# National Archives and Records Administration Office of the Federal Register

DEC 24 2008 Clara Barley Federal Register Liaison Officer Office of General Counsel Department of Energy 1000 Independence Avenue, SW Room 6E078, GC-74 Washington DC 20585

Dear Ms. Barley: 

## COPY fOR YOUR lNfORI,lAT/ON

The material listed in the attachment is approved for incorporation by reference in 10 CFR Part 431.

This approval is contingent upon the final rule containing any language changes, which were agreed upon by our staffs. The approval to incorporate by reference these publications is effective on the effective date of your final rule. lfyou wish to enforce some other edition of these publications approved, you must:

1. Publish notice of the change(s) in the Federal Register, and amend the Code of Federal Regulations; and

2. Ensure that a copy of that edition is on file at the Office of the Federal Register; and 3. Notify me in writing of the change.

Federal Register Attorney: 

## IIfIl

Attaclunent



### u.s. mail address: 8601 Adelphi Road, College Park. MD 20740-6001 Office location: 800 North Capitol Street, NW, Suite 700, Washington,. DC 20002--4244 Federal Register web sites: http://www.archives.gov /federal-registcr and hltp:! /www.gpoaccess.gov/nara

### Material Approved for Incorporation By 

### Reference
Air-Conditioning and Refrigeration Institute ARI Standard 1200-2006 Perjormanl% Rating of Commercial Refrigerated Display Merchandisers lind Storage Cabinets 2006 CfR litk, "'11 ' S«Ntm to.431.64 10.431.66

Pagt 1 of'EERE-2006-BT-STD-0126 COMMENT 47

MEMORANDUM FOR THE DEPUTY SECRETARY

THROUGH : C. H. ALBRIGHT, JR. UNDER SECRETARY OF ENERGY FROM: JOHN F. MIZROCH ACTING ASSISTANT SECRETARY ENERGY EFFICIENCY AND RENEWABLE ENERGY SUBJECT: ACTION : Approval to Publish in the Federal Register a Final Rule for Energy Conservation Standards for Co mmercial Refrigeration Equipment (RIN: 1904-AB59) ISSUE : The notice requests approval to publish in the Federal Register the attached notice of final rule for ice-cream freezers; self-contai ned commercial refrigerators, freezers, and refrigerator-freezers without doors; and remote-c ondensing commercial refrigerators, freezers, and refrigerator-freezers (commerc ial refrigeration equipment). BACKGROUND:

 Commercial refrigeration equipment is used primarily to store and display perishable food products for sale in food-sales buildings ( e.g., supermarkets and convenience stores), some multi-line retail stores, and in some food service applications like restaurants, salad ba rs, and cafeterias.

 The Energy Policy Act of 2005 (EPACT 2005) amends the Energy Policy and Conservation Act to add new subsection 342( c)(4)(A), which direct s the Secretary of Energy to issue by rule energy conservati on standards for the above commercial refrigeration equipment. 42 U.S.C. 6313(c)(4)(A).

 Major interested parties include Hill Phoenix; Hussman; Tyle r Refrigeration; Zero Zone; Delfield; Structural Concep ts; Master-Bilt; Kysor Warren; the Air-Conditioning, Heating, and Refrigeration Institute; and the Ameri can Council for an Energy Efficient Economy.

 In this final rule, the U.S. Department of Energy (DOE) is adopting trial standard level (TSL) 4 for ice cream freezers; self-containe d commercial refrigerators, freezers, and refrigerator-freezers without doors; and remo te-condensing commercial refrigerators, freezers, and refrigerator-freezers.EERE-2006-BT-STD-0126 COMMENT 47

o TSL 4 will result in significant national energy savings and is technologically feasible and economically justified.

o DOE's adoption of TSL 4 represents the maximum efficiency levels that the analysis showed to have positive net present value to the Nation for all equipment classes.

 The energy conservation standard would apply to all commercial refrigeration equipment manufactured on or after January 1, 2012, and offered for sale in the United States. SENSITIVITIES : This rulemaking is one of the scheduled actions described in the Department’s report to Congress, which was prep ared in response to section 141(a) of EPACT 2005. POLICY IMPACT : This rulemaking supports the implementation of EPACT 2005. URGENCY : To meet the deadlines in the report to Congress, this notice should be submitted to the Federal Register no later than December 31, 2008. RECOMMENDATION : Recommend this notice be a pproved for publication in the Federal Register

. Attachment Approve: __________________________ Disapprove: ________________________ Date: _____________________________ CONCURRENCE: GC-1/ Eric J. Fygi, 12/18/08 PI/Robert C. Marlay for PI-1, 12/15/08 OMB/Nathan J. Frey, 12/18/08EERE-2006-BT-STD-0126 COMMENT 47

MEMORANDUM FOR: David R. Hill General Counsel Jonathan Shrier Acting Assistant Secretary for Policy and International Affairs FROM: John F. Mizroch Acting Assistant Secretary Energy Efficiency and Renewable Energy SUBJECT: ACTION : Approval to Publish in the Federal Register a Final Rule for Energy Conservation Standards for Commercial Refrigeration Equipm ent (RIN: 1904-AB59) ISSUE: The attached notice concerning the above subject is provided for your concurrence or nonconcurrence.

• This rulemaking is one of th e scheduled actions described in the Department of Energy’ s report to Congress, which was prepared in response to section 141(a) of the Energy Policy Act of 2005. It has a scheduled publication date of January 1, 2009 for a final rule.

• In order to coordinate the response to this request on a timely basis, we have forwarded a copy of the package to each addressee for concurrence.

• Please deliver your respons e to Robbie Dooms, EE ESECS Coordinator, EE-12, in Room 5E-042, by

_______________. AttachmentsEERE-2006-BT-STD-0126 COMMENT 47

[BILLING CODE] DEPARTMENT OF ENERGY 10 CFR Part 431 [Docket Number: EERE–2006–BT–STD–0126] RIN 1904–AB59

Energy Conservation Program for Commerc ial and Industrial Equipment: Energy Conservation Standards for Commercial Ice-Cream Freezers; Self-ContainedCommercial Refrigerators, Commercial Freezers, and Commercial RefrigeratorFreezers without Doors; and Remote Condensing Commercial Refrigerators, Commercial Freezers, and Commercial Refrigerator-Freezers

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

ACTION: Final rule.

SUMMARY: The Department of Energy (DOE) is adopting new energy conservation standards for commercial ice-cream freezers; self-contained commerci al refrigerators, commercial freezers, and commercial refriger ator-freezers without doors; and remote condensing commercial refrigerators, commerc ial freezers, and commercial refrigeratorfreezers. DOE has determined that energy conservation standards for these types of equipment would result in significant cons ervation of energy, a nd are technologically feasible and economically justified.

1EERE-2006-BT-STD-0126 COMMENT 47

DATES: The effective date of this rule is [INSERT DATE 60 DAYS FROM DATE OF PUBLICATION] . The standards established in today’s final rule will be applicable starting January 1, 2012. Incorporation by reference of the material listed is approved by the Director of the Federal Register on [INSERT DATE 60 DAYS FROM DATE OF PUBLICATION]

.

ADDRESSES: For access to the dock et to read background documents, the technical support document, transcripts of the public m eetings in this proceeding, or comments received, visit the U.S. Department of Energy, Resource Room of the Building Technologies Program, 950 L’Enfant Plaza, SW., 6th Floor, Washi ngton, DC 20024, (202) 586-2945, between 9 a.m. and 4 p.m., Monday th rough Friday, except Federal holidays. Please call Brenda Edwards at the above te lephone number for additional information regarding visiting the Resour ce Room. (Note: DOE’s Freedom of Information Reading Room no longer houses rulemaking materials.) You may also obtain copies of certain previous rulemaking document s in this proceeding (i.e. , framework document, advance notice of proposed rulemaking, notice of pr oposed rulemaking), draft analyses, public meeting materials, and related test procedure documents from the Office of Energy Efficiency and Renewabl e Energy’s website at www.eere.energy.gov/buildings/appliance_standard s/commercial/refrigeration_equipment.h tml

.

FOR FURTHER INFORMATION CONTACT:

2EERE-2006-BT-STD-0126 COMMENT 47
Charles Llenza, U.S. Department of Energy, Energy Efficiency and Renewable Energy, Building Technologies Program, EE–2J, 1000 Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-2192, Charles.Llenza@ee.doe.gov

. Francine Pinto, Esq., U.S. Department ofEnergy, Office of General Counsel, GC72, 1000 Independence Avenue, SW., Wash ington, DC 20585-0121, (202) 586-9507, Francine.Pinto@hq.doe.gov

.

SUPPLEMENTARY INFORMATION: Table of Contents: I. Summary of the Final Rule and Its Benefits A. The Standard Levels B. Benefits to Customers of Co mmercial Refrigeration Equipment C. Impact on Manufacturers D. National Benefits II. Introduction A. Authority B. Background 1. History of Standards Rulemaking for Commercial Refrigeration Equipment III. General Discussion A. Test Procedures B. Technological Feasibility 1. General 2. Maximum Technologically Feasible Levels C. Energy Savings D. Economic Justification 1. Specific Criteria a. Economic Impact on Commerci al Customers and Manufacturers b. Life-Cycle Costs c. Energy Savings d. Lessening of Utility or Performance of Equipment e. Impact of Any Le ssening of Competition f. Need of the Nation to Conserve Energy g. Other Factors 2. Rebuttable Presumption IV. Methodology and Discussion of Comments on Methodology A. Market and Technology Assessment 1. Definitions Related to Commer cial Refrigeration Equipment

3EERE-2006-BT-STD-0126 COMMENT 47
a. Air-Curtain Angle Definition b. Door Angle Definition c. Ice-Cream Freezer Definition d. Equipment Configuration Definitions e. Hybrid and Wedge Case Definitions 2. Equipment Classes B. Engineering Analysis 1. Approach 2. Analytical Models a. Cost Model b. Energy Consumption Model 3. Equipment Classes Analyzed 4. Wedge Cases 5. Ice-Cream Freezers—Temperature Range 6. Special Application Temperature Cases 7. Coverage of Remote Condensing Units 8. Regulating Secondary Cooling Applications C. Markups to Determine Equipment Price D. Energy Use Characterization E. Life-Cycle Cost and Payback Period Analyses F. Shipments Analysis G. National Impact Analysis H. Life-Cycle Cost Sub-Group Analysis I. Manufacturer Impact Analysis J. Utility Impact Analysis K. Employment Impact Analysis L. Environmental Assessment V. Discussion of Other Comments A. Information and Assumptions Used in Analyses 1. Market and Technology Assessment a. Data Sources b. Beverage Merchandisers 2. Engineering Analysis a. Design Options b. Baseline Models c. Consideration of Alternative Refrigerants d. Consideration of N SF 7 Type II Equipment e. Product Class Extension Factors f. TSL Energy Limits g. Compressor Selection Oversize Factor h. Offset Factors for Self-Contained Equipment i. Self-Contained Condensing Coils 3. Manufacturer Impact Analysis VI. Analytical Results and Conclusions A. Trial Standard Levels 1. Miscellaneous Equipment

