LCC and NPV analyses
because the value of CO₂ emissions reductions affects the
economic justification of standards, DOE must incorporate these effects
into the LCC and NPV analyses. (Earthjustice, No. 60, at pgs 7-8 and
(NRDC and Earthjustice, Issue Paper, No. 82 at p. 1)) New York, et al.
also recommended that DOE prioritize energy savings and reduced
CO₂ emissions and allocate at least as much weight to the
monetary value of reduced carbon emissions as it does to other monetary
impacts. (NY et al., No. 88 at p. 1)\53\ On the other hand, NEMA
expressed support of the approach used by DOE in the NOPR to reflect a
range for monetized values and report environmental benefits separately
from the net benefits of energy savings. (NEMA, No. 81 at p. 21)
---------------------------------------------------------------------------

    \53\ A joint comment by the States of New York, California,
Connecticut, Delaware, Illinois, Massachusetts, New Hampshire, New
Jersey, Ohio, Vermont, and Washington.
---------------------------------------------------------------------------

    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. A summary of the monetary
results is shown in section VII.C.6 of this notice. DOE considered both
values when weighing the benefits and burdens of standards.

J. Monetizing Carbon Dioxide and Other Emissions Impacts

    DOE also calculated the possible monetary benefit of
CO₂, NO_X, and Hg reductions. Cumulative monetary
benefits were determined using discount rates of 3 and 7 percent. DOE
monetized reductions in CO₂ emissions due to the standards
in this final rule based on 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 CO₂ emissions.
    Several parties provided comments regarding the economic valuation
of CO₂ for the April 2009 NOPR. NRDC commented that New
England now has a CO₂ trading price that could be used by
DOE (NRDC, Public Meeting Transcript, No. 38.4 at p. 311-312) NRDC and
Earthjustice argue that DOE should incorporate an assumption of a
mandatory cap on CO₂ emissions or at the very least revise
the range of CO₂ valuation. (NRDC and Earthjustice, Issue
Paper, No. 82, p. 1-14) NY et al. also criticized the range of
CO₂ values used in the NOPR and recommended the use of a
long-run marginal abatement cost of CO₂ for monetizing
CO₂ emission reductions, rather than the damage costs given
the highly uncertain nature of the latter (NY et al., No. 88, p. 9-10).
As discussed in section VII.C.6, DOE has updated the approach described
in the April 2009 NOPR (74 FR 16920, 17009 (Apr. 13, 2009)) for its
monetization of environmental emissions reductions for today's rule.
    Although this rulemaking does not affect SO₂ emissions
or NO_X emissions in the 28 eastern States and D.C. where
CAIR is in effect, there are markets for SO₂ and
NO_X emissions allowances. The market clearing price of
SO₂ and NO_X emissions allowances is roughly the
marginal cost of meeting the regulatory cap, not the marginal value of
the cap itself. Further, because national SO₂ and
NO_X emissions are regulated by a cap-and-trade system, the
cost of meeting these caps is included in the price of energy. Thus,
the value of energy savings already includes the value of
SO₂ and NO_X control for those consumers
experiencing energy savings. The economic cost savings associated with
SO₂ and NO_X emissions caps is approximately equal
to the change in the price of traded allowances resulting from energy
savings multiplied by the number of allowances that would be issued
each year. That calculation is uncertain because the energy savings
from new or amended standards for IRL and GSFL would be so small
relative to the entire electricity generation market that the resulting
emissions savings would have almost no impact on price formation in the
allowances market. These savings would most likely be outweighed by
uncertainties in the

[[Page 34133]]

marginal costs of compliance with SO₂ and NO_X emissions caps.
    EEI commented that the cost of remediating emissions such as
CO₂, NO_X, SO₂, and mercury were
already included in electricity rates paid by consumers and therefore
emission reductions should not be ``monetized'' because it would lead
to double counting. (EEI, No. 78 at p. 4-5). As described above, DOE
has only monetized the value of emissions not covered by existing caps,
such as NO_X in regions not covered by CAIR. The monetization
of these emissions is based on estimates of their damage costs (i.e.,
health effects) that are not included in economic prices.
    EEI also commented that DOE should consider the most recent trends
in electricity generation, including reductions in emissions, the rise
of renewable portfolio standards, and the possibility of an upcoming
CO₂ cap-and-trade program which would reduce the amount of
CO₂ produced per kWh generated. (EEI, No. 45 at p. 5)
Earthjustice stated that Federal caps will likely be in place by the
time new standards become effective, so DOE should increase its
electricity prices to reflect the cost of complying with emission caps.
Earthjustice also noted that there are regional cap-and-trade programs
in effect in the Northeast (Regional Greenhouse Gas Initiative (RGGI))
and the West (Western Climate Initiative (WCI)) that will affect the
price of electricity but are not reflected in the AEO energy price
forecasts. (Earthjustice, No. 60 at p. 6-7) NY et al. also recommended
including some level of CO₂ pricing in its modeling. (NY et
al., No. 88, at p. 25)
    In response, DOE incorporated current trends in its analysis, but
expressly did not include possible future legislation in this
rulemaking. The current NEMS-BT model used in projecting the
environmental impacts includes the CAIR rule, as described above, which
is projected to reduce SO₂ and NO_X emissions.
NEMS-BT also takes into account the current set of State level
renewable portfolio standards, the effect of the RGGI, and utility
investor reactions to the possibility of future CO₂ cap and
trade programs, all of which impact electricity prices and reduce the
projected carbon intensity of generation.\54\
---------------------------------------------------------------------------

    \54\ For more information, see the Update to the AEO2009 and the
AEO2009 Assumptions documentation [add proper cites].
---------------------------------------------------------------------------

VI. Discussion of Other Key Issues and Comments

A. Sign Industry Impacts

    The CA Stakeholders supported the adoption of TSL3 for the 8-foot
SP Slimline and 8-foot RDC HO product classes partially due to concern
for the outdoor sign industry. Based on communication with the Director
of Technical & Regulatory Affairs for the International Sign
Association, the CA Stakeholders believed that the outdoor sign
industry would experience significant negative impacts if covered 8-
foot T12 lamps were eliminated by DOE proposing TSL4. (CA Stakeholders,
No. 63 at p. 10) However, DOE does not believe that such an impact
exists. The definition of ``general service fluorescent lamp'' exempts
any fluorescent lamp designed and marketed for cold temperature
applications. 10 CFR 430.2. Because outdoor signs typically require
lamps and ballasts designed for cold temperature operation, they should
be minimally impacted by an energy conservation standard. If owners of
outdoor signs are in fact using covered 8-foot T12 lamps, they have the
option to replace those lamps with either a covered 8-foot T8 lamp or
an exempted 8-foot T12 lamp designed for use in cold temperature
applications. Thus, the outdoor sign industry will not be negatively
impacted by DOE adopting TSL4.

B. Max-Tech IRL

    As required under 42 U.S.C. 6295(p)(1) and described in the April
2009 NOPR, DOE identified the efficacy levels that would achieve the
maximum improvements in energy efficiency that are technologically
feasible (max-tech levels) for GSFL and IRL. 74 FR 16920, 16933-35
(April 13, 2009). For IRL, DOE tentatively determined that the maximum
technologically feasible efficacy level would incorporate the highest-
efficiency technologically feasible reflector, halogen infrared
coating, and filament design. Id. Combining all three of these high-
efficiency technologies simultaneously results in the maximum
technologically feasible level. However, because the only technology
pathway to this level is dependent on a proprietary technology, DOE did
not consider this level further in its analyses. In the April 2009
NOPR, DOE analyzed TSL5, which is the most efficient commercially-
available IRL and employs a silver reflector, an improved (but not
most-efficient) IR coating, and a filament design that results in a
lifetime of 4,200 hours. Although this commercially-available lamp uses
the patented silver technology, DOE believes that there are alternate
pathways to achieve this level. A combination of redesigning the
filament to achieve higher temperature operation (and thus reducing
lifetime to 3,000 hours), employing other non-proprietary high-
efficiency reflectors, and applying a higher-efficiency IR coating has
the potential to result in an IRL that meets an equivalent efficacy
level (for more information regarding these technologies, see chapter 3
of the TSD). Therefore, in the April 2009 NOPR, DOE concluded that TSL5
is the maximum technologically feasible level for IRL that is not
dependent on the use of a proprietary technology. Id.
1. Treatment of Proprietary Technologies
    Several stakeholders commented that DOE did not analyze the max-
tech level for IRL as required by EPCA because IRL can achieve
efficacies even higher than TSL5. (ASAP, Public Meeting Transcript, No.
38.4 at p. 96; ADLT, Public Meeting Transcript, No. 38.4 at p. 113;
Earthjustice, No. 60 at pp. 2-3; CA Stakeholders, No. 63 at p. 14;
ACEEE, No. 76 at p. 5; NRDC, No. 82 at p. 2) Commenters disagreed with
DOE's conclusion that it could not establish a TSL that required the
use of a proprietary technology. (Earthjustice, No. 60 at pp. 3-4; CA
Stakeholders, No. 63 at p. 14; ACEEE, No. 76 at p. 5) These
stakeholders claimed that DOE must either analyze the economic impacts
of the true max-tech level, which would incorporate the proprietary
technology, or show that standards based on the proprietary silverized
reflector are not technologically feasible. (Earthjustice, No. 60 at p.
4; CA Stakeholders, No. 63 at pp. 14-15)
    DOE agrees with the stakeholders that max-tech level for IRL is
different than TSL5. While TSL5 is the highest efficiency level on
which DOE performed the full range of economic analyses (including LCC,
national impacts, and manufacturer impacts), DOE maintains that it did
in fact consider and analyze the max-tech level consistent with EPCA.
According to EPCA, DOE is required to establish energy conservation
standards that ``shall be designed to achieve the maximum improvement
in energy efficiency * * * which the Secretary determines is
technologically feasible and economically justified.'' (42 U.S.C.
6295(o)(2)(A)) To determine economic justification, DOE considers
(among other factors) ``the economic impact of the standard on the
manufacturers'' and ``the impact of any lessening of competition * * *
that is likely to result

[[Page 34134]]

from the imposition of a standard.'' (42 U.S.C. 6295(o)(2)(B)(i)(I) and (V))
    The observation that DOE did not label the max tech level as TSL6
does not mean that DOE did not consider this efficiency level. As noted
in the April 2009 NOPR and further explained below, DOE rejected this
level because it required the use of a proprietary technology. However,
DOE is not broadly screening out proprietary technologies or otherwise
eliminating them from its analysis. In contrast to the present case,
most patents do not convey market power to their owners because close
substitutes for these inventions exist. Licensors will pay no more for
these technologies than the cost advantage they provide over the next
best alternative pathway to compliance with the efficiency standard.
Ultimately the availability of cost-effective alternate technology
pathways is what limits the ability of the owner of a proprietary
technology to extract high fees for its use.
    However, it is DOE's opinion that a standard level which can only
be met with a single proprietary technology which comes without
assurances of open and free technology access should be rejected
because it carries great risk of resulting in an anti-competitive
market, a principle consistently applied in past DOE rulemakings. In
such a situation, the standards-setting process itself would convey
great market power because there would be no alternative means to
satisfy the standard. DOE believes that this is sufficient cause to
conclude that the max-tech level in question is not economically
justified. Having made this determination, there was no need or benefit
to performing additional analyses relevant to the other statutory
criteria. In fact, in Natural Resources Defense Council v. Herrington,
the DC Circuit recognized that a complete analysis of all factors in
not always required: `` If no standard could have been based on
prototypes without requiring manufacturers to accomplish the
impossible, we agree that DOE could reasonably deem all such standards
economically unjustified without trudging through the remaining
statutory factors.'' 768 F.2d 1355, 1396-97 (D.C. Cir. 1985).
    At the NOPR public meeting, ASAP suggested that DOE should consider
cross-licensing as a vehicle for manufacturers to access proprietary
technologies if such technologies might comprise the only pathway to
compliance with a certain standard level. (ASAP, Public Meeting
Transcript, No. 38.4 at p. 97) While DOE acknowledges that
manufacturers of proprietary technologies can create cross-licensing
agreements with other organizations, DOE continues to reject the notion
that a standard requiring a specific proprietary technology can be
established under the EPCA criteria, for several reasons. First, the
availability and the price of the proprietary technology could change
after the efficiency standards are established, if the patent owner
attempts to extract the value added by the standard-setting process in
royalty fees for the technology required to meet the max-tech level.
Second, DOE believes that the terms of cross-licensing agreements are
generally not made public, so it is difficult to assess historical
trends as to the impact of such agreements on the market. Thus, DOE
cannot assess the cost implications of current or future cross-
licensing agreements made in the industry; by extension, DOE cannot
assess the manufacturer, consumer, or nationwide impact of a standard
that requires the usage of a proprietary technology.
    In consideration of all of these factors, DOE maintains that it
considers a standard level which can be met by only one proprietary
design to be economically unjustified. Thus, DOE has rejected the max-
tech level for IRL, and conducted the full range of economic analyses
on what it believes to be the next highest efficiency level (not
dependent on a proprietary design), TSL5.
2. Other Technologies
    In response to the April 2009 NOPR, DOE received a number of
comments suggesting that even without the use of a proprietary
technology, several existing technologies could be utilized to produce
IRL with efficacies that meet or exceed TSL5. (ADLT, Public Meeting
Transcript, No. 38.4 at pp. 107-110, 113; CA Stakeholders, No. 63 at
pp. 16-17; ADLT, No. 72 at p. 2; ACEEE, No. 76 at p. 5; NRDC, No. 82 at
p. 4) Manufacturers also commented on the burdens and barriers
associated with implementing some of these technologies. Comments
received regarding alternate technologies that could be used to meet or
exceed TSL5 are summarized below.
a. High-Efficiency IR Coatings
    DOE analyzed advanced IR coatings in the April 2009 NOPR as a
possible technology pathway to achieving TSL5 without the use of the
proprietary silverized reflector. 74 FR 16920, 16944-45 (April 13,
2009). As part of its analysis (documented in the Appendix 5D of the
TSD), DOE obtained several halogen burners on which advanced IR
coatings were deposited.\55\ Using a combination of testing and
engineering calculations, DOE determined the maximum lamp efficacy that
could result from implementing an advanced IR coating and non-
proprietary aluminum reflector, while maintaining a lamp lifetime
similar to the baseline lamp lifetime.
---------------------------------------------------------------------------

    \55\ Halogen infrared (HIR) lamps that are commercially
available today typically use infrared (IR) coatings with
alternating layers of two materials (i.e., SIO₂ and a
second material of either Ta₂O₅ or
Nb₂O₅) and have layer counts ranging from 45
to 75. In contrast, the most-efficient HIR lamps have a coating made
of three materials: SiO₂, Ta₂O₅,
and TiO₂, the latter in the high-index rutile phase. This
three-material coating, described as a Hybrid\TM\ by Advanced
Lighting Technologies, Inc. (hereafter referred to as ``advanced IR
coating ''), has an effective IR reflectance significantly higher
than that of the two-material coatings used in the commercially-available
examples, thereby resulting in enhanced lumen-per-watt (lm/W) values.
---------------------------------------------------------------------------

    In response to the April 2009 NOPR, several stakeholders noted that
DOE's maximum lamp efficacy as presented in Appendix 5D of the TSD, far
exceeds that of TSL5 and, thus, should have been considered as a higher
TSL6. (PG&E, Public Meeting Transcript, No. 38.4 at p. 99; CA
Stakeholders, No. 63 at p. 15) The CA Stakeholders further agreed with
DOE's statement in appendix 5D that advanced IR coatings are not a
developmental product. (CA Stakeholders, No. 63 at p. 17) ADLT
confirmed that the uncoated burner tested by DOE for appendix 5D has
been used in products for several years in the United States and that
the coating applied to this burner has been in production in Europe on
12V burners for several years. (ADLT, No. 72 at p. 3)
    In contrast, NEMA commented that because DOE's lamp efficacies
calculated in Appendix 5D are based on prototype burners, and not on
product that is currently in production, these values overestimate the
final performance that would be achieved after making all design and
process tradeoffs necessary to implement a complete high-speed, high-
volume assembly process. (NEMA, No. 81 at pp. 28-29) In addition, both
Philips and ADLT agreed that there is a difference between the efficacy
that can be attained in a laboratory production process and that which
can be attained in an industrial environment. ADLT acknowledged that
this difference is more pronounced when employing higher-efficiency IR
coatings. (Philips, Public Meeting Transcript, No. 38.4 at p. 111;
ADLT, Public Meeting Transcript, No. 38.4 at pp. 112-113)
    While DOE considers advanced IR coatings to be a valid design
option for increasing IRL efficacy and has not screened it out of the
analysis, DOE also

[[Page 34135]]

recognizes that it lacks the data to accurately estimate the
performance of lamps utilizing this design option when manufactured at
the production volumes needed to service the IRL market. Although all
individual components of the prototype have been produced in high
volume for separate products, that alone does not prove that a lamp
with that combination of parts would have the same efficacy when
manufactured on a large scale. In addition, as the analysis performed
in appendix 5D of the TSD was based on an IR coating deposited in a
laboratory environment, it is reasonable to assume that the efficacy of
similar burners when manufactured in an industrial environment will be
lower. While DOE recognizes that advanced IR coatings will likely
produce higher-efficacy IRL, because DOE does not have adequate data to
accurately estimate this efficacy, DOE is no longer considering the
tested burners in establishing the max-tech level or alternate
technology pathways to achieving other TSLs.
b. Silverized Reflectors
    Commenters stated that in addition to the patent for GE's
silverized reflector, two other patents exist for manufacturing
coatings of reflective silver. Another company possesses a provisional
patent for a silverized lamp reflector (``Reflector A''), a technology
(currently in development) that has been demonstrated in prototypes
that have tested performances at least equal to that of the patented
technology. A third entity has a patent for a ``durable silver
reflective coating'' (``Reflector B'') that could be used for lamp
applications. (CA Stakeholders, No. 63 at p. 19-20; ADLT, No. 72 at p. 2)
    While recognizing the promise of these reflective silver
technologies, DOE notes that significant uncertainty remains as to the
successful implementation of both of these designs in commercial
products at the scale needed to service the IRL market. In addition,
DOE has no data on the performance of Reflector A. Although stakeholder
have provided tested efficacies of lamps utilizing Reflector B, similar
to the discussion regarding advance IR coatings, DOE is unable
accurately estimate the performance of these lamps when produced at
high volumes in industrial environments. For this reason, although DOE
considers silverized reflectors as an IRL design option, DOE has
concluded that it cannot base its establishing of max-tech or adoption
of any other TSL on the potential performance of these reflectors.
c. Integrally-Ballasted Low-Voltage IRL
    In the April 2009 NOPR, DOE screened out integrally-ballasted low-
voltage IRL as a technology option, because it was unaware of any IRL
with integrated transformers that stepped down voltage from 120V line
voltage. 74 FR 16920, 16940 (April 13, 2009). Therefore, DOE could not
conclusively determine if this technology option was technologically
feasible. (See the Chapter 4 of the NOPR TSD). To demonstrate
technological feasibility, the California Stakeholders contracted a
consulting company to combine existing lamp components to make several
prototypes of 120V IRL utilizing low-voltage capsules. The tested
efficacies of these prototype indicated that low-voltage capsules could
be used as a technology pathway to meeting TSL4 and TSL5. (California
Stakeholders, No. 63 at pp. 20-21) Regarding the technological
feasibility of low-voltage IRL, Philips commented that higher mains
voltages found in Europe (such as 220V and 240V) allow greater
improvements in efficiency to be obtained by IRL with integrated
transformers, but such improvements could not be obtained as easily in
the U.S., where a mains voltage of 120V is used. (Philips, Public
Meeting Transcript, No. 38.4 at pp. 318-319)
    In response, because the California Stakeholders have demonstrated
that an integrally-ballasted low-voltage IRL operating on 120V mains is
technologically feasible, DOE is no longer screening out this
technology option in its screening analysis. However, because one of
the tested prototypes (in particular, the only one claimed to meet
TSL5) combined the low-voltage capsule with a developmental silverized
reflector (see section V.B.5.d), DOE believes that there is significant
uncertainty regarding the actual efficacies when such a product is
manufactured on large scales. In addition, as stakeholders did not
provide the lifetime of their tested prototypes, DOE cannot confirm
that the resulting efficacies represent products with lifetimes similar
to the baseline lamps DOE analyzed. Therefore, although DOE recognizes
the potential of integrally-ballasted low-voltage IRL to reach high
efficacies, due to the lack of definitive data DOE cannot base the establishing
of max tech or the adoption of any other TSL on the test data provided.
3. Lamp Lifetime
    Because lamp lifetime affects lamp efficacy, certain commenters
suggested that the max-tech level should reflect a typical baseline
lamp with a lifetime of between 1,000 and 2,000 hours. (CA
Stakeholders, No. 63 at p. 15) ADLT acknowledged that a relationship
exists between lamp lumens and lifetime in which, all other things
remaining equal, one cannot be changed without affecting the other.
ADLT suggested that DOE should analyze lamps with lifetimes between
2,000 and 3,000 hours, which represents lifetimes commonly found in the
commercial and residential markets. (ADLT, No. 72 at p. 3)
    DOE agrees that the max-tech level should be based on a lamp with a
lifetime typical to the baseline lamp, and it conducted its rulemaking
analyses accordingly. As discussed in Chapter 5 of the TSD and
consistent with ADLR's recommendation, DOE believes typical lifetimes
of IRL regulated by this rulemaking are currently 2,500 to 3,000 hours.
As discussed in section I.A.2, DOE has already considered that the
maximum technologically feasible level would incorporate the highest-
efficiency filament design, and such a filament would increase
operating temperature (and efficacy) to a point that would result in a
lifetime equivalent to the baseline lamp lifetime. However, because
this level requires the use of the proprietary silverized reflector,
DOE rejected this level as not economically-justified.
    In addition, DOE has reevaluated whether TSL5 represents the
maximum technologically feasible level not dependent on a single
proprietary technology. In the April 2009 NOPR, DOE based TSL5 on a
commercially-available IRL which employs a proprietary silver
reflector, an improved (but not most-efficient) IR coating, and a
filament design that results in a lifetime of 4,200 hours. However, DOE
also stated that it believed that other technology pathways (not
dependent on the proprietary technology) may exist. This belief was
largely based on advanced IR coated capsules DOE tested (as documented
in Appendix 5D). However, as discussed in section VI.B.2.a, DOE does
not have the required certainty regarding these tested efficacies, and,
therefore, is not considering them in establishing standard levels for
this final rule. To verify that an alternate technology pathway exists
to achieving TSL5, DOE evaluated commercially-available lamps at TSL4
(that generally have lifetimes of 4,000 hours) and modeled their
efficacies at a reduced life-time similar to the baseline (2,500
hours). Using the 9th edition of the IESNA Lighting Handbook and by
developing a relationship between lifetime, lumens,

[[Page 34136]]

and wattage, DOE determined that a reduced lifetime TSL4 lamp (not
using the proprietary silver reflector) would in fact just meet the
efficacy requirements of TSL5. Therefore, DOE believes that TSL5
represents the maximum technologically feasible level not dependent on a
single proprietary technology, taking into account all lifetime considerations.

 C. IRL Lifetime

 1. Baseline Lifetime Scenario
    As discussed earlier, DOE's NOPR analyses were primarily based on
commercially-available lamps, modeling 4,000-hour-lifetime and 4,200-
hour-lifetime lamps at TSL4 and TSL5. DOE received a number of comments
on the anticipated availability of IRL of various lifetimes under
amended standards. Specifically, NEMA stated that it is possible to
achieve higher efficacy levels (e.g., TSL4 and TSL5), but that only
shorter-lifetime lamps are likely to be offered at those levels. NEMA
also argued that PAR halogen lamps must have lifetimes of at least
2,000 hours (and more typically 3,000 hours) in order to be
economically viable to consumers. (NEMA, No. 81 at pp. 5, 31) In
addition, ADLT commented that the market determines the appropriate
combination of efficacy and lifetime, it predicted that, in the future,
higher-efficacy lamps would have shorter lifetimes than those proposed
by DOE at TSL4 and TSL5 in the April 2009 NOPR. (ADLT, No. 72 at p. 3-
4) The CA Stakeholders also disagreed with DOE's selection of longer-
lifetime lamps at TSL4 and TSL5. They stated that on a technology
basis, lamp lifetime does not necessarily increase with the use of
improved halogen technology. The CA Stakeholders believed that because
manufacturers will be able to produce lamps with different combinations
of lamp life and efficacy at TSL4 and TSL5, DOE's shipment analysis
should not assume any change in average lamp life at those levels. (CA
Stakeholders, No. 63 at p. 28)
    Although DOE acknowledges that there is a technology trade-off
between IRL lifetime and efficacy, based on the current stock of
commercially-available product, DOE has concluded that lamp lifetimes
of 4,000 hours and 4,200 hours are technologically feasible at TSL4 and
TSL5, respectively. However, DOE also recognizes that given the issues
regarding proprietary technologies, some manufacturers may choose to
meet these higher efficacy levels by reducing lifetime to 2,500 hours
and 3,000 hours. In addition, DOE also agrees with the CA Stakeholders,
that beyond issues regarding proprietary technologies, given their
ability to provide similar offerings of lamp lifetime, manufacturers
will likely choose to offer lamps at lifetime similar to the baseline
lamps (2,500 to 3,000 hours). Finally, DOE agrees with stakeholders
that such an assumption will likely change the impacts of amended
standards on consumers and manufacturers from those presented in the
April 2009 NOPR.
    For this reason, DOE developed a Baseline Lifetime scenario (in
which it analyzed LCC savings, NPV, and manufacturer impacts) to
investigate the effects of shorter lamp lifetime at TSL4 and TSL5. DOE
determined it was not necessary to apply this scenario to TSL1 through
TSL3, because at those levels, DOE already analyzes lamps with
lifetimes similar to those of the baseline lamp lifetimes. However, for
this scenario at TSL4, for each of the three baseline lumen packages,
DOE analyzed an additional IRL with a lifetime equivalent to the
baseline lamp's lifetime (2500 hours for the 90W lumen package, 2500
hours for the 75W lumen package, 3000 hours for the 50W lumen package).
The efficacy and wattages of the additional IRL were the same as those
analyzed at TSL4 in the April 2009 NOPR. In addition, as DOE had no
indication that a less-costly technology could be utilized to meet TSL4
at these lower lifetimes, DOE modeled that the price of these
additional lamps would be the same as the long-lifetime TSL4 lamps.
    For the Baseline Lifetime scenario at TSL5, as discussed in section
VI.B.3, DOE's calculations indicate that the operating temperature of
the 4,000 hour TSL4 lamp could be increased so as to result in a 2,500
hour lifetime lamp with an efficacy that would just meet TSL5.
Therefore, at TSL5, DOE models three additional lamps (one for each
baseline lumen package) which have lifetimes of 2,500 hours, the same
prices of the TSL4 lamps (since these lamps would use the same
technologies), and the same wattages and efficacies of the previously
analyzed TSL5 lamps. The results of this Baseline Lifetime scenario are
presented with the Commercial Product Lifetime scenario in sections
VII.B, VII.C.1, VII.C.2 and VII.C.3.
 2. Minimum Lamp Lifetime Requirement
    Some stakeholders expressed concern regarding the possibility of
extremely low lifetime lamps entering the market if DOE were to adopt
TSL4 or TSL5. As mentioned above, NEMA stated that a PAR halogen lamp
must have a lifetime of at least 2,000 hours, and more typically 3,000
hours, to be economically viable. (NEMA, No. 81 at p. 31) NEMA stated
that shorter-lifetime lamps are unacceptable for long-life applications
and negatively impacted the environment, because more lamps must be
manufactured, transported, and disposed of. (NEMA, No. 81 at pp. 5, 31)
Thus, NEMA commented that DOE should have considered a minimum lamp
life when setting efficacy standards. (NEMA, Public Meeting Transcript,
No. 38.4 at pp. 104, 111-112) Edison Electric Institute recommended
that DOE should consider setting a minimum lifetime standard for IRL,
as was done for CFL via the Energy Policy Act of 2005 (EPACT 2005).
(EEI, Public Meeting Transcript, No. 38.4 at p. 117)
    While DOE acknowledges that EPACT 2005 set a minimum lifetime
standard for CFL based on the August 9, 2001 version of the Energy Star
Program Requirements for Compact Fluorescent Lamps (42 U.S.C.
6295(bb)), DOE does not have the authority to set minimum lifetime
standards for incandescent reflector lamps, because lamps lifetime is
not an energy efficiency metric. Under 42 U.S.C. 6291(6), ``energy
conservation standard'' is defined as: (1) A performance standard which
prescribes a minimum level of energy efficiency or a maximum quantity
of energy use; or (2) a design requirement (only for specifically
enumerated products, which do not include incandescent reflector
lamps). Because a standard for lamp lifetime would not fall under the
definition of ``energy conservation standard'' as defined by 42 U.S.C.
6291(6), DOE cannot adopt a minimum lifetime requirement for IRL in
this final rule.
 3. 6,000-Hour-Lifetime Lamps
    In response to these comments, DOE notes that it selected IRL
designs for its Commercial Product Lifetime scenario that would
preserve the lifetime of the baseline IRL analyzed in this rulemaking,
even though DOE understands that manufacturers can increase IRL
efficacy by reducing IRL lifetime. 73 FR 13620, 13650 (March 13, 2008).
DOE notes that improved HIR lamps, as well as lamps introduced to meet
TSL5 in the April 2009 NOPR have lifetimes greater than 4,000 hours,
demonstrating that longer-life lamps can meet higher standard levels.
DOE also believes that the life-cycle cost analysis results presented
in this rulemaking accurately indicate the economic benefits to
consumers, as the life-cycle cost analysis inherently considers lamp
lifetime as well as the time value of money. Furthermore, in the April 2009

[[Page 34137]]

NOPR, DOE expressed its belief that lamp lifetime is an economic issue
rather than a utility issue because lifetime does not change the light
output of the lamp. 74 FR 16920, 16939 (April 13, 2009). Nevertheless,
DOE analyzed whether long-life lamps would be available at higher TSLs.
At TSL5, DOE has determined that manufacturers can provide lamps with a
lifetime of at least 4,200 hours, but is unable to confirm that they
could offer lamps with a lifetime of 6,000 hours. However, at TSL4, DOE
believes that manufacturers can achieve lifetimes of 6,000 hours by
decreasing the efficacy of a lamp compliant with TSL5. Thus, 6,000-
hour-lifetime lamps would not be eliminated at this standard level.
    In summary, DOE understands that lifetime and IRL efficacy are
related, but believes that the selection of an IRL lifetime by a lamp
designer does not automatically determine the efficacy of the lamp.
There are a variety of methods that lamp designers can utilize to meet
DOE's standard levels, and these methods are analyzed in this rulemaking.
DOE considers how lamp lifetime affects consumers in its LCC analysis.

 D. Impact on Competition

 1. Manufacturers
    DOE received several comments related to the impact of IRL
standards on industry competition. Philips believed that because most
technologies employed to manufacture advanced IR coatings were
proprietary, the adoption of IRL standards that required such a
technology would adversely affect competition among lamp manufacturers.
(Philips, Public Meeting Transcript, No. 38.4 at pp. 111-112)
    ADLT disagreed that advanced IR coatings required proprietary
technology. (ADLT, Public Meeting Transcript, No. 38.4 at p. 112) The
CA Stakeholders also disagreed and instead supported DOE's assertion in
appendix 5D that advanced IR coatings were not a developmental product,
and were presently not patented and were available to all lamp
manufacturers. (CA Stakeholders, No. 63 at p. 17) ADLT confirmed that
the uncoated burner tested by DOE for appendix 5D has been in
production for several years in the United States. Furthermore, the
coating applied to this burner has been in production in Europe on 12V
burners for several years. (ADLT, No. 72 at p. 3)
    The California Stakeholders asserted that adoption of a high
standard level for IRL would not cause a significant lessening of
competition. They commented that because manufacturers invest in new
technologies at different times in competition with rivals,
manufacturers currently offer products of different efficacies. The
California Stakeholders added further that manufacturers have already
invested significant capital to develop efficient burners and reflectors,
which is reflected by the fact that they offer products currently
meeting TSL 4 and TSL 5. (California Stakeholders, No. 63 at pp. 24-25)
    In response, DOE does not believe that the adoption of a high
standard level will adversely affect competition between lamp
manufacturers. Consumers purchase lamps for a variety of utility
features (size, color, dimming capability, directional light, lifetime,
etc.) other than efficacy. Because consumer choice among these many
features will remain unrestricted by this final rule, manufacturers
have many grounds on which to compete. Furthermore, continued
innovation in incandescent technology--driven, in part, by the desire
to maintain a schedule of margins based on efficiency (as opposed to
simply the utility features noted above)--is likely to maintain or even
promote competition. DOE also acknowledges the proprietary silverized
reflector technology at issue. As discussed in section VI.A, DOE
believes there are alternative technologies to meeting higher efficacy
levels and therefore believes that this final rule does not provide for
any technological advantage that doesn't already exist in the
marketplace. A more detailed discussion of the impact of the adopted
IRL standard on industry competition is contained in section VII.C.5.
    DOE also received comment regarding the impact of the effective
date for IRL standards on industry competition. To DOE's knowledge, two
of the three major manufacturers of IRL currently sell a full product
line (across common wattages) that meet TSL4. However, it is DOE's
understanding that OSI employs a technology platform that, due to the
positioning of the filament in the HIR capsule, is inherently less
efficient. Therefore, it is likely that in order to meet TSL4, OSI
would have to make considerably higher investments than the other
manufacturers, placing it at a competitive disadvantage. OSI commented
that they required one additional year to obtain the requisite
approval, design, build, and install equipment, and stabilize high
volume production if DOE were to adopt TSL4. (OSI, No. 84 at p. 1)
    While DOE recognizes the challenges inherent in gaining access to
technology and building capacity needed to begin production, as
detailed in section VI.I of this notice DOE does not have the statutory
authority to extend the implementation period. OSI did not provide the
detailed information which DOE would need to appreciate why what is
achievable in 4 years cannot be accomplished in the 3 years lead time
specified by EPCA. For example DOE believes that proprietary
technologies are not required to meet TSL 4 and that suppliers could
provide HIR capsules if these could not be manufactured in-house.
Furthermore it is unclear how it might be possible to stabilize high
volume production without producing high volumes of lamps. For this
reason DOE believes that a 3 year lead time will be sufficient to
ensure that the IRL market is supplied.
2. Suppliers
    DOE also received several comments related to the potential impact
of the adopted IRL standard on the competition between technology
suppliers. The Applied Coatings Group (ACG) expressed concern regarding
the adoption of an IRL standard that could only be met using an
advanced IR coating manufactured by ADLT (this coating is described in
appendix 5D of the TSD). ACG believed that such an action may create a
monopoly for DSI, a subsidiary of ADLT, which would be detrimental for
the lighting industry and consumers. (ACG, No. 52 at p. 2)
    Conversely, the CA Stakeholders believed that there is already
competition to manufacture advanced coatings for lamps. They provided a
list of companies that had either already invested in the technology or
were considering such an investment. (CA Stakeholders, No. 63 at p. 18)
DSI, a U.S. company which is owned by ADLT, applies coatings using a
sputtering process in a vacuum chamber. Auer Lighting, a German company
also owned by ADLT, manufactures a similar coating of comparable
efficiency and price using plasma impulse chemical vapor deposition
(PICVD). Furthermore, a patent is pending on a third process to apply
an IR coating to improve lamp efficacy (CA Stakeholders, No. 63 at pp.
17-18) The CA Stakeholders believe that the IRL standards adopted by
this rulemaking and the GSIL standards imposed by EISA 2007 will only
increase the level of competition in the advanced coatings industry.
(CA Stakeholders, No. 63 at pp. 18-19)
    DOE agrees with the CA Stakeholders that the adopted standard for
IRL will not create a monopoly for DSI because sufficient competition
exists in the advanced coatings industry. As

[[Page 34138]]

discussed above, other companies are currently investing in advanced IR
coating technology or are considering such an investment prior to DOE
adopting revised IRL standards in this final rule. Furthermore,
technology pathways exist other than advanced IR coatings that can meet
or exceed the highest efficacy level. Thus, it is extremely unlikely
for one company to become a monopoly as a result of DOE's adopted
standards because there is more than one technology pathway to meet the
most efficient level. For these reasons, DOE believes that the IRL
standards adopted in today's final rule will not adversely impact
competition among technology suppliers.

E. Xenon

    In response to the March 2008 ANOPR, DOE received comments
regarding the price and availability of xenon. Manufacturers believed
that because of xenon's high price and limited supply, it should not be
considered for use as a higher efficiency inert fill gas. (NEMA, No. 21
at p. 9) Although price is not considered in the screening analysis,
DOE did conduct an in-depth market assessment of the supply of xenon,
and the potential impact of xenon supply limitations on IRL standard
levels. DOE determined that although xenon is a rare gas, its supply is
sufficiently large to incorporate into all IRL and that the xenon
supply would not affect IRL product availability (see appendix 3B of
the TSD for more details). As such, in the April 2009 NOPR, DOE
believed that the use of xenon as a higher efficiency inert fill gas
satisfied the screening criteria and considered it as a design option
when developing efficacy levels.
    The CA Stakeholders agreed with DOE's analysis and conclusions in
appendix 3B of the TSD that xenon is not likely to impact
manufacturers' ability to produce IRL at higher standard levels. (CA
Stakeholders, No. 63 at p. 22) NEMA agreed with DOE's observations
regarding the fluctuating demand for xenon and its price being affected
by demand in other industries. However, NEMA reiterated that DOE must
consider the increased cost of xenon in its LCC analysis because NEMA
estimates these costs to be substantial ($0.50 to $0.75 per lamp).
(NEMA, No. 81 at p. 20)
    In response, DOE did consider the impact of the price of xenon on
LCC savings in the April 2009 NOPR and has updated its analysis with
NEMA's inputs. DOE performed an analysis, described in appendix 3B, in
which it calculated how much the price of xenon would have to increase
before LCC savings became negative. DOE concluded that, in general, the
price of xenon could approximately triple before it significantly
negatively impacted LCC savings. However, DOE notes that when examining
LCC savings for lamps modeled in the Baseline Lifetime scenario (see
section VI.C.1), the economic benefits of moving to higher efficacy
lamps is much reduced. Therefore, increases in the price of xenon could
in fact turn LCC savings to LCC increases for some consumers. DOE also
maintains its conclusion that the availability of xenon will not be
impacted by this final rule because historical evidence shows that
supply slowly increases until it meets demand. For more details, see
appendix 3B of the TSD.

F. IRL Hot Shock

    In interviews, manufacturers of IRL expressed concern that halogen
and HIR IRL are susceptible to a premature failure mode known as ``hot
shock'' when installed in energized sockets, which could reduce LCC
savings for consumers. The hot shock condition occurs when the lamp
filament contacts another part of itself due to vibration or torque,
causing an electrical short within the lamp. In written comments, both
NEMA and GE expressed that hot shock is a significant concern for
efficacious IRL, especially in the residential sector, where IRL in
recessed ceiling cans of multi-floor houses may experience hot shock
due to vibrations caused by the movement of people on the upper floors
shared by the ceilings where IRL are installed. (NEMA, No. 81 at p. 6,
p. 10, pp. 27-28; GE, No. 80 at p. 7-8) In contrast, the California
Stakeholders provided three reasons why they believed that the hot
shock failure mode is not prevalent enough to prevent DOE from
selecting a standard level that may require higher efficiency
technologies. (California Stakeholders, No. 63 at pp. 21-22) Firstly,
the California Stakeholders stated that in product documentation,
manufacturers describe simple ways to avoid hot shock, primarily by
avoiding installing or directing lamps while circuits are on. Secondly,
the California Stakeholders stated that a patented technology
(specifically a voltage reduction circuit) exists that claims to
eliminate the risk of hot shock. Lastly, the California Stakeholders
argued that as manufacturers have been selling halogen and HIR lamps
for many years, if hot shock was a significant concern, there would be
a noticeable adverse market response and mentioning of consumer
dissatisfaction (of which their research found neither).
    DOE acknowledges that halogen and HIR IRL are susceptible to hot
shock during installation in energized sockets or due to vibration that
occurs during operation. DOE cannot set standards that necessitate the
usage of a proprietary technology due to the adverse impacts on
manufacturers and industry competition that may result. Thus, DOE is
not considering the patent described by the California Stakeholders as
a feasible way of preserving LCC savings. See section VI.B.1 for
further details. DOE does agree, however, that halogen and HIR products
are readily available on the market despite the risk of hot shock. DOE
was unable to determine the prevalence of hot shock in the commercial
or residential sectors due to a lack of available data, so DOE
determined at what lifetime a standards-compliant lamp purchased by a
commercial or residential consumer would experience negative LCC
savings. The results are shown in Table VI.1 for commercial consumers
and Table VI.2 for residential consumers. Entries of ``N/A'' represent
lamps that already give negative LCC savings to consumers. DOE also
notes, as discussed in the April 2008 NOPR, during interviews
manufacturers stated hot shock could decrease lifetime by 25 to 30 percent.

                   Table VI.1--IRL Lifetime for Negative LCC Savings in the Commercial Sector
----------------------------------------------------------------------------------------------------------------
                                                                               IRL lifetime (hours)
                         Efficacy level                          -----------------------------------------------
                                                                   90W baseline    75W baseline    50W baseline
----------------------------------------------------------------------------------------------------------------
EL1.............................................................             N/A             N/A             N/A
EL2--6,000 hr...................................................            2587            2587            3277
EL2--3,000 hr...................................................            2242            2242             N/A
EL3.............................................................            1897            1897            2932
EL4.............................................................            1897            2242            3277

[[Page 34139]]

EL5.............................................................            1897            1897            3277
----------------------------------------------------------------------------------------------------------------


                   Table VI.2--IRL Lifetime for Negative LCC Savings in the Residential Sector
----------------------------------------------------------------------------------------------------------------
                                                                               IRL lifetime (hours)
                         Efficacy level                          -----------------------------------------------
                                                                   90W baseline    75W baseline    50W baseline
----------------------------------------------------------------------------------------------------------------
EL1.............................................................            2443             N/A             N/A
EL2--6,000 hr...................................................            2355            2532            3233
EL2--3,000 hr...................................................            1999            2177            2977
EL3.............................................................            1644            1821            2621
EL4.............................................................            1733            1910            2977
EL5.............................................................            1644            1910            3243
----------------------------------------------------------------------------------------------------------------

G. Rare Earth Phosphors

    During manufacturer interviews, manufacturers asserted that higher
TSLs for GSFL would require substantially larger amounts of triphosphor
to attain those efficiency levels. As compared to halophosphor,
triphosphor is composed of more expensive rare earth elements that
increase many performance features of GSFL, including efficacy, lumen
maintenance, and color rendition. Manufacturers commented that a
standards-induced increase in triphosphor demand would drive up prices
for the rare earth elements used to make triphosphor, and might
potentially exceed what the market could supply. In response, for the
April 2009 NOPR, DOE conducted a market assessment of the rare earth
phosphor industry (see April 2009 NOPR TSD Appendix 3C). DOE focused on
the key rare earth elements used in high-efficacy GSFL--yttrium,
terbium, and europium--because they are major cost drivers of
triphosphor and were the subject of manufacturer concerns over
availability. After completing the assessment, DOE did not believe it
had sufficient information to project phosphor prices by modeling
future supply and demand curves. Instead, DOE compared the LCC savings
of consumers purchasing high-efficacy lamps to potential increases in
the incremental first cost of rare-earth-based 800-series lamps that
would result from higher rare earth phosphor prices. In general, DOE
found that in most commercial and residential purchase events, consumer
LCC savings was sufficiently high to remain positive even in the face
of potentially dramatic increases in phosphor prices. DOE also stated
that higher prices were likely to attract mining firms into the market
and make less-concentrated rare earth deposits economically viable. 74
FR 16920, 16974 (April 13, 2009)
    NEMA disagreed with DOE's analysis in the April 2009 NOPR and
conclusion on four major points: First, DOE underestimated the increase
in standards-induced triphosphor demand; second, DOE did not
appropriately consider the problems with supply in the industry; third,
higher efficacy levels will have a negative environmental impact due to
the required increase in mining operations; fourth, the cumulative
effect of the above factors would lead to dramatic increases in costs
to manufactures and consumers.
    Specifically, on the magnitude of standards-induced triphosphor
demand, NEMA argued that TSL 1 or TSL 2 would prohibit halophosphor
lamps, which would double manufacturer triphosphor demand. NEMA
commented that shifting all lamps to TSL 4 or TSL 5 would increase the
industry's triphosphor needs by an additional factor of three. In sum,
NEMA estimated TSL 1, TSL 2, TSL 3, TSL 4, and TSL 5 would require 175
percent, 200 percent, 230 percent, 250 percent, and 350 percent of
current triphosphor usage, respectively. (Philips, Public Meeting
Transcript, No 38.4 at pp. 247-248, 251-252; NEMA, No. 81 at pp. 3, 18-
19) Conversely, NRDC argued that the conversion of T12 lamps to T8 and
T5 lamps would mitigate the increase in phosphor demand. (NRDC, No. 82 at p. 3)
    In response to all comments, DOE conducted additional research on
the rare earth industry, including several interviews with agents along
the triphosphor value chain and other industry experts. Based on these
interviews, manufacturer comments, further research and analysis of
additional data obtained, DOE reevaluated its rare earth phosphor
market analysis and assumptions.
    To determine how much trisphosphor demand would increase at each
TSL, DOE determined the amount of triphosphor required in each lamp
type at each TSL, using assumptions from manufacturer interviews and
industry interviews. For example, DOE used Philips' estimate that high
performance 800-series lamps require three to four times as much
triphosphor as standard 700-series lamps to establish the difference in
triphosphor weight between the two phosphor series. DOE then multiplied
these amounts by its shipments projections (see section V.D.2) for each
phosphor series. (See TSD appendix 3C for a more detailed discussion of
DOE's methodology.)
    Based on this analysis, DOE agrees with the industry commenters
that amended standards will lead to significant increases in
manufacturers' need for triphosphor, and by extension, europium (Eu),
terbium (Tb), and yttrium (Y). DOE estimates that at TSL 3, TSL 4, and
TSL 5, manufacturer demand for triphosphor in covered products in 2012
would be 171 percent, 183 percent, and approximately 230 percent of
base-case usage, respectively. These ranges reflect DOE's upper-bound
and lower-bound energy savings scenarios, which DOE used to capture the
effect of consumers selecting different phosphor series lamps in
response to standards. In the lower-bound scenario, triphosphor usage
actually declines from TSL 3 to TSL 4, as the increase in triphosphor
usage due to higher-efficacy lamps is offset by the decline in usage
from the elimination of high-efficacy T12 lamps. At TSL 5, there is a
large incremental jump in usage under any scenario.

[[Page 34140]]

    DOE believes its own estimate of the standards-induced triphosphor
demand differs from NEMA's estimate for several reasons. First, DOE's
estimate is relative to the 2012 market as opposed to current usage.
DOE's analysis attempts to isolate the impact on triphosphor usage from
the energy conservation standards under consideration in this
rulemaking, net of the expected increase between now and the effective
date. As such, DOE accounts for a currently-ongoing trend toward
triphosphor lamps in the base case due to the increased penetration of
triphosphor T8 lamps relative to halophosphor T12 lamps. Supporting
this base-case increase in triphosphor usage, one industry supplier
told DOE it expected triphosphor demand for linear GSFL to double in
five to six years in the base case. Another said it expects continued
double-digit growth in terbium demand. Second, DOE's estimate does not
assume that all T8 lamps are 700-series in the 2012 base case. For
example, 22 percent of 4-foot medium bipin lamps T8 are 800-series or
high-performance 800-series lamps.
    Regarding NEMA's second point regarding the total available supply
of rare earth phosphors, Philips commented that Rhodia, a major
phosphor supplier, told them in 2006 that there was only a 14-year
terbium supply left in the ground, meaning that if demand doubled due
to standards, the lamp industry would struggle to obtain sufficient
amounts of terbium in six to seven years. NEMA commented that Rhodia
predicted that even without changes to DOE's energy conservation
standards, terbium, and europium would be in short supply within five
years. (Philips, Public Meeting Transcript, No 38.4 at pp. 254-255,
258-259, 263)
    NEMA also highlighted China's monopolistic position in the rare
earth market as a threat to supply. NEMA stated that China, in an
attempt to move manufacturing of products such as GSFL to their
country, is setting production caps, reducing export quotas and
licenses, and placing taxes on exports of rare earth commodities.
According to NEMA, Chinese mine operators will not flood the market
with the more abundant elements because that would depress their value.
(NEMA, No. 81 at pp. 16-18)
    NEMA also rejected the notion that mines outside China, induced by
higher phosphor prices, could augment supply by the amount China is
restricting it. NEMA asserted that DOE should focus not on rare earths
in general but rather those that are important to GSFL, particularly
terbium and europium, because they represent only a tiny fraction of
the rare earth mined. NEMA stated that DOE's list of potential mines in
the April 2009 NOPR TSD (appendix 3b) does not indicate the presence of
significant phosphor elements needed for GSFL manufacturing. For
example, one mine DOE had listed as a potential source is in Mountain
Pass, California. However, NEMA stated that its ore contained only 0.2
percent europium and no measure of terbium, according to the U.S.
Geological Survey. (NEMA, No. 81 at p. 16-19) Even if other mines
eventually go into production, Philips argued, they will not come
online quickly enough to meet standards-induced demand. (Philips,
Public Meeting Transcript, No 38.4 at pp. 253, 259) NEMA commented that
DOE's conclusion that higher rare earth prices will attract additional
mining operations is not supported by the record or anyone with
knowledge of the subject. (NEMA, No. 81 at p. 19)
    As it relates to the physical availability of Y, Tb, and Eu, DOE
reevaluated its analysis on the supply and demand of the key rare
earths to the lighting industry given manufacturer comments. DOE agrees
that the availability of rare earth phosphors (particularly with regard
to terbium and europium) is a serious issue. As stated above, DOE
agrees that manufacturers will most likely require large increases in
rare earth phosphors to meet the standard established by this final
rule. DOE interviewed industry experts and suppliers along the
triphosphor value chain about the quantity of the key elements likely
to be available over the near, intermediate, and long term. DOE
received conflicting reports from those within the field regarding
future supplies of these key materials. Many factors obscure the amount
of recoverable rare earth that will be available to manufacturers,
including future Chinese policy and strategic priorities, policies of
countries outside China, demand from other applications, reclamation
efforts, and lack of transparency in the industry. Industry experts
have suggested there are sufficient amounts available to meet expected
demand for anywhere from 15 years to indefinitely. That is not to say
that a supply shortage of these key elements and other rare earths is
unlikely. Indeed, many of those experts that DOE interviewed expect
shortages of most rare earths--not because of this rulemaking, but
because of Chinese policy. Based on its interviews and research, DOE
has concluded that the pivotal issue governing the risk to the physical
availability of rare earths is Chinese policy. China currently supplies
some 95 percent of the rare earth market and has taken steps to
restrict the exportation of rare earths resources. Many in the field,
as noted by manufacturers, consider this to be more a reflection of
China's strategic decision to compel rare earth-dependent industries
(which tend to be burgeoning high-technology fields) to host operations
in China,\56\ rather than an indication of limitation in terms of the
physical availability of the resource.\57\ DOE does not dispute such a
strategy could restrict rare earth phosphor supplies. However, DOE
again notes this is substantially not a function of this final rule,
but of external factors that may or may not affect industry in the base
case as well as the standards case.
---------------------------------------------------------------------------

    \56\ Latimer, Cole; Kim, Jieun, Kim; Tahara-Stubbs, Mia; Wang,
Yumin, ``China's Rare Earth Monopoly Threatens Global Suppliers,
Rival Producers Claim,'' Financial Times (May 29, 2009).
    \57\ Richardson, Ed, Thomas & Skinner, ``High Performance
Magnets,'' Strategic Minerals Conference (April 2009).
---------------------------------------------------------------------------

    In terms of other mining operations outside China, DOE found
differing opinions on whether such operations have the potential to
appreciably increase the supply of the key rare earths. DOE understands
the key difference between those elements critical to the lighting
industry and rare earths in general (discussed below) and agrees with
NEMA that simply increasing production of rare earths is not sufficient
to meet the specific needs of lamp manufacturers. While DOE also agrees
that new projects outside of China could take years to come online,
industry experts related that part of the reason for this is the threat
of China increasing supply, thereby reducing prices, just as other
facilities embark on the large capital costs required to develop mines.
While this does imply a limited role for non-Chinese suppliers, it
necessarily also implies an increase in rare earth phosphor supply.
    DOE continues to believe that any sharp increase in demand over the
long term will send strong price signals to rare earth suppliers and
potential suppliers around the globe, thereby increasing investment in
the exploration and recovery of rare earths, as discussed in appendix
3B of the TSD. Another view common to the industry is that nations
outside China will be forced to view rare earths as a strategic
resource and take steps to secure access. The United States Geological
Survey estimates that 58 percent of rare earth reserves base are in
China,\58\ meaning

[[Page 34141]]

there could be other sources of rare earths, although reserves of those
specific rare earth elements key to lighting use may be more highly
concentrated in China than all rare earths. (Please see appendix 3C of
the TSD for a list of potential rare earth development projects.) Two
potential domestic rare earth sources are the Mountain Pass, California
site and the Pea Ridge iron ore mine in Missouri. NEMA and Philips
noted that while 20,000 tons of rare earths could potentially be mined
at Mountain Pass, only 0.2% was europium. Regardless of the likelihood
of the mine in Mountain Pass reopening, DOE notes that that amount
equates to 40 tons of europium annually, a figured DOE confirmed by
interviews with the mine's operators. Production could in fact be
higher, and such an amount is not insignificant amount given that
estimated total worldwide demand for europium was 300 tons in 2007 and
was projected to be 420 tons in 2012.\59\ While estimates vary, a
Rhodia presentation estimates terbium demand to be 420 tons in 2012,
not the 600 tons NEMA noted. The company also told DOE that it expects
supply and demand to be in balance in the near term for terbium and
europium. Reports of the Pea Ridge resource indicate it is relatively
rich in the rare earths key to the lighting industry, including
terbium.\60\ Molycorp, the company that owns the Mountain Pass site,
also told DOE that it is currently exploring four other sites outside
China that have significant concentrations of the heavy rare earths
(the group to which the critical rare earths such as terbium belong).
---------------------------------------------------------------------------

    \58\ Hedrick, James B., Mineral Commodity Summaries, United
States Geological Survey (Jan. 2009).
    \59\ Cuif. Jean-Pierre, Rhodia Silcea--Electronics BU, ``Is
there enough rare earth for the ``green switch'' and flat Tvs?'',
Phosphor Global Summit 2008 (March 2008).
    \60\ Available at: http://www.wingsironore.com/data/
wings_enterprises_reo_quick_summary.pdf 
---------------------------------------------------------------------------

    NEMA also commented on phosphor reclamation as another source of
rare earth supply. Philips stated that Rhodia has said there physically
will not be enough phosphor beyond 2015 without reclamation. NEMA
argued that while reclamation could augment supply, it would require
significant infrastructure investment and still bring issues such as
mercury contamination into play with regard to international transport
(as many phosphor manufacturers are overseas). Such infrastructure and
systems of collection and handling currently do not exist. Therefore,
NEMA argued, while it expects recycling to emerge in response to the
impending shortage, it is ``entirely speculative'' to assume
reclamation can impact the rare earth phosphor shortage in this decade.
Philips stated that only one of the two types of the green phosphor can
currently be recycled; the type commonly used in CFLs cannot. In
addition, GE stated that at TSL 4 and TSL 5, reclamation will not
enlarge supply because reclaimed phosphor does not perform well enough
to meet those levels. (Philips, Public Meeting Transcript, No 38.4 at
pp. 261, 262; NEMA, No. 81 at p. 18)
    Based on interviews, DOE believes that reclamation efforts can play
a significant role in augmenting supply, but only in the longer term.
Rhodia estimates that by 2015 there will be more than 250 tons of rare
earth oxide in recycled lamps.\61\ Rhodia already has reclamation
ability and is ramping up its capacity, but technical and economic
challenges of commercial-scale operations remain. First, the
infrastructure to collect recycled GSFL must be in place. With this
infrastructure, a commercial-scale, technically-viable process for
distilling the rare earths from the other lamp materials--glass,
alumina, halophosphate, etc.--must be established. This will have to
include chemical treatments, mercury removal, and waste disposal.
---------------------------------------------------------------------------

    \61\ Rhodia, ``Phosphor Recycling: Dream or New Source of Rare
Earths?'' Presentation at Phosphor Global Summit 2009 (March 2009).
---------------------------------------------------------------------------

    While DOE agrees that reclaimed phosphor is too degraded to be used
at TSL 4 or TSL 5, DOE notes that Rhodia stated that it can still meet
the needs of high-performance lamps because the company refines the
triphosphor back down into its original elements (e.g., terbium,
europium) and then remanufactures the triphosphor. Because this process
clearly adds cost to the reclaimed triphosphor, it is likely only
higher price points will trigger additional supply via reclamation.
    The attractiveness of reclamation will depend not only on the cost
of the process versus the price of normal rare earth acquisition, but
also the amount of rare earth available for recovery in the retiring
lamp stock. Currently, the universe of retiring lamps was installed
several years ago; they are mostly halophosphor lamps. Therefore, the
yield of rare earth oxides from recycling these lamps would be unlikely
to make commercial-scale reclamation economically attractive in the
very near future. As such, in light of the other details, DOE agrees
that large-scale reclamation is unlikely to occur before 2015. However,
in several years, Rhodia expects the amount of recoverable useful rare
earth to grow significantly as high-performance GSFL become
commonplace.\62\ Just as energy conservation standards will increase
the demand for rare earth phosphor in 2012, they will provide larger
volumes available for reclamation when they retire. At such time, it is
entirely possible that reclamation eventually could augment supply.
---------------------------------------------------------------------------

    \62\ Rhodia, ``Phosphor Recycling: Dream or New Source of Rare
Earths?'', Presentation at Phosphor Global Summit 2009 (March 2009).
---------------------------------------------------------------------------

    On its third point regarding the impact of rare earth mining, NEMA
argued that those who think TSL 5 is environmentally sound are not
considering the environmental impact that will arise from such an
increase in demand. Philips argued that the goal of the U.S. should not
be to quadruple strip mining operations around the world. According to
Philips, TSL 5 would increase mining by 300 percent relative to TSL 3,
depleting natural resources more rapidly and increasing the cost to the
consumer. (Philips, Public Meeting Transcript, No 38.4 at pp. 253, 259;
NEMA, No. 81 at p. 19)
    DOE agrees with NEMA and Philips that increased demand could
require additional mining operations. However, mining for rare earths
reflects a small portion of all global mining operations. DOE does not
believe that the increase in global demand resulting from this final
rule will come close to requiring the mining increase suggested by
Philips as industry experts also noted that rare earths in many
instances could be mined as byproducts and, therefore, not create the
same footprint as an entirely new project.
    On its fourth point, NEMA and Philips argued that a massive price
spike in rare earth phosphors will occur in 2012 when manufacturers
supplying the U.S. market have to double their requirements as China
continues to reduce quotas. GE commented that this would lead to very
expensive lamps for consumers. (GE, Public Meeting Transcript, No 38.4
at pp. 256; Philips, Public Meeting Transcript, No 38.4 at pp. 248-249;
NEMA, No. 81 at p. 18) Conversely, the California Stakeholders
commented that they agreed with DOE's April 2009 NOPR analysis related
to rare earth phosphors, stating that rare earth phosphor prices and
availability would not affect product availability or consumers' life
cycle cost savings. (California Stakeholders, No. 63 at p. 11) ACEEE
commented that it does not expect the availability of rare earth
phosphors to result in excessive price volatility. (ACEEE, No. 76 at p. 2)
    In response, as discussed in the April 2009 NOPR, DOE believes that
the standards case, all other things being

[[Page 34142]]

equal, will result in higher prices for yttrium, europium, and terbium.
(74 FR 16920, 16974 (April 13, 2009) As in the April 2009 NOPR, DOE
does not believe is it possible to generate reasonable price forecasts,
particularly given the historical volatility in rare earth prices,
trade restrictions, trade policies, lack of publically-available data
from China, and potential supply sources coming online. As an example
of the price volatility, terbium prices on May 20, 2009 were roughly
half what they averaged in 2008,\63\ this after increasing dramatically
in previous years.
---------------------------------------------------------------------------

    \63\ See http://lynascorp.com/page.asp?category_id=1&page_id=25.