4EERE-2006-BT-STD-0126 COMMENT 47
B. Significance of Energy Savings C. Economic Justification 1. Economic Impact on Commercial Customers a. Life-Cycle Costs and Payback Period b. Commercial Customer Sub-Group Analysis 2. Economic Impact on Manufacturers a. Industry Cash-Flow Analysis Results b. Cumulative Regulatory Burden c. Impacts on Employment d. Impacts on Manufacturing Capacity e. Impacts on Manufacturers That Are Small Businesses 3. National Net Present Value and Net National Employment 4. Impact on Utility or Performance of Equipment 5. Impact of Any Lesse ning of Competition 6. Need of the Nation to Conserve Energy 7. Other Factors D. Conclusion VII. Procedural Issues and Regulatory Review A. Review Under Executive Order 12866 B. Review Under the Regulatory Flexibility Act C. Review Under the Paperwork Reduction Act D. Review Under the National Environmental Policy Act E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and Gene ral Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under the Treasury and Gene ral Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under the Information Quality Bulletin for Peer Review M. Congressional Notification VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

A. The Standard Levels The Energy Policy and Conservation Act, as amended (42 U.S.C. 6291 et seq. ; EPCA), directs the Department of Ener gy (DOE) to establish mandatory energy conservation standards for commercial ice- cream freezers; self-contained commercial refrigerators, commercial freezers, and commerc ial refrigerator-freez ers without doors; and

5EERE-2006-BT-STD-0126 COMMENT 47
remote condensing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers. (42 U.S.C. 6313(c)(4)(A)) These types of equipment are referred to collectively hereafter as “commercial refrigera tion equipment.” Any such standard must be designed to “achieve the maximum improvement in energy efficiency . . . which the Secretary determines is tec hnologically feasible and economi cally justified.” (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Furthermore, the ne w standard must “result in significant conservation of energy.” (42 U.S.C. 6295(o)(3 )(B) and 6316(e)(1)) The standards in today’s final rule, which apply to all commercial refrigeration equipment, satisfy these requirements. 1
Table I-1 shows the standard levels DOE is adopting today. These standards will apply to all commercial refrigeration equipment manufactured for sale in the United States, or imported to the United Stat es, on or after January 1, 2012.

1 Currently, no mandatory Federal energy conservatio n standards exist for the commercial refrigeration equipment covered by this rulemaking. 6EERE-2006-BT-STD-0126 COMMENT 47

Table I-1 Standard Levels for Co mmercial Refrigeration Equipment Equipment Class 2 Standard Level *,** (kWh/day)*** Equipment Class Standard Level *,** (kWh/day) VOP.RC.M 0.82 x TDA + 4.07 VCT.RC.I 0.66 x TDA + 3.05 SVO.RC.M 0.83 x TDA + 3.18 HCT.RC.M 0.16 x TDA + 0.13 HZO.RC.M 0.35 x TDA + 2.88 HCT.RC.L 0.34 x TDA + 0.26 VOP.RC.L 2.27 x TDA + 6.85 HCT.RC.I 0.4 x TDA + 0.31 HZO.RC.L 0.57 x TDA + 6.88 VCS.RC.M 0.11 x V + 0.26 VCT.RC.M 0.22 x TDA + 1.95 VCS.RC.L 0.23 x V + 0.54 VCT.RC.L 0.56 x TDA + 2.61 VCS.RC.I 0.27 x V + 0.63 SOC.RC.M 0.51 x TDA + 0.11 HCS.RC.M 0.11 x V + 0.26 VOP.SC.M 1.74 x TDA + 4.71 HCS.RC.L 0.23 x V + 0.54 SVO.SC.M 1.73 x TDA + 4.59 HCS.RC.I 0.27 x V + 0.63 HZO.SC.M 0.77 x TDA + 5.55 SOC.RC.L 1.08 x TDA + 0.22 HZO.SC.L 1.92 x TDA + 7.08 SOC.RC.I 1.26 x TDA + 0.26 VCT.SC.I 0.67 x TDA + 3.29 VOP.SC.L 4.37 x TDA + 11.82 VCS.SC.I 0.38 x V + 0.88 VOP.SC.I 5.55 x TDA + 15.02 HCT.SC.I 0.56 x TDA + 0.43 SVO.SC.L 4.34 x TDA + 11.51 SVO.RC.L 2.27 x TDA + 6.85 SVO.SC.I 5.52 x TDA + 14.63 VOP.RC.I 2.89 x TDA + 8.7 HZO.SC.I 2.44 x TDA + 9. SVO.RC.I 2.89 x TDA + 8.7 SOC.SC.I 1.76 x TDA + 0.36 HZO.RC.I 0.72 x TDA + 8.74 HCS.SC.I 0.38 x V + 0.88

* TDA is the total display area of the case, as measur ed in the Air-Conditioning and Refrigeration Institute (ARI) Standard 1200-2006, Appendix D.

** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C. *** Kilowatt hours per day.

B. Benefits to Customers of Comme rcial Refrigeration Equipment Table I-2 indicates the impacts on commercial customers of today’s standards. Table I-2 Implications of New St andards for Commercial Consumers

Equipment Class Energy Conservation Standard Total Installed Cost

($) Total Installed Cost Increase ($) Life-Cycle Cost Savings ($) Payback Period (years)
VOP.RC.M 0.82 x TDA + 4.07 $8,065 $536 1,788 2.0

2 For this rulemaking, equipment class designations consist of a combination (in sequential order separated by periods) of: (1) an equipment family code (VOP=vertical open, SVO=semivertical open, HZO=horizontal open, VCT=vertical transparent doors, VCS=vertical solid doors, HCT=horizontal transparent doors, HCS=horizontal solid doors, or SOC=service over counter); (2) an operating mode code (RC=remote condensing or SC=self-contained); and ( 3) a rating temperature code (M=medium temperature (38 °F), L=low temperature (0 °F), or I=ice-cream temperature (-15 °F)). For example, “V OP.RC.M” refers to the “vertical open, remote condensing, medium temperature” equipmen t class. See discussion in section V.A.2 and chapter 3 of the TSD, market and technology assessment, for a more detailed explanation of the equipment class terminology. See for a list of the equipment classes by category. Table IV-2 7EERE-2006-BT-STD-0126 COMMENT 47

VOP.RC.L 2.27 x TDA + 6.85 11,222 1,947 3,938 2.8 VOP.SC.M 1.74 x TDA + 4.71 4,381 633 1,549 2.4 VCT.RC.M 0.22 x TDA + 1.95 11,654 2,134 2,339 3.9 VCT.RC.L 0.56 x TDA + 2.61 12,584 2,513 5,419 2.6 VCT.SC.I 0.67 x TDA + 3.29 6,602 1,385 5,217 1.7 VCS.SC.I 0.38 x V + 0.88 4,227 326 1,757 1.3 SVO.RC.M 0.83 x TDA + 3.18 7,470 435 1,274 1.9 SVO.SC.M 1.73 x TDA + 4.59 3,719 439 1,136 2.3 SOC.RC.M 0.51 x TDA + 0.11 12,740 240 945 1.7 HZO.RC.M 0.35 x TDA + 2.88 8,133 248 1,040 1.6 HZO.RC.L 0.57 x TDA + 6.88 8,194 270 1,102 1.6 HZO.SC.M 0.77 x TDA + 5.55 3,398 313 826 2.3 HZO.SC.L 1.92 x TDA + 7.08 3,836 460 1,761 1.7 HCT.SC.I 0.56 x TDA + 0.43 2,478 238 785 1.9

The economic impacts on commercial consumers (i.e. , the average life-cycle cost (LCC) savings) are positive for all equipment classes. For example, currently available remote condensing vertical open equipment opera ting at medium temperatures, semivertical equipment with those same characteristics, and vertical closed equipment with transparent doors and operating at low temp eratures—three of the most common types of commercial refrigeration equipment—typically have installed prices of $8,065, $7,470 and $12,584, and annual energy costs of $1,879, $1,413, and $2,249, respectively. To meet the new standards, DOE estimates that the installed prices of such equipment will be $8,601, $7,905, and $15,097, respectively, an increase of $536, $435, and $2,513. This price increase will be offset by annual energy savings of about $331, $234, and $977.

C. Impact on Manufacturers Using a real corporate disc ount rate of 11.5 percent, DOE estimates the industry net present value (INPV) of the commercial refrig eration equipment industry to be $540 million in 2007$. DOE expects the impact of today’s standards on the industry net present value (INPV) of manufacturers of comm ercial refrigeration equipmen t to be a loss of 7.29 to

8EERE-2006-BT-STD-0126 COMMENT 47 27.35 percent (-$39 million to -$148 million). Based on DOE’s interviews with manufacturers of commercial re frigeration equipment, DOE exp ects minimal plant closings or loss of employment as a result of the standards.

D. National Benefits DOE estimates the standards will save approximately 1.035 quads (quadrillion (10 15 ) British thermal units (Btu)) of energy over 30 years (2012–2042). This is equivalent to all the energy consumed by more than 5 million American households in a single year.

By 2042, DOE expects the energy savings from the standards to eliminate the need for approximately 0.7 new 1,000-megawatt (MW) power plants. These energy savings will result in cumulative greenhouse gas emission re ductions of approximately 52.6 million tons (Mt) of carbon dioxide (CO 2 ), or an amount equal to th at produced by approximately 332,500 cars every year. Additionally, the standa rds will help allevi ate air pollution by resulting in between approximately 3.64 and 89.97 kilotons (kt) of cumulative nitrogen oxide (NO X ) emission reductions and between approxi mately 0 and 1.38 tons of cumulative mercury emission reductions from 2012 through 2042. The estimated net present values of these emissions reductions are between $0 and $469 million for CO 2, between $394,000 and $9.7 million for NO X , and between $0 and $284,000 for mercur y at a 7-percent discount rate in 2007$, discounted to 2008. At a 3-percent discount rate, the estimated net present values of these emissions reductions are between $0 and $955 million for CO 2 , between $0.8 million and $20.5 million for NO X , and between $0 and $560,000 for mercury.

9EERE-2006-BT-STD-0126 COMMENT 47

The national NPV of the standards is $1.414 billion using a 7-pe rcent discount rate and $3.930 billion using a 3-percent discount rate, cumulative from 2012 to 2062 in 2007$. This is the estimated total value of future savings minus the estimated increased equipment costs, discounted to 2008.

The benefits and costs of today’s final ru le can also be expressed in terms of annualized [2007$] values between 2012 and 2042. Using a 7-percent discount rate for the annualized cost analysis, the cost of the standa rds established in toda y’s final rule is $95 million per year in increased equipment and inst allation costs, while th e annualized benefits are $229 million per year in reduced equipment operating costs. Using a 3-percent discount rate, the cost of the standards established in today’s final rule is $81 million per year, while the benefits of today’s sta ndards are $253 million per year.

II. Introduction

A. Authority Title III of EPCA sets forth a variety of provisions designed to improve energy efficiency. Part A of Title III (42 U.S.C. 6291–6309) provides for the Energy Conservation Program for Consumer Products Other than Auto mobiles. Part A-1 of Title III (42 U.S.C. 6311–6317) establishes a similar program for “C ertain Industrial Equipment,” including commercial refrigeration equipment, the subject of this rulemaking. 3 DOE publishes today’s final rule pursuant to Part A-1 of Title III, which provides for test procedures, labeling, and

3 This part was originally titled Part C. However, it was redesignated Part A- 1 after Part B of Title III of EPCA was repealed by Pub. L. 109-58. 10EERE-2006-BT-STD-0126 COMMENT 47
energy conservation standards for commercial refrigeration equipment and certain other equipment; and authorizes DOE to require info rmation and reports from manufacturers. The test procedure for commercial refrigeration equipment appears in Title 10 Code of Federal Regulations (CFR) part 431.64.

EPCA provides criteria for prescribing ne w or amended standards for commercial refrigeration equipment. As indicated above , any new or amended standard for this equipment must be designed to achieve the ma ximum improvement in energy efficiency that is technologically f easible and economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) Additionally, EPCA provides spec ific prohibitions on prescribing such standards. DOE may not prescribe an amended or new standard for any equipment for which DOE has not established a test proced ure. (42 U.S.C. 6295(o)(3)(A) and 6316(e)(1)) Further, DOE may not prescribe an amended or new standard if DOE determines by rule that such standard would not result in “significant conser vation of energy” or “is not technologically feasible or economically justified.” (42 U.S.C. 6295(o)(3)(B) and 6316(e)(1))

EPCA also provides that in deciding wh ether such a standard is economically justified for equipment such as commercial refrigeration equipment, DOE must, after receiving comments on the proposed standard, determine whether the benefits of the standard exceed its burdens by considering, to the greatest ex tent practicable, the following seven factors:

11EERE-2006-BT-STD-0126 COMMENT 47
1. the economic impact of the standard on ma nufacturers and consumers of the products subject to the standard; 2. the savings in operating cost s throughout the estimated aver age life of products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard; 3. the total projected amount of energy savings likely to result directly from the imposition of the standard; 4. any lessening of the utility or the performance of the products likely to result from the imposition of the standard; 5. the impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard; 6. the need for national energy conservation; and 7. other factors the Secretary of Energy (Secretary) considers relevant. (42 U.S.C. 6295(o)(2)(B )(i)-(ii) and 6316(e)(1))

In addition, EPCA, as amended (42 U. S.C. 6295(o)(2)(B)(iii) and 6316(e)(1)), establishes a rebuttable presumption that a st andard for commercial refrigeration equipment is economically justified if the Secretary finds that “the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy (and as a pplicable, water) savings during the first year that the consumer will receive as a result of the standard,” as calculated under the test procedure in place for that standard.

12EERE-2006-BT-STD-0126 COMMENT 47

EPCA further provides that the Secretar y may not prescribe an amended or new standard if interested persons have establishe d by a preponderance of the evidence that the standard is “likely to result in the unavailabi lity in the United States in any covered product type (or class) of performance characteristi cs (including reliabili ty), features, sizes, capacities, and volumes that are substantially the same as thos e generally available in the United States at the time of the Secretary’s finding.” (42 U.S.C. 6295(o)(4) and 6316(e)(1))

Section 325(q)(1) of EPCA is applicable to promulgating standards for most types or classes of equipment, including commercial refrig eration equipment, that have two or more subcategories. (42 U.S.C. 6295(q)(1) and 42 U.S.C. 6316(e)(1)) Unde r this provision, DOE must specify a different standard level than that which applie s generally to such type or class of equipment for any group of products “w hich have the same function or intended use, if . . . products within such group—(A) consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other pr oducts within such type (or class) do not have and such feature justifies a higher or lo wer standard” than applies or will apply to the other products. (42 U.S.C. 6295(q)(1)(A) and (B)) In determining whether a performancerelated feature justifies such a different standard for a group of products, DOE must consider “such factors as the utility to the consumer of such a feature” and other factors DOE deems appropriate. (42 U.S. C. 6295(q)(1)) Any rule prescr ibing such a standard must include an explanation of the basis on which DO E established such a higher or lower level. (See 42 U.S.C. 6295(q)(2))

13EERE-2006-BT-STD-0126 COMMENT 47

Federal energy conservation standards for commercial equipment generally supersede State laws or regulations concer ning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a)–(c); 42 U.S. C. 6316(e)(2)-(3)) DOE can, however, grant waivers of preemption for particular State laws or regulations, in accordance with the procedures and other provisions of section 327 (d) of the Act. (42 U.S.C. 6297(d); 42 U.S.C. 6316(e)(2)-(3))

B. Background
1. History of Standards Rulemaking for Commercial Refrigeration Equipment As discussed in the notice of propos ed rulemaking, 73 FR 50072, 50076 (August 25, 2008) (the August 2008 NOPR), the EPACT 2005 am endments to EPCA require that DOE issue energy conservation st andards for the equipment covered by this rulemaking. (42 U.S.C. 6313(c)(4)(A)) The amendments also incl ude definitions for terms relevant to this equipment (42 U.S.C. 6311(9)). These defini tions provide that co mmercial refrigeration equipment is connected to eith er a self-contained condensing un it or to a remote condensing unit (42 U.S.C. 6311 (9)(A)(vii)), the two condens er configurations of equipment covered by this rulemaking, and include definitions of a remote condensing unit and self-contained condensing unit (42 U.S.C. 6311 (9)(E)-(F)).

DOE commenced this rulemaking on April 25, 2006, by publishing a notice of a public meeting and of the availability of its framework document for the rulemaking. 71 FR 23876. The framework document described the approaches DOE anticipated using and

14EERE-2006-BT-STD-0126 COMMENT 47

issues to be resolved in the rulemaki ng. DOE held a public meeting on May 16, 2006, to present the contents of the framework document, describe the analyses DOE planned to conduct during the rulemaking, obtain public comme nt on these subjects, and facilitate the public’s involvement in the rulemaking. DOE also allowed the submission of written statements, after the public meeting, in response to the framework document.

On July 26, 2007, DOE published an adva nce notice of proposed rulemaking (ANOPR) in this proceeding. 72 FR 41161 (the July 2007 ANOPR). In the July 2007 ANOPR, DOE sought comment on its proposed e quipment classes for the rulemaking, and on the analytical framework, models, and tools that DOE used to analyze the impacts of energy conservation standards for commercial refrigeration equi pment. In conjunction with the July 2007 ANOPR, DOE published on its website the complete ANOPR TSD, which included the results of DOE’s various preliminar y analyses in this rulemaking. In the July 2007 ANOPR, DOE requested oral and written comments on these results and on a range of other issues. DOE held a public meeting in Washington, DC, on August 23, 2007, to present the methodology and results of the ANOPR anal yses and to receive oral comments from those who attended. The oral and written comments DOE received focused on DOE’s assumptions, approach, and equipment class brea kdown, and were addressed in detail in the August 2008 NOPR.

In the August 2008 NOPR, DOE proposed new energy conservation standards for commercial refrigeration equipment. 73 FR 50072. In conjunction with the August 2008 NOPR, DOE also published on its website the complete technical support document (TSD)

15EERE-2006-BT-STD-0126 COMMENT 47
for the proposed rule, which incorporated th e final analyses DOE c onducted and technical documentation for each analysis. The TSD includ ed the engineering analysis spreadsheets, the LCC spreadsheet, and the national imp act analysis spreadsheet. The standards DOE proposed for commercial refrigeration equipment are shown in Table II-1

. Table II-1 August 2008 Proposed Standard Levels for Commercial Refrigeration Equipment

Equipment Class Standard Level *,** (kWh/day) Equipment Class Standard Level *,** (kWh/day) VOP.RC.M 0.82 x TDA + 4.07 VCT.RC.I 0.71 x TDA + 3.05 SVO.RC.M 0.83 x TDA + 3.18 HCT.RC.M 0.16 x TDA + 0.13 HZO.RC.M 0.35 x TDA + 2.88 HCT.RC.L 0.34 x TDA + 0.26 VOP.RC.L 2.28 x TDA + 6.85 HCT.RC.I 0.4 x TDA + 0.31 HZO.RC.L 0.57 x TDA + 6.88 VCS.RC.M 0.11 x V + 0.26 VCT.RC.M 0.25 x TDA + 1.95 VCS.RC.L 0.23 x V + 0.54 VCT.RC.L 0.6 x TDA + 2.61 VCS.RC.I 0.27 x V + 0.63 SOC.RC.M 0.51 x TDA + 0.11 HCS.RC.M 0.11 x V + 0.26 VOP.SC.M 1.74 x TDA + 4.71 HCS.RC.L 0.23 x V + 0.54 SVO.SC.M 1.73 x TDA + 4.59 HCS.RC.I 0.27 x V + 0.63 HZO.SC.M 0.77 x TDA + 5.55 SOC.RC.L 1.08 x TDA + 0.22 HZO.SC.L 1.92 x TDA + 7.08 SOC.RC.I 1.26 x TDA + 0.26 VCT.SC.I 0.73 x TDA + 3.29 VOP.SC.L 4.37 x TDA + 11.82 VCS.SC.I 0.38 x V + 0.88 VOP.SC.I 5.55 x TDA + 15.02 HCT.SC.I 0.56 x TDA + 0.43 SVO.SC.L 4.34 x TDA + 11.51 SVO.RC.L 2.28 x TDA + 6.85 SVO.SC.I 5.52 x TDA + 14.63 VOP.RC.I 2.9 x TDA + 8.7 HZO.SC.I 2.44 x TDA + 9 SVO.RC.I 2.9 x TDA + 8.7 SOC.SC.I 1.76 x TDA + 0.36 HZO.RC.I 0.72 x TDA + 8.74 HCS.SC.I 0.38 x V + 0.88

* TDA is the total display area of the case, as m easured in the ARI Standard 1200-2006, Appendix D.
** V is the volume of the case, as measured in ARI Standard 1200-2006, Appendix C. In the August 2008 NOPR, DOE identified seve n issues on which is was particularly interested in receiving comments and views of interested parties: light-emitting diode (LED) price projections, base case effi ciency trends, operating temperature ranges, offset factors for smaller equipment, extension of standard s developed for the 15 primary classes to the remaining 23 secondary classes, standards for hy brid cases and wedges, and standard levels. 73 FR 50134. After the public ation of the August 2008 NOP R, DOE received written comments on these and other issues. DOE also held a public meeting in Washington, DC, on

16EERE-2006-BT-STD-0126 COMMENT 47
September 23, 2008, to hear oral comments on and solicit information relevant to the proposed rule. The August 2008 NOPR included additional background information on the history of this rulemaking. 73 FR 50076-77.