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

    However, given that DOE believes standards-induced demand increase
has the potential to affect the worldwide demand of europium, terbium,
and yttrium, DOE has concluded that it is possible prices will rise for
these elements, all other things being equal. To broadly gauge the
potential impact of standards on prices, DOE assessed the standards-
induced increase of their demand in the context of the international
market for these materials, as these key rare earths have many
applications and are transacted in a global market. DOE estimates that
this final rule will increase worldwide demand for terbium and europium
relative to the 2012 base case by roughly 10 percent. DOE used Rhodia
estimates for the 2012 base case.\64\
---------------------------------------------------------------------------

    \64\ Cuif. Jean-Pierre, Rhodia Silcea--Electronics BU, ``Is
there enough rare earth for the ``green switch'' and flat Tvs?'',
Phosphor Global Summit 2008 (March 2008).
---------------------------------------------------------------------------

    DOE's interviews and research showed that there are many value-
added processes in the supply chain of triphosphor. Some of the cost
attendant to these processes is not directly driven by the demand (and
scarcity) of these rare earth elements themselves, but by the mining,
chemical processing and concentrating, and blending costs that are
inherent to triphosphor production. According to interview
participants, these processes are highly driven by energy costs, which
will be mostly equivalent in the base case and standards cases. This is
supported by the fact that despite the prospect of increasing demand,
the prices of the key rare earths declined significantly from summer
2008 to spring 2009, more in line with oil and other commodity prices.
Other important cost drivers to manufacturers include a 25-percent
tariff on the export of key rare earths from China, which will also be
the same in the base case and standards cases.
    As it did in the April 2009 NOPR, DOE conducted a sensitivity
analysis for this final rule to address the potential increases in end-
user lamp prices attributable to higher rare earth input costs. And
despite the fact that price increases in the key rare earth elements
are unlikely to be equal to triphosphor costs (because of the many
other cost inputs), to be conservative, DOE assumed that such a
relationship existed. That is, if Eu, Y, and Tb prices--weighted for
their proportional use in triphosphor--doubled, DOE assumed the price
of triphosphor also doubled. DOE used the analysis to determine how
robust consumer LCC savings are at TSL 3, TSL 4, and TSL 5. DOE
compares the LCC savings due to purchasing higher-efficacy GSFL (as
calculated in chapter 8) to LCC savings under scenario with higher
phosphor prices. As discussed in appendix 3C of the TSD, DOE determined
the quantity of each rare earth phosphor required to manufacture each
phosphor series of GSFL. DOE then estimated how a range of prices for
the key rare earth phosphors would affect manufacturing lamp costs.
Next, by applying manufacturer and retail markups, DOE analyzed how
increases in rare earth phosphor prices may affect LCC savings for a
consumer of each lamp type.
    DOE found that for most commercial and residential purchase events,
consumer LCC savings were sufficiently high to remain positive even if
there were dramatic increases in triphosphor prices and manufacturers
were forced to pass those cost increases on to the consumer with
current markup levels. In fact, all events that yield positive LCC
savings at TSL 4 at current triphosphor prices would maintain positive
LCC savings despite dramatic increases in trisphosphor prices (as a
result of rare earth price increases). By the same token, DOE
calculated that the dramatic decline in rare earths prices since the
summer of 2008 likely did not significantly affect consumer LCC savings.
    In conclusion, regardless of the differences between DOE and NEMA's
phosphor usage estimates, it is worth noting that moving from TSL 3 to
TSL 4 results in a much smaller increase in triphosphor usage than any
other incremental step up in efficacy levels, according to each
estimate. As noted above, NEMA estimates a relatively small increase in
usage at TSL 4 relative to TSL 3 (250 percent vs. 230 percent) and both
show a much larger increase in moving to TSL 5 (350 percent). Given
that NEMA commented that TSL 3 could be implemented in terms of
triphosphor, despite more than doubling domestic usage, DOE believes
the relatively small incremental demand increase of moving to TSL 4
works to justify the latter, higher efficacy level. (NEMA, No. 81 at p.
2; GE, Public Meeting Transcript, No 38.4 at pp. 254-255) Similarly,
while it is impossible to guarantee the amount of recoverable rare
earth in the ground, or predict the supply impacts of Chinese policy,
DOE does not believe the slight incremental impact of TSL 4 relative to
TSL 3 significantly exacerbates these concerns. However, given the
large increases in rare earth phosphor required at TSL 5 relative to
TSL 4, DOE is concerned about the impact of TSL 5 on product
availability as well as the potential environmental impact of producing
the necessary rare earth resources.
    For all of these reasons--a relative small increase in triphosphor
needs at TSL4 relative to TSL 3, which industry acknowledged was
acceptable; continued LCC savings for the consumer even with higher
triphosphor prices and tariffs; greater potential for additional supply
resources and reclamation with higher rare earth prices; and,
significantly, the fact that the major factors in rare earth
availability and prices are largely independent of this rulemaking--DOE
concludes that TSL 1 through TSL 4 are appropriate with respect to rare
earth phosphor availability, prices, and environmental impact.

H. Product and Performance Feature Availability

1. Dimming Functionality
    NEMA expressed concern about the loss of dimming capability as IRL
consumers migrate to other technologies. NEMA acknowledged that
although no data exists to characterize the dimming market, industry
believes there is ``considerable overlap'' between dimmer and IRL
installations. Thus, for both the commercial and residential sector,
NEMA believes that a significant number of installed halogen lamps are
used in combination with dimmers. NEMA commented that at TSL4 and TSL5
specifically, the high price of covered IRL will likely force consumers
to buy lower cost, but non-dimmable technologies. NEMA argued this
would disappoint end-users, especially those in the residential sector,
as they are more likely to purchase a lamp based on its first cost.
Furthermore, NEMA argued that because a significant percentage of
installed halogen lamps are used in dimming applications (and therefore
consume less energy when dimmed), the energy saving benefit of an
alternative non-dimmable replacement is reduced. (NEMA, No. 81 at p.
29-30) Lutron also urged DOE to account for this functional loss in its

[[Page 34143]]

analysis. (Lutron, No. 38.4 at p. 316) Similarly, IALD commented that
IRL provide utility, such as high CRI and dimming capability, that is
unlikely to be met with emerging technologies and used in special
applications, such as auditorium and art gallery lighting. (IALD, No.
71 at p. 2)
    In response, DOE believes that it has already accounted for dimming
functionality in its analysis. First, DOE's efficacy levels do not
eliminate any dimming capability from the market. Thus, DOE is not
assuming this functionality must be met with emerging technologies.
Covered IRL are available at every TSL for use in dimming applications.
Second, DOE's emerging and existing scenarios already incorporate the
effect of consumers who make purchasing decisions based only on a
lamp's first cost. Third, DOE disagrees that the percentage of covered
lamps used in dimming applications would affect DOE's projected energy
savings. While DOE agrees with NEMA that when lamps are dimmed they
consume less energy, DOE expects the usage of dimmers to remain the
same in both the base and standards case. It is unlikely that a
consumer would dim a lamp more or less only because he/she is using a
standards-compliant lamp. Lastly, DOE believes consumers who would be
``greatly disappointed'' without dimming functionality would not be
deterred from an incrementally higher first cost associated with
retaining that functionality. For these reasons, DOE has already
accounted for dimming functionality in its analysis.
2. GSFL Product Availability
    NEMA wrote that TSL4 and TSL5 cannot be economically justified,
partly because these efficacy levels would preserve T8 lamps that are
mostly incompatible with today's installed base of T8 ballasts; NEMA
also stated that higher standards for U-shaped lamps would negatively
impact competition and eliminate energy-efficient U-shaped lamps with
6-inch spacing. (NEMA, Public Meeting Transcript, No. 38.4 at pp. 24,
38, NEMA, No. 81 at pp. 2-3)
    DOE disagrees with NEMA that TSL 3 would remove nearly all T12
lamps from the market by the effective date. Certain T12 lamps still
meet TSL 3, as presented in NOPR, a point that NEMA does not dispute.
Moreover, given the magnitude of the current T12 shipments,
particularly in the residential sector, where, as NEMA has noted, the
most common residential magnetic ballast is exempted, DOE believes that
T12 lamps will remain on the market at TSL 3.
    Next, DOE has accounted for compatibility with existing ballasts,
as well as the need for a new ballast purchases (when applicable), in
all its analyses, as discussed in the April 2009 NOPR. While DOE agrees
TSL 4 or higher may eliminate T12 lamps from the market, as presented
in DOE's market share matrices, at least five T8 lamps meet TSL 4, and
two providing residential consumers with product options. Therefore,
DOE does not believe this final rule presents a possibility of product
shortages.

I. Alternative Standard Scenarios

    In the April 2009 NOPR, DOE noted that although it was proposing
TSL3, serious consideration would be given to a more stringent standard
level for GSFL in the final rule. Accordingly, DOE requested comment on
alternative scenarios for GSFL standards that could achieve greater
energy savings than the proposed TSL3. In addition to consideration of
a standard that would eliminate T12 lamps as presented in TSL4 and
TSL5, DOE also provided two examples of alternative standard scenarios
that may be considered: (1) A standard with a delayed implementation
date (i.e., extended lead time); and (2) a standard with differentiated
residential and commercial levels. 74 FR 16920, 17017, 17025 (April 13,
2009). In response, DOE received several comments on these example scenarios.
1. Tiered Standard
    ACEEE, the California stakeholders, NEMA, and NEEP all recommended
various forms of tiered standards. (ACEEE, No. 55 at pp. 1-3; NEEP, No.
61 at p. 4; NEMA, No. 81 at p. 23, 24; California Stakeholders, No. 2
at p. 2) ACEEE and the California Stakeholders also argued that DOE set
a precedent for such a tiered, phased-in standard in 2001 with
residential clothes washers, when DOE issued a final rule making one
efficiency level effective in 2004 and second level effective in 2007.
(California Stakeholders, No. 61 at p. 9; ACEEE, No. 55 at p. 2)
    DOE analyzed the impacts of a tiered, phased-in standard, as
suggested by many stakeholders. Under such approach, DOE's analysis
showed a mitigation of manufacturer INPV, similar to a delayed
effective date alternative scenario but to a lesser extent. Again, the
lower capital costs (due to more time for the base-case migration away
from T12s), time value of money effects, and longer retention of
higher-margin sales, all mitigate the negative INPV impacts. DOE,
however, again carefully reviewed the governing statute and has
determined that it does not have the authority to implement tiered,
phased-in standards under EPCA.
    DOE carefully evaluated the legality of tiered standards based on
the language in EPCA. 42 U.S.C. 6295(i)(3) requires amended standards
for GSFL and IRL to apply to products manufactured ``on or after'' the
36-month period beginning on the date such final rule is published. DOE
interprets this provision to mean that the standard will be in place
for covered lamps that are manufactured precisely three years after
publication of the final rule and prospectively thereafter. DOE
reasoned that it would be illogical to give separate meaning to the
terms ``on'' and ``after'', an interpretation that could conceivably
allow for a second-tier standard effective at some point subsequent to
the date 36 months after the publication date of the rule, because this
interpretation would also allow for a rule that requires compliance
with the established standards on only the exact date 36 months from
the publication date. Therefore, DOE concluded that section 6295(i)(3)
of EPCA does not allow tiered standards for the final GSFL and IRL
rule. This is in contrast to EPCA's general service lamps provisions at
42 U.S.C. 6295(i)(6)(A)(iv), where Congress explicitly directed DOE to
consider phased-in effective dates. DOE notes that 42 U.S.C.
6295(i)(5), relating to ``additional'' GSFL lamps, contains a different
formulation providing that the standards shall apply to products
manufactured ``after'' a date that is 36 months after the date the rule
is published. However, it is DOE's understanding that the
``additional'' GSFL covered by subsection (i)(5) are not those products
which significantly alter INPV or consumer LCC savings in this
rulemaking. In light of the above, DOE chose not to adopt tiered
standards for these lamps.
2. Delayed Effective Date
    ACEEE and the California Stakeholders, as well as NEMA and Osram
Sylvania, stated that DOE should consider various delayed effective
dates, although the California Stakeholders suggested that this should
be a last resort. (California Stakeholders, No. 61 at p. 4; ACEEE, No.
55 at p. 2; NEMA, No. 81 at pp. 2, 24-26; Osram Sylvania, No. 84 at p. 2)
    DOE carefully evaluated the legality of delayed implementation
dates based on the language in EPCA. DOE concluded that a delayed
effective date which sets no standards for compliance on or about June
30, 2012, which is the anticipated date ``on or after the 36-month
period beginning on the date

[[Page 34144]]

such final rule is published,'' would not be permissible under EPCA (42
U.S.C. 6295(i)(3)). As in the discussion above for tiered standards,
DOE interprets the language of 42 U.S.C. 6295(i)(3) to mean that a
standard will be in place for covered lamps that are manufactured
precisely three years after publication of the final rule and
prospectively thereafter. This is again in contrast to EPCA's general
service lamps provisions at 42 U.S.C. 6295(i)(6)(A)(iv), where Congress
explicitly directed DOE to consider phased-in effective dates. DOE also
carefully considered 42 U.S.C. 6295(i)(5), which provides that the
final rule for ``additional'' GSFL shall apply to products
``manufactured after a date which is 36 months after the date such rule
is published'' and could potentially support a later effective date for
``additional'' GSFL. However, it is DOE's understanding that
``additional'' GSFL are not those products which significantly alter
INPV or consumer LCC savings in this rulemaking. In light of the above,
DOE chose not to use delayed effective dates for those lamps as
recommended by commenters.
3. Residential Exemption
    NEEP, GE and NEMA recommended various forms of residential
exemptions and/or labeling for T12 lamps as alternate standard
scenarios. (NEEP, No. 61 at p. 4; NEMA, No. 81 at pp. 2, 24-26; (GE,
No. 80 at pp. 1-3) ACEEE and the California Stakeholders opposed
separate treatment for the residential sector through a bifurcated
standard. (California Stakeholders, No. 61 at p. 9; ACEEE, No. 55 at p.
3; NEMA, No. 81 at pp. 2, 24-26)
    DOE considered the option of having differentiated standards for
residential consumers and commercial consumers. Absent a specific
statutory directive (e.g., one conveying product labeling or packaging
authority), it has long been DOE's position that it regulates
equipment, rather than product use. In general, DOE has sought to avoid
interfering with manufacturing decisions related to product use,
marketing, or packaging. This approach is also reflective of the
inherent difficulties in enforcing product usage requirements and the
potential loopholes that may be created.
    In the present case, DOE notes that in contrast to situations where
it sets product classes whose efficiency-related differences (e.g., in
terms of utility, capacity, type of energy use) warrant different
standard levels, the lamps under consideration here have no significant
technical differences as would support different standard levels. Given
the identical nature of T12 lamps used in residential and commercial
settings, it would be potentially easy for commercial customers to
purchase and install T12 lamps marketed for residential use. DOE is
concerned that this option could significantly undermine the energy
savings potential to the Nation of the lamps standard. Therefore, DOE
has decided not to consider such an approach further.
4. Conclusions Regarding Alternative Standard Scenarios
    In considering whether to adopt a more stringent standard for GSFL
than the proposed TSL3, DOE sought to explore various approaches (e.g.,
tiered standards, delayed effective dates) to mitigate the impacts on
manufacturers and certain consumers. However, after careful examination
of the relevant provisions of EPCA, for the reasons explained above,
DOE has determined that none of these options is available.
Accordingly, the effective date of this final rule for all covered
product classes will be three years from the date of publication.

J. Benefits and Burdens

    Since DOE opened the docket for this rulemaking, it has received
more than 80 written comments, with hundreds of signatories, from a
diverse set of parties, including manufacturers and their
representatives, state attorney generals, members of Congress, energy
conservation advocates, consumer advocacy groups, private citizens, and
electric and gas utilities. DOE also received more than 20,000 email
form letter submissions recommending DOE strengthen the proposed energy
conservation standards. All substantive comments on the analytic
methodologies DOE used are discussed heretofore in sections of this
final rule notice. DOE also received many comments related to the
relative merits of various TSLs. Generally, these comments either
stated a certain TSL was economic justified, technologically feasible,
and maximized energy, or they argued how DOE should weight the various
factors that go into making that determination. See section VII for a
discussion of DOE's analytic results and how it weighed those factors
in establishing today's final rule.
    PSI stated that DOE should adopt GSFL and IRL standards that align
with or surpass the European Union's ``Eco-Design Standards for Energy-
Using Product (EuP) Directive.'' On the other hand, a private citizen
wrote to DOE expressing that DOE's proposed standards for GSFL and IRL
will not save significant energy, will negatively impact the work of
lighting designers, and may have a negative impact on the quality of
work and living spaces; the citizen expressed that conservation in
other areas could yield greater reduction in energy usage. (Private
Citizen, No. 48 at pp. 1-3)

VII. Analytical Results and Conclusions

A. Trial Standard Levels

    DOE analyzed the costs and benefits of five TSLs each for the GSFL
and IRL covered in today's final rule. Table VII.1 and Table VII.2
present the TSLs and the corresponding product class efficacy
requirements for GSFL and IRL. See the engineering analysis in section
V.B.4 of this final rule for a more detailed discussion of the efficacy
levels. In this trial standard levels section, DOE presents the
analytical results for the TSLs of all product classes that DOE
analyzed, including scaled product classes. See chapter 5 of the final
rule TSD for further information on representative and scaled product
class efficacy levels.
1. General Service Fluorescent Lamps
    As discussed in section V.B.2, the following lamps with a CCT less
than 4,500K compose the five representative GSFL product classes: (1)
4-foot medium bipin; (2) 8-foot single pin slimline; (3) 8-foot
recessed double contact HO lamps; (4) 4-foot miniature bipin T5 SO; and
(5) 4-foot miniature bipin T5 HO lamps. U-shaped lamps with a CCT less
than 4,500K are a scaled product class. The six lamp types (including
U-shaped lamps) with CCTs greater than or equal to 4500K compose six
additional product classes, which are also scaled product classes. DOE
developed TSLs that generally follow a trend of increasing efficacy by
using higher-quality phosphors. The TSLs also represent a general move
from higher-wattage technologies to lower-wattage, lower-diameter lamps
with higher efficacies. Table VII.1 shows the TSLs for GSFL. DOE
composed each TSL utilizing the same methodology employed in the April
2009 NOPR. TSL5 represents all maximum technologically feasible GSFL
efficacy levels, as in the April 2009 NOPR. 74 FR 16920, 16980 (April
13, 2009).
    For this final rule, DOE revised the efficacy levels for 4-foot T5
MiniBP standard-output and high-output lamps to reflect testing at
25[deg] C as well as manufacturing variability. The April 2009 NOPR EL1
requirements for T5 standard-output lamps have thus been revised from
103 lm/W to 86 lm/W, and the April 2009 NOPR EL2 requirements have been
revised from 108 lm/W to 90 lm/W. The April 2009 NOPR EL1

[[Page 34145]]

requirements for T5 high-output lamps have been revised from 89 lm/W to
76 lm/W. 74 FR 16920, 16980 (April 13, 2009). The EPCA standard for
GSFL in the representative product classes of this final rule are shown
in Table I.3. Trial standard levels for all GSFL product classes in
this final rule are shown in Table VII.1.

            Table VII.1--Trial Standard Levels for GSFL--Efficacy Levels for all GSFL Product Classes
----------------------------------------------------------------------------------------------------------------
                                                                              Trial standard level
                 CCT                          Lamp type        -------------------------------------------------
                                                                    1         2         3         4         5
----------------------------------------------------------------------------------------------------------------
<=4,500K.............................  4-foot medium bipin            78        81        85        89        93
                                        (representative).
                                       2-foot U-shaped........        70        72        76        84        87
                                       8-foot single pin              86        92        95        97        98
                                        slimline
                                        (representative).
                                       8-foot recessed double         83        86        88        92        95
                                        contact HO
                                        (representative).
                                       4-foot T5 miniature            86        86        86        86        90
                                        bipin SO
                                        (representative).
                                       4-foot T5 miniature            76        76        76        76        76
                                        bipin HO
                                        (representative).
>4,500K and <=7,000K.................  4-foot medium bipin....        77        79        82        88        92
                                       2-foot U-shaped........        65        67        71        81        85
                                       8-foot single pin              83        87        91        93        94
                                        slimline.
                                       8-foot recessed double         80        83        84        88        91
                                        contact HO.
                                       4-foot T5 miniature            81        81        81        81        85
                                        bipin SO.
                                       4-foot T5 miniature            72        72        72        72        72
                                        bipin HO.
----------------------------------------------------------------------------------------------------------------

2. Incandescent Reflector Lamps
    As discussed in section V.B.4, DOE has established five efficacy
levels based on an equation relating efficacy to lamp wattage. As also
discussed in section V.B.2, DOE only directly analyzed the standard-
spectrum IRL with a diameter greater than 2.5 inches and voltage less
than 125 volts; DOE then scaled minimum efficacy requirements to other
product classes. This is consistent with what DOE did for the April
2009 NOPR. 74 FR 16920, 16981 (April 13, 2009).
    The EPCA standard for IRL is shown in Table I.4. The efficacy
levels for all IRL product classes are shown as coefficients for the
efficacy level requirement equation A*P[caret]0.27 in Table VII.2 for
the TSLs to which they correspond, where A is the coefficient shown in
the table for a specific product class and TSL, and P represents the
rated wattage of the lamp. TSL5 represents the maximum technologically
feasible level, as in the April 2009 NOPR. 74 FR 16920, 16981-2 (April
13, 2009). For this final rule, DOE revised the April 2009 NOPR
efficacy levels for the representative IRL product class in order to
account for IRL manufacturing variability, as described in chapter 5 of the TSD.

                         Table VII.2--Trial Standard Levels for IRL-Coefficients of Efficacy Levels for all IRL Product Classes
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Diameter                             Trial standard level
                 Lamp wattage                             Lamp type                 (in       Voltage  -------------------------------------------------
                                                                                  inches)                   1         2         3         4         5
--------------------------------------------------------------------------------------------------------------------------------------------------------
40W-205W.....................................  Standard-spectrum..............       > 2.5      >=125V       5.3       5.5       6.2       6.8       7.4
                                                                                              <125V\1\       4.6       4.8       5.4       5.9       6.4
                                                                                     <=2.5      >=125V       4.7       4.9       5.5       5.7       6.2
                                                                                                 <125V       4.0       4.2       4.8       5.0       5.4
40W-205W.....................................  Modified-spectrum..............        >2.5      >=125V       4.5       4.7       5.3       5.8       6.3
                                                                                                 <125V       3.9       4.1       4.6       5.0       5.4
                                                                                     <=2.5      >=125V       4.0       4.1       4.6       4.9       5.3
                                                                                                 <125V       3.4       3.6       4.0       4.2       4.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\(Representative.)

    At the public meeting, Energy Solutions suggested that DOE present
efficacy levels for IRL in terms of lumen output rather than wattage
because lumen output is a more appropriate measure of the functional
performance of a lamp. (Energy Solutions, Public Meeting Transcript,
No. 38.4 at pp. 94-95) DOE understands that the primary function of a
lamp is to provide light for the consumers' applications. Market
research indicated that the most common IRL baselines on the market
today provide three distinct levels of initial lumen output: 1,310
lumens from a 90W baseline, 1,050 lumens from a 75W baseline, and 630
lumens from a 50W baseline, respectively. Based on this understanding,
DOE utilized a ``lumen package'' perspective in the April 2009 NOPR to
select and analyze more-efficacious replacements for these three IRL
baselines such that their lumen output is no greater than 10% below the
baseline lumen output. 74 FR 16920, 16944 (April 13, 2009). DOE
believes that the usage of lumen classes allows DOE to take into
account consumers' interests in light output when developing efficacy
levels based on IRL wattage. Thus, DOE has not changed its presentation
of efficacy levels for the final rule.

B. Significance of Energy Savings

    To estimate the energy savings through 2042 due to potential
standards, DOE compared the energy consumption of GSFL and IRL under
the base case (no standards) to energy consumption of these products
under each standards case (each TSL that DOE has considered). Table
VII.3 and Table VII.4 show the forecasted national energy savings
(including rebound effect and HVAC interactions where applicable) in

[[Page 34146]]

quads (quadrillion BTU) at each TSL for GSFL and IRL. As discussed in
section V.D.1, DOE models two base-case shipment scenarios and several
standards-case shipment scenarios. For each lamp type, these scenarios
combined produce eight possible sets of NES results. The tables below
present the results of the two scenarios that represent the maximum and
minimum energy savings resulting from all the scenarios analyzed.
    For GSFL, DOE presents ``Existing Technologies, High Lighting
Expertise, Shift'' and ``Emerging Technologies, Market Segment-Based
Lighting Expertise, Roll-Up'' in Table VII.3 as the scenarios that
produce the maximum and minimum energy savings, respectively. Due to a
larger reduction in the installed stock of lamps affected by standards,
the Emerging Technologies base-case forecast results in lower energy
savings than the Existing Technologies base-case forecast. In addition,
because a portion of consumers purchasing non-energy-saving, higher-
lumen-output systems in the Market Segment-Based Lighting Expertise
scenario, it results in lower energy savings than the High Lighting
Expertise scenario. Finally, because in the Shift scenario more
consumers move to higher-efficacy lamps than in the Roll-Up scenario,
the Shift scenario results in higher energy savings than the Roll-Up scenario.
    Table VII.3 presents total national energy savings for each TSL
(labeled as ``Total'' savings). The table also reports national energy
savings due to individually regulating each type of GSFL (presented
next to the lamp type names), assuming no amended standard on all other
lamp types. However, it is important to note that individual lamp type
energy savings (due to separate regulation) do not sum to equal total
energy savings achieved at the trial standard levels due to standards-
induced substitution effects between lamp types. Instead, these savings
are provided merely to illustrate the approximate relative energy savings
of each lamp type under a TSL. Please see the NOPR for a discussion of
the affect of various TSLs on NES. 74 FR 16920, 17005-06 (April 13, 2009).