III. General Discussion

A. Test Procedures On December 8, 2006, DOE published a final ru le (the December 2006 final rule) in which it adopted American National Sta ndards Institute (ANSI)/Air-Conditioning and Refrigeration Institute (ARI) Standard 1200-2006, “Performance Rating of Commercial Refrigerated Display Merchandise rs and Storage Cabinets,” as the DOE test procedure for this equipment. 4 71 FR 71340, 71369-70; 10 CFR 431.63-431.64. ARI Standard 1200-2006 contains rating temperatur e specifications of 38 ° F (±2 ° F) for commercial refrigerators and refrigerator compartments, 0 ° F (±2 ° F) for commercial freezers and freezer compartments,
and -5 ° F (±2 ° F) for commercial ice-cream freezer s. The standard also requires performance tests to be conducted according to the ANSI/American Society of Heating, Refrigerating, and Air-Conditioning Engineer s (ASHRAE) Standard 72-2005, “Method of Testing Commercial Refrigerators and Freezers.” In the test procedure final rule, DOE also adopted a -15 ° F (±2 ° F) rating temperature for commer cial ice-cream freezers. 71 FR 71370. In addition, DOE adopted ANSI/Associat ion of Home Appliance Manufacturers (AHAM) Standard HRF-1-2004, “Energy, Perf ormance and Capacity of Household

4 The Air-Conditioning and Refrigeration Institute (ARI ) and the Gas Appliance Manufacturers Association (GAMA) announced on December 17, 2007, that their members voted to approve the merger of two trade associations to represent the interests of cooling, heating, and commercial refrigeration equipment manufacturers. The merged associatio n became AHRI on January 1, 2008. 17EERE-2006-BT-STD-0126 COMMENT 47
Refrigerators, Refrigerator-Freezers and Fr eezers,” for determining compartment volumes for this equipment. 71 FR 71369-70.

B. Technological Feasibility
1. General As stated above, any standards that DOE establishes for commercial refrigeration equipment must be technologically feasible . (42 U.S.C. 6295(o)(2 )(A) and (o)(3)(B); 42 U.S.C. 6316(e)(1)) DOE considers a design option to be technologically feas ible if it is in use by the respective industry or if research has progressed to the development of a working prototype. “Technologies incorporated in co mmercial products or in working prototypes will be considered technologically feasible .” 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i).

This final rule considers the same design options as those evaluated in the August 2008 NOPR. (See chapter 4 of the final rule TSD accompanying this notice.) All the evaluated technologies have been used (or are being used) in commercially available products or working prototypes. Therefore, DOE has determined that all of the efficiency levels evaluated in this noti ce are technologically feasible.

2. Maximum Technologically Feasible Levels As required by EPCA, (42 U.S.C. 6 295(p)(2) and 42 U.S. C. 6316(e)(1)) in developing the August 2008 NOPR, DOE identif ied the energy use levels that would achieve the maximum reductions in energy use th at are technologically feasible (max-tech 18EERE-2006-BT-STD-0126 COMMENT 47
levels) for commercial re frigeration equipment. 73 FR at 50077-78. (See NOPR TSD chapter 5.) DOE received comments indicati ng that LED efficacy had improved since the August 2008 NOPR. DOE also received co mments regarding the LED lighting configurations assumed in the e ngineering analysis for various equipment types. This caused the max-tech levels proposed in the Augus t 2008 NOPR to change for equipment classes with lighting. In general, the max-tech levels for open equipment classes decreased and the max-tech levels for closed cases increased from the max-tech levels proposed in the August 2008 NOPR. For today’s final rule, the max-tech levels for all classes are the levels provided in Table III-1

. Table III-1 “Max-Tech” Energy Use Levels

Equipment Class “Max-Tech” Level (kWh/day) Equipment Class “Max-Tech” Level (kWh/day) VOP.RC.M 0.74 x TDA + 4.07 VCT.RC.I 0.66 x TDA + 3.05 SVO.RC.M 0.76 x TDA + 3.18 HCT.RC.M 0.16 x TDA + 0.13 HZO.RC.M 0.35 x TDA + 2.88 HCT.RC.L 0.34 x TDA + 0.26 VOP.RC.L 2.27 x TDA + 6.85 HCT.RC.I 0.4 x TDA + 0.31 HZO.RC.L 0.57 x TDA + 6.88 VCS.RC.M 0.11 x V + 0.26 VCT.RC.M 0.22 x TDA + 1.95 VCS.RC.L 0.23 x V + 0.54 VCT.RC.L 0.56 x TDA + 2.61 VCS.RC.I 0.27 x V + 0.63 SOC.RC.M 0.4 x TDA + 0.11 HCS.RC.M 0.11 x V + 0.26 VOP.SC.M 1.65 x TDA + 4.71 HCS.RC.L 0.23 x V + 0.54 SVO.SC.M 1.65 x TDA + 4.59 HCS.RC.I 0.27 x V + 0.63 HZO.SC.M 0.77 x TDA + 5.55 SOC.RC.L 0.84 x TDA + 0.22 HZO.SC.L 1.92 x TDA + 7.08 SOC.RC.I 0.99 x TDA + 0.26 VCT.SC.I 0.67 x TDA + 3.29 VOP.SC.L 4.14 x TDA + 11.82 VCS.SC.I 0.38 x V + 0.88 VOP.SC.I 5.26 x TDA + 15.02 HCT.SC.I 0.56 x TDA + 0.43 SVO.SC.L 4.15 x TDA + 11.51 SVO.RC.L 2.27 x TDA + 6.85 SVO.SC.I 5.27 x TDA + 14.63 VOP.RC.I 2.89 x TDA + 8.7 HZO.SC.I 2.44 x TDA + 9. SVO.RC.I 2.89 x TDA + 8.7 SOC.SC.I 1.38 x TDA + 0.36 HZO.RC.I 0.72 x TDA + 8.74 HCS.SC.I 0.38 x V + 0.88

19EERE-2006-BT-STD-0126 COMMENT 47

C. Energy Savings DOE forecasted energy savings in its na tional energy savings (NES) analysis, through the use of an NES spreadsheet tool, as discussed in the August 2008 NOPR. 73 FR at 50078, 50101-04, 50121.

One of the criteria that governs DOE’s adoption of standa rds for commercial refrigeration equipment is that the standard must result in “significant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 42 U.S. C. 6316(e)(1)) While EPCA does not define the term “significant,” a U.S. Court of A ppeals, in Natural Resources Defense Council v. Herrington , 768 F.2d 1355, 1373 (D.C. Cir. 1985), indi cated that Congress intended “significant” energy savings in th is context to be savings that were not “genuinely trivial.” DOE’s estimates of the energy savings for energy conservation standards at each of the trial standard levels (TSLs) in toda y’s rule indicate that the ener gy savings each would achieve are nontrivial. Therefore, DOE considers these savings “significant” within the meaning of section 325 of EPCA.

D. Economic Justification
1. Specific Criteria As noted earlier, EPCA provides seven factor s to evaluate in determining whether an energy conservation standard for commercial refrigeration equipment is economically justified. (42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1)) The following sections discuss how DOE has addressed each of t hose seven factors in this rulemaking.

20EERE-2006-BT-STD-0126 COMMENT 47

a. Economic Impact on Commercial Customers and Manufacturers DOE considered the economic impact of the new commercial refrigeration equipment standards on commercial customer s and manufacturers. For customers, DOE measured the economic impact as the change in installed cost and lif e-cycle operating costs, i.e. , the LCC. (See sections IV.E and VI.C.1.a , and chapter 8 of the TSD accompanying this notice.) DOE investigated the impacts on ma nufacturers through the ma nufacturer impact analysis (MIA). (See sections IV.I and VI.C.2 , and chapter 13 of the TSD accompanying this notice.) The economic impact on commercia l customers and manufacturers is discussed in detail in the August 2008 NOPR. 73 FR at 50078-79, 50095-50100, 50104-07, 50013-16, 50117-21, 50130-31.

b. Life-Cycle Costs DOE considered life-cycle costs of commerci al refrigeration equipment, as discussed in the August 2008 NOPR. 73 FR at 50078-79, 50095-50100, 50104, 50013-16, 50117-18. DOE calculated the sum of the purchase pri ce and the operating expense—discounted over the lifetime of the equipment—to estimate the range in LCC benefits that commercial consumers would expect to achie ve due to the standards.

c. Energy Savings Although significant conservation of energy is a separate statut ory requirement for imposing an energy conservation standard, EP CA also requires DOE, in determining the economic justification of a proposed standard, to consider the total projected energy savings that are expected to result directly from the standard. ( 42 U.S.C. 6295(o)(2)(B)(i)(III) and

21EERE-2006-BT-STD-0126 COMMENT 47
42 U.S.C. 6316(e)(1)) As in the August 2008 NOPR, 73 FR at 50078, 50101-04, 50121, for today’s final rule DOE used the NES spreadsh eet results in its consideration of total projected savings that are dire ctly attributable to the sta ndard levels DOE considered.

d. Lessening of Utility or Performance of Equipment In selecting today’s standard levels, DOE sought to avoid new standards for commercial refrigeration equipment that would lessen the utility or performance of that equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 42 U.S.C. 6316(e)(1)) 73 FR at 50079, 50088-89, 50123.

e. Impact of Any Lessening of Competition DOE considers any lessening of competition th at is likely to result from standards. Accordingly, as discussed in the August 2008 NOPR, 73 FR at 50079, 50123, DOE requested that the Attorney General transmit to the Secretary a written determination of the impact, if any, of any lessening of competition li kely to result from the proposed standards, together with an analysis of the nature and extent of such impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii) and 42 U.S.C. 6316(e)(1))

To assist the Attorney General in maki ng such a determination, DOE provided the Department of Justice (DOJ) with copies of the August 2008 proposed rule and the TSD for

22EERE-2006-BT-STD-0126 COMMENT 47
review. (DOJ, No. 37 at pp. 1–2) The Attorney General’s response is discussed in section
VI.C.5 below, and is reprinted at the end of this rule. 5

f. Need of the Nation to Conserve Energy In considering standards for commercial refrigeration equi pment, the Secretary must consider the need of the Nation to conserve energy. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 42 U.S.C. 6316(e)(1)) The Secretary recognizes that energy conservation benefits the Nation in several important ways. The non-monetary bene fits of the standards are likely to be reflected in improvements to the security a nd reliability of the Nation’s energy system. Today’s standards also will likely result in environmental benefits. As discussed in the proposed rule, DOE has considered these factor s in adopting today’s standards. 73 FR at 50074, 50079, 50108, 50123-26, 50132.

g. Other Factors EPCA directs the Secretary of Energy, in determining whether a standard is economically justified, to consider any other fact ors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 42 U.S.C. 6316(e)(1)) In adopti ng today’s standard, DOE considered the LCC impacts on the commercial refrigeration equipment of independent, small grocery/convenience store businesses. Compared to the impact of standards on the overall market for commercial refrigeration equipment, the impact of standards on these businesse s might be disproportionate because these businesses

5 A notation in the form “DOJ, No. 37 at pp. 1-2” identifies a written comment that DOE has received and has included in the docket of this rulemaking. This particular notation refers to (1) a comment submitted by the Department of Justice (DOJ), (2) in document number 37 in the docket of this rulemaking, and (3) appearing on pages 1 and 2 of document number 37. 23EERE-2006-BT-STD-0126 COMMENT 47
experience both higher discount rates and lack of access to national account equipment purchases. 73 FR at 50079, 50104, 50117-18.