                       Table VII.3--Summary of Cumulative National Energy Savings for GSFL
----------------------------------------------------------------------------------------------------------------
                                                                            National energy savings  (quad btu)
                                                                         ---------------------------------------
                                                                                                   Emerging
                  TSL/EL                              Lamp type                Existing          technologies,
                                                                          technologies, high    market segment-
                                                                               lighting         based lighting
                                                                           expertise, shift   expertise, roll-up
----------------------------------------------------------------------------------------------------------------
1.........................................  4-foot MBP..................                0.89                0.61
                                            8-foot SP Slimline..........                0.25                0.25
                                            8-foot RDC HO...............                0.17                0.02
                                            4-foot MiniBP SO............                0.69                0.11
                                            4-foot MiniBP HO............                0.96                0.53
                                            2-foot U-Shaped.............                0.04                0.03
                                           ---------------------------------------------------------------------
                                               Total....................                3.01                1.54
----------------------------------------------------------------------------------------------------------------
2.........................................  4-foot MBP..................                0.99                0.75
                                            8-foot SP Slimline..........                0.28                0.27
                                            8-foot RDC HO...............                0.22                0.19
                                            4-foot MiniBP SO............                0.69                0.11
                                            4-foot MiniBP HO............                0.96                0.53
                                            2-foot U-Shaped.............                0.05                0.03
                                           ---------------------------------------------------------------------
                                               Total....................                3.19                1.88
----------------------------------------------------------------------------------------------------------------
3.........................................  4-foot MBP..................                4.17                1.81
                                            8-foot SP Slimline..........                0.32                0.32
                                            8-foot RDC HO...............                0.23                0.19
                                            4-foot MiniBP SO............                0.69                0.11
                                            4-foot MiniBP HO............                0.96                0.53
                                            2-foot U-Shaped.............                0.19                0.08
                                           ---------------------------------------------------------------------
                                               Total....................                6.59                3.06
----------------------------------------------------------------------------------------------------------------
4.........................................  4-foot MBP..................                6.96                2.30
                                            8-foot SP Slimline..........                0.37                0.23
                                            8-foot RDC HO...............                0.56                0.56
                                            4-foot MiniBP SO............                0.69                0.11
                                            4-foot MiniBP HO............                0.96                0.53
                                            2-foot U-Shaped.............                0.32                0.10
                                           ---------------------------------------------------------------------
                                               Total....................                9.94                3.83
----------------------------------------------------------------------------------------------------------------
5.........................................  4-foot MBP..................                8.79                3.32
                                            8-foot SP Slimline..........                0.37                0.24
                                            8-foot RDC HO...............                0.62                0.57
                                            4-foot MiniBP SO............                0.82                0.26
                                            4-foot MiniBP HO............                0.96                0.53

[[Page 34147]]

                                            2-foot U-Shaped.............                0.40                0.15
                                           ---------------------------------------------------------------------
                                               Total....................               12.00                5.08
----------------------------------------------------------------------------------------------------------------

    For IRL, DOE presents ``Existing Technologies, R-CFL Production
Substitution, Shift'' and ``Emerging Technologies, BR Product
Substitution, Roll-Up'' in Table VII.4 as the scenarios that produce
the maximum and minimum energy savings, respectively. Similar to GSFL,
the Existing Technologies base-case forecast results in higher energy
savings than the Emerging Technologies base-case forecast due to the
greater installed stock of IRL affected by standards. The BR Product
Substitution scenario, which includes migration to exempted BR lamps
but not to R-CFL, results in lower energy savings than the R-CFL
Product Substitution scenario, which accounts for the reverse effect.
In addition, while the effect is greater for GSFL than for IRL, the
Shift scenario (only affecting commercial consumers because DOE assumes
residential consumers always purchase the lowest first-cost lamp) also
represents higher energy savings than the Roll-Up scenario for IRL. As
seen in the table below, TSL 5 achieves maximum energy savings for both
scenarios. As discussed in section VI.C.1, DOE also analyzed a
``Baseline Lifetime Scenario.'' Although this scenario considers
shortened lifetimes as TSL 4 and TSL 5, national energy savings do not
change because shipments remain the same as the normal lifetime scenario.

     Table VII.4--Summary of Cumulative National Energy Savings for
                      Incandescent Reflector Lamps
------------------------------------------------------------------------
                                      National energy savings  (quads)
                                   -------------------------------------
                                         Existing           Emerging
                TSL                  technologies, R-   technologies, BR
                                       CFL product          product
                                      substitution,      substitution,
                                          shift             roll-up
------------------------------------------------------------------------
1.................................               0.45               0.16
2.................................               1.09               0.40
3.................................               1.91               0.81
4.................................               2.39               0.94
5.................................               2.72               1.12
------------------------------------------------------------------------

C. Economic Justification

1. Economic Impact on Consumers
a. Life-Cycle Costs and Payback Period
    Consumers affected by new or amended standards usually experience
higher purchase prices and lower operating costs. Generally, these
impacts are best captured by changes in life-cycle costs. DOE designed
the LCC analysis around lamp purchasing events and calculated the LCC
savings relative to the baseline for each lamp replacement event
separately in each lamp product class, as done for the April 2009 NOPR.
74 FR 16920, 16982 (April 13, 2009). The separate computation of the
impacts on each event and each product class allowed DOE to view the
results of many subgroup populations in the LCC analyses. The following
discussion presents salient results from the LCC analysis. When a
standard results in ``positive LCC savings,'' the life cycle cost of
the standards-compliant lamp or lamp-and-ballast system is less than
the life cycle cost of the baseline lamp or lamp-and-ballast system,
and the consumer benefits economically. When a standard results in
``negative LCC savings,'' the life cycle cost of the standards-
compliant lamp or lamp-and-ballast system is higher than the life cycle
cost of the baseline lamp or lamp-and-ballast system, and the consumer
is adversely affected economically. The results at some efficacy levels
are presented as ranges, which reflect the results of multiple systems
(i.e., multiple lamp-ballast pairings) that consumers could purchase to
meet those specific efficacy levels.
    The LCC results shown in this notice reflect a subset of all of the
lamp purchasing events analyzed by DOE, although they represent the
most prevalent purchasing events. As done in the April 2009 NOPR, DOE
is also presenting the installed prices of the lamp-and-ballast systems
in order to allow comparisons of the up-front costs that consumers must
bear when purchasing baseline or standards-case systems. 74 FR 16920,
16982 (April 13, 2009). All of the LCC results shown in this notice
were generated using the April 2009 AEO2009 reference case electricity
price trend (which includes the impact of ARRA) as well as medium-range
lamp and ballast prices. In many cases, DOE omitted Events IB (Lamp
Failure: Lamp & Ballast Replacement) and IV (Ballast Retrofit) in this
notice, because DOE believes these lamp purchase events to be
relatively less frequent. In addition, DOE has chosen not to present
detailed PBP results by efficacy level in this final rule notice
because DOE believes that LCC results are a better measure of cost-
effectiveness. However, a full set of both LCC and PBP results for the
systems DOE analyzed is available in chapter 8 and appendix 8B of the
TSD. Chapter 8 presents LCC results for all lamp

[[Page 34148]]

purchasing events analyzed by DOE. Furthermore, chapter 8 includes the
LCC results presented in this notice along with additional presented
details, such as system design option details, start-year operating
cost savings, and payback periods. Appendix 8B presents Monte Carlo
simulation results performed by DOE as part of the LCC analysis and
also presents sensitivity results, such as LCC savings under the
AEO2009 high-economic-growth and low-economic-growth cases.
i. General Service Fluorescent Lamps
    Table VII.5 through Table VII.12 present the results for the
baseline lamps in each of the five GSFL product classes DOE analyzed
(i.e., 4-foot medium bipin, 4-foot miniature bipin SO, 4-foot miniature
bipin HO, 8-foot single pin slimline, and 8-foot recessed double
contact HO). Not all baselines have suitable replacement options for
every lamp purchasing event at every efficacy level. For instance,
because DOE assumed that consumers wish to purchase systems or lamp
replacements with a lumen output within 10 percent of their baseline
system output, in some cases, the only available replacement options
produce less light than this. Thus, the replacement options are
considered unsuitable substitutions. These cases are marked with ``LL''
(less light) in the LCC results tables below. In some cases, when
consumers who currently own a T12 system need to replace their lamps,
no T12 energy saving lamp replacements are available. In these cases,
in order to save energy, the consumers must switch to other options,
such as a T8 lamp and appropriate ballast. These cases are marked with
``NER'' (no energy-saving replacement) in tables.
    Because some baseline lamps already meet higher efficacy levels
(e.g., the baseline 32W 4-foot T8 MBP lamp achieves EL2), LCC savings
at the levels below the baseline are zero. In these cases, ``BAE''
(baseline above efficacy level) is listed in the tables to indicate
that the consumer makes the same purchase decision in the standards-
case as they do in the base-case. Also, not all lamp purchase events
apply for all baseline lamps or efficacy levels. For example, DOE
assumed that the standards-induced retrofit event does not apply to the
32W T8 system, because it is already the most efficacious 4-foot medium
bipin GSFL system. For these events, an ``EN/A'' (event not applicable)
exists in the table. Finally, because LCC savings are not relevant when
no energy conservation standard is established, ``N/A'' (not
applicable) exists in the LCC savings column for the baseline system.
    Overall, based on the NIA model, DOE estimates that at TSL4 and
TSL5 in 2012, approximately 2 percent of 4-foot MBP shipments result in
negative LCC savings, and 9 percent of shipments are associated with
the high installed price increases due to forced retrofits. At TSL5,
all 4-ft T5 miniature bipin standard output shipments result in
positive LCC savings; For 8-foot SP slimline at TSL4 and TSL5,
approximately 24 percent of 2012 shipments would result in negative LCC
savings, and 65 percent of shipments would be associated with the high
installed price increases due to forced retrofits. DOE estimates that
at TSL5 in 2012, approximately 33 percent of 8-foot RDC HO shipments
would result in negative LCC savings, and 86 percent of shipments would
be associated with the high installed price increases due to forced retrofits.
    For 4-foot MiniBP T5 standard-output lamps, TSL4 would require
these lamps to meet EL1, resulting in positive LCC savings of $1.10 for
lamp replacement and $43.30 for new construction or renovation (seen in
Table VII.9). At TSL5 (EL2 for standard output T5 lamps), all consumers
have available lamp designs which result in positive LCC savings of
$1.10 (for lamp replacement) and $45.67 to $47.49 (for new construction
or renovation).
    For 4-foot MiniBP T5 high-output lamps, TSL4 and TSL5 have
identical life-cycle cost impacts: Consumers of high-output lamps who
need only a lamp replacement would experience negative LCC savings of -
$3.03 (approximately 44 percent of shipments, according the NIA model).
However, purchasing a T5 high-output system for new construction or
renovation would result in positive LCC savings of $65.69 to $67.06.
    Table VII.5 presents the findings of an LCC analysis on various 3-
lamp 4-foot medium bipin GSFL systems operating in the commercial
sector. The analysis period (based on the longest-lived baseline lamp's
lifetime) for this product class in the commercial sector is 5.5 years.
As seen in the table, DOE analyzes three baseline lamps: (1) 40W T12;
(2) 34W T12; and (3) 32W T8. For a complete discussion of the 4-foot
MBP LCC results, see chapter 8 of the TSD and the April 2009 NOPR. 74
FR 16920, 16984 (April 13, 2009).
BILLING CODE 6450-01-P

[[Page 34149]]
[GRAPHIC] [TIFF OMITTED] TR14JY09.000

BILLING CODE 6450-01-C
    Table VII.7 presents the LCC results for a 4-foot medium bipin
system operating in the residential sector under average operating
hours. Under average operating hours, only the ballast failure event
(Event III) applies because the ballast and fixture reach the end of
their 15 year life before the baseline lamp (which would otherwise have
a lifetime of 19 years when operated for 791 hours per year) fails. DOE
uses a 15-year analysis period, based on the effective service life of
the lamp (limited by the fixture or ballast life). 74 FR 16920, 16985
(April 13, 2009).

[[Page 34150]]

  Table VII.6--LCC Results for a 2-Lamp Four-Foot Medium Bipin GSFL System Operating in the Residential Sector
                                          With Average Operating Hours
----------------------------------------------------------------------------------------------------------------
                                                                LCC savings              Installed price
                                                          ------------------------------------------------------
                                                                   2008$                      2008$
             Baseline                   Efficacy level    ------------------------------------------------------
                                                            Event III: Ballast
                                                                 failure*          Event III: Ballast  failure
----------------------------------------------------------------------------------------------------------------
40 Watt T12.......................  Baseline.............  N/A.................  51.38.
                                    EL1..................  7.03 to 10.25.......  49.04 to 56.19.
                                    EL2..................  6.82 to 19.17.......  50.51 to 56.39.
                                    EL3..................  1.06 to 18.86.......  52.66 to 60.19.
                                    EL4..................  18.57 to 24.36......  52.96 to 56.15.
                                    EL5..................  20.21 to 22.32......  53.13 to 54.04.
----------------------------------------------------------------------------------------------------------------
*Analysis period is 15.0 years.
N/A: Not Applicable.

    In addition to conducting the LCC analysis under average operating
hours, DOE also computed residential LCC results under high operating
hours (1,210 hours per year) in order to analyze the economic impacts
of the lamp failure event (Event I). Table VII.7 presents these LCC and
installed-price results for a 2-lamp four-foot medium bipin GSFL system
under the lamp failure event and high operating hours. As seen in Table
VII.7, DOE divides the residential GSFL lamp failure event into Events
IA (Lamp Failure: Lamp Replacement) and IB (Lamp Failure: Lamp and
Ballast Replacement). Event IA, presented also in the commercial sector
analysis, solely models a lamp purchase (in response to lamp failure)
in both the base case and standards case. With high operating hours,
DOE calculates that the baseline lamp initially purchased with a
ballast fails after 12.4 years. Thus, a replacement lamp will operate
for only 2.6 additional years before the fixture is removed. To compute
the results shown in Table VII.7, DOE assumes that residential-sector
GSFL consumers will discard their replacement lamp when the fixture is
removed and therefore uses a 2.6 year analysis period.

         Table VII.7--LCC Results for a 2-Lamp Four-Foot Medium Bipin GSFL System Operating in the Residential Sector With High Operating Hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Efficacy level                                             Installed price
                                  ----------------------------------------------------------------------------------------------------------------------
                                                                            2008$                                           2008$
             Baseline                                   ------------------------------------------------------------------------------------------------
                                        LCC savings         Event IA: Lamp      Event IB: Lamp and      Event IA: Lamp      Event IB: Lamp and ballast
                                                             replacement*      ballast replacement*      replacement                replacement
--------------------------------------------------------------------------------------------------------------------------------------------------------
40 Watt T12......................  Baseline............  N/A.................  N/A.................  4.13...............  4.13.
                                   EL1.................  LL..................  EN/A................  LL.................  EN/A.
                                   EL2.................  LL..................  EN/A................  LL.................  EN/A.
                                   EL3.................  -5.53...............  EN/A................  12.94..............  EN/A.
                                   EL4.................  NR..................  -4.13 to -2.04......  NR.................  52.96 to 56.15.
                                   EL5.................  NR..................  -3.52 to -2.87......  NR.................  53.13 to 54.04.
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Analysis period is 2.6 years.
N/A: Not Applicable; LL: Available Options Produce Less Light; EN/A: Event Not Applicable; NR: No Replacement.

    As discussed in section V.C.8, DOE analyzed additional residential-
sector GSFL lamp failure LCC scenarios for this final rule based on the
understanding that some residential-sector GSFL consumers may preserve
their lamps during fixture end-of-life and then install those lamps on
a new fixture instead of discarding them. Consumers exhibiting this
behavior can operate lamps for their full lifetimes and thus will
eventually experience a lamp failure even when operating with average
operating hours. When operated for average operating hours, the
baseline lamp has a lifetime of 19 years; therefore, DOE uses 19 years
as the analysis period. This analysis shows that some residential
consumers with T12 systems do in fact obtain LCC savings when forced to
retrofit their T12 ballast with a T8 system at EL4 and EL5. However,
DOE also notes that the results of this analysis are highly dependent
on the remaining years of lifetime left on the T12 ballast when the
lamp is replaced. Therefore, as seen in Table VII.8 DOE computes LCC
savings for several scenarios of remaining ballast life at the time of
lamp replacement. At EL3, under the scenario where consumers retain
their lamp upon ballast replacement, consumers obtain LCC savings. At
EL4, consumers can achieve positive LCC savings if their ballast have
less than 8 years of life remaining at the point of lamp failure. In
other words, consumers who would need to purchase a ballast within 8
years after replacing their lamp would benefit from a standard at EL4.
At EL5, standards-case consumers can achieve positive LCC savings if
their fixtures have less than 7 years of life remaining.

[[Page 34151]]

[GRAPHIC] [TIFF OMITTED] TR14JY09.001

    Table VII.9 presents the results for an electronically-ballasted 4-
foot T5 miniature bipin standard-output, baseline system operating in
the commercial sector. Table VII.10 presents the results for an
electronically-ballasted 4-foot T5 miniature bipin high-output baseline
system operating in the industrial sector. For further discussion on
the 4-foot MiniBP LCC results see the April 2009 NOPR and Chapter 8 of
the TSD. 74 FR 16920, 16987 (April 13, 2009).

             Table VII.9--LCC Results for a 2-Lamp Four-Foot Miniature Bipin Standard Output GSFL System Operating in the Commercial Sector
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         LCC savings                                  Installed price
                                                          ----------------------------------------------------------------------------------------------
                                                                            2008$                                          2008$
             Baseline                   Efficacy level    ----------------------------------------------------------------------------------------------
                                                                                 Event V: New
                                                            Event IA: Lamp       construction/      Event IA: Lamp       Event V: New  construction/
                                                             replacement*         renovation*         replacement                 renovation
--------------------------------------------------------------------------------------------------------------------------------------------------------
28 Watt T5........................  Baseline.............               N/A  N/A.................              9.75  71.87.
                                    EL1..................               NER  43.30...............             13.66  75.78.
                                    EL2..................              1.10  45.67 to 47.49......             15.44  77.56 to 78.06.
--------------------------------------------------------------------------------------------------------------------------------------------------------
*Analysis period is 5.5 years.
N/A: Not Applicable; NER: No Energy-Saving Replacement.


               Table VII.10--LCC Results for a 2-Lamp Four-Foot Miniature Bipin High Output GSFL System Operating in the Industrial Sector
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         LCC savings                                  Installed price
                                                          ----------------------------------------------------------------------------------------------
                                                                            2008$                                          2008$
             Baseline                   Efficacy level    ----------------------------------------------------------------------------------------------
                                                                                 Event V: New
                                                            Event IA: Lamp       construction/      Event IA: Lamp       Event V: New  construction/
                                                             replacement*         renovation*         replacement                 renovation
--------------------------------------------------------------------------------------------------------------------------------------------------------
54 Watt T5........................  Baseline.............               N/A  N/A.................             10.84  74.09.
                                    EL1..................             -3.03  65.69 to 67.06......             20.61  79.31 to 83.87.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Analysis period is 3.9 years.
N/A: Not Applicable; NER: No Energy-Saving Replacement.

    Table VII.11 presents the results for an 8-foot single-pin slimline
GSFL system operating in the commercial sector. The analysis period is
4 years. For this product class, DOE analyzes three baseline lamps: (1)
75W T12; (2) 60W T12; and (3) 59W T8. For further discussion on the 8-
foot SP slimline LCC results, see the April 2009 NOPR and chapter 8 of
the TSD. 74 FR 16920, 16988 (April 13, 2009).

[[Page 34152]]
[GRAPHIC] [TIFF OMITTED] TR14JY09.002

    Table VII.12 shows LCC results for an 8-foot recessed double-
contact GSFL system operating in the industrial sector. The analysis
period for this product class is 2.3 years. DOE analyzes 110W T12 and
95W T12 baseline lamps on magnetic ballasts. For further discussion on
the 8-foot RDC HO LCC results see the April 2009 NOPR and chapter 8 of
the TSD. 74 FR 16920, 16990 (April 13, 2009).

[[Page 34153]]
[GRAPHIC] [TIFF OMITTED] TR14JY09.003

ii. Incandescent Reflector Lamps
    Table VII.13 shows the commercial and residential sector LCC
results for IRL. The results are based on the reference case April 2009
AEO2009 electricity price forecast (which includes the impact of the
ARRA) and medium-range lamp prices. The analysis period is 3.4 years
for the residential sector and 0.9 years for the commercial sector. In
general, the results of the LCC analysis are consistent with those
presented in the April 2009 NOPR. 74 FR 16920, 16991 (April 13, 2009).
As discussed in section VI.C.1, DOE analyzed an additional scenario,
called the Baseline Lifetime scenario, for the LCC analysis, NIA and
MIA that modeled lamps at EL4 and EL5 with similar lifetimes to that of
the baseline lamp lifetimes. The LCC results for both the Baseline
Lifetime scenario and the Commercial Lifetime scenario (in which lamps
at EL4 and EL5 have lifetimes of 4,000 hours and 4,200 hours,
respectively) are shown as ranges at EL4 and EL5. As seen in Table
VII.13, the lower range of LCC savings, representing the Baseline
Lifetime scenario lamps, are negative for the 50W baseline in both
sectors at EL5 and only in the commercial sector at EL4.

[[Page 34154]]

                                               Table VII.13--LCC Results for Incandescent Reflector Lamps
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    LCC savings (2008$)
                                                              Installed price (2008$)
                                                                         -------------------------------------------------------------------------------
                      Baseline                          Efficacy level          Event I: Lamp replacement/event V: New construction and renovation
                                                                         -------------------------------------------------------------------------------
                                                                             Commercial *       Residential **        Commercial          Residential
--------------------------------------------------------------------------------------------------------------------------------------------------------
90 Watt PAR38.......................................           Baseline                 N/A                 N/A                6.43                5.33
                                                                      EL1             -0.12                0.14                7.41                6.31
                                                                      EL2      3.72 to 6.12        3.19 to 4.94        7.88 to 8.06        6.78 to 6.96
                                                                      EL3              6.01                5.81                8.06                6.96
                                                                      EL4      2.61 to 7.95        3.78 to 7.45                9.43                8.33
                                                                      EL5      4.26 to 9.14        5.65 to 9.10       9.43 to 10.02        8.33 to 8.92
75 Watt PAR38.......................................           Baseline                 N/A                 N/A                6.43                5.33
                                                                      EL1             -0.40               -0.17                7.41                6.31
                                                                      EL2      3.17 to 5.76        2.57 to 4.54        7.88 to 8.06        6.78 to 6.96
                                                                      EL3              4.64                4.25                8.06                6.96
                                                                      EL4      1.51 to 6.85        2.54 to 6.20                9.43                8.33
                                                                      EL5      2.42 to 7.30        3.56 to 7.01       9.43 to 10.02        8.33 to 8.92
50 Watt PAR30.......................................           Baseline                 N/A                 N/A                5.80                4.70
                                                                      EL1             -0.37               -0.29                6.78                5.68
                                                                      EL2     -0.07 to 2.74        0.11 to 2.36        7.25 to 7.43        6.15 to 6.33
                                                                      EL3              0.63                0.92                7.43                6.33
                                                                      EL4     -0.25 to 1.81        0.11 to 1.75                8.80                7.70
                                                                      EL5     -3.17 to 1.36       -1.64 to 1.51        8.80 to 9.39       7.70 to 8.29
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Analysis period is 0.9 years.
 **Analysis period is 3.4 years.

b. Consumer Subgroup Analysis
    Certain consumer subgroups may be disproportionately affected by
standards. As done for the April 2009 NOPR, DOE performed LCC subgroup
analyses as part of its proposal for low-income consumers, institutions
of religious worship, and institutions that serve low-income
populations. 74 FR 16920, 16991 (April 13, 2009). See section V.C for a
review of the inputs to the LCC analysis. DOE found the impacts on
these consumer subgroups to be generally consistent with those
presented in the April 2009 NOPR with one exception: for institutions
that serve low-income populations, with updates to electricity prices
in this final rule, consumers who in the base case purchase a 75W T12
replacement lamp, no longer obtain LCC savings. 74 FR 16920, 16996
(April 13, 2009). For further detail on the consumer subgroup analysis,
see chapter 12 of the TSD.
2. Economic Impact on Manufacturers
    DOE estimated the impact of amended energy conservation standards
for covered products on the INPV of the industries that manufacture the
products. The impact of amended standards on INPV consists of the
difference between the INPV in the base case and the INPV in the
standards case. INPV is the primary metric used in the MIA and
represents one measure of the fair value of the GSFL and IRL industries
in 2008$. For each industry affected by today's rule, DOE calculated
INPV by summing all of the net cash flows, discounted at the industry's
cost of capital or discount rate.
    Table VII.14 through Table VII.17 show the changes in INPV that
bound the range of impacts that DOE estimates would result from the
TSLs considered for this final rule.

  Table VII.14--Manufacturer Impact Analysis for GSFL With the Flat Markup Scenario Under the Existing Technology Base Case--High Lighting Expertise--
                                                            Shift in Efficiency Distributions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Trial standard level
                                                              Units                Base case -----------------------------------------------------------
                                                                                                   1           2           3           4           5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  (2008$ millions)................         639         697         695         721         635         671
Change in INPV................................  (2008$ millions)................  ..........          58          56          82          -4          33
                                                (%).............................  ..........       9.11%       8.83%      12.82%      -0.64%       5.09%
Amended Energy Conservation Standards Product   (2008$ millions)................  ..........         3.3         8.8         8.8        11.6        29.6
 Conversion Costs.
Amended Energy Conservation Standards Capital   (2008$ millions)................  ..........        38.5        60.5       104.5       181.5       181.5
 Conversion Costs.
                                                                                 -----------------------------------------------------------------------
    Total Investment Required.................  (2008$ millions)................  ..........        41.8        69.3       113.3       193.1       211.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


 Table VII.15--Manufacturer Impact Analysis for GSFL With the Four-Tier Markup Scenario Under the Emerging Technology Base Case--Market Segment Lighting
                                                      Expertise--Rollup in Efficiency Distributions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Trial standard level
                                                              Units                Base case -----------------------------------------------------------
                                                                                                   1           2           3           4           5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  (2008$ millions)................         527         662         629         432         365         316

[[Page 34155]]

Change in INPV................................  (2008$ millions)................  ..........         134         102         -95        -162        -211
                                                (%).............................  ..........      25.47%      19.29%     -18.08%     -30.74%     -40.04%
Amended Energy Conservation Standards Product   (2008$ millions)................  ..........         3.3         8.8         8.8        11.6        29.6
 Conversion Costs.
Amended Energy Conservation Standards Capital   (2008$ millions)................  ..........        38.5        60.5       104.5       181.5       181.5
 Conversion Costs.
                                                                                 -----------------------------------------------------------------------
    Total Investment Required.................  (2008$ millions)................  ..........        41.8        69.3       113.3       193.1       211.1
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table VII.16--Manufacturer Impact Analysis for IRL Under the Existing Technologies Base Case--No Product Substitution Scenario--Shift in Efficiency
                                                                      Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Trial standard level
                                                              Units                Base case -----------------------------------------------------------
                                                                                                   1           2           3           4           5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  (2008$ millions)................         301         293         233         221         199         190
Change in INPV................................  (2008$ millions)................  ..........         (8)        (68)        (81)       (102)       (111)
                                                (%).............................  ..........      -2.80%     -22.71%     -26.78%     -34.02%     -36.90%
Amended Energy Conservation Standards Product   (2008$ millions)................  ..........          $3          $3          $2          $3          $7
 Conversion Costs.
Amended Energy Conservation Standards Capital   (2008$ millions)................  ..........         $32         $83        $134        $167        $185
 Conversion Costs.
                                                                                 -----------------------------------------------------------------------
    Total Investment Required.................  (2008$ millions)................  ..........         $35         $87        $137        $170        $192
--------------------------------------------------------------------------------------------------------------------------------------------------------


  Table VII.17--Manufacturer Impact Analysis for IRL Under the Emerging Technology Base Case--Product Substitution--Roll-Up in Efficiency Distributions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 Trial standard level
                                                              Units                Base case -----------------------------------------------------------
                                                                                                   1           2           3           4           5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..........................................  (2008$ millions)................         221         205         158         139         123         117
Change in INPV................................  (2008$ millions)................  ..........        (15)        (63)        (81)        (98)       (104)
                                                (%).............................  ..........      -6.87%     -28.58%     -36.80%     -44.36%     -47.18%
Amended Energy Conservation Standards Product   (2008$ millions)................  ..........          $3          $3          $2          $3          $7
 Conversion Costs.
Amended Energy Conservation Standards Capital   (2008$ millions)................  ..........         $29         $77        $125        $155        $172
 Conversion Costs.
                                                                                 -----------------------------------------------------------------------
    Total Investment Required.................  (2008$ millions)................  ..........         $33         $81        $127        $158        $179
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The April 2009 NOPR provides a detailed discussion of the estimated
impact of amended standards for GSFL and IRL on INPVs. 74 FR 16920,
16999-17003 (April 13, 2009). This qualitative discussion on the
estimated impacts of amended GSFL and IRL standards in INPVs for the
final rule can be found in chapter 13 of the TSD.
a. Industry Cash Flow Analysis Results for the IRL Lifetime Sensitivity
    For the final rule, DOE analyzed the effects of the Baseline
Lifetime scenario as a sensitivity. The impacts of this scenario on
INPV are presented below. For a full description of the scenario, see
section VI.C.1 of today's final rule.

  Table VII.18--Manufacturer Impact Analysis for IRL Under the Existing Technologies Base Case--BR Substitution
                    Scenario--Roll-Up in Efficiency Distribution--Baseline Lifetime Scenario*
----------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level
                                                  Units              Base case   -------------------------------
                                                                                         4               5
----------------------------------------------------------------------------------------------------------------
INPV..................................  (2008$ millions)........             301             281             258
Change in INPV........................  (2008$ millions)........  ..............            (21)            (43)
                                        (%).....................  ..............          -6.81%         -14.24%
Amended Energy Conservation Standards   (2008$ millions)........  ..............              $3              $7
 Product Conversion Costs.

[[Page 34156]]

Amended Energy Conservation Standards   (2008$ millions)........  ..............            $167            $167
 Capital Conversion Costs.
                                                                 -----------------------------------------------
    Total Investment Required.........  (2008$ millions)........  ..............            $170            $174
----------------------------------------------------------------------------------------------------------------
* The scenarios that bound the INPV results in the sensitivity scenario are different than the scenarios that
  bound the INPV results in the normal standards cases.


    Table VII.19--Manufacturer Impact Analysis for IRL Under the Emerging Technology Base Case--R-CFL Product
                  Substitution--Shift in Efficiency Distributions--Baseline Lifetime Scenario*
----------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level
                                                  Units              Base case   -------------------------------
                                                                                         4               5
----------------------------------------------------------------------------------------------------------------
INPV..................................  (2008$ millions)........             221             160             171
Change in INPV........................  (2008$ millions)........  ..............            (61)            (49)
                                        (%).....................  ..............         -27.52%         -22.35%
Amended Energy Conservation Standards   (2008$ millions)........  ..............              $3              $7
 Product Conversion Costs.
Amended Energy Conservation Standards   (2008$ millions)........  ..............            $155            $155
 Capital Conversion Costs.
                                                                 -----------------------------------------------
    Total Investment Required.........  (2008$ millions)........  ..............            $158            $162
----------------------------------------------------------------------------------------------------------------
* The scenarios that bound the INPV results in the sensitivity scenario are different than the scenarios that
  bound the INPV results in the normal standards cases.

    The sensitivity results show that decreasing the lifetime of the
standards-compliant lamps at TSL 4 and TSL 5 lowers the estimated range
of INPV impacts relative to the no sensitivity results. In the base
case, the lamps that meet TSL 4 and TSL 5 are premium products with
longer life than standard HIR lamps. If manufacturers decreased the
lifetime of the lamps in response to the energy conservation standards,
the industry revenues in the standards case are greater due to higher
total shipments at TSL 4 and TSL 5. The higher revenues help to
mitigate the impacts of the significant capital conversion costs
required to comply with the energy conservation standards.
b. Cumulative Regulatory Burden
    The April 2009 NOPR notes that one aspect of DOE's assessment of
manufacturer burden is the cumulative impact of multiple regulatory
actions that affect manufacturers. 74 FR 16920, 17003 (April 13, 2009).
In addition to DOE's energy conservation regulations for GSFL and IRL,
DOE identified other requirements that manufacturers face for these and
other products and equipment they manufacture in the three years before
and after the anticipated effective date of the amended DOE
regulations. Id. DOE believes that the EISA 2007 requirements for GSIL
are significant and could have the greatest cumulative burden on
manufacturers, but that they will not pose insurmountable challenges.
Id.
    Chapter 13 of the TSD addresses in greater detail the issue of
cumulative regulatory burden.
c. Impacts on Employment
    As discussed in the April 2009 NOPR, and for today's final rule,
DOE believes that amended energy conservation standards will not alter
domestic employment levels of the GSFL industry. 74 FR 16920, 17003
(April 13, 2009). During interviews with manufacturers, DOE learned
that GSFL are produced on high-speed, fully-automated lines. Production
workers are not involved in the physical assembly of the final product
(e.g., in inserting components, transferring partly assembled lamps,
soldering lamp bases). The employment levels required for these tasks
are a function of the total volume of the facility, not the labor
content of the product mix produced by the plant. Since higher TSLs
involve using more-efficient phosphors, employment will not be impacted
because standards will not change the overall scale of the facility.
    As discussed in the April 2009 NOPR, and for today's final rule,
DOE believes that amended energy conservation standards will not
significantly impact IRL direct employment. 74 FR 16920, 17004 (April
13, 2009). The impact that new standards will have on employment is far
less significant than the potential impact from emerging technologies.
Both scenarios show that the absolute magnitudes of employment impacts
due to standards are small. Whether standards have a positive or
negative impact on employment is largely determined by the extent to
which consumers elect to substitute IRL with other lamp technologies
(such as R-CFL or exempted IRL) in the standards case.
    Further support for these conclusions is set forth in chapter 13 of the TSD.
d. Impacts on Manufacturing Capacity
    DOE stated its view in the April 2009 NOPR, 74 FR 16920, 17004
(April 13, 2009), that amended standards would not significantly affect
GSFL production capacity. Over the long-term, any redesign of GSFL
needed to meet standards would largely be a materials issue that would
not affect manufacturing capacity. In the short term, although higher
are expediting the shift from T12 shipments to T8 shipments and require
shutting down and retooling production lines, manufacturers are able to
temporarily ramp up production before shutdowns occur to maintain
shipments during retooling. For today's final rule, DOE maintains its
belief that amended energy conservation standards for GSFL will

[[Page 34157]]

not significantly impact manufacturing capacity.
    In the NOPR, DOE stated it did not believe there would be a
capacity constraint at the proposed standard level. DOE stated that
manufacturers could install additional coaters, purchase infrared
burners from a supplier, and use existing excess capacity. These
options would allow IRL manufacturers to maintain production capacity
levels and continue to meet market demand. 74 FR 16920, 17004 (April
13, 2009). In response to the April 2009 NOPR, manufacturers did raise
concerns that the energy conservation standards in today's final rule
could result in a constrained market. However, none of the comments DOE
received indicated that that the energy conservation standards would
result in the unavailability of standards-compliant products. At worst,
the energy conservation standards could result in a short-term
disruption in which the one manufacturer that requested additional time
in between the announcement and effective date does not supply covered
IRL. DOE did not receive comment that would indicate the other
manufacturers would not have the necessary volume of standards-
compliant lamps by the effective date of the final rule. For today's
final rule, DOE maintains its belief that manufacturers will be able to
maintain production capacity of covered IRLs and will be able to meet
market demand.
e. Impacts on Manufacturers That Are Small Businesses
    As discussed in the April 2009 NOPR, 74 FR 16920, 17004 (April 13,
2009), DOE identified no small manufacturers of IRL but did identify
one small manufacturer that produces covered GSFL and is unlikely to be
significantly affected by today's final rule.\65\ In response to the
April 2009 NOPR, one small business requested it be included in DOE's
small business manufacturer impact analysis. For today's final rule,
DOE re-analyzed its list of potential small business manufacturers,
including those that submitted comments. DOE still has not identified
any small manufacturer of covered IRL. However, DOE continues to
identify the one small manufacturer that produces covered GSFL. For a
discussion of the impacts on small business manufacturers, see chapter
13 of the TSD and section VIII.B of today's notice.
---------------------------------------------------------------------------

    \65\ As discussed in the April 2009 NOPR, 74 FR 17004-05, DOE
identified only manufacturer of covered GSFL or IRL that met the
criteria to be classified as a small business. For further detail on
DOE's inquiry regarding small manufacturers, please see section
VIII.B on the review under the Regulatory Flexibility Act.
---------------------------------------------------------------------------

3. National Net Present Value and Net National Employment
    The NPV analysis is a measure of the cumulative benefit or cost of
standards to the Nation, discounted to $2008 dollars. In accordance
with the OMB's guidelines on regulatory analysis,\66\ 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 to
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 to capital to be near this rate. DOE also used the 3-
percent rate to capture the potential effects of standards on private
consumption (e.g., through higher prices for equipment and the 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 (i.e., 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.
---------------------------------------------------------------------------

    \66\ OMB Circular A-4, section E (Sept. 17, 2003).
---------------------------------------------------------------------------

    The tables below show the forecasted net present value at each
trial standard level for GSFL and IRL. As shown above for NES results,
Table VII.20 presents the ``Existing Technologies, High Lighting
Expertise, Shift'' scenario and the ``Emerging Technologies, Market
Segment-Based Lighting Expertise, Roll Up'' scenario as the maximum and
minimum NPVs for GSFL, respectively. In general, the NPV results at
each trial standard level are a reflection of the life-cycle cost
savings at the corresponding efficacy levels. As seen in section
VII.C.1.a, for most lamp purchasing events and most baseline lamps,
increasing efficacy levels generally result in increased LCC savings.
See the April 2009 NOPR and chapter 11 of the TSD for a description of
the effect of various TSLs on NPV. 74 FR 16920, 17006-07 (April 13, 2009).

                         Table VII.20--Summary of Cumulative Net Present Value for GSFL
----------------------------------------------------------------------------------------------------------------
                                                                              NPV (billion 2008$)
                                                             ---------------------------------------------------
                                                               Existing technologies,    Emerging technologies,
                                                              high lighting expertise,    market segment-based
           TSL/EL                      Product class                    shift           lighting expertise, roll-
                                                             --------------------------            up
                                                                                       -------------------------
                                                              7% Discount  3% Discount  7% Discount  3% Discount
----------------------------------------------------------------------------------------------------------------
1...........................  4-foot MBP....................         3.30         6.86         1.11         2.88
                              8-foot SP Slimline............         0.55         1.40         0.51         1.34
                              8-foot RDC HO.................         0.54         0.88        -0.19        -0.24
                              4-foot MiniBP SO..............         1.47         3.37         0.08         0.26
                              4-foot MiniBP HO..............         2.22         4.81         1.19         2.63
                              2-foot U-Shaped...............         0.15         0.31         0.05         0.13
                                                             ---------------------------------------------------
                                 Total......................         8.24        17.63         2.75         7.00
----------------------------------------------------------------------------------------------------------------
2...........................  4-foot MBP....................         2.63         5.99         0.75         2.60
                              8-foot SP Slimline............         0.60         1.53         0.58         1.50
                              8-foot RDC HO.................         0.68         1.09         0.77         1.20
                              4-foot MiniBP SO..............         1.47         3.37         0.08         0.26
                              4-foot MiniBP HO..............         2.22         4.81         1.19         2.63

[[Page 34158]]

                              2-foot U-Shaped...............         0.12         0.27         0.03         0.12
                                                             ---------------------------------------------------
                                 Total......................         7.73        17.07         3.41         8.31
----------------------------------------------------------------------------------------------------------------
3...........................  4-foot MBP....................         9.40        20.06         2.68         7.05
                              8-foot SP Slimline............         0.82         1.82         0.82         1.82
                              8-foot RDC HO.................         0.32         0.59         0.22         0.39
                              4-foot MiniBP SO..............         1.47         3.37         0.08         0.26
                              4-foot MiniBP HO..............         2.22         4.81         1.19         2.63
                              2-foot U-Shaped...............         0.43         0.91         0.12         0.32
                                                             ---------------------------------------------------
                                 Total......................        14.81        31.80         5.18        12.60
----------------------------------------------------------------------------------------------------------------
4...........................  4-foot MBP....................        18.66        37.88         6.34        14.22
                              8-foot SP Slimline............         0.84         1.97         0.24         0.91
                              8-foot RDC HO.................         1.87         3.17         1.87         3.17
                              4-foot MiniBP SO..............         1.47         3.37         0.08         0.26
                              4-foot MiniBP HO..............         2.22         4.81         1.19         2.63
                              2-foot U-Shaped...............         0.85         1.72         0.29         0.65
                                                             ---------------------------------------------------
                                 Total......................        26.31        53.53        10.02        21.84
----------------------------------------------------------------------------------------------------------------
5...........................  4-foot MBP....................        22.79        45.79         6.12        14.24
                              8-foot SP Slimline............         0.84         1.97         0.33         1.07
                              8-foot RDC HO.................         1.98         3.36         1.81         3.10
                              4-foot MiniBP SO..............         1.91         4.29         0.32         0.91
                              4-foot MiniBP HO..............         2.22         4.81         1.19         2.63
                              2-foot U-Shaped...............         1.04         2.08         0.28         0.65
                                                             ---------------------------------------------------
                                 Total......................        30.93        62.55        10.05        22.57
----------------------------------------------------------------------------------------------------------------

    For IRL, DOE presents the ``Existing Technologies, R-CFL Product
Substitution, Shift'' and ``Emerging Technologies, BR Product
Substitution, Roll-Up'' scenarios as the maximum and minimum NPVs,
respectively. As seen in Table VII.21, NPV increases with TSL,
consistent with LCC savings generally increasing with efficacy level.
In particular, for the BR Product Substitution scenario, the negative
NPV at TSL1 results because the life-cycle cost savings at EL1 (the
associated EL) are primarily negative. However, as seen in the R-CFL
Product Substitution scenario, TSL1 achieves positive NPV due to
primarily the increased movement to highly cost-effective R-CFLs. For
further discussion of the NPV results see the April 2009 NOPR and
chapter 11 of the TSD. 74 FR 16920, 17006-07 (April 13, 2009).

             Table VII.21--Summary of Cumulative Net Present Value for Incandescent Reflector Lamps
----------------------------------------------------------------------------------------------------------------
                                                                        NPV (billion 2008$)
                                                 ---------------------------------------------------------------
                                                   Existing technologies, R-CFL      Emerging technologies, BR
                       TSL                          product substitution, shift    product substitution, roll-up
                                                 ---------------------------------------------------------------
                                                    7% Discount     3% Discount     7% Discount     3% Discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
1...............................................            0.45            1.11           -0.09           -0.04
2...............................................            4.59            8.94            2.08            3.93
3...............................................            6.34           12.50            3.04            5.84
4...............................................            9.06           17.81            4.20            8.02
5...............................................           10.16           20.01            4.90            9.38
----------------------------------------------------------------------------------------------------------------

    As discussed in section VI.C, DOE developed a Baseline Lifetime
scenario (which it analyzed the LCC savings, NPV, and manufacturer
impacts) to investigate the effects of shorter lamp lifetime at TSL4
and TSL5. DOE did not feel it necessary to apply this scenario to TSL1
through TSL3 because DOE already analyzes lamps with lifetimes similar
to that of the baseline lamp lifetimes. Relative to the normal lifetime
scenario, NPV decreases due to the significant increase in incremental
equipment costs, since more lamps need

[[Page 34159]]

to be shipped as they have shorter lifetimes.

   Table VII.22--Summary of Cumulative Net Present Value for Incandescent Reflector Lamps--``Baseline Lifetime
                                                   Scenario''
----------------------------------------------------------------------------------------------------------------
                                                                        NPV (billion 2008$)
                                                 ---------------------------------------------------------------
                                                   Existing technologies, R-CFL      Emerging technologies, BR
                       TSL                          product substitution, shift    product substitution, roll-up
                                                 ---------------------------------------------------------------
                                                    7% Discount     3% Discount     7% Discount     3% Discount
                                                       rate            rate            rate            rate
----------------------------------------------------------------------------------------------------------------
4...............................................            5.22           10.81            1.83            3.78
5...............................................            4.86           10.13            2.53            5.12
----------------------------------------------------------------------------------------------------------------

    DOE also estimated the national employment impacts that would
result from each TSL. In addition to considering the direct employment
impacts for the manufacturers of products covered in this rulemaking
(discussed above), DOE also developed estimates of the indirect
employment impacts of energy conservation standards on the economy in
general. As Table VII.23 and Table VII.24 show, DOE estimates that any
net monetary savings from GSFL and IRL standards would be redirected to
other forms of economic activity. DOE also expects these shifts in
spending and economic activity would affect the demand for labor. DOE
estimated that net indirect employment impacts from energy conservation
standards for GSFL and IRL would be positive (see Tables below), but
very small relative to total national employment. This increase would
likely be sufficient to fully offset any adverse impacts on employment
that might occur in the lamp products industries. Earthjustice
commented that the value of this additional employment should be
monetized using a wage rate and included in the justification of the
TSL selected. (Earthjustice, No. 60 at pg 6) However, this would double
count the consumer savings that are the source of the job creation. DOE
believes it more appropriate to consider job benefits separately from
the direct benefits of energy savings similar to DOE's approach for
considering environmental emissions benefits. For details on the
employment impact analysis methodology and results, see chapter 15 of
the TSD accompanying this notice.

 Table VII.23--Net National Change in Indirect Employment for GSFL, Jobs
                                 in 2042
------------------------------------------------------------------------
                                         Net national change in jobs
                                                 (thousands)
                                   -------------------------------------
                                                            Emerging
       Trial standard level              Existing        technologies,
                                      technologies,     roll-up, market
                                       shift, high       segment based
                                        expertise          expertise
------------------------------------------------------------------------
1.................................               12.0                6.5
2.................................               12.2                5.5
3.................................               15.1               10.7
4.................................               18.4               13.3
5.................................               19.6               15.5
------------------------------------------------------------------------


 Table VII.24--Net national change in indirect employment for IRL, jobs
                                 in 2042
------------------------------------------------------------------------
                                         Net national change in jobs
                                                 (thousands)
                                   -------------------------------------
       Trial standard level              Existing           Emerging
                                      technologies,      technologies,
                                       shift, R-CFL     roll-up, BR lamp
                                       substitution       substitution
------------------------------------------------------------------------
1.................................                1.7                0.7
2.................................                4.3                2.5
3.................................                6.9                4.8
4.................................                9.5                6.0
5.................................               10.4                6.8
------------------------------------------------------------------------

4. Impact on Utility or Performance of Products
    As indicated in sections IV.D.d and VI.B.4 of the April 2009 NOPR,
DOE has concluded that TSLs it considered for GSFL and IRL would not
lessen the utility or performance of any GSFL or IRL covered by this
rulemaking. 74 FR 16920, 17009 (April 13, 2009)
5. Impact of Any Lessening of Competition
    As discussed in the April 2009 NOPR, 74 FR 16920, 16936, 17009
(April 13, 2009), and in section IV.D.e of this preamble, DOE considers
any lessening

[[Page 34160]]

of competition likely to result from standards; the Attorney General
determines the impact, if any, of any such lessening of competition.
    The DOJ concluded that the GSFL standards contained in the proposed
rule would not likely lead to a lessening of competition. DOJ has not
determined the impact on competition of more stringent standards than
those proposed in the April 2009 NOPR (DOJ, No. 77 at p. 1). Although
DOJ did not evaluate the impacts on competition of TSL 4 for GSFL, DOE
believes that TSL 4 does not raise competitive issues. For all product
classes analyzed DOE found that all manufacturers offered product at
TSL 4. Further, the product modifications needed to reach TSL 4 involve
the use of more efficient phosphor blends which do not entail
proprietary barriers.
    For IRL, DOJ concluded that the proposed TSL 4 could adversely
affect competition. IRL standards proposed in the April 2009 NOPR would
increase the minimum efficiency levels to the second highest level
under consideration in this rulemaking. DOJ commented that the IRL
market is highly concentrated, with three domestic manufacturers. Based
on its review, DOJ stated that it appears that only two of the large
manufacturers identified may currently manufacture IRLs that would meet
the new standard and that these firms produce only limited quantities
of such products for high-end applications. The current producers may
not have the capacity to meet demand. In addition, one of these
manufacturers uses proprietary technology currently unavailable to
other manufacturers. Given the capital investments new entrants or
providers would be required to make, and the potential that
manufacturers may have to obtain proprietary technology, there is a
risk that one or more IRL manufacturers will not produce products that
meet the proposed standard. Note also that the National Impact Analysis
does not consider the possibility of lessened competition effects, and
so, depending on their magnitude, such effects may negatively impact
the Net Present Value of the standards. DOJ requested that DOE consider
the possibility of new technology in this area as it settles on
standards in this field. (DOJ, No. 77 at pp. 1-2)
    DOE agrees with DOJ that the IRL market is highly concentrated,
with three major manufacturers supplying the vast majority of the U.S.
market. However, for the April 2009 NOPR, DOE stated that all
manufacturers produced at least one lamp that met TSL 4, even though
one manufacturer did not produce a full line of product at this
efficacy. 74 FR 16920, 17003 (April 13, 2009).
    In the NOPR, DOE indicated that it believed manufacturers could
maintain production capacity levels and continue to meet market demand
at the proposed IRL standard (TSL 4). DOE noted that the current volume
of these improved HIR lamps is many times lower than the volume of
standard halogen lamps for all three major manufacturers. DOE used
market research and analysis of HIR capsule production, and interviews
with manufacturers of lamps and suppliers of HIR capsules and coating
decks to analyze if manufacturers of IRL would be able to supply the
market if lamp manufacturers outsourced all or part of their capsule
production. In the NOPR, DOE stated it did not believe there would be a
capacity constraint at the proposed standard level. DOE stated that
manufacturers could install additional coaters, purchase infrared
burners from a supplier, and use existing excess capacity. All these
stated options would allow IRL manufacturers to maintain production
capacity levels and continue to meet market demand for all IRL standard
levels. 74 FR 16920, 17004 (April 13, 2009).
    For today's final rule, DOE did not receive comments that indicated
that the energy conservation standards would result in the
unavailability of standards-compliant products. DOE did receive
comments about the potential for a short-term market disruption. One
major manufacturer requested additional time in between the
announcement and effective date to allow more time to stabilize
improved HIR manufacturing before the regulation mandates the improved
technology. (OSI, No. 84 at p. 1) Another major manufacturer responded
to April 2009 NOPR by commenting that TSL 4 allows the continued
manufacture and sale of energy efficient products to the market and
that these products have also been proven manufacturable by at least
two major lighting companies. (Philips, No. 75 at p. 1) In its
individual comment, the third major manufacturer did not comment on its
intention to make the required capital investments. DOE believes that
this manufacturer will not have difficulty supplying at least part of
the market at the proposed standards because this manufacturer
currently has a full line of products at both TSL 4 and TSL 5. Although
DOE received comments that there could be a constrained market, other
comments suggest that this constraint will at worst be a short-term
problem. However, since all three large manufacturers currently
manufacture product at the efficacies required by today's final rule, a
short-term constraint would not be a competitive issue.
    DOE does not believe manufacturers will have to obtain proprietary
technology to meet the energy conservation standards set forth by
today's rule. As stated in section VI.B.2, all major manufacturers have
access to alternative technology pathways to meet TSL 4 without the use
of proprietary technology. In the April 2009 NOPR, DOE stated that all
major manufacturers produce two or more lamps that exceed TSL 4, some
of which are not dependent on proprietary technology. DOE listed
alternative technologies to meet TSL 4 including other non-patented
types of improved reflectors and higher-efficiency IR coatings. 74 FR
16920, 16945 (April 13, 2009). DOE did not receive additional
information or comments that would indicate that the identified
alternative technologies necessary to meet energy conservation
standards set forth by today's final rule will lead to any lessening of
competition. Section VI.B of today's final rule further discusses
alternative technology pathways and proprietary technology.
    The Attorney General's response is reprinted at the end of today's
rulemaking.
6. Need of the Nation To Conserve Energy
    Improving the energy efficiency of GSFL and IRL, where economically
justified, 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. Reduced demand might
also improve the reliability of the electricity system, particularly
during peak-load periods. As a measure of this reduced demand, DOE
expects the energy savings from the adopted standards to eliminate the
need for approximately 1.8 to 6.2 gigawatts (GW) of generating capacity
for GFSL and up to 200 to 1,100 megawatts (MW) for IRL by 2042.
    Enhanced energy efficiency also produces environmental benefits in
the form of reduced emissions of air pollutants and greenhouse gases
associated with energy production. Table VII.25 and Table VII.26
provide DOE's estimate of cumulative CO₂, NO_X,
and Hg emissions reductions that would result from the TSLs considered
in this rulemaking. The expected energy savings from these GSFL and IRL
standards may also reduce the cost of maintaining nationwide emissions
standards and constraints. In the environmental assessment (EA; chapter

[[Page 34161]]

16 of the TSD accompanying this notice), DOE reports estimated annual changes
in CO₂, NO_X, and Hg emissions attributable to each TSL.

                                                 Table VII.25--Summary of Emissions Reductions for GSFL
                                               [Cumulative reductions for products sold from 2012 to 2042]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               TSL1            TSL2            TSL3            TSL4            TSL5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                (i) Existing Technologies, Shift, High Lighting Expertise
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMT)..................................  ...........................           130.3           133.9           296.6           487.6           552.0
NOX (kt)...................................  ...........................            11.7            10.0            17.0            36.8            58.1
Hg (t).....................................  low........................             0.0             0.0             0.0             0.0             0.0
Hg (t).....................................  high.......................             2.0             2.4             4.8             7.3             8.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Emerging Technologies, Roll Up, Market Segment Based Lighting Expertise
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMT)..................................  ...........................            66.4            86.0           148.3           174.6           262.0
NOX (kt)...................................  ...........................             1.9             5.1             7.3            11.0            12.9
Hg (t).....................................  low........................             0.0             0.0             0.0             0.0             0.0
Hg (t).....................................  high.......................             1.2             1.4             2.3             2.8             4.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  Table VII.26--Summary of Emissions Reductions for IRL
                                              [(Cumulative reductions for products sold from 2012 to 2042)]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               TSL1            TSL2            TSL3            TSL4            TSL5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Existing Technologies, Shift, R-CFL Substitution
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMT)..................................  ...........................            19.8            48.9            85.1           105.7           118.1
NOX (kt)...................................  ...........................             1.9             5.5             7.6             8.4             9.3
Hg (t).....................................  low........................             0.0             0.0             0.0             0.0             0.0
Hg (t).....................................  high.......................             0.3             0.7             1.3             1.7             1.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Emerging Technologies, Roll Up, BR Lamp Substitution
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMT)..................................  ...........................             7.5            19.1            37.8            44.0            53.3
NOX (kt)...................................  ...........................             1.3             3.2             5.4             6.4             8.1
Hg (t).....................................  low........................             0.0             0.0             0.0             0.0             0.0
Hg (t).....................................  high.......................             0.1             0.3             0.6             0.7             0.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
MMt = million metric tons.
kt = thousand metric tons.
t = metric tons.
Note: The derivation for the emission ranges are described below.