2. Rebuttable Presumption Section 325(o)(2)(B)(iii) of EPCA states that there is a rebuttable presumption that an energy conservation standard is economically justified if the additional cost to the consumer of a product that meets the standard le vel is less than three times the value of the first-year energy (and as applicable water) savings resulting from the standard, as calculated under the applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)) DOE’s LCC and payback period (PBP) an alyses generate values that calculate the payback period for consumers of potenti al energy conservation standards, which includes, but is not limited to, the three- year payback period contemplated under the rebuttable presumption test discussed above . However, DOE routinely conducts a full economic analysis that considers the full range of impacts, including those to the consumer, manufacturer, Nation, and environment, as required under 42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S.C. 6316(e)(1). The results of this analysis serve as the basis for DOE to definitively evaluate the economic justific ation for a potential standard level (thereby supporting or rebutting the results of any preliminary de termination of economic justification).

IV. Methodology and Discussion of Comments on Methodology DOE used several analytical tools that it developed previously and adapted for use in this rulemaking. One is a spreadsheet that calc ulates LCC and PBP. Another tool calculates national energy savings and national NPV. DOE also used the Government Regulatory 24EERE-2006-BT-STD-0126 COMMENT 47
Impact Model (GRIM), along with other methods , in its MIA. Finally, DOE developed an approach using the National Energy Modeling System (NEMS) to estimate impacts of energy efficiency standards for commercial refr igeration equipment on electric utilities and the environment. The TSD appendices discuss each of these analytical tools in detail. 73 FR
at 50079-108.

As a basis for this final rule, DOE has continued to use the spreadsheets and approaches explained in the August 2008 NOP R. DOE used the same general methodology as applied in the August 2008 NOPR, but revise d some of the assumptions and inputs for the final rule in response to stakeholder comments. The following paragraphs discuss these revisions.

A. Market and Technology Assessment When beginning an energy conservation standards rulemaking, DOE develops information that provides an overall picture of the market for the equipment concerned, including the purpose of the equi pment, the industry structure, and market characteristics. This activity includes both quantitative and qualitative assessments based primarily on publicly available information. DOE presen ted various subjects in the market and technology assessment for this rulemaking. (See the August 2008 NOPR and chapter 3 of the NOPR TSD.) These include equipment defi nitions, equipment classes, manufacturers, quantities and types of equipment sold and o ffered for sale, retail market trends, and regulatory and nonregulatory programs.

25EERE-2006-BT-STD-0126 COMMENT 47

1. Definitions Related to Commer cial Refrigeration Equipment

a. Air-Curtain Angle Definition For equipment without doors, an air curt ain divides the refrigerated compartment from the ambient space. DOE proposed the follo wing definition of air- curtain angle in the August 2008 NOPR that is consiste nt with the industry-approve d standards: “Air-curtain angle means: (1) For equipment without door s and without a discha rge air grille or discharge air honeycomb, the angl e between a vertical line exte nded down from the highest point on the manufacturer’s r ecommended load limit line and th e load limit line itself, when the equipment is viewed in cross-section; a nd (2) For all other equipment without doors, the angle formed between a vertical line and the straight line drawn by c onnecting the point at the inside edge of the discharge air opening with the point at the inside edge of the return air opening, when the equipment is viewed in cross-secti on.” 73 FR 50080; 50135. DOE did not receive any additional comments on the defini tion of air-curtain angle in response to the August 2008 NOPR; thus, DOE is adopti ng these definitions as proposed.

b. Door Angle Definition The door orientation affects the energy c onsumption of equipment with doors. This equipment can be broadly categorized by the angle of the door. In the August 2008 NOPR, DOE proposed the following definition of door angl e: “(1) For equipment with flat doors, the angle between a vertical line and the li ne formed by the plane of the door, when the equipment is viewed in cross- section; and (2) For equipment with curved doors, the angle formed between a vertical line and the strai ght line drawn by connecting the top and bottom points where the display area glass joins the cabin et, when the equipment is viewed in cross26EERE-2006-BT-STD-0126 COMMENT 47
section.” 73 FR 50080; 50135. DOE did not r eceive any additional comments on the definition of door angle in response to th e August 2008 NOPR; thus, DOE is adopting the definition as proposed.

c. Ice-Cream Freezer Definition During the NOPR public meeting, interested parties expressed concern about the definition of an “ice-cream freezer” as used in this rulemaking. Hussman stated that using the term “ice cream” to refer to a temperature range might be confusing because ice cream is also a product. (Hussman, Public Meeting Transcript, No. 27 at p. 15) 6 Southern Store Fixtures expressed a similar conc ern, adding that other types of frozen items, such as frozen juice, may be displayed in ice-cream type cas es. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 18)

As described in the July 2007 ANOPR, th e EPCA provision that required this rulemaking identifies specifically the categ ories “ice-cream freezer s,” “self-contained commercial refrigerators, freezers, and refrig erator-freezers without doors,” and “remote condensing commercial refrigerators, freezers, and refrigerator-freezers.” (42 U.S.C. 6313(c)(4)(A), added by EPACT 2005, section 136(c)) Because the term “ice-cream freezers” was specified in EPCA, the term “ice cream” is appropriate to describe that

6 A notation in the form “Hussman, Public Meeting Transcri pt, No. 27 at p. 15” identifies an oral comment that DOE received during the September 23, 2008, NOPR pu blic meeting. This comment was recorded in the public meeting transcript in the docket for this ru lemaking (Docket No. EE-2006-STD-0126), maintained in the Resource Room of the Building Technologies Program . This particular notation refers to a comment (1) made during the public meeting by Hussman; (2) recorded in document number 27, which is the public meeting transcript filed in the docket of this rulemaking; and (3) appearing on page 15 of document number 27. 27EERE-2006-BT-STD-0126 COMMENT 47
specific equipment category in this rulemaking, and DOE is therefore maintaining the use of that term in the rulemaking. Also, see section IV.A.2 of this final rule.

d. Equipment Configuration Definitions The configuration of commercial refrigeration equipment affects its energy consumption and the equipment classes into wh ich this equipment is divided. In the August 2008 NOPR, DOE proposed five definitions of equipment configurations, shown in Table
IV-1 . 73 FR 50081; 50135.

Table IV-1 Equipment Configuration Definitions Equipment Family Description Vertical Open (VOP) Equipment without doors and an air-curtain angle ≥ 0 degrees and < 10 degrees from the vertical. Semivertical Open (SVO) Equipment without doors and an air-curtain angle ≥ 10 degrees and < 80 degrees from the vertical. Horizontal Open (HZO) Equipment without doors and an air-curtain angle ≥ 80 degrees from the vertical. Vertical Closed (VC) Equipment with hinged or sliding doors and a door angle < 45 degrees. Horizontal Closed (HC) Equipment with hinged or sliding doors and a door angle ≥ 45 degrees.

DOE did not receive any a dditional comments on the definitions of the five configurations; thus, DOE is adopting these definitions as proposed.

e. Hybrid and Wedge Case Definitions As stated in the August 2008 NOPR, certain types of equipment meet the definition of “commercial refrigerati on equipment” (Section 136(a)(3 ) of EPACT 2005), but do not fall directly into any of the 38 equipment cl asses defined in the market and technology assessment. Among these types are hybrid cases and wedge cases; DOE proposed

28EERE-2006-BT-STD-0126 COMMENT 47
definitions for these in the August 2008 NOPR. Because DOE did not receive any additional comments on the definitions of “commercial hybridrefrigerators, freezers, and refrigeratorfreezers” or on the definition of “wedge cas e,” DOE is adopting these definitions as proposed in section 431.62.

2. Equipment Classes Commercial refrigerators, commercial freezers, and comme rcial refrigerator-freezers can be divided into various equipment classes categorized largely by phys ical characteristics that affect energy efficiency. Some of thes e characteristics delineate the categories of equipment covered by this rulemaking. 7 Most affect the merchandise that the equipment can be used to display and how the customer can access that merchandise. Key physical characteristics that affect energy efficiency are the operating temperature, the presence or absence of doors (i.e. , closed cases or open cases), the type of doors used (i.e. , transparent or solid), the angle of the d oor or air-curtain (i.e. , horizontal, semivertical, or vertical), and the type of condensing unit (i.e. , remote or self-contained). As discussed in the August 2008 NOPR, 73 FR 50080-83, DOE is adopting equipmen t classes in this rulemaking by: (1) dividing commercial refrigerat ors, commercial freezers, a nd commercial refrigeratorfreezers into equipment families; (2) subdivi ding these families based on condensing unit configurations and rating temperature designations; and (3) identifying the resulting classes that are within each of the three equipment categories covered by this rulemaking. Because

7 “Commercial refrigerators, commercial freezers, and commercial refrigerator-freezers” is a type of covered commercial equipment. For purposes of discussion only in this proceeding, DOE uses the term “categories” to designate groupings of “comm ercial refrigeration equipment.” The categor ies of equipment are: self-contained commercial refrigerators, commercial freezers, and commercial refrigerato r-freezers without doors; remote condensing commercial refrigerators, commercial fr eezers, and commercial refrigerator-freezers; and commercial ice-cream freezers. DOE w ill analyze specific equipment classes that fall within these general categories and set appropriate standards. 29EERE-2006-BT-STD-0126 COMMENT 47
DOE did not receive any comments in response to the presentation of equipment classes in the August 2008 NOPR, DOE is a dopting the equipment classes as proposed without further modification. Table IV-2 presents the equipment classes covered under this rulemaking, organized by the three equipment categories.

30EERE-2006-BT-STD-0126 COMMENT 47
Table IV-2 Commercial Refrigeration Equipment Classes by Category

Equipment

Category Condensing Unit Configuration Equipment Family Operating Temperature (°F) Equipment Class Designation ≥ 32 VOP.RC.M Vertical Open < 32 VOP.RC.L ≥ 32 SVO.RC.M Semivertical Open < 32 SVO.RC.L ≥ 32 HZO.RC.M Horizontal Open < 32 HZO.RC.L ≥ 32 VCT.RC.M Vertical Closed Transparent < 32 VCT.RC.L ≥ 32 HCT.RC.M Horizontal Closed Transparent < 32 HCT.RC.L ≥ 32 VCS.RC.M Vertical Closed Solid < 32 VCS.RC.L ≥ 32 HCS.RC.M Horizontal Closed Solid < 32 HCS.RC.L ≥ 32 SOC.RC.M Remote Condensing Commercial Refrigerators, Commercial Freezers, and CommercialRefrigeratorFreezers Remote

Service Over Counter < 32 SOC.RC.L ≥ 32 VOP.SC.M Vertical Open < 32 VOP.SC.L ≥ 32 SVO.SC.M Semivertical Open < 32 SVO.SC.L ≥ 32 HZO.SC.M Self-Contained

Commercial Refrigerators, Commercial Freezers, and CommercialRefrigeratorFreezers without Doors Self-Contained Horizontal Open < 32 HZO.SC.L Vertical Open VOP.RC.I Semivertical Open SVO.RC.I Horizontal Open HZO.RC.I Vertical Closed Transparent VCT.RC.I Horizontal Closed Transparent HCT.RC.I Vertical Closed Solid VCS.RC.I Horizontal Closed Solid HCS.RC.I Remote

Service Over Counter SOC.RC.I Vertical Open VOP.SC.I Semivertical Open SVO.SC.I Horizontal Open HZO.SC.I Vertical Closed Transparent VCT.SC.I Horizontal Closed Transparent HCT.SC.I Vertical Closed Solid VCS.SC.I Horizontal Closed Solid HCS.SC.ICommercial IceCream Freezers

Self-Contained

Service Over Counter ≤ -5*

SOC.SC.I * Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer desi gned to operate at or below -5 °F (-21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.

31EERE-2006-BT-STD-0126 COMMENT 47

B. Engineering Analysis The engineering analysis develops cost -efficiency relations hips to show the manufacturing costs of achiev ing increased efficiency. As discussed in the August 2008 NOPR, DOE used the design-option approach, i nvolving consultation with outside experts, review of publicly available cost and performance information, and modeling of equipment cost and energy consumption. 73 FR 50083-50093. Chapter 5 of the NOPR TSD contained detailed discussion of the engineering anal ysis methodology. In response to the August 2008 NOPR, DOE received a number of comments on the engine ering analysis methodology. These comments, and DOE’s response, are detailed in the following paragraphs.

1. Approach For the NOPR, DOE adopted a design-options approach for the engineering analysis. The methodology DOE used to perform the design- option analysis is described in detail in chapter 5 of the TSD. DOE used industry-s upplied data, which were developed using an efficiency-level approach, to validate DOE data. DOE received no further comments on the design-options approach and, as a result, made no changes to this methodology for the final rule.

2. Analytical Models

a. Cost Model In the engineering analysis, DOE establis hes the relationship between manufacturer production cost and energy consumption for the commercial refrigeration equipment

32EERE-2006-BT-STD-0126 COMMENT 47
covered in this rulemaking. In determining th is relationship, DOE estimated the incremental manufacturer production costs associated with te chnological changes that reduce the energy consumption of the baseline models (i.e. , design options).

During the NOPR public meeting, the Amer ican Council for an Energy-Efficient Economy (ACEEE) stated that DOE’s method of estimating manufacturer production costs based on a snapshot analysis of available engi neering options is flaw ed, because historical data for other building technologies show that incremental costs of complying with standards have been much lower than DOE estimated. ACEEE attributed this to manufacturers redesigning their processes to meet new energy conservation standards. (ACEEE, Public Meeting Transcript, No. 27 at p. 28) AHRI disagreed with ACEEE and cited the residential central air-conditioner ru lemaking as an example of where the actual cost of equipment was much higher than DOE estimated. (AHRI, Public Meeting Transcript, No. 27 at p. 29) However, ACEEE responded that this was because commodity prices increased dramatically for that equipment and that once this was accounted for, the observed price increase in baseline residentia l air-conditioner units was 2 percent lower than DOE’s estimate. (ACEEE, Public Meeting Tran script, No. 27 at p. 30) Appliance Standards Awareness Project (ASAP) added th at a retrospective analysis would be useful for helping DOE evaluate its model for predicting costs. (ASAP, Public Meeting Transcript, No. 27 at p. 31) ACEEE also commented that DOE’s model for assessing the cost and value of energy conservation standards is flawed, because th e model fails to account for manufacturer learning curves. Over time, the price of most equipment drops as more units are produced, regardless of the efficiency standards placed on them. Therefore, DOE’s assumption that

33EERE-2006-BT-STD-0126 COMMENT 47
greater efficiency standards will cause equipm ent prices to increase is not valid. (ACEEE, No. 31 at p. 1) A comment submitted by repres entatives of ACEEE, Appliance Standards Awareness Project, Alliance to Save Ener gy, California Energy Commission, Natural Resources Defense Council, Northeast Energy Efficiency Partnerships, Northwest Power and Conservation Council, Pacific Gas and Electric Company, Sempra Energy Utilities, and Southern California Edison (her eafter referred to as the Joint Comment) agreed with ACEEE that DOE’s engineering analysis me thodology should take manufacturer learning curves into account. (Joint Comment, No. 34 at p. 6)

The cost-efficiency curves that DOE presented in the NOPR TSD showed incremental costs of implementing design opt ion changes above the baseline. The costefficiency curves are not intended to capture fu ture economies of scale, or other related cost reductions that may or may not result from increased cumulative production over time. DOE acknowledges that manufacturing efficiency evol ves over time, but notes that earlier trends do not necessarily reflect future trends. DOE ha s insufficient data to project final minimized unit costs of newer technologies. DOE believes that thorough and rigorous manufacturing cost analysis based on actual equipment at all e fficiency levels represents the most effective and appropriate way to estimate current and near-term incremental manufacturing costs. Therefore, DOE has used available informa tion on existing design options in the costefficiency analysis. i. LED Price Projections DOE estimates the economic impacts of th e proposed standards based on current costs of technologically feas ible energy saving design op tions used in commercial

34EERE-2006-BT-STD-0126 COMMENT 47
refrigeration equipment. One such technology, which has been a focal point in this rulemaking, is solid-state lighting (i.e. , LEDs). For the ANOPR, DOE based LED lighting costs on a retrofit case study, but revised its assumptions for the NOPR after gathering information from LED chip and fixture manufact urers. These changes caused the original equipment manufacturer (OEM) cost (i.e. , the cost to commercial refrigeration equipment manufacturers) of LED fixt ures to increase for both ope n refrigeration cases and refrigeration cases with transparent doors. Based on these revised costs, DOE tentatively rejected TSL 5 (i.e. , the efficiency level where LEDs were first implemented for most equipment classes) because it was not economically feasible.

However, DOE conducted a sensitivity analysis for the NOPR to gauge the effect of expected LED price reductions. That anal ysis estimated NPV and LCC values for equipment classes if projected LED prices we re used in DOE’s analysis. DOE’s Multi-Year Program Plan was used to estimate the reduction in LED chip price by 2012. 8 The sensitivity analysis used an estimated reduc tion in LED chip price of 80 percent by 2012, which represented a 50-percent reduction in overall LED system cost, assuming the costs of the power supply and LED fixtures did not change significantly from the values used in the engineering analysis. DOE recogni zed that if these projected re ductions were to be realized or exceeded, the economic impacts of this standard could change significantly, possibly making higher TSLs economically justified. Therefore, in the NOPR, DOE requested

8 U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY’09–FY’14. This document was prepared under the direction of a Technical Committee from the Next Generation Lighting Initiative Alliance (NGLIA). Informat ion about NGLIA and its members is available at www.nglia.org. 35EERE-2006-BT-STD-0126 COMMENT 47
comment on all aspects of the LED issue, specifically soliciting any information or data that could increase confidence in the price projections.

DOE received several comments. ASAP , Natural Resources Defense Council (NRDC), Earthjustice, and th e Joint Comment all expresse d support for the use of DOE LED price projections. They stated that the pr ojections are sufficiently justified and would be a more adequate basis for the standard th an the assumption that LED prices will remain constant at 2007 levels. (ASA P, No. 27 at p. 100; NRDC, Pub lic Meeting Transcript, No. 27 at p. 105; Earthjustice, Public Meeting Transcript, No. 27 at p. 106; Joint Comment, No. 34 at p. 2) Pacific Gas and Electric Company, Southern California Edison, and Sempra Energy Utilities (Southern California Gas and San Diego Gas and Electric Company) (hereafter the California Utilities Joint Comm ent) suggested that the DOE projections might be too conservative. (California Utilities Joint Comment, No. 41 at p. 3) ACEEE agreed, attributing this underestimation to the exclus ion of scale-dependent factors. ACEEE stated that as LED production scales up, there will be greater pr ice reductions and increased quality in terms of reproducibility. (ACEEE, N o. 31 at p. 7 and Public Meeting Transcript, No. 27 at p. 111) As evidence of the validity of DOE LED cost projections, the California Utilities Joint Comment stated that LED pr ices have already dropped rapidly, rendering DOE analyses based on 2007 prices obsolete. It suggested that the price of LED lighting for use in refrigeration has already fallen by r oughly 10 percent since 2007. (California Utilities Joint Comment, No. 41 at p. 13) The California Utilities Joint Comment also stated that LED prices will continue to drop after 2012, a fa ct that should be considered in the NPV analyses. (California Utilities Joint Comment, No. 41 at p. 8)

36EERE-2006-BT-STD-0126 COMMENT 47

For today’s final rule, DOE updated the LED costs to represent the current cost of LEDs. DOE did not receive any da ta providing a greater level of confidence that LED price reductions would occur. However, LED costs have decreased and the costs used in the NOPR engineering analysis no longer repr esent the current cost of LEDs. While considerable information is available that sugg ests LED prices are likely to decline by at least as much as DOE’s sensitivity analysis assumed, DOE is not using this information as the basis of its analysis due to a lack of certainty about the timi ng and success of LED research and product development. See section V.A.2.a for more detail on the updated LED lighting assumptions.

ii. Material Price Projections As discussed in the August 2008 NOPR, DO E performed a sensitivity analysis to explore the effects of future LED fixture prices on commercial refrigeration equipment prices in the engineering an alysis. During the NOPR public meeting, AHRI commented that if DOE were to include LED price projections in the technical analys es, equivalent actions should be taken for other materials that also have shown recent price variability (i.e. , refrigerants). (AHRI, Public Meeting Transcript, No. 27 at p. 102) AHRI believes commodity prices are likely to change significantly, which would affect equipment costs and change efficiency trends. AHRI cited the potential change in costs of hydrofluorocarbon refrigerants (HFCs) if pending legislation capping those refri gerants is passed. (AHRI, No. 33 at p. 3) True Manufacturing Company (True) added that the indus try is already using

37EERE-2006-BT-STD-0126 COMMENT 47
cheaper, less efficient substitute materials to produce heat transfer devices in response to rising copper prices. (True, Public Meeting Transcript, No. 27 at p. 104)

As stated above, DOE did not use LED price projections in the final rule due to a lack of certainty about the timing and extent to which the projections would be realized. Similarly, DOE also did not incl ude material price projections in the final rule analysis.

b. Energy Consumption Model The energy consumption model estimates the daily energy consumption of commercial refrigeration equipment at various performance levels using a design-options approach. The model is specific to the cat egories of equipmen t covered under this rulemaking, but is sufficiently generalized to model the energy consumption of all covered equipment classes. For a given equipment class, the model estimates the daily energy consumption for the baseline and the energy cons umption of several le vels of performance above the baseline. The model is used to cal culate each performance level separately. For the NOPR, DOE updated its radia tion load calculati ons by revising its assumptions for the view factor and changed its calculation method for infiltra tion load by replacing defrost melt-water with infiltrated air. 73 FR 50086. No comments were received in response to these changes. Therefore, DOE maintained th ese revised calculation methodologies for the final rule.