    As discussed in section IV.I of this final rule, DOE does not
report SO₂ emissions reductions from power plants because
reductions from an energy conservation standard would not affect the
overall level of SO₂ emissions in the United States due to
the emissions caps for SO₂.
    NO_X emissions from 28 eastern States and the District of
Columbia (DC) are limited under the Clean Air Interstate Rule (CAIR),
published in the Federal Register on May 12, 2005.\67\ Although CAIR
has been remanded to EPA by the D.C. Circuit, it will remain in effect
until it is replaced by a rule consistent with the Court's December 23,
2008, opinion in North Carolina v. EPA.\68\ Because all States covered
by CAIR opted to reduce NO_X emissions through participation
in cap-and-trade programs for electric generating units, emissions from
these sources are capped across the CAIR region.
---------------------------------------------------------------------------

    \67\ 70 FR 25162 (May 12, 2005).
    \68\ North Carolina v. EPA, 550 F.3d 1176 (DC Cir. 2008).
---------------------------------------------------------------------------

    For the 28 eastern States and D.C. where CAIR is in effect, no
NO_X emissions reductions will occur due to the permanent
cap. Under caps, physical emissions reductions in those States would
not result from the energy conservation standards under consideration
by DOE, but standards might have produced an environmentally related
economic impact in the form of lower prices for emissions allowance
credits, if they were large enough. However, DOE determined that in the
present case, such standards would not produce an environmentally
related economic impact in the form of lower prices for emissions
allowance credits, because the estimated reduction in NO_X
emissions or the corresponding allowance credits in States covered by
the CAIR cap would be too small to affect allowance prices for
NO_X under the CAIR. In contrast, new or amended energy
conservation standards would reduce NO_X emissions in those
22 States that are not affected by CAIR. As a result, the NEMS-BT does
forecast emission reductions from the proposed amended standards
considered in today's final rule.
    In the April 2009 NOPR, however, DOE provided a different estimate
of NO_X reductions because DOE assumed that the CAIR rule had
been vacated. This is because the CAIR rule was vacated by the U.S.
Court of Appeals for the District of Columbia Circuit (DC Circuit) in
its July 11, 2008 decision in North Carolina v. Environmental
Protection Agency.\69\ Although the D.C. Circuit, in a December 23,
2008, opinion,\70\ decided to allow the CAIR rule to remain in effect
until it is replaced by a rule consistent with the

[[Page 34162]]

court's earlier opinion, DOE retained its analysis of NO_X
emissions reductions based on an assumption that the CAIR rule was not
in effect because: (1) The NOPR rulemaking was sufficiently advanced at
the time that the December 23, 2008, opinion was issued that revisiting
the analysis would have caused undue delays; and (2) neither the July
11, 2008, nor the December 23, 2008, decisions of the D.C. Circuit
changed the standard-setting proposals offered in the NOPR.
---------------------------------------------------------------------------

    \69\ 531 F.3d 896 (D.C. Cir. 2008).
    \70\ See North Carolina v. EPA, 550 F.3d 1176 (DC Cir. 2008).
---------------------------------------------------------------------------

    Thus, for the April 2009 NOPR, DOE established a range of
NO_X reductions based on low and high emission rates (in
metric kilotons of NO_X emitted per terawatt-hour (TWh) of
electricity generated) derived from the AEO2008. DOE anticipated that,
in the absence of the CAIR Rule's trading program, the new or amended
conservation standards would reduce NO_X emissions nationwide
not just in 22 statues.
    As noted in section IV.I, DOE was able to estimate the changes in
Hg emissions associated with an energy conservation standard as
follows. DOE notes that the NEMS-BT model used for the NOPR, used as an
integral part of today's rulemaking, does not estimate Hg emission
reductions due to new energy conservation standards, as it assumed that
Hg emissions would be subject to EPA's CAMR.\71\ CAMR would have
permanently capped emissions of mercury for new and existing coal-fired
plants in all States by 2010. As with SO₂ and
NO_X, DOE assumed that under such a system, energy
conservation standards would have resulted in no physical effect on
these emissions, but might have resulted in an environmentally related
economic benefit in the form of a lower price for emissions allowance
credits if those credits were large enough. DOE estimated that the
change in the Hg emissions from energy conservation standards would not
be large enough to influence allowance prices under CAMR.
---------------------------------------------------------------------------

    \71\ 70 FR 28606 (May 18, 2005).
---------------------------------------------------------------------------

    On February 8, 2008, the DC Circuit issued its decision in New
Jersey v. Environmental Protection Agency \72\ to vacate CAMR. In light
of this development and because the NEMS-BT model could not be used to
directly calculate Hg emission reductions, DOE used the Hg emission
rates discussed below to calculate emissions reductions in the NOPR.
This same methodology is used for the Final Rule as well due to the
continued fluid environment ``* * * with many States planning to enact
new laws or make existing laws more stringent.'' \73\ The NEMS-BT has
only rough estimates of mercury emissions, and it was felt that the
range of emissions used in the NOPR remain appropriate given these
circumstances.
---------------------------------------------------------------------------

    \72\ 517 F.3d 574 (DC Cir. 2008).
    \73\ Energy Information Administration, Annual Energy Outlook
2009 (March 2009), page 18.
---------------------------------------------------------------------------

    Therefore, rather than using the NEMS-BT model, DOE established a
range of Hg rates to estimate the Hg emissions that could be reduced
through standards. DOE's low estimate assumed that future standards
would displace electrical generation only from natural gas-fired power
plants, thereby resulting in an effective emission rate of zero. (Under
this scenario, coal-fired power plant generation would remain
unaffected.) The low-end emission rate is zero because natural gas-
fired power plants have virtually zero Hg emissions associated with
their operation. Earthjustice stated that basing the low end of the
range on the displacement of only gas-fired power plants was
inconsistent with DOE's utility impact analysis (Earthjustice, No. 60
at pg. 8-9). DOE believes that the estimate should provide the full
range of possible outcomes and has selected the low and high values to bracket
the uncertainties associated with estimating mercury emission reductions.
    DOE's high estimate, which assumed that standards would displace
only coal-fired power plants, was based on an estimate of the 2006
nationwide mercury emission rate from AEO2008. (Under this scenario,
DOE assumed that gas-fired power plant generation would remain
unaffected and that no future reductions in the rate of mercury
emissions from such sources would occur.) Because power plant emission
rates are a function of local regulation, scrubbers, and the mercury
content of coal, it is extremely difficult to identify a precise high-
end emission rate. Therefore, the most reasonable high estimate is
based on the assumption that all displaced coal generation would have
been emitting at the 2006 average emission rate for coal generation as
specified by the April Update to AEO2009. This is viewed as a high
estimate because it is likely that future emission controls will be
installed at coal-fired power plants which will reduce their average
emission rate. As noted previously, because virtually all mercury
emitted from electricity generation is from coal-fired power plants,
DOE based the emission rate on the tons of mercury emitted per TWh of
coal-generated electricity. Based on the emission rate for 2006, DOE
derived a high-end emission rate of 0.0255 tons per TWh. To estimate
the reduction in mercury emissions, DOE multiplied the emission rate by
the reduction in coal-generated electricity due to the standards
considered in the utility impact analysis. These changes in Hg
emissions are small, ranging from 0.2 to 1.0 percent of the national
base-case emissions forecast by NEMS-BT for GFSL, depending on the TSL
and scenario, and less than 0.2 percent for all IRL levels.
    In the April 2009 NOPR, DOE considered accounting for a monetary
benefit of CO₂ emission reductions associated with
standards. To put the potential monetary benefits from reduced
CO₂ 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 CO₂ 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 the April 2009 NOPR, DOE proposed to use the range $0 to $20 per
ton for the year 2007 in 2007$. 74 FR 16920, 17012 (April 13, 2009).
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. 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).\74\ 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

[[Page 34163]]

result from CO₂ emission reductions. Because U.S.-specific
estimates were unavailable, DOE used the global mean value as an upper
bound U.S. value.
---------------------------------------------------------------------------

    \74\ During the preparation of its review of the state of
climate science, the IPCC identified various estimates of the
present value of reducing CO₂ 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
CO₂ 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 CO₂ 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 $12 per ton of CO₂. The literature
review (Tol 2005) from which this mean was derived did not report
the year in which these dollars were denominated. However, DOE
understands this estimate was for the year 1995 denominated in
1995$. Updating that estimate to 2007$ yields a SCC for the year
1995 of $15 per ton of CO₂.
---------------------------------------------------------------------------

    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.\75\
---------------------------------------------------------------------------

    \75\ ``Climate Change 2007--Impacts, Adaptation and
Vulnerability.'' Contribution of Working Group II to the ``Fourth
Assessment Report'' of the IPCC, 17. Available at
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).
    NRDC and Earthjustice and NY et al. commented that DOE should use
global, rather than U.S. based estimates for CO₂ values
(NRDC, Issue Paper, No. 82 at p. 13 and NY et al., Attachment, No. 88
at p. 3). NY et al. recommended DOE use $80 per short ton
CO₂ ($88 metric) in 2009$ based on recent meta-analysis of
GHG abatement cost analyses published by international agencies and
multinational consultancies. NY et al., also criticized the range of
CO₂ values used in the NOPR and recommended the use of a
long-run marginal abatement cost of CO₂ for monetizing
CO₂ emission reductions, rather than the damage costs given
the highly uncertain nature of the latter (NY et al., No. 88, p. 9-10).
    DOE continues to use SCC values in today's final rule. DOE has not
adopted using an abatement cost because the actual costs of reducing
CO₂ emissions are highly variable. They range from negative
costs, such as energy efficiency improvement measures that produce net
economic benefits, to hundreds of dollars per ton of CO₂,
such as emission reductions that might require the early abandonment of
large capital investments in power plants, industrial facilities or
buildings. In order to identify a specific marginal cost per ton of
CO₂ reduced usually requires the establishment of key
parameters, such as the scope of the emissions covered, the quantity of
emission reductions to be achieved and the timeframe for the
achievement of these reductions. These parameters must be determined
through legislative or regulatory processes. Moreover, the use of SCC
is consistent with the IPCC Fourth Assessment Report. However, if a
nationwide regulatory mandate is established to limit or reduce U.S.
greenhouse gas emissions, the marginal costs of reducing emissions that
are imposed by such a mandate might be the basis for valuing such
emission reductions in the future.
    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 ton. 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.\76\ 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.
---------------------------------------------------------------------------

    \76\ 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 CO₂ 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 CO₂ 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 CO₂
emissions.\77\
---------------------------------------------------------------------------

    \77\ 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 CO₂ emissions, as well as the domestic benefits.
Consequently, DOE considered in its decision-process for this final
rule the potential benefits resulting from reduced CO₂
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 CO₂ 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% \78\ per year to represent the expected
increases, over time, of the benefits associated with reducing
CO₂ and other greenhouse gas emissions.
---------------------------------------------------------------------------

    \78\ Estimates of SCC are assumed to increase over time since
future emissions are expected to produce larger incremental damages
as physical and economic systems become more stressed as the
magnitude of climate change increases. Although most studies that
estimate economic damages caused by increased GHG emissions in
future years produce an implied growth rate in the SCC, neither the
rate itself nor the information necessary to derive its implied
value is commonly reported. Given the limited amount of debate thus
far about the appropriate growth rate of the SCC, applying a rate of
3%/yr seems appropriate at this stage. This value is consistent with
the range recommended by IPCC (2007).
---------------------------------------------------------------------------

    The tables below present the resulting estimates of the potential range
of net present value benefits associated with reducing CO₂ emissions.

[[Page 34164]]

   Table VII.27--Estimates of Value of CO2 Emissions Reductions for GSFL Under Trial Standard Levels at Seven-Percent and Three-Percent Discount Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Value of estimated CO2 emission reductions (billion      Value of estimated CO2 emission reductions
                                   Estimated                  2008$) at 7% discount rate                      (billion 2008$) at 3% discount rate
          GSFL  TSL             cumulative CO2  --------------------------------------------------------------------------------------------------------
                                (MMt) emission   CO2 value of $2/  CO2 value of $33/ CO2 value of $80/ CO2 value of $2/   CO2 value of     CO2 value of
                                  reductions          ton CO2           ton CO2           ton CO2          ton CO2        $33/ton CO2      $80/ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................  66 to 130.......  0.1 to 0.1......  1.1 to 2.1......  2.6 to 5.1......  0.1 to 0.3.....  2.3 to 4.5.....  5.6 to 10.9.
2............................  86 to 134.......  0.1 to 0.1......  1.5 to 2.2......  3.6 to 5.3......  0.2 to 0.3.....  3.0 to 4.6.....  7.2 to 11.2.
3............................  148 to 297......  0.2 to 0.3......  2.5 to 4.9......  6.1 to 11.9.....  0.3 to 0.6.....  5.1 to 10.3....  12.5 to 24.9.
4............................  175 to 488......  0.2 to 0.5......  3.1 to 8.4......  7.5 to 20.4.....  0.4 to 1.0.....  6.0 to 16.9....  14.7 to 40.9.
5............................  262 to 552......  0.3 to 0.6......  4.6 to 9.6......  11.1 to 23.4....  0.6 to 1.2.....  9.1 to 19.1....  22.0 to 46.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------


   Table VII.28--Estimates of Value of CO2 Emissions Reductions for IRL Under Trial Standard Levels at Seven-Percent and Three-Percent Discount Rates
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Value of estimated CO2 emission reductions (billion      Value of estimated CO2 emission reductions
                                   Estimated                  2008$) at 7% discount rate                      (billion 2008$) at 3% discount rate
           IRL TSL              cumulative CO2  --------------------------------------------------------------------------------------------------------
                                (MMt) emission   CO2 value of $2/  CO2 value of $33/ CO2 value of $80/ CO2 value of $2/   CO2 value of     CO2 value of
                                  reductions          ton CO2           ton CO2           ton CO2          ton CO2        $33/ton CO2      $80/ton CO2
--------------------------------------------------------------------------------------------------------------------------------------------------------
1............................  7 to 20.........  0.0 to 0.0......  0.1 to 0.3......  0.3 to 0.8......  0.0 to 0.0.....  0.3 to 0.7.....  0.6 to 1.7.
2............................  19 to 49........  0.0 to 0.1......  0.4 to 0.8......  0.8 to 2.1......  0.0 to 0.1.....  0.7 to 1.7.....  1.6 to 4.1.
3............................  38 to 85........  0.0 to 0.1......  0.7 to 1.5......  1.7 to 3.6......  0.1 to 0.2.....  1.3 to 2.9.....  3.2 to 7.1.
4............................  44 to 106.......  0.0 to 0.1......  0.8 to 1.8......  1.9 to 4.4......  0.1 to 0.2.....  1.5 to 3.7.....  3.7 to 8.9.
5............................  53 to 118.......  0.1 to 0.1......  1.0 to 2.0......  2.3 to 4.9......  0.1 to 0.2.....  1.8 to 4.1.....  4.5 to 9.9.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    DOE is well aware that scientific and economic knowledge about the
contribution of CO₂ and other green house gas emissions
(GHG) to changes in the future global climate and the potential
resulting damages to the world economy continues to evolve rapidly.
Thus, any value placed in this rulemaking on reducing CO₂
emissions is subject to likely change.
    The Department of Energy, together with other Federal agencies, is
reviewing various methodologies for estimating the monetary value of
reductions in CO₂ and other greenhouse gas emissions. This
review will consider the comments on this subject that are part of the
public record for this and other rulemakings, as well as other
methodological assumptions and issues, such as whether the appropriate
values should represent domestic U.S. benefits, as well as global
benefits (and costs). Given the complexity of the many issues involved,
this review is ongoing. However, consistent with DOE's legal
obligations, and taking into account the uncertainty involved with this
particular issue, DOE has included in this final rule the most recent
values and analyses employed in a rulemaking by another Federal agency.
    DOE also investigated the potential monetary benefit of reduced
SO₂, NO_X, and Hg emissions from the TSLs it
considered. As previously stated, DOE's initial analysis assumed the
presence of nationwide emission caps on SO₂ and Hg, and caps
on NO_X emissions in the 28 States covered by CAIR. In the
presence of these caps, DOE concluded that no physical reductions in
power sector emissions would occur, but that the standards could put
downward pressure on the prices of emissions allowances in cap-and-
trade markets. Estimating this effect is very difficult because of
factors such as credit banking, which can change the trajectory of
prices. DOE has concluded that the effect from energy conservation
standards on SO₂ allowance prices is likely to be negligible
based on runs of the NEMS-BT model. See chapter 16 of the TSD
accompanying this notice for further details.
    Because the courts have decided to allow the CAIR rule to remain in
effect, projected annual NO_X allowances from NEMS-BT are
relevant.\79\ As noted above, standards would not produce an economic
impact in the form of lower prices for emissions allowance credits in
the 28 eastern States and D.C. covered by the CAIR cap. New or amended
energy conservation standards would reduce NO_X emissions in
those 22 States that are not affected by CAIR. For the area of the
United States not covered by CAIR, DOE estimated the monetized value of
NO_X 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_X emissions, ranging from
$370 per ton to $3,800 per ton of NO_X from stationary
sources, measured in 2001$ (equivalent to a range of $432 per ton to
$4,441 per ton in 2007$).\80\
---------------------------------------------------------------------------

    \79\ The Update to the AEO2009 based version of NEMS-BT includes
the representation of CAIR.
    \80\ Office of Management and Budget Office of Information and
Regulatory Affairs, ``2006 Report to Congress on the Costs and
Benefits of Federal Regulations and Unfunded Mandates on State,
Local, and Tribal Entities,'' Washington, DC (2006).
---------------------------------------------------------------------------

    For Hg emissions reductions, DOE estimated the national monetized
values resulting from the TSLs considered for today's rule based on
environmental damage estimates from the literature. DOE conducted
research for today's final rule and determined that the impact of
mercury emissions from power plants on humans is considered highly
uncertain. However, DOE identified two estimates of the environmental
damage of mercury based on two estimates of the adverse impact of
childhood exposure to methyl mercury on IQ for American children, and
subsequent loss of lifetime economic productivity resulting from these
IQ losses. The high-end estimate is based on an estimate of the current
aggregate cost of the loss of IQ in American children that results from
exposure to mercury of U.S. power plant origin ($1.3 billion per year
in year 2000$), which works out to $32.6 million per ton emitted per year

[[Page 34165]]

(2007$).\81\ The low-end estimate is $0.66 million per ton emitted (in
2004$) or $0.729 million per ton (in 2007)$. DOE derived this estimate
from a published evaluation of mercury control using different methods
and assumptions from the first study, but also based on the present
value of the lifetime earnings of children exposed.\82\ Table VI.28 and
Table VI.29 present the resulting estimates of the potential range of
present value benefits associated with reduced national NO_X
and Hg emissions from the TSLs DOE considered.
---------------------------------------------------------------------------

    \81\ Trasande, L., et al., ``Applying Cost Analyses to Drive
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911 (2006).
    \82\ Ted Gayer and Robert Hahn, ``Designing Environmental
Policy: Lessons from the Regulation of Mercury Emissions,''
Regulatory Analysis 05-01, AEI-Brookings Joint Center for Regulatory
Studies, Washington, DC (2004). A version of this paper was
published in the Journal of Regulatory Economics in 2006. The
estimate was derived by back-calculating the annual benefits per ton
from the net present value of benefits reported in the study.

                    Table VII.29--Estimates of Savings From NOX Emissions Reductions for GSFL
----------------------------------------------------------------------------------------------------------------
                                                                 Value of estimated NOX   Value of estimated NOX
                                         Estimated cumulative     emission reductions      emission reductions
                 TSL                      NOX (kt) emission      (million 2008$) at 7%    (million 2008$) at 3%
                                              reductions             discount rate            discount rate
----------------------------------------------------------------------------------------------------------------
1....................................  1.9 to 11.7............  $0.7 to $23.8..........  $0.8 to $34.5.
2....................................  5.1 to 10.0............  $1.5 to $21.9..........  $1.9 to $30.4.
3....................................  7.3 to 17.0............  $2.2 to $41.1..........  $2.7 to $54.7.
4....................................  11.0 to 36.8...........  $4.2 to $107.2.........  $4.6 to $132.4.
5....................................  12.9 to 58.1...........  $5.0 to $125.6.........  $5.5 to $173.9.
----------------------------------------------------------------------------------------------------------------


                    Table VII.30--Estimates of Savings From NOX Emissions Reductions for IRL
----------------------------------------------------------------------------------------------------------------
                                                                 Value of estimated NOX   Value of estimated NOX
                                         Estimated cumulative     emission reductions      emission reductions
                 TSL                      NOX (kt) emission      (million 2007$) at 7%    (million 2007$) at 3%
                                              reductions             discount rate            discount rate
----------------------------------------------------------------------------------------------------------------
1....................................  1.3 to 1.9.............  $0.3 to $4.6...........  $0.4 to $6.0.
2....................................  3.2 to 5.5.............  $0.8 to $13.8..........  $1.1 to $17.9.
3....................................  5.4 to 7.6.............  $1.5 to $19.7..........  $1.9 to $25.2.
4....................................  6.4 to 8.4.............  $1.8 to $24.4..........  $2.2 to $30.0.
5....................................  8.1 to 9.3.............  $2.2 to $27.0..........  $2.7 to $33.1.
----------------------------------------------------------------------------------------------------------------


                    Table VII.31--Estimates of Savings From Hg Emissions Reductions for GSFL
----------------------------------------------------------------------------------------------------------------
                                                                 Value of estimated Hg    Value of estimated Hg
                                       Estimated cumulative Hg    emission reductions      emission reductions
                 TSL                       (tons) emission       (million 2007$) at 7%    (million 2007$) at 3%
                                              reductions             discount rate            discount rate
----------------------------------------------------------------------------------------------------------------
1....................................  0.0 to 2.0.............  $0 to $16.5............  $0 to $32.7.
2....................................  0.0 to 2.4.............  $0 to $20.3............  $0 to $39.6.
3....................................  0.0 to 4.8.............  $0 to $41.4............  $0 to $80.2.
4....................................  0.0 to 7.3.............  $0 to $67.7............  $0 to $125.6.
5....................................  0.0 to 8.8.............  $0 to $84.5............  $0 to $154.4.
----------------------------------------------------------------------------------------------------------------


                     Table VII.32--Estimates of Savings From Hg Emissions Reductions for IRL
----------------------------------------------------------------------------------------------------------------
                                                                 Value of estimated Hg    Value of estimated Hg
                                       Estimated cumulative Hg    emission reductions      emission reductions
                 TSL                       (tons) emission       (million 2007$) at 7%    (million 2007$) at 3%
                                              reductions             discount rate            discount rate
----------------------------------------------------------------------------------------------------------------
1....................................  0.0 to 0.3.............  $0 to $2.7.............  $0 to $5.2.
2....................................  0.0 to 0.7.............  $0 to $6.7.............  $0 to $12.5.
3....................................  0.0 to 1.3.............  $0 to $11.7............  $0 to $22.1.
4....................................  0.0 to 1.7.............  $0 to $15.0............  $0 to $28.1.
5....................................  0.0 to 1.8.............  $0 to $16.0............  $0 to $30.2.
----------------------------------------------------------------------------------------------------------------

7. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a
standard is economically justified, to consider any other factors that
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)
and 6316(e)(1)) In adopting today's standards, the Secretary considered
the potential for GSFL and IRL standards to adversely affect low-income
consumers, institutions of religious worship, historical facilities,
institutions that serve low-income populations, and consumers of T12
electronic ballasts.

D. Conclusion

    EPCA contains criteria for prescribing new or amended energy
conservation standards. It provides that any such standard for GSFL and
IRL must be designed to achieve the maximum improvement in energy
efficiency that the Secretary determines is technologically feasible
and economically justified. (42 U.S.C. 6295(o)(2)(A)) As stated above,
in determining whether a standard is economically justified, the
Secretary must determine whether the benefits of the standards exceed
its burdens considering the seven factors discussed

[[Page 34166]]

in section IV.D. (42 U.S.C. 6295(o)(2)(B)(i)) A determination of
whether a standard level is economically justified is not made based on
any one of these factors in isolation. The Secretary must weigh each of
these seven factors in total in determining whether a standard is
economically justified. Further, the Secretary may not establish an
amended standard if such standard would not result in ``significant
conservation of energy,'' or ``is not technologically feasible or
economically justified.'' (42 U.S.C. 6295(o)(3)(B))
    As discussed in section V.A.1, DOE established a separate set of
TSLs for GSFL and for IRL. Therefore, DOE analyzed each lamp type (GSFL
or IRL) separately when considering various TSLs and eventually
proposing standards. The following discussion briefly explains the
development of the TSLs, consideration of the TSLs (starting with the
most stringent) under the statutory factors, and the conclusion as to
the GSFL standards and IRL standards that most improve energy
efficiency that DOE has determined would most improve energy-efficiency
and would be technologically feasible and economically justified.
    For GSFL, DOE considered five TSLs in the April 2009 NOPR, with
TSL5 being the most stringent level for which DOE performed full
analyses. 74 FR 16920, 16979-82 (April 13, 2009). It is noted that DOE
also considered the potential for a standard level beyond TSL5 that
would require GSFL to use a higher-efficiency gas fill composition,
which would have been the maximum technologically feasible level.
Although more-efficient fill gases (often including higher molecular
weight gases) are appropriate for and are currently used in some lamp
applications, DOE is also aware employing this technology can cause
lamp instability resulting in striations or flickering in some
circumstances. DOE's research indicated that a potential standard level
that would require the use of higher-efficiency fill gases would
significantly reduce (or in some cases eliminate) the utility and
performance of the covered GSFL. DOE concluded on this basis that a
level with such an adverse impact on product utility would not be
economically justified.\83\ (42 U.S.C. 6295(o)(2)(B)(i)(IV) and (3)(B))
Having made this determination, there was no need to perform additional
analyses relevant to the other statutory criteria. (See section I.A.2
for additional detail.) Consequently, TSL5 represents the most-
efficient level analyzed for GSFL.
---------------------------------------------------------------------------

    \83\ DOE notes that it did not eliminate higher-efficiency fill
gases from further consideration as a technology under the screening
analysis, because that technology may be appropriate for low-wattage
lamp applications.
---------------------------------------------------------------------------

    For IRL, DOE's engineering analysis considered the maximum
technologically feasible level, which would require the use of a silver
reflector. However, this level utilized a proprietary technology that
represents a unique pathway to achieving that efficiency level.
Accordingly, DOE determined that such level was likely to have
significant anti-competitive effects on the markets for such lamps and
ultimately concluded that it is not economically justified. (42 U.S.C.
6295(o)(3)(B)) Therefore, TSL5, which does not require installation of
the proprietary silver reflector, represents the most efficient level
analyzed for IRL. (See sections VI.B and VII.A.2 of this notice for
more information on maximum technologically feasible levels and other
efficacy levels DOE analyzed.)
    DOE then considered the impacts of standards at each trial standard
level that was identified and analyzed, beginning with the most
efficient level, to determine whether the given level was economically
justified. DOE then considered less efficient levels until it reached
the highest level that meets the key statutory criteria in terms of
being technologically feasible, economically justified, and saving a
significant amount of energy.
    DOE discusses the benefits and/or burdens of each trial standard
level in the following sections. DOE bases its discussion on
quantitative analytical results for each trial standard level
(presented in section VII) such as national energy savings, net present
value (discounted at 7 percent and 3 percent), emissions reductions,
industry net present value, life-cycle cost, and consumers installed
price increases. In addition to providing a summary of results, DOE
discusses below the life-cycle cost and consumer installed price
increase results for each product class and baseline, where
appropriate. Beyond the quantitative results, DOE also considers other
burdens and benefits that affect economic justification, including how
the impacts of standards on competition, supply constraints, and lamp
input prices may affect the economic benefits and burdens presented.
1. General Service Fluorescent Lamps Conclusion
    In addition to the results presented above, DOE also calculates the
annualized benefits and costs of each TSL. The table below presents
these values for GSFL.

                              Table VII.33--Annualized Benefits and Costs for GSFL
----------------------------------------------------------------------------------------------------------------
                                                  Primary estimate        Low estimate          High estimate
   TSL         Category             Unit       -----------------------------------------------------------------
                                                    7%         3%         7%         3%         7%         3%
----------------------------------------------------------------------------------------------------------------
1.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     650        741        445        504        855        978
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       2.73       2.98       1.83       2.01       3.64       3.96
           Quantified.
                             NOX (kT).........       0.37       0.28       0.17       0.10       0.57       0.46
                             Hg (T)...........       0.02       0.03       0.00       0.00       0.05       0.06
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     123         80        181        128         64         31
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     527        661        264        375        791        946
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------

[[Page 34167]]

2.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     761        842        586        633        936       1051
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       3.22       3.41       2.68       2.73       3.76       4.08
           Quantified.
                             NOX (kT).........       0.45       0.33       0.38       0.25       0.52       0.40
                             Hg (T)...........       0.03       0.04       0.00       0.00       0.07       0.07
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     224        160        255        186        192        134
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     537        683        330        448        744        918
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------
3.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............    1528       1663       1017       1089       2038       2237
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       6.50       6.89       4.51       4.67       8.49       9.11
           Quantified.
                             NOX (kT).........       0.76       0.55       0.55       0.37       0.98       0.73
                             Hg (T)...........       0.07       0.07       0.00       0.00       0.14       0.15
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     577        484        522        417        633        550
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     950       1179        495        671       1405       1688
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------
4.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............    2302       2420       1329       1387       3275       3452
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........      10.48      10.60       5.76       5.69      15.20      15.52
           Quantified.
                             NOX (kT).........       1.78       1.19       1.03       0.63       2.54       1.76
                             Hg (T)...........       0.11       0.11       0.00       0.00       0.22       0.23
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     582        425        378        230        786        621
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............    1720       1994        951       1158       2489       2831
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                      Incremental Net Benefits/Costs Relative to TSL3
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     770        815        456        487       1084       1143
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------
5.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............    2850       2988       1738       1811       3961       4165
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........      12.95      13.07       8.33       8.41      17.57      17.73
           Quantified.
                             NOX (kT).........       2.10       1.53       1.21       0.75       2.98       2.31
                             Hg (T)...........       0.14       0.14       0.00       0.00       0.27       0.28
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2009$............     911        737        783        613       1039        861
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2009$............    1939       2251        955       1197       2922       3304
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                      Incremental Net Benefits/Costs Relative to TSL4
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     219        257          4         39        433       473
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------
Note: Annualized values are for the period from 2012 to 2042.