38EERE-2006-BT-STD-0126 COMMENT 47

3. Equipment Classes Analyzed For the final rule, DOE did not make any ch anges to the equipment classes directly analyzed in the NOPR engineering analysis. Table IV-3 shows the 15 equipment classes DOE directly analyzed.

Table IV-3 Equipment Classes Directly Analyzed in the Engineering Analysis Equipment Class Description VOP.RC.M Vertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature VOP.RC.L Vertical Freezer without Doors with a Remote Condensing Unit, Low Temperature SVO.RC.M Semivertical Refrigerator without Doors with a Remote Condensing Unit, Medium Temperature HZO.RC.M Horizontal Refrigerator withou t Doors with a Remote Condensing Unit, Medium Temperature HZO.RC.L Horizontal Freezer without Doors with a Remote Condens ing Unit, Low Temperature VCT.RC.M Vertical Refrigerator with Tran sparent Doors with a Remote Condensing Unit, Medium Temperature VCT.RC.L Vertical Freezer with Transparent Doors with a Remote Condensing Unit, Low Temperature SOC.RC.M Service Over Counter Refrigerator with a Remote Condensing Unit, Medium Temperature VOP.SC.M Vertical Refrigerator without Doors with a Sel f-Contained Condensing Unit, Medium Temperature SVO.SC.M Semivertical Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature HZO.SC.M Horizontal Refrigerator without Doors with a Self-Contained Condensing Unit, Medium Temperature HZO.SC.L Horizontal Freezer without Do ors with a Self-Contained Cond ensing Unit, Low Temperature VCT.SC.I Vertical Ice-Cream Freezer with Transparent Do ors with a Self-Contained Condensing Unit, IceCream Temperature VCS.SC.I Vertical Ice-Cream Freezer with Solid Doors with a Self-Contained Cond ensing Unit, Ice-Cream Temperature HCT.SC.I Horizontal Ice-Cream Freezer with Transparent Do ors with a Self-Contain ed Condensing Unit, IceCream Temperature

4. Wedge Cases In the August 2008 NOPR, DOE considered remote condensing and self-contained wedge cases as covered equipment. 9 DOE proposed that the calculated daily energy consumption (CDEC) or total daily energy cons umption (TDEC) be measured according to

9 If a wedge case does not include a refrigeration co mponent and simply serves as a miter transition piece between two other cases, then it does not meet the definitio n of commercial refrigeration equipment, and is not covered under this rulemaking. 39EERE-2006-BT-STD-0126 COMMENT 47
the ANSI/ASHRAE Standard 72-2005 test procedure. 10 DOE also proposed that the maximum daily energy consumption (MDEC) for each model shall be the amount derived by incorporating into the standa rds equation for the appropriate equipment class a value for the TDA that is the product of: (1) the vertic al height of the air curtain or glass (in a transparent door), and (2) the largest overall wi dth of the case when viewed from the front. 73 FR 50113. In the NOPR, DOE sought comment re garding appropriate standard levels for wedge cases, but did not receive any comments on this specific proposal.

Hussman, Hill Phoenix, and AHRI commented that wedge cases should be excluded from this rulemaking because they are niche products that do not represent a significant part of the commercial refrigeration industry. (Hu ssman, No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI, No. 33 at p. 5) Hill Phoenix further states that most supermarkets and grocery stores do not use wedge cases at all, and thos e that do will only us e a few within a store because they are much more expensive per linear foot than a standard case. (Hill Phoenix, Public Meeting Transcript, No. 27 at p. 18) Hussm an further states that wedge cases use less than 0.5 percent of the total energy consumed by the supermarket industry and represent only 1.5 percent of the cases shipped. (Hu ssman, No. 42 at p. 2) DOE acknowledges that wedge cases are niche equipment and do not re present a significant market share in the commercial refrigeration equipment industry. Ho wever, market share is not a basis for

10 In the August 2008 NOPR, the test procedure cited was ANSI/ASHRAE Standard 72-2005. However, the test procedure DOE adopted into section 431.64 of 10 CFR Part 431 is ARI Standard 1200-2006, which specifically references ANSI/ASHRAE Standard 72-2005 as the method of testing commercial refrigeration equipment. 71 FR 71356 DOE notes that ARI Standard 1200-2006 would give identical test results for the measurement of energy consumption as ANSI/ASHRAE Standard 72-2005. Therefore, for today’s final rule, DOE is referencing ARI Standard 1200-2006 for th e measurement of CDEC and TDEC of wedge cases. 40EERE-2006-BT-STD-0126 COMMENT 47
rejecting an equipment category from consid eration in the rulemaking. Therefore, DOE concludes that wedge cases ar e covered in this rulemaking.

Hill Phoenix and AHRI also commented that wedge cases should be excluded from this rulemaking because there are no test pr ocedures in place to test wedges since ARI Standard 1200-2006 excludes wedges from its scope of coverage. (Hill Phoenix, No. 32 at p. 2; AHRI, No. 33 at p. 5) As stated in th e July 2007 ANOPR, EPCA directs DOE to set standards for commercial refrigeration equipment (i.e. , the three categor ies of equipment identified above). Any equipment that m eets the EPCA definiti on of a “commercial refrigerator, freezer, or refrig erator-freezer” and falls under one of these three categories will be covered by this rulemaking. In the December 2006 final rule, DOE incorporated by reference certain sections of ARI Standard 1200-2006 as the test procedure for commercial refrigeration equipment, but did not reference section 2.2, wh ich provides exclusions for certain equipment such as wedge cases. 11 The equipment excluded in this section of ARI Standard 1200-2006 will only be excluded from this rulemaking if they do not meet the EPACT 2005 definition of a “comm ercial refrigerator, freezer , or refrigerator-freezer.” 12 72 FR 41169 DOE believes that the EPACT 2005 definition of a “commercial refrigerator,

11 ARI Standard 1200-2006 refers to wedge cases as “miter transition displa y merchandisers used as a corner section between two refrigerated display merchandisers.” 12 “(9)(A) The term ‘commercial refrigerator, freezer, and refrigerator-freezer’ m eans refrigeration equipment that— (i) is not a consumer product (as defined in section 321of EPCA [42 U.S.C. 6291(1)]); (ii) is not designed and marketed exclusively for medical, scientific, or research purposes; (iii) operates at a chilled, frozen, combinatio n chilled and frozen, or variable temperature; (iv) displays or stores merchandise and other perishable materials horizontally, semivertically, or vertically; (v) has transparent or solid doors, sliding or hinged doors, a combination of hinged, sliding, transparent, or solid doors, or no doors; (vi) is designed for pull-down temperature applications or holding temperature applications; and (vii) is connected to a self-contained condensing unit or to a remote condensing un it.” (42 U.S.C. 6311(9)(A))

41EERE-2006-BT-STD-0126 COMMENT 47
freezer, or refrigerator-freezer” is sufficiently broad that it includes wedge cases. Therefore, DOE has concluded that wedge cases are properly covered in this rulemaking.

Hussman, Hill Phoenix, and AHRI also commented that wedge cases should be excluded from this rulemaking because they do not function effectively and cannot be tested as a stand-alone merchandiser since they requir e straight cases of the same model on either side. This configuration makes accurate perf ormance testing of wedges nearly impossible and no specific testing guidelines for wedge s exist within ANSI/ASHRAE Standard 72- 2005 or ANSI/ARI Standard 1200-6006. (Hussman, No. 42 at p. 2; Hill Phoenix, No. 32 at p. 6; AHRI, No. 33 at p. 5) DOE acknowledges that there is no specific guidance in the ANSI/ASHRAE Standard 72-2005 or ARI Sta ndard 1200-2006 test procedures that addresses the proper operation of wedge cases. However, DOE believes that wedge cases are not significantly different from normal displa y cases used in between other display cases (i.e. , cases within a display case line-up) in terms of operation and the ability to be tested. A wedge case and a normal case within a display ca se line-up both have display cases adjacent to them in normal operation and do not have end panels installed on their sides. DOE expects that wedge cases and cases within a display case line-up shoul d be tested in the same manner under the test procedure.

Hussman and Hill Phoenix also commente d that wedge cases should be excluded from this rulemaking because the TDA for in side wedges approaches zero. Therefore, standards for such cases are not meaningful because the TDA in the standards equation is zero. (Hussman, Public Meeting Transcript, N o. 27 at p. 16; Hill Phoenix, Public Meeting

42EERE-2006-BT-STD-0126 COMMENT 47
Transcript, No. 27 at p. 19) As stated a bove, DOE proposed language in the August 2008 NOPR to specifically address the TDA issue of wedge cases. DOE proposed that for remote condensing and self-contained wedge cases, the CDEC or TDEC shall be measured according to the ANSI/ASHRAE Standard 72-2005 Test Procedure. DOE also proposed that the MDEC for each model shall be the amount derived by incorporating into the standards equation for the appropriate equipment class a value for the TDA that is the product of: (1) the vertical height of the ai r curtain or glass (in a transp arent door), and (2) the largest overall width of the case, when viewed from the front. 10 73 FR 50113. (See section VI.A.1 .) This procedure is conservative because it allows for the widest horizontal dimension of the display case to be used in determining TDA. Th at is, using this procedure, the standards for a wedge case would be less stringent than a normal display case, in the same equipment class, of equal refrigerated volume.

If a manufacturer finds that meeting th e standard for wedge cases would cause hardship, inequity, or unfair distribution of burdens, the manufacturer may petition OHA for exception relief or exemption from the standa rd pursuant to OHA’s authority under section 504 of the DOE Organization Act (42 U.S.C. 71 94), as implemented at subpart B of 10 CFR part 1003. OHA has the authority to grant such re lief on a case-by-case basis if it determines that a manufacturer has demonstrated that meeting the standard would cause hardship, inequity, or unfair di stribution of burdens.