[[Page 34168]]

a. Trial Standard Level 5
    For GSFL, DOE first considered the most efficient level, TSL5,
which would save an estimated total of 5.1 to 12.0 quads of energy
through 2042--a significant amount of energy. For the Nation as a
whole, TSL5 would have a net savings of $10.0 billion to $30.9 billion
at a 7-percent discount rate and $22.6 billion to $62.6 billion at a 3-
percent discount rate. The emissions reductions at TSL5 are estimated
at 262 to 552 MMt of CO₂, 13 to 58 kt of NO_X, up
to 9 metric tons of Hg. Total generating capacity in 2042 is estimated
to decrease compared to the reference case by 2.7 to 7.3 GW under TSL5.
The monetized values of emissions reductions are estimated at $5.0 to
$125.6 million for NO_X and up to $84.5 million for Hg at a
7-percent discount rate and $5.5 to $173.9 million for NO_X
and up to $154.4 million for Hg at a 3-percent discount rate. The
estimated benefits of reducing CO₂ emissions using the mid-
range of the CO₂ value (using $33 per ton) is $4.6 to $9.6
billion and $9.1 to $19.1 billion at 7-percent and 3-percent discount
rates respectively. The full range of likely benefits of CO₂
emission reductions is $0.3 billion to $23.4 billion at a 7-percent
discount rate and $0.6 billion to $46.4 billion at a 3-percent discount rate.
    The impacts on manufacturers at TSL5 result from the
commoditization of high-efficacy lamps and the need to convert all T12
lines to T8 lines, requiring a capital investment of $211 million. The
projected change in industry value ranges from a decrease of $211
million to an increase of $33 million. The extent of the industry
impacts is driven primarily by how successful manufacturers will be in
maintaining their current gross margins at near their current levels as
efficient products become commoditized. Currently, manufacturers obtain
higher margins for more-efficient products; therefore, to avoid the
higher end of the anticipated impacts, manufacturers are likely to have
to find new ways to differentiate GSFL to maintain full product lines.
At TSL5, DOE recognizes the risk of very large negative impacts if the
high end of the range of impacts is reached, resulting in a net loss of
40 percent in INPV.
    At TSL5, DOE projects that most GSFL consumers would experience
life-cycle cost savings. The following discussion summarizes the
specific life-cycle cost impacts of TSL5 on the separate product
classes and baseline lamps.
    Table VII.5 presents the findings of an LCC analysis on various
three-lamp, 4-foot medium bipin GSFL systems operating in the
commercial sector. Regardless of the baseline lamp currently employed,
consumers have lamp designs available which result in positive LCC
savings at TSL5. At this standard level, users of 40W or 34W 4-foot MBP
T12 baseline lamps installed on a magnetic ballast who need to replace
their lamp would incur the cost of a lamp and ballast replacement
($65.96 to $73.94) because no T12 lamp currently meets the efficacy
requirements of TSL5. Comparing this cost of lamp-and-ballast
replacements to the cost of only baseline lamp replacements ($11.65 to
$14.50) results in installed price increases of $52.83 to $59.44. These
ranges in prices depend on the specific baseline lamps previously owned
by consumers and the specific combinations of lamps and ballasts they
select in the standards case. However, over the life of the lamp, these
consumers would save $13.93 to $24.16.
    Table VII.6 presents LCC results for a two-lamp 4-foot MBP system
operating in the residential sector under average operating hours. The
results are presented for a system operating 40W T12 lamps with a
magnetic ballast, as this configuration is typical of the installed
base of residential GSFL systems. As discussed in the NOPR, DOE
believes that the vast majority of lamps sold in the residential market
are sold with new ballasts or luminaires. 74 FR 16920, 16951 (April 13,
2009) At TSL5, residential consumers are expected to purchase T8 lamps
with electronic ballasts in lieu of the T12 lamps with magnetic
ballasts that they would purchase absent standards. These consumers
would see LCC savings of $20.21 to $22.32. DOE recognizes that not all
residential GSFL lamps would be sold in conjunction with a new ballast
or luminaire in the base case. In particular, consumers with higher
operating hours or consumers who choose to not discard their lamps upon
fixture or ballast replacement may need to replace their lamp on an
existing system. However, at TSL5, there are no standards-compliant T12
replacement lamps available. As seen in Table VII.8, the consumer
economics of retrofitting a T12 system with a T8 system for a
residential 4-foot MBP system depend on the remaining life of the T12
ballast. For those consumers who replace a T12 system with less than 7
years of life remaining in 2012, the LCC savings are positive. Those
consumers who have greater than 7 years of life remaining in their T12
systems in 2012 will experience negative LCC savings. Considering an
average system life of 15 years, and estimating that 10 percent of T12
lamps sold to residential sector are replacement lamps, DOE calculates
that fewer than 6 percent of current purchasers of T12 lamps in the
residential sector will experience increases in LCC. The first-costs
increase for residential consumers forced to retrofit to T8 systems
would be $49.00 to $49.91 ($53.13 to $54.04 for an installed T8 system
compared to $4.13 for two new T12 lamp).
    With regard to 4-foot MBP consumer subgroups, all consumer
subgroups analyzed achieve similar LCC savings to the average consumer
with the exception of commercial consumers who own 40W or 34W 4-foot
MBP T12 lamps installed on electronic ballasts. These consumers, upon
lamp failure, are forced to retrofit their existing ballasts, resulting
in negative LCC savings of -$12.43 to -$7.00. Overall, based on the
NIA, DOE estimates that at TSL5 in 2012, less than 2 percent of 4-foot
MBP shipments result in negative LCC savings, and 9 percent of
shipments are associated with the high installed price increases due to
forced retrofits.
    Table VII.11 presents the findings of an LCC analysis on various
two-lamp, 8-foot SP slimline GSFL systems operating in the commercial
sector. Except for consumers who purchase reduced-wattage 60W T12 lamps
absent standards (and experience a lamp failure), all other consumers
have available lamp designs that result in positive LCC savings at
TSL5. At this standard level, users of 75W or 60W 8-foot SP slimline
T12 baseline lamps installed on a magnetic ballast who need to replace
their lamp would incur the cost of a lamp and ballast replacement
($97.41 to $98.80) because no T12 lamp currently meets the efficacy
requirements of TSL5. Comparing the cost of a lamp-and-ballast
replacement to the cost of only a baseline lamp replacement ($11.77 to
$16.79) results in an installed price increase of $82.01 to $87.03. In
addition, users of 60W T12 lamps who need to replace their lamp
experience negative LCC savings of -$15.81 to -$13.89. On the other
hand, over the life of the lamp, users of 75W T12 lamps who require a
lamp replacement would save $9.68.
    With regard to 8-foot SP slimline consumer subgroups, all consumer
subgroups analyzed achieve similar LCC savings to the average consumer
with the exception of consumers of T12 lamps operating in religious
institutions, consumers of T12 lamps

[[Page 34169]]

operating in institutions that serve low-income populations, and users
of T12 lamps installed on electronic ballasts. These consumers, upon
lamp failure, are forced to retrofit their existing ballasts, resulting
in negative LCC savings. In particular, consumers in institutions of
religious worship (which have low operating hours in comparison with
the average commercial-sector consumer) and consumers in institutions
serving low income populations (experience negative LCC savings of -
$30.56 to -$0.44. Consumers with T12 lamps installed on electronic
ballasts experience negative LCC savings of -$33.55 to -$15.82.
Overall, based on the NIA model, DOE estimates that at TSL5 in 2012,
approximately 24 percent of 8-foot SP slimline shipments would result
in negative LCC savings, and 65 percent of shipments would be
associated with the high installed price increases due to forced retrofits.
    Table VII.12 presents the findings of an LCC analysis on various
two-lamp, 8-foot RDC HO GSFL systems operating in the industrial
sector. With the exception of consumers who purchase reduced-wattage
95W T12 lamps absent standards (and purchase a lamp in response to a
lamp failure), all other consumers have available lamp designs that
result in positive LCC savings at TSL5. At this standard level, users
of 110W or 95W 8-foot RDC HO T12 baseline lamps installed on a magnetic
ballast who need to replace their lamp would incur the cost of a lamp
and ballast replacement ($131.38) because no T12 lamp currently meets
the efficacy requirements of TSL5. Comparing the cost of a lamp-and-
ballast replacement to the cost of only a baseline lamp replacement
($14.46 to $20.51) results in an installed price increase of $110.87 to
$116.92. Users of 95W T12 lamps who need to replace their lamp
experience negative LCC savings of -$7.97. On the other hand, over the
life of the lamp, users of 110W T12 lamps who require a lamp
replacement would save $13.07.
    With regard to 8-foot RDC HO consumer subgroups, all consumer
subgroups analyzed achieve similar LCC savings to the average consumer
except consumers who own T12 lamps installed on electronic ballasts.
These consumers, upon lamp failure, are forced to retrofit their
existing ballasts, resulting in negative LCC savings of -$20.50 to -
$5.31. Overall, based on the NIA model, DOE estimates that at TSL5 in
2012, approximately 33 percent of 8-foot RDC HO shipments would result
in negative LCC savings, and 86 percent of shipments would be
associated with the high installed price increases due to forced retrofits.
    Table VII.9 and Table VII.10 present the LCC analyses on two-lamp
4-foot MiniBP T5 standard-output and high-output systems, respectively.
The standard-output system is modeled as operating in the commercial
sector, and the high-output system is modeled as operating in the
industrial sector. The baseline lamps for these systems are the model
28W and 54W halophosphor lamps, respectively, as discussed in section
V.B.3. At TSL5 (EL2 for standard output T5 lamps), all consumers of
standard output lamps have available lamp designs which result in
positive LCC savings of $1.10 (for lamp replacement) and $45.67 to
$47.49 (for new construction or renovation). At TSL5 (EL1 for high
output T5 lamps), consumers of high-output lamps who need only a lamp
replacement would experience negative LCC savings of -$3.03. However,
purchasing a T5 high-output system for new construction or renovation
would result in positive LCC savings of $65.69 to $67.06.
    At TSL 5, the demand for rare-earth phosphors is significantly
increased compared to current levels. DOE understands that it is
difficult to predict the effects of new energy conservation standards
on rare earth phosphor demand. However, DOE is sensitive to the trade
vulnerability inherent in the concentrated geographical location of
these resources and the possible incentives for manufacturers to
relocate production (and associated employment) outside the U.S. It is
particularly challenging to draw a line below which the risks are
manageable and above which the risks become unacceptable. DOE notes
that in its comments, NEMA views TSL 3 as a level that allows
manufacturers to retain the flexibility needed to manage the impact of
increased worldwide rare earth phosphor usage. In their comments, NEMA
provided their estimate of the relative increase in rare earth phosphor
demand for each TSL. This analysis showed the impacts at TSL 3 and TSL
4 to be very similar, increases of 230 percent and 250 percent,
respectively. In contrast, the impacts at estimated by NEMA at TSL 5
are shown to be significantly larger at 350 percent. DOE concludes from
this that NEMA perceives considerably larger risks at TSL 5 than at TSL
4 or TSL 3.
    At TSL 5, product availability is also a concern, particularly the
elimination of reduced-wattage 25W lamps, due to increased standard
levels. DOE agrees with comments received that 25W lamps are valuable
energy-saving products, because they provide a simple pathway to energy
savings that does not require ballast replacements or design
assistance. (California Stakeholders, No. 63 at p. 9) As demonstrated
in DOE's national impact analysis, the level of expertise required to
implement certain design choices is a key factor in determining energy
savings, as well as consumer and national NPV benefits.
    In summary, after carefully considering the analysis discussed
above and weighing the benefits and burdens of TSL5, the Secretary has
determined the following: At TSL 5, the benefits of energy savings,
emissions reductions (both in terms of physical reductions and the
monetized value of those reductions, including the likely U.S. and
global benefits of reduced emissions of CO₂), and the
positive net economic savings to the Nation (over 31 years) is
outweighed by the economic burden on some consumers (as indicated by
the large increase in total installed cost), the potentially large
reduction in INPV for manufacturers resulting from large conversion
costs and reduced gross margins, the elimination of certain low-wattage
lamps, and the risks associated with significantly increased demand for
rare-earth phosphors. Consequently, the Secretary has concluded that
TSL 5 is not economically justified.
b. Trial Standard Level 4
    Next, DOE considered TSL 4, which would save an estimated total of
3.8 to 9.9 quads of energy through 2042--a significant amount of
energy. For the Nation as a whole, TSL4 would have a net savings of
$10.0 billion to $26.3 billion at a 7-percent discount rate and $21.8
billion to $53.5 billion at a 3-percent discount rate. The emissions
reductions at TSL4 are estimated at 175 to 488 MMt of CO₂,
11 to 37 kt of NO_X, and up to 7.3 metric tons of Hg. Total
generating capacity in 2042 is estimated to decrease compared to the
reference case by 1.8 to 6.2 GW under TSL4. The monetized values of
emissions reductions are estimated at $4.2 to $107.2 million for
NO_X and up to $67.7 million for Hg at a 7-percent discount
rate and $4.6 to $132.4 million for NO_X and up to $125.6
million for Hg at a 3-percent discount rate. The estimated benefits of
reducing CO₂ emissions using the mid-range of the
CO₂ value (using $33 per ton) is $3.1 to $8.4 billion and
$6.0 to $16.9 billion at 7-percent and 3-percent discount rates
respectively. The full range of likely benefits of CO₂
emission reductions is $0.2 billion to $20.4 billion at a 7-percent
discount rate and $0.4 billion to

[[Page 34170]]

$40.9 billion at a 3-percent discount rate.
    Similar to TSL5, the level of impacts on manufacturers would depend
primarily on their ability to differentiate their product offerings to
offset the reduced range of efficacy levels. TSL 4 would also require a
complete conversion of all T12 4-foot MBP, 8-foot SP slimline, and 8-
foot RDC HO lines to T8 lines, a capital investment of $193 million.
The projected change in industry value ranges from a decrease of $162
million to a decrease of $4 million. Because manufacturers have a
broader range of efficiency available at TSL 4 than at TSL 5 (thereby
permitting greater product differentiation and increased gross
margins), DOE believes the impacts at TSL 4 will be significantly less
than at TSL 5 and that the high range of impacts is less likely to occur.
    As seen in Table VII.5 through Table VII.12, at TSL4, DOE projects
that 4-foot MBP, 8-foot SP slimline, and 8-foot RDC HO consumers would
experience similar life-cycle cost savings and increases as they would
experience at TSL5. Like TSL5, most consumers who own T12 ballasts
prior to 2012 at TSL4 would likely experience negative economic
impacts, either through life-cycle cost increases or by large increases
in total installed cost. For 4-foot MiniBP T5 standard-output lamps,
TSL4 would require these lamps to meet EL1, resulting in positive LCC
savings of $1.10 for lamp replacement and $43.30 for new construction
or renovation (seen in Table VII.9). For 4-foot MiniBP T5 high-output
lamps, TSL4 would require the same efficacy level (EL1) as TSL5,
resulting in identical life-cycle cost impacts.
    At TSL 4, the demand for rare-earth phosphors, although
significantly increased compared to current levels, is similar to the
demand at TSL 3, a level that manufacturers have suggested would allow
them to retain the flexibility needed to manage the impacts of
increased worldwide rare earth phosphor usage. In consideration of the
small increased demand of rare-earth phosphors over a level that
industry has indicated to be acceptable, DOE believes that risks of
trade vulnerability and potential relocation of lamp production
overseas in response to a standard adopted at TSL4 are low.
    In contrast to TSL5, at TSL 4, consumers have several energy-saving
lamp options including the reduced-wattage 25W and 30W 4-foot MBP
lamps. The presence of these lamps on the market provides consumers
with more simple pathways to achieving energy savings. As demonstrated
in DOE's national impact analysis, the level of expertise required to
implement certain design choices is a key factor in determining energy
savings, as well as consumer and national NPV benefits.
    In summary, after carefully considering the analysis discussed
above and weighing the benefits and burdens of TSL4, the Secretary has
determined the following: At TSL4, the benefits of energy savings,
emissions reductions (both in terms of physical reductions and the
monetized value of those reductions, including the likely U.S. and
global benefits of reduced emissions of CO₂), and the
positive net economic savings to the Nation (over 31 years) outweighs
the economic burden on some consumers (as indicated by the large
increase in total installed cost), the potential reduction in INPV for
manufacturers, and the risks associated with increased demand for rare
earth phosphors. Consequently, the Secretary has concluded that TSL4
offers the maximum improvement in efficacy that is technologically
feasible and economically justified, and will result in significant
conservation of energy. Therefore, DOE is adopting the energy
conservation standards for GSFL at trial standard level 4.
2. Incandescent Reflector Lamps Conclusion
    In addition to the results presented above, DOE also calculates the
annualized benefits and costs of each TSL. The table below presents
these values for GSFL.

                               Table VII.34--Annualized Benefits and Costs for IRL
----------------------------------------------------------------------------------------------------------------
                                                  Primary estimate        Low estimate          High estimate
   TSL         Category             Unit       -----------------------------------------------------------------
                                                    7%         3%         7%         3%         7%         3%
----------------------------------------------------------------------------------------------------------------
1.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     120        130         68         72        173        188
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       0.43       0.43       0.24       0.24       0.62       0.63
           Quantified.
                             NOX (kT).........       0.09       0.07       0.07       0.05       0.11       0.08
                             Hg (T)...........       0.00       0.00       0.00       0.00       0.01       0.01
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     103        100         77         74        129        127
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............      18         29         -9         -2         44         61
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
2.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     293        313        176        182        410        443
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       1.1        1.1        0.66       0.63       1.53       1.56
           Quantified.
                             NOX (kT).........       0.26       0.19       0.21       0.14       0.32       0.23
                             Hg (T)...........       0.01       0.01       0.00       0.00       0.02       0.02
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     -33        -39        -28        -32        -39        -46
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------

[[Page 34171]]

                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     326        352        203        215        449        489
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
3.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     531        603        349        389        712        817
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       1.97       1.98       1.29       1.25       2.66       2.7
           Quantified.
                             NOX (kT).........       0.42       0.3        0.37       0.26       0.47       0.33
                             Hg (T)...........       0.02       0.02       0.00       0.00       0.04       0.04
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............      72         71         52         50         92         92
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     459        532        297        339        620        725
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
4.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     650        696        406        424        894        968
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       2.39       2.4        1.51       1.45       3.28       3.35
           Quantified.
                             NOX (kT).........       0.51       0.35       0.45       0.31       0.58       0.4
                             Hg (T)...........       0.02       0.02       0.00       0.00       0.05       0.05
         -------------------------------------------------------------------------------------------------------
                                                           Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     118        106        227        218          9         -6
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     532        590        179        207        885        973
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                      Incremental Net Benefits/Costs Relative to TSL3
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............      73         58       -118       -132        265        248
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
5.......                                                 Benefits
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     750        802        480        502       1020       1103
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
          Annualized         CO2 (Mt).........       2.76       2.76       1.83       1.76       3.69       3.75
           Quantified.
                             NOX (kT).........       0.59       0.4        0.54       0.37       0.65       0.44
                             Hg (T)...........       0.02       0.03       0.00       0.00       0.05       0.05
         -------------------------------------------------------------------------------------------------------
                                                     Incremental Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     126        116        232        222         26          9
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                                    Net Benefits/Costs
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............     621        687        247        280        994       1093
           Monetized
           ($millions/year).
         -------------------------------------------------------------------------------------------------------
                                      Incremental Net Benefits/Costs Relative to TSL4
         -------------------------------------------------------------------------------------------------------
          Annualized         2008$............      89         97         68         73        109       120
           Monetized
           ($millions/year).
----------------------------------------------------------------------------------------------------------------
Note: Annualized values are for the period from 2012 to 2042.

a. Trial Standard Level 5
    For IRL, DOE first considered the most efficient level, TSL5, which
would save an estimated total of 1.12 to 2.72 quads of energy through
2042--a significant amount of energy. For the Nation as a whole, TSL5
would have a net savings of $4.9 billion to $10.2 billion at a 7-
percent discount rate and $9.4 billion to $20.0 billion at a 3-percent
discount rate. The emissions reductions at TSL5 are estimated at 53 to
118 MMt of CO₂, 8 to 9 kt of NO_X, and up to 2
metric tons of Hg. Total generating capacity in 2042 is estimated to
decrease compared to the reference case by 300 to 1400 MW under TSL5.
The monetized values of emissions reductions are estimated at $2.2 to
$27.0 million for NO_X and up to $16.0 million for Hg at a 7-
percent discount rate and $2.7 to $33.1 million for NO_X and
up to $30.2 million for Hg at a 3-percent

[[Page 34172]]

discount rate. The estimated benefits of reducing CO₂
emissions using the mid-range of the CO₂ value (using $33
per ton) is $1.0 to 2.0 billion and $1.8 to $4.1 billion at 7-percent
and 3-percent discount rates respectively. The full range of likely
benefits of CO₂ emission reductions is $0.1 billion to $4.9
billion at a 7-percent discount rate and $0.1 billion to $9.9 billion
at a 3-percent discount rate.
    As seen in Table VII.13, regardless of the baseline lamp purchased
absent standards, commercial-sector consumers have available lamp
designs at TSL5 which would result in positive LCC savings ranging from
$1.36 to $9.14, while residential-sector consumers have available lamp
designs which would result in positive LCC savings ranging from $1.51 to $9.10.
    The projected change in industry value at TSL5 would range from a
decrease of $104 million to $111 million, or a net loss of 37 to 47
percent in INPV. The range in impacts is attributed in part to
uncertainty concerning the future share of emerging technologies in the
IRL market, as well as the expected migration to R-CFL and exempted IRL
technologies under standards.
    DOE based TSL5 on commercially-available IRL which employ a silver
reflector, an improved IR coating, and a filament design that results
in a lifetime of 4,200 hours. To DOE's knowledge, only one manufacturer
currently sells products that meet TSL5. In addition, it is DOE's
understanding that the silver reflector is a proprietary technology
that all manufacturers may not be able to employ. However, DOE
considered TSL5 in its analysis because it believes that there is an
alternate, non-proprietary pathway to achieve this level. This pathway
consists in redesigning the filament to achieve higher-temperature
operation and, thus, reducing lifetime to 2,500 hours.
    DOE conducted a complete set of analyses to capture the economic
impacts of a TSL5 lamp designed to operate with a lifetime of 2500
hours instead of 4200 hours. Whereas the energy savings and emission
reductions do not change for the Nation as a whole, a reduced-life lamp
would result in much reduced net savings (NPV) of $2.53 billion to
$4.86 billion at a 7-percent discount rate and $10.1 billion to $5.1
billion at a 3-percent discount rate. As seen in Table VII.13, as
compared to one of the baseline lamps purchased absent standards,
consumers would experience negative LCC savings, ranging from -$3.17
(in the commercial sector) to -$1.64 (in the residential sector), at
TSL5. Because reduced lamp life results in greater IRL shipments, the
projected change in industry value would be greatly reduced to a
decrease of $43 million to $49 million, or a net loss of 14 to 22
percent in INPV.
    The reduced LCC savings at TSL 5 for the reduced-life lamps brings
added concern to the issue of hot shock, which is when vibrations that
occur while the lamp is energized cause premature lamp failure. It is
DOE's understanding that hot shock can reduce lamp life by 25 percent
to 30 percent for some consumers. For a lamp rated at 2500 hours, this
means that service life could be reduced to 1750 hours. As demonstrated
in Tables Table VI.1 and Table VI.2, DOE expects that a lamp with price
and efficacy associated with TSL5 and a lifetime of 1750 hours would
result in negative LCC savings for the vast majority of consumers.
    Furthermore, DOE is also concerned about the possible lessening of
competition at TSL5. Only one manufacturer currently sells product that
meets TSL5. This commercially-available product employs a proprietary
technology, and while DOE has some evidence that alternative non-
proprietary technologies may be used to meet this level, these
alternative technologies have not been manufactured in large quantities
and questions remain as to their cost and performance, as discussed
above. Because DOE has not been able to verify manufacturer costs
associated with these alternative technologies, it is possible that
these approaches may not be cost-competitive with the currently-
available product employing the proprietary technology. While DOE
recognizes that a 2500-hour lamp at TSL 5 is technologically feasible
and would not require the use of proprietary technologies, the LCC
results show that these shortened-life lamps are likely to be less
attractive to consumers and, therefore, at a competitive disadvantage.
    In summary, after carefully considering the analysis discussed
above and weighing the benefits and burdens of TSL5, the Secretary has
determined the following: At TSL5, the benefits of energy savings,
emissions reductions (both in terms of physical reductions and the
monetized value of those reductions, including the likely U.S. and
global benefits of reducing CO₂ emissions), the positive net
economic savings to the Nation (over 31 years) is outweighed by the
large capital conversion costs that could result in a reduction in INPV
for manufacturers, possible negative LCC savings for some consumers of
2500-hour lamps, and the possible lessening of competition.
Consequently, the Secretary has concluded that TSL5 is not economically
justified.
b. Trial Standard Level 4
    Next, DOE considered TSL4, which would save an estimated total of
0.94 to 2.39 quads of energy through 2042--a significant amount of
energy. For the Nation as a whole, TSL4 would have a net savings of
$4.20 billion to $9.06 billion at a 7-percent discount rate and $17.8
billion to $8.0 billion at a 3-percent discount rate. The emissions
reductions at TSL4 are estimated at 44 to 106 MMt of CO₂,
6.4 to 8.4 kt of NO_X, and up to 2 metric tons of Hg. Total
generating capacity in 2042 is estimated to decrease compared to the
reference case by 200 to 1,100 MW under TSL4. The monetized values of
emissions reductions are estimated at $1.8 to $24.4 million for
NO_X and up to $15.0 million for Hg at a 7-percent discount
rate and $2.2 to $30.0 million for NO_X and up to $28.1
million for Hg at a 3-percent discount rate. The estimated benefits of
reducing CO₂ emissions using the mid-range of the
CO₂ value (using $33 per ton) is $0.8 to $1.8 billion and
$1.5 to $3.7 billion at 7-percent and 3-percent discount rates
respectively. The full range of likely benefits of CO₂
emission reductions is $50 million to $4.4 billion at a 7-percent
discount rate and $0.1 billion to $8.9 billion at a 3-percent discount rate.
    The projected change in industry value at TSL4 would range from a
decrease of $98 million to $102 million, or a net loss of 34 to 44
percent in INPV. The range in impacts is attributed in part to
uncertainty concerning the future share of emerging technologies in the
IRL market, as well as the expected migration to R-CFL and exempted IRL
technologies under standards.
    As seen in Table VII.13, regardless of the baseline lamp currently
employed, commercial-sector consumers have available lamp designs at
TSL4 which would result in positive LCC savings ranging from $1.81 to
$7.95, while residential-sector consumers have available lamp designs
which would result in positive LCC savings ranging from $1.75 to $7.45.
    DOE does not believe TSL4 requires the use of a single proprietary
technology. To DOE's knowledge, two manufacturers currently sell a
full-range of lamp wattages that meet TSL4. Unlike TSL5, where it is
possible that some manufacturers would not be able to achieve the level
without lowering lamp lifetime, DOE believes that the existence of
multiple technology pathways to TSL4 would not necessarily result in
the reduction in lamp lifetime at TSL4. However, DOE also recognizes that

[[Page 34173]]

manufacturers may choose to sell products with reduced lifetimes.
Therefore, DOE conducted a complete set of analyses to capture the
economic impacts of a TSL4 lamp designed to operate with a lifetime of
2500 hours and 3000 hours instead of 4000 hours. Whereas the energy
savings and emission reductions do not change for the Nation as a
whole, a reduced-life lamp would result in much reduced net savings
(NPV) of $1.83 billion to $5.22 billion at a 7-percent discount rate
and $10.8 billion to $3.8 billion at a 3-percent discount rate. As seen
in Table VII.13, as compared to one of the baseline lamps purchased
absent standards, commercial consumers would experience small negative
LCC savings of -$0.25 at TSL4. Because reduced lamp life results in
greater IRL shipments, the projected change in industry value would be
greatly reduced to a decrease of $21 million to $61 million, or a net
loss of 7 to 28 percent in INPV.
    Hot shock is less of a concern at TSL4 than at TSL5. DOE
understands that manufacturers may choose to reduce their negative
impacts by providing lamps with lifetimes less than 4000 hours at TSL4.
However, because 4000-hour TSL4 lamps can be produced without the use
of proprietary technologies, manufacturers may be able to implement
technological changes in their lamps to prevent hot shock, while
retaining lifetimes above 3000 hours.
    In addition, competitive impacts are less severe at TSL4 than at
TSL5. To DOE's knowledge, two of the three major manufacturers of IRL
currently sell a full product line (across common wattages) that meet
this potential standard level. It is DOE's understanding that the third
manufacturer employs a technology platform that, due to the positioning
of the filament in the HIR capsule, is inherently less efficient.
Therefore, it is likely that in order to meet TSL4, this manufacturer
would have to make higher investments than the other manufacturers,
placing it at a competitive disadvantage. This manufacturer has
commented that it could manufacture products at TSL4 if the standards
implementation lead time were extended by an additional one year. While
DOE recognizes the challenges inherent in gaining access to technology
and building capacity needed to begin production, as detailed in
section VI.D.1 of this notice, DOE does not have the statutory
authority to extend the implementation period.
    In summary, after considering the analysis discussed above and
comments on the April 2009 NOPR, and weighing the benefits and burdens
of TSL4, the Secretary has determined the following: At TSL4, the
benefits of energy savings, emissions reductions (both in terms of
physical reductions and the monetized value of those reductions,
including the likely U.S. and global benefits of reduced CO₂
emissions), the positive net economic savings to the Nation (over 31
years), and positive life-cycle cost savings outweighs the reduction in
INPV for manufacturers. Consequently, the Secretary has concluded that
TSL4 offers the maximum improvement in efficacy that is technologically
feasible and economically justified, and will result in significant
conservation of energy. Therefore, DOE is adopting the energy
conservation standards for IRL at trial standard level 4.

VIII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify
the problem it intends to address that warrants agency action such as
today's final rule (including, where applicable, the failures of
private markets or public institutions), and to assess the significance
of that problem in evaluating whether any new regulation is warranted.
DOE included a description of market failures in its April 2009 NOPR.
74 FR 16920, 17018-19 (April 13, 2009). DOE believes, in this final
rule, that these market failures continue to persist.
    In addition, because today's regulatory action is a significant
regulatory action under section 3(f)(1) of Executive Order 12866,
section 6(a)(3) of that Executive Order requires DOE to prepare and
submit for review to the Office of Information and Regulatory Affairs
(OIRA) in the Office of Management and Budget (OMB) an assessment of
the costs and benefits of today's rule. Accordingly, DOE presented to
OIRA for review the draft final rule and other documents prepared for
this rulemaking, including a regulatory impact analysis (RIA). These
documents are included in the rulemaking record and are available for
public review in the Resource Room of DOE's Building Technologies
Program, 950 L'Enfant Plaza, SW., 6th Floor, Washington, DC 20024,
(202) 586-9127, between 9:00 a.m. and 4:00 p.m., Monday through Friday,
except Federal holidays.
    Carlins Consulting stated that regulations were not necessary for
consumers to adopt energy efficient lighting because the marketplace
has provided the consumer with adequate options to choose a proper
light source for any application given many variables. Specifically,
the commenter cited the shift in office lighting from incandescent to
fluorescent, then from T12 fluorescent lamps to T8 fluorescent lamps,
the extinction of mercury vapor lamps after the introduction of metal
halide lamps, and most recently--the popularity of lighting controls as
evidence of the marketplace and economic incentives leading to the
creation of energy efficient products. (Carlins Consulting, No. 57 at p. 1)
    In response, the April 2009 NOPR contained a summary of the RIA,
which evaluated the extent to which major alternatives to standards for
GSFL and IRL could achieve significant energy savings at reasonable
cost, as compared to the effectiveness of the proposed rule. 74 FR
16920, 17019-22 (April 13, 2009). The complete RIA (Regulatory Impact
Analysis for Proposed Energy Conservation Standards for General Service
Fluorescent Lamps and Incandescent Reflector Lamps) is contained in the
TSD prepared for today's rule. The RIA consists of: (1) A statement of
the problem addressed by this regulation, and the mandate for
government action; (2) a description and analysis of the feasible
policy alternatives to this regulation; (3) a quantitative comparison
of the impacts of the alternatives; and (4) the national economic
impacts of today's standards.
    DOE sought additional information to further develop its analysis
(i.e., information to verify estimates of the percentages of consumers
purchasing efficient lighting and the extent to which consumers will
continue to purchase more-efficient lighting in future years), and to
conduct additional analyses in support of its conclusions (i.e., data
on the correlation between the efficacy of existing lamps, usage
patterns, and associated electricity price), but received no additional
information or data in response to the April 2009 NOPR.
    The major alternatives to the standards that DOE analyzed are: (1)
No new regulatory action; (2) consumer rebates; (3) consumer tax
credits; (4) manufacturer tax credits; (5) voluntary energy-efficiency
targets; (6) bulk government purchases; and (7) early replacement. Each
of these alternatives was analyzed in the RIA, with the exception of
early replacement, because DOE found that the lifetimes of the lamps
analyzed are too short for early replacement to result in significant
savings. As explained in the April 2009 NOPR, DOE determined that none of

[[Page 34174]]

these alternatives would save as much energy or have an NPV as high as
the proposed standards, TSL3 for GSFL and TSL4 for IRL. That same
conclusion applies to the standards in today's rule. DOE has determined
that none of the alternatives save as much energy or have an NPV as
high as the adopted standards, TSL4 for GSFL and TSL4 for IRL. (DOE
further notes that for GSFL, the final rule standard set at TSL4 would
save more energy and have a higher NPV than the proposed standard at
TSL3.) Also, several of the alternatives would require new enabling
legislation, since authority to carry out those alternatives does not
presently exist. Additional detail on the regulatory alternatives is
found in the RIA report in the TSD.

B. 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, and a final regulatory
flexibility analysis for any such rule that an agency adopts as a final
rule, unless the agency certifies that the rule, if promulgated, will
not have a significant economic impact on a substantial number of small
entities. A regulatory flexibility analysis examines the impact of the
rule on small entities and considers alternative ways of reducing
negative impacts. Also, as required by Executive Order 13272, ``Proper
Consideration of Small Entities in Agency Rulemaking,'' 67 FR 53461
(August 16, 2002), DOE published procedures and policies on February
19, 2003, to ensure that the potential impacts of its rules on small
entities are properly considered during the rulemaking process. 68 FR
7990. DOE has made its procedures and policies available on the Office
of the General Counsel's Web site: http://www.gc.doe.gov.
    The Small Business Administration (SBA) classifies manufacturers of
GSFL and IRL as small businesses if they have 1,000 or fewer
employees.\84\ DOE used this small business size standard, published at
65 FR 30386 (May 15, 2000) and codified at 13 CFR part 121, to
determine whether any small entities would be required to comply with
today's rule. The size standard is listed by North American Industry
Classification System (NAICS) code and industry description. GSFL and
IRL manufacturing are classified under NAICS 335110, ``Electric Lamp
Bulb and Part Manufacturing.''
---------------------------------------------------------------------------

    \84\ See www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.
---------------------------------------------------------------------------

    As explained in the April 2009 NOPR, DOE reviewed the proposed rule
under the provisions of the Regulatory Flexibility Act and the
procedures and policies published on February 19, 2003 (68 FR 7990). On
the basis of that review, DOE certified that the proposed rule, if
promulgated, ``would not have a significant economic impact on a
substantial number of small entities.'' 74 FR 16920, 17022-23 (April
13, 2009). Therefore, DOE did not prepare an initial regulatory
flexibility analysis for the proposed rule. DOE set forth its
certification to the Chief Counsel for Advocacy of the SBA and the
statement of factual basis for that certification.
    DOE received comments from Tailored Lighting Inc. in response to
the Regulatory Flexibility Act discussion in the April 2009 NOPR.
Tailored Lighting Inc. stated that DOE incorrectly characterizes the
small business manufactures in the market by not including Tailored
Lighting Inc. and possibly other businesses like it. (Tailored Lighting
Inc., No. 73 at p. 2)
    For the April 2009 NOPR, DOE conducted an extensive
characterization of the GSFL and IRL industries and presented its
findings for review and comment. In its characterization, DOE found
that the majority of covered GSFL and IRL are manufactured by three
large companies. A very small percentage of the market is manufactured
by either large or small companies that primarily specialize in lamps
not covered by this rulemaking. 74 FR 16920, 17022-23 (April 13, 2009).
    During its market survey for the April 2009 NOPR, DOE created a
list of every company that manufactures covered and non-covered GSFL
and IRL for sale in the United States. DOE also asked stakeholders and
industry representatives if they were aware of any other small
manufacturers. DOE then reviewed publicly-available data and contacted
companies on its list, as necessary, to determine whether they met the
SBA's definition of a small business manufacturer in the GSFL or IRL
industries. In total, DOE contacted 57 companies that could potentially
be small businesses. During initial review of the 57 companies in its
list, DOE either contacted or researched each company to determine if
it sold covered GSFL and IRL. Research included reviewing each
company's product catalogs and reviewing company's independent research
reports.\85\ Based on its research, DOE screened out companies that did
not offer lamps covered by this rulemaking or if research reports
indicated they were large manufacturers. Initially, DOE estimated that
only 12 out of 57 companies listed were potentially small business
manufacturers of covered products. 74 FR 16920, 17023 (April 13, 2009).
Out of those 12 companies, DOE interviewed the four companies that
consented to be interviewed. From these interviews, DOE determined that
one manufacturer was not a small business. Two of the companies sold
covered products, but were not manufacturers. The remaining company was
the small business manufacturer DOE identified in the NOPR.
---------------------------------------------------------------------------

    \85\ Dun and Bradstreet provides independent research regarding
company cash flows, revenues, employees, and credit-worthiness.
---------------------------------------------------------------------------

    For today's final rule, DOE contacted the remaining eight companies
again and conducted additional research. Out of the eight other
companies, DOE determined that seven did not manufacture covered
products or were not the manufacturer of the covered products that they
offered. DOE was unable to determine if the remaining company was a
small business manufacturer.
    DOE also reviewed the product offerings of Tailored Lighting to
determine whether that company is a small business manufacturer
impacted by this rule. DOE determined that Tailored Lighting Inc is not
a ``small business'' manufacturer within the context of the present
rulemaking because it does not currently manufacture covered products.
    For the final rule, DOE continued to indentify the small GSFL
manufacturer discussed in the April 2009 NOPR as the only small
business manufacturer of products covered by this rulemaking. In the
April 2009 NOPR, DOE found that the small manufacturer of covered GSFL
shared some of the same concerns about energy conservation standards as
large manufacturers. DOE summarized the key issues in the April 2009
NOPR. 74 FR 16920, 16974-75 (April 13, 2009). However, the small
manufacturer was less concerned about the potential of standards to
severely harm its business. Because the small manufacturer is more
focused on specialty products not covered by this rulemaking, covered
GSFL represents a smaller portion of its revenue and product portfolio.
In addition, this manufacturer stated that it is possible to pass along
cost increases to consumers, thereby limiting margin impacts due to
energy conservation standards.
    DOE could not use the GSFL GRIM to model the impacts of energy
conservation standards on the small business manufacturer of covered GSFL.

[[Page 34175]]

The GSFL GRIM models the impacts on GSFL manufacturers if concerns
about margin pressure and significant capital investments necessitated
by standards are realized. The small manufacturer did not share these
concerns, and, therefore, the GRIM model would not be representative of
the identified small business manufacturer. Like large manufacturers,
the small business manufacturer stated that more-efficient products
earn a premium; however, unlike larger manufacturers, the small
manufacturer stated that it could pass costs along to its customers (a
statement expected to apply to both the proposed TSL3 and the final
rule's TSL4). Since the GSFL GRIM models the financial impact of the
standards commoditizing premium products, it is not representative of
the small business manufacturer because the small business manufacturer
did not share these concerns. Because of its focus on specialized
products, the small manufacturer was more concerned about being able to
offer the products to their customers than the impact on its bottom
line. For further information about the scenarios modeled in the GRIM,
see section V.F of today's notice and chapter 13 of the TSD.
    DOE reviewed the standard levels considered in today's final rule
under the provisions of the Regulatory Flexibility Act and the
procedures and policies published on February 19, 2003. On the basis of
the foregoing, DOE reaffirms the certification. Therefore, DOE has not
prepared a final regulatory flexibility analysis for this rule.

C. Review Under the Paperwork Reduction Act

    DOE stated in the April 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 16920, 17023 (April 13, 2009). DOE received no
comments on this in response to the April 2009 NOPR, and, as with the
proposed rule, today's rule imposes no information and recordkeeping
requirements. Therefore, DOE has taken no further action in this
rulemaking with respect to the Paperwork Reduction Act.

D. Review Under the National Environmental Policy Act

    DOE prepared an environmental assessment of the impacts of today's
standards, which it published as chapter 16 within the TSD for the
final rule. DOE found the environmental effects associated with today's
standards for GSFL and IRL 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 (NEPA) (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 NEPA
(10 CFR part 1021). The FONSI is available in the docket for this rulemaking.

E. 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. In accordance with DOE's statement of
policy describing the intergovernmental consultation process it will
follow in the development of regulations that have Federalism
implications, 65 FR 13735 (March 14, 2000), DOE examined the proposed
rule and determined that the rule 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 16920,
17023 (April 13, 2009). DOE received no comments on this issue in
response to the April 2009 NOPR, and its conclusions on this issue are
the same for the final rule as they were for the proposed rule. This
statement remains true even though DOE has adopted energy conservation
standards for GSFL in this final rule (TSL4) that are at a higher level
than those proposed (TSL3). Therefore, DOE is taking no further action
in today's final rule with respect to Executive Order 13132.

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 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; and (3) provide a clear legal standard for
affected conduct rather than a general standard and promote
simplification and burden reduction. Section 3(b) of Executive Order
12988 specifically requires that Executive agencies make every
reasonable effort to ensure that the regulation: (1) Clearly specifies
the preemptive effect, if any; (2) clearly specifies any effect on
existing Federal law or regulation; (3) provides a clear legal standard
for affected conduct while promoting simplification and burden
reduction; (4) specifies the retroactive effect, if any; (5) adequately
defines key terms; and (6) addresses other important issues affecting
clarity and general draftsmanship under any guidelines issued by the
Attorney General. Section 3(c) of Executive Order 12988 requires
Executive agencies to review regulations in light of applicable
standards in section 3(a) and section 3(b) to determine whether they
are met or it is unreasonable to meet one or more of them. DOE has
completed the required review and determined that, to the extent
permitted by law, the final regulations meet the relevant standards of
Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    As indicated in the April 2009 NOPR, DOE reviewed the proposed rule
under Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L.
104-4) (UMRA), which imposes requirements on Federal agencies when
their regulatory actions will have certain types of impacts on State,
local, and Tribal governments and the private sector. 74 FR 16920,
17024 (April 13, 2009). DOE concluded that, although this rule would
not contain an intergovernmental mandate, it may result in expenditure
of $100 million or more in one year by the private sector. Id.
Therefore, in the April 2009 NOPR, DOE addressed the UMRA requirements
that it prepare a statement as to the basis, costs, benefits, and
economic impacts of the proposed rule, and that it identify and
consider regulatory alternatives to the proposed rule. Id. DOE received
no comments concerning the UMRA in response to the April 2009 NOPR, and
its conclusions on this issue are the same for the final rule as they
were for the proposed rule. This statement remains true even though DOE
has adopted energy conservation standards for GSFL in this final rule
(TSL4) that are at a higher level than those proposed (TSL3).
Therefore, DOE is taking no further action in today's final rule with
respect to the UMRA.

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

    DOE determined that, for this rulemaking, it need not prepare a
Family Policymaking Assessment under Section 654 of the Treasury and
General Government Appropriations Act, 1999 (Pub. L. 105-277). Id. DOE
received no comments concerning Section 654 in response to the April
2009 NOPR, and, therefore, takes no further action in today's final
rule with respect to this provision.

[[Page 34176]]

I. Review Under Executive Order 12630

    DOE determined, under Executive Order 12630, ``Governmental Actions
and Interference with Constitutionally Protected Property Rights,'' 53
FR 8859 (March 18, 1988), that the proposed rule would not result in
any takings which might require compensation under the Fifth Amendment
to the U.S. Constitution. 74 FR 16920, 17024 (April 13, 2009). DOE
received no comments concerning Executive Order 12630 in response to
the April 2009 NOPR, and, today's final rule also would not result in
any takings which might require compensation under the Fifth Amendment.
Therefore, DOE takes no further action in today's final rule with
respect to this Executive Order.

J. Review Under the Treasury and General Government Appropriations Act of 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. The OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002),
and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE
has reviewed today's final rule under the OMB and DOE guidelines and has
concluded that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use,'' 66 FR 28355
(May 22, 2001) requires Federal agencies to prepare and submit to the
OIRA a Statement of Energy Effects for any significant energy action.
DOE determined that the proposed rule was not a ``significant energy
action'' within the meaning of Executive Order 13211 because the rule,
which sets energy efficiency standards for covered GSFL and IRL, would
not have a significant adverse effect on the supply, distribution, or
use of energy, nor has it been designated as a significant energy
action by the Administrator of OIRA. 74 FR 16920, 17024 (April 13,
2009). Accordingly, DOE did not prepare a Statement of Energy Effects
on the proposed rule. DOE received no comments on this issue in
response to the April 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. This statement remains
true even though DOE has adopted energy conservation standards for GSFL
in this final rule (TSL4) that are at a higher level than those
proposed (TSL3). Accordingly, DOE has not prepared a Statement of
Energy Effects on the rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, the OMB, in consultation with the Office of
Science and Technology, issued its Final Information Quality Bulletin
for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 2005). The purpose
of the Bulletin is to enhance the quality and credibility of the
Government's scientific information. The Bulletin establishes that
certain scientific information shall be peer reviewed by qualified
specialists before it is disseminated by the Federal Government. As
indicated in the April 2009 NOPR, this includes influential scientific
information related to agency regulatory actions, such as the analyses
in this rulemaking. 74 FR 16920, 17024-25 (April 13, 2009).
    As more fully set forth in the April NOPR, DOE conducted formal
peer reviews of the energy conservation standards development process
and analyses, and has prepared a Peer Review Report pertaining to the
energy conservation standards rulemaking analyses. 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.

M. 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. DOE also will submit the
supporting analyses to the Comptroller General in the U.S. Government
Accountability Office (GAO) and make them available to each House of Congress.

IX. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Confidential business
information, Energy conservation, Household appliances, Imports,
Incorporation by reference, Intergovermental relations, Small businesses.

    Issued in Washington, DC, on June 26, 2009.
Cathy Zoi,
Assistant Secretary, Energy Efficiency and Renewable Energy.

• For the reasons set forth in the preamble, chapter II, subchapter D, of
Title 10, Code of Federal Regulations, Parts 430 is amended as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

• 1. The authority citation for part 430 continues to read as follows:

    Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

• 2. Section 430.2 is amended by revising the definition of ``colored
fluorescent lamp,'' ``fluorescent lamp,'' and ``rated wattage'' to read
as follows:

Sec.  430.2  Definitions.

* * * * *
    Colored fluorescent lamp means a fluorescent lamp designated and
marketed as a colored lamp and not designed or marketed for general
illumination applications with either of the following characteristics:
    (1) A CRI less than 40, as determined according to the method set
forth in CIE Publication 13.3 (incorporated by reference; see Sec.  430.3); or
    (2) A correlated color temperature less than 2,500K or greater than
7,000K as determined according to the method set forth in IESNA LM-9
(incorporated by reference; see Sec.  430.3).
* * * * *
    Fluorescent lamp means a low pressure mercury electric-discharge
source in which a fluorescing coating transforms some of the
ultraviolet energy generated by the mercury discharge into light,
including only the following:
    (1) Any straight-shaped lamp (commonly referred to as 4-foot medium
bipin lamps) with medium bipin bases of nominal overall length of 48
inches and rated wattage of 25 or more;
    (2) Any U-shaped lamp (commonly referred to as 2-foot U-shaped
lamps) with medium bipin bases of nominal overall length between 22 and
25 inches and rated wattage of 25 or more;
    (3) Any rapid start lamp (commonly referred to as 8-foot high
output lamps) with recessed double contact bases of nominal overall
length of 96 inches;
    (4) Any instant start lamp (commonly referred to as 8-foot slimline
lamps) with single pin bases of nominal overall length of 96 inches and
rated wattage of 52 or more;
    (5) Any straight-shaped lamp (commonly referred to as 4-foot

[[Page 34177]]

miniature bipin standard output lamps) with miniature bipin bases of
nominal overall length between 45 and 48 inches and rated wattage of 26
or more; and
    (6) Any straight-shaped lamp (commonly referred to 4-foot miniature
bipin high output lamps) with miniature bipin bases of nominal overall
length between 45 and 48 inches and rated wattage of 49 or more.
* * * * *
    Rated wattage means:
    (1) With respect to fluorescent lamps and general service fluorescent lamps:
    (i) If the lamp is listed in ANSI C78.81 (incorporated by
reference; see Sec.  430.3) or ANSI C78.901 (incorporated by reference;
see Sec.  430.3), the rated wattage of a lamp determined by the lamp
designation of Clause 11.1 of ANSI C78.81 or ANSI C78.901;
    (ii) If the lamp is a residential straight-shaped lamp, and not
listed in ANSI C78.81 (incorporated by reference; see Sec.  430.3), the
wattage of a lamp when operated on a reference ballast for which the
lamp is designed; or
    (iii) If the lamp is neither listed in one of the ANSI standards
referenced in (1)(i) of this definition, nor a residential straight-
shaped lamp, the electrical power of a lamp when measured according to
the test procedures outlined in Appendix R to subpart B of this part.
    (2) With respect to general service incandescent lamps and
incandescent reflector lamps, the electrical power measured according
to the test procedures outlined in Appendix R to subpart B of this part.
* * * * *

• 3. Section 430.3 is amended by:
• A. Removing paragraph (c)(1);
• B. Redesignating paragraphs (c)(2) through (13) as (c)(1) through (12);
• C. Revising newly redesignated paragraph (c)(1); and
• D. In newly redesignated paragraph (c)(5), add ``430.32,'' after
``430.2,''.
    The revision reads as follows:

Sec.  430.3  Materials incorporated by reference.

* * * * *
    (c) * * *
    (1) ANSI C78.3-1991 (``ANSI C78.3''), American National Standard
for Fluorescent Lamps-Instant-start and Cold-Cathode Types-Dimensional
and Electrical Characteristics, approved July 15, 1991; IBR approved
for Sec.  430.32.
* * * * *

• 4. Appendix R to Subpart B of Part 430 is amended by adding paragraphs
4.1.2.3, 4.1.2.4, and 4.1.2.5 to read as follows:

Appendix R to Subpart B of Part 430--Uniform Test Method for Measuring
Average Lamp Efficacy (LE) and Color Rendering Index (CRI) of Electric Lamps

* * * * *
    4.1.2.3 8-foot slimline lamps shall be operated using the
following reference ballast settings:
    (a) T12 lamps: 625 volts, 0.425 amps, and 1280 ohms.
    (b) T8 lamps: 625 volts, 0.260 amps, and 1960 ohms.
    4.1.2.4 8-foot high output lamps shall be operated using the
following reference ballast settings:
    (a) T12 lamps: 400 volts, 0.800 amps, and 415 ohms.
    (b) T8 lamps: 450 volts, 0.395 amps, and 595 ohms.
    4.1.2.5 4-foot miniature bipin standard output or high output
lamps shall be operated using the following reference ballast settings:
    (a) Standard Output: 329 volts, 0.170 amps, and 950 ohms.
    (b) High Output: 235 volts, 0.460 amps, and 255 ohms.
* * * * *
• 5. Section 430.32 is amended by revising paragraph (n) to read as follows:

Sec.  430.32  Energy and water conservation standards and effective dates.

* * * * *
    (n) General service fluorescent lamps and incandescent reflector
lamps. (1) Except as provided in paragraphs (n)(2) and (n)(3) of this
section, each of the following general service fluorescent lamps
manufactured after the effective dates specified in the table shall
meet or exceed the following lamp efficacy and CRI standards:

----------------------------------------------------------------------------------------------------------------
                                                                     Minimum
                                  Nominal lamp                    average lamp
           Lamp type                 wattage       Minimum CRI   efficacy  (lm/           Effective date
                                                                       W)
----------------------------------------------------------------------------------------------------------------
4-foot medium bipin............            >35W              69            75.0  Nov. 1, 1995.
                                          <=35W              45            75.0  Nov. 1, 1995.
2-foot U-shaped                            >35W              69            68.0  Nov. 1, 1995.
8-foot slimline................           <=35W              45            64.0  Nov. 1, 1995.
                                           >65W              69            80.0  May 1, 1994.
                                           >65W              45            80.0  May 1, 1994.
8-foot high output.............           >100W              69            80.0  May 1, 1994.
                                         <=100W              45            80.0  May 1, 1994.
----------------------------------------------------------------------------------------------------------------

    (2) The standards described in paragraph (n)(1) of this section do
not apply to:
    (i) Any 4-foot medium bipin lamp or 2-foot U-shaped lamp with a
rated wattage less than 28 watts;
    (ii) Any 8-foot high output lamp not defined in ANSI C78.81
(incorporated by reference; see Sec.  430.3) or related supplements, or
not 0.800 nominal amperes; or
    (iii) Any 8-foot slimline lamp not defined in ANSI C78.3
(incorporated by reference; see Sec.  430.3).
    (3) Each of the following general service fluorescent lamps
manufactured after July 14, 2012, shall meet or exceed the following
lamp efficacy standards shown in the table:

------------------------------------------------------------------------
                                                               Minimum
                                                               average
             Lamp type                  Correlated color         lamp
                                           temperature         efficacy
                                                                (lm/W)
------------------------------------------------------------------------
4-foot medium bipin................  <=4,500K..............           89
                                     >4,500K and <=7,000K..           88
2-foot U-shaped....................  <=4,500K..............           84

[[Page 34178]]

                                     >4,500K and <=7,000K..           81
8-foot slimline....................  <=4,500K..............           97
                                     >4,500K and <=7,000K..           93
8-foot high output.................  <=4,500K..............           92
                                     >4,500K and <=7,000K..           88
4-foot miniature bipin standard      <=4,500K..............           86
 output.
                                     >4,500K and <=7,000K..           81
4-foot miniature bipin high output.  <=4,500K..............           76
                                     >4,500K and <=7,000K..           72
------------------------------------------------------------------------

    (4) Except as provided in paragraph (n)(5) of this section, each of
the following incandescent reflector lamps manufactured after November
1, 1995, shall meet or exceed the lamp efficacy standards shown in the table:

------------------------------------------------------------------------
                                                        Minimum average
                 Nominal lamp wattage                  lamp efficacy (lm/
                                                               W)
------------------------------------------------------------------------
40-50................................................               10.5
51-66................................................               11.0
67-85................................................               12.5
86-115...............................................               14.0
116-155..............................................               14.5
156-205..............................................               15.0
------------------------------------------------------------------------

    (5) Each of the following incandescent reflector lamps manufactured
after July 14, 2012, shall meet or exceed the lamp efficacy standards
shown in the table:

----------------------------------------------------------------------------------------------------------------
                                                                                                 Minimum average
         Rated lamp wattage                Lamp spectrum        Lamp diameter    Rated voltage    lamp efficacy
                                                                   (inches)                           (lm/W)
----------------------------------------------------------------------------------------------------------------
40-205.............................  Standard Spectrum.......             >2.5           >=125V      6.8*P\0.27\
                                                                                          <125V      5.9*P\0.27\
                                                                         <=2.5           >=125V      5.7*P\0.27\
                                                                                          <125V      5.0*P\0.27\
40-205.............................  Modified Spectrum.......             >2.5           <=125V      5.8*P\0.27\
                                                                                          <125V      5.0*P\0.27\
                                                                         <=2.5           >=125V      4.9*P\0.27\
                                                                                          <125V      4.2*P\0.27\
----------------------------------------------------------------------------------------------------------------
Note 1: P is equal to the rated lamp wattage, in watts.
Note 2: Standard Spectrum means any incandescent reflector lamp that does not meet the definition of modified
  spectrum in 430.2.

    (6) (i)(A) Subject to the exclusions in paragraph (n)(6)(ii) of
this section, the standards specified in this section shall apply to ER
incandescent reflector lamps, BR incandescent reflector lamps, BPAR
incandescent reflector lamps, and similar bulb shapes on and after
January 1, 2008.
    (B) Subject to the exclusions in paragraph (n)(6)(ii) of this
section, the standards specified in this section shall apply to
incandescent reflector lamps with a diameter of more than 2.25 inches,
but not more than 2.75 inches, on and after June 15, 2008.
    (ii) The standards specified in this section shall not apply to the
following types of incandescent reflector lamps:
    (A) Lamps rated at 50 watts or less that are ER30, BR30, BR40, or
ER40 lamps;
    (B) Lamps rated at 65 watts that are BR30, BR40, or ER40 lamps; or
    (C) R20 incandescent reflector lamps rated 45 watts or less.

Appendix

    [The following letter from the Department of Justice will not
appear in the Code of Federal Regulations.]

Department of Justice, Antitrust Division, Main Justice Building,
950 Pennsylvania Avenue, NW., Washington, DC 20530-0001, (202) 514-
2401/(202) 616-2645(f), antitrust.atr@usdoj.gov, 
http://www.usdoj.gov/atr.

June 15, 2009.

Warren Belmar, Esq.,
Deputy General Counsel for Energy Policy, Department of Energy,
Washington, DC 20585.

    Dear Deputy General Counsel Belmar: I am responding to your
letter seeking the views of the Attorney General about the potential
impact on competition of proposed amended energy conservation
standards for general service fluorescent lamps (``GSFL'') and
incandescent reflector lamps (``IRL''). Your request was submitted
pursuant to Section 325(o)(2)(B)(i)(V) of the Energy Policy and
Conservation Act, as amended, (``ECPA''), 42 U.S.C.
6295(o)(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 contained in the Notice
of Proposed Rulemaking (``NOPR'') (74 FR 16920, April 13, 2009) and
the supplementary information submitted to the Attorney General, and
attended the February 3, 2009 public hearing on the proposed standards.
    Based on this review, the Department of Justice does not believe
that the proposed standard for GSFLs would likely lead to a
lessening of competition. Our review has focused upon the standards DOE has

[[Page 34179]]

proposed adopting; we have not determined the impact on competition
of more stringent standards than those proposed in the NOPR.
    With respect to IRLs, the Department is concerned that the proposed
Trial Standard Level 4 could adversely affect competition. The NOPR
would increase the minimum efficiency levels for IRLs to the second
highest level under consideration in this rulemaking. The IRL market is
highly concentrated, with three domestic manufacturers. Based on our
review, it appears that only two of these firms may currently
manufacture IRLs that would meet the new standard. It is our
understanding that these firms produce only limited quantities of such
products for high-end applications. The current producers may not have
the capacity to meet demand. In addition, one of these manufacturers
uses proprietary technology currently unavailable to other manufacturers.
    Given the capital investments new entrants or providers would be
required to make, and the potential that manufacturers may have to
obtain proprietary technology, there is a risk that one or more IRL
manufacturers will not produce products that meet the proposed
standard. We request that the Department of Energy consider the
possibility of new technology in this area as it settles on standards
in this field.

    Sincerely,

Christine A. Varney,
Assistant Attorney General.
[FR Doc. E9-15710 Filed 7-13-09; 8:45 am]
BILLING CODE 6450-01-P
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Energy Conservation Program: Energy Conservation Standards and Test Procedures for General Service Fluorescent Lamps and Incandescent Reflector Lamps

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