43EERE-2006-BT-STD-0126 COMMENT 47

5. Ice-Cream Freezers—Temperature Range In the test procedure final rule for commercial refrigeration equipment, DOE established the definition of ice-cream freezer as “a commercial freezer that is designed to operate at or below -5 °F (-21 °C) and that th e manufacturer designs, ma rkets, or intends for the storing, displaying, or disp ensing of ice cream.” 71 FR 71369-70. DOE incorporated the test procedure into its regulations in 10 CF R 431.62. Under this definition, unless equipment is designed, marketed, or inte nded specifically for the storage, display or dispensing of ice cream, it would not be considered an ice- cream freezer. For example, multi-purpose commercial freezers manufactured for storing and di splaying frozen foods in addition to ice cream and designed to operate at or below -5 °F (-21 °C) would not meet this definition. Thus, DOE would not treat them as commerc ial ice-cream freezers in this rulemaking. However, any commercial freezer that is speci fically manufactured for storing, displaying, or dispensing ice cream and is designed for normal operation at or below -5 °F, would meet the definition. Other equipment that meet the definition include freezer s designed to operate considerably below -5 °F and are specif ically designed for ice cream storage (e.g. , “hardening” cabinets), as well as ice-cream dipping cabinets designed to operate below -5 °F. For the NOPR, DOE expanded the defini tion used to categor ize a unit’s rating temperature by including a specific operating temperature range for medium-temperature, low-temperature, and ice-cream temperature applications.

Hill Phoenix and AHRI commented on the proposed temperature ranges for lowtemperature and ice-cream temperature freezers . Hill Phoenix, in agreement with AHRI, stated that the operating range for low-temperat ure cases should be changed to less than 32

44EERE-2006-BT-STD-0126 COMMENT 47
°F and greater than -15 °F, and the operati ng range for ice-cream temperature cases be changed to less than or equal to -15 °F. H ill Phoenix and AHRI stated that freezers that operate below -15 °F are constructe d differently than cases that ope rate in the -5 °F to -10 °F range. Hill Phoenix stated that DOE’s current temperature range desi gnations would require freezers that operate in the -5 °F to -10 °F ra nge to be rated at -15 °F. (Hill Phoenix, No. 32 at p. 4; AHRI, No. 33 at p. 4)

As previously stated, ice-cream freezers ar e defined by the test procedure, which states that an ice-cream freezer is “a commercia l freezer that is designe d to operate at or below -5 °F (-21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice crea m.” 71 FR 71369; 10 CFR 431.62. Based on the comments from AHRI and Hill Phoenix discus sed above, DOE is modifying the operating temperature ranges used to define each type of equipment from the temperature ranges that were used in the NOPR. For today’s final ru le, DOE is organizing equipment classes based on the three operating temp erature ranges shown in Table IV-4 . For today’s final rule, DOE will continue to classify equipment as medium temperature (refrigerators), low temperature (freezers), or ice-cream temperature (ice-cr eam freezers). Furthermore, DOE maintains the required rating temperatures as specified in the test procedure final rule: 38 °F (±2 °F) for commercial refrigerators and refrigerator co mpartments, 0 °F (±2 °F) for commercial freezers and freezer compartments, and -15 °F (±2 °F) for commercial ice-cream freezers.
71 FR 71370.

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Table IV-4 Rating Temperature Designations Operating Temperature (°F) Rating Temperature (°F) Description ≥ 32 (M) 38 Medium temperature (refrigerators) < 32 (L) 0 Low temperature (freezers) ≤ -5 (I)* -15 Ice-cream te mperature (ice-cream freezers) * Ice-cream freezer is defined in 10 CFR 431.62 as a commercial freezer that is designed to operate at or below -5 °F (-21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.

6. Special Application Temperature Cases After the NOPR public meeting, DOE recei ved comments on including “application temperatures” for commercial refrigeration e quipment. These are rating temperatures other than the standard rating temperatures. Hill Phoe nix stated that some refrigerated cases are designed for and operate at medium temp erature and hold foods with temperature requirements that tend to range from10 °F to 20 °F. These cases are not designed to operate at the rating temperature of 0 °F. Hill Phoenix al so stated that the cases would have to be redesigned to operate at the rating temperature, which would cause them to consume more energy. Therefore, Hill Phoenix recommended that this type of product be tested using the application temperature at whic h the product is designed to perf orm, but be required to meet the low-temperature standard. (Hill Phoeni x, No. 32 at p. 4) AHRI concurred with Hill Phoenix, recommending that any case designed specifically to hol d products at temperatures higher than the rating temperatur e specified for that class be tested at its application temperature and must meet the energy standa rds of that class. ( AHRI, No. 33 at p. 5) However, the Joint Comment cautioned that rating specialty cases at application temperatures could create loopholes allowing eq uipment to be tested at an application temperature different from the temperature at which the equipment is designed to operate in the field. (Joint Commen t, No. 34 at p. 4)

46EERE-2006-BT-STD-0126 COMMENT 47
In the test procedure final rule for commercial refrigeration equipment, DOE adopted ARI Standard 1200-2006 as the DOE test procedure for commer cial refrigeration equipment. 71 FR 71340, 71369-70; 10 CF R 431.63-431.64. ANSI/ARI Standard 1200– 2006 contains rating temperature specifica tions of 38 °F (±2 °F) for commercial refrigerators and refrigerator compartments, and 0 °F (±2 °F) for commercial freezers and freezer compartments. In the test procedure fi nal rule, DOE also adopted a -15 °F (±2 °F) rating temperature for commercial ice-cream freezers. 71 FR 71370.

Requiring manufacturers to test special applic ation cases at one of the three specified standard rating temperatures (38 ° F, 0 ° F, and -15 ° F) instead of at their corresponding application temperature could result in higher ener gy consumption for these cases if they have to be redesigned for tes ting at the standard rating temp erature. However, DOE agrees with the Joint Comment that allowing such special application cases to be tested at an application temperature that is different from the temperatur e at which the equipment is designed to operate in the fiel d could create loopholes. Theref ore, DOE is maintaining the requirement that all equipment must be tested at one of the three sp ecified standard rating temperatures adopted by DOE in the test procedure final rule. In the example from Hill Phoenix, the equipment is classified as a me dium-temperature unit, but the equipment is designed to operate below 32 °F and above -5 °F, thus categorizing it as a low-temperature unit under today’s final rule. Because it is a low-temperature unit, it is required to be tested at 0 °F (±2 °F).

47EERE-2006-BT-STD-0126 COMMENT 47
Any manufacturer that is una ble to test such equipmen t at its designated rating temperature must request a test procedure waiv er from DOE under the provisions described in 10 CFR 431.401. If the manufacturer believe s that meeting the standard would cause hardship, inequity, or unfa ir distribution of burdens, it may petition OHA for exception relief from the energy conservation standard pursuant to OHA’s authority under section 504 of the DOE Organization Act (42 U.S.C. 7194), as implemented at subpart B of 10 CFR part 1003. However, the majority of equipment cove red by this rulemaking can be tested using the three specified rating temperatures provided in the test procedure.

7. Coverage of Remote Condensing Units In the framework document, ANOPR, and NOPR, DOE considered energy conservation standards that covered only th e refrigerated cases of remote condensing commercial refrigeration equipment, and not the remote condensing unit. DOE cited language in EPACT 2005’s defi nitions for “self contained condensing unit” and “remote condensing unit” as a justification for this a pproach. DOE believes that, by definition, the remote condensing units that support remote condensing refrigeration equipment are not considered an “integral part” of the refrigeration equipment. (EPACT 2005, Section 136(a)(3)) As a result, DOE stated in the Augus t 2008 NOPR that remote condensing units would not be considered in this rulemaking.

For the NOPR, the Joint Comment stated th at the scope of this rulemaking should not be limited to the refrigerated cabinets or display cases of remote condensing systems. According to the Joint Comment, regulating the remote condensing units supporting these

48EERE-2006-BT-STD-0126 COMMENT 47
cabinets has a significant potenti al to save energy because these units account for 90 percent of the total capacity of commercial refrig eration equipment subject to this rulemaking,. (Joint Comment, No. 34 at p. 7)

As stated in the framework document and the July 2007 ANOPR, DOE does not believe that the remote condensing units of remote condensing refrigeration equipment systems are considered part of the equipment to which they are connected. EPCA defines a “self-contained condensing unit,” in part, as an “assembly of refrigerating components that is an integral part of the refrigerated equipment ...” (42 U.S.C. 6311(9)(F), added by EPACT 2005, section 136(a)(3)). EPCA also defi nes a “remote condensing unit,” in part, as an “assembly of refrigerating components that is remotely located from the refrigerated equipment ...” (42 U.S.C. 6311(9)(E), adde d by EPACT 2005, sect ion 136(a)(3)) The EPCA definition of remote condensing unit imp lies that the remote condensing unit is not part of the refrigeration equipment because it refers to the unit and the refrigeration equipment as separate entities. A remote c ondensing unit functions as a supplement to remote condensing refrigeration equipment, but is not an “integral part.” Therefore, energy conservation standards for remote condens ing commercial refrigerators, commercial freezers, and commercial refrigerator-freezers ap ply only to the refrigerated equipment (i.e ., storage cabinets and display cases), but not to the remote condensing units. For the final rule, DOE maintains that the energy conser vation standards set fo r remote condensing commercial refrigeration equipment only appl y to display cases, not to the remote condensing units.

49EERE-2006-BT-STD-0126 COMMENT 47
However, DOE has the authority to classify industrial or commercial equipment as covered under EPCA section 341(a) and (b), if classification is “necessary” to improve the efficiency of industrial equipment (which incl udes commercial refrigeration equipment) in order to conserve energy. (42 U.S.C. 6312( a) and (b)) If DOE were to add remote condensing units as covered equipment, DOE would undertake a separate rulemaking process to consider standards for these produc ts in accordance with EPCA section 341(a) and (b).

8. Regulating Secondary Cooling Applications In the framework document, DOE decide d to exclude equipment designed for secondary coolant applications. DOE’s interp retation of the EPACT 2005 definitions of “commercial refrigerator, freezer, and refrigerator-freezer” was consistent with the ARI Standard 1200-2006, which explicitly excludes secondary coolant ap plications. Following the framework document, many interested part ies, including ARI, Southern Company, and EEI, agreed with the exclusion of secondary coolant applications in this rule because of their insignificant presence in the market and the co mplexity of modifying the test procedure to accommodate them. ACEEE, on the other hand, commented that DOE should have a broad scope of coverage and should, in general, c over as much as possible in the rulemaking. 72
FR 41171.

After considering the framework comments, DOE decided to continue to exclude secondary coolant applications from this rulemaking in the July 2007 ANOPR. Following the ANOPR, commercial refrigeration manufacturer s expressed concerns that the exclusion

50EERE-2006-BT-STD-0126 COMMENT 47
of secondary coolant systems could provide a loophole if customers purchased these lower efficiency systems instead of regulated direct expansion equipment. 73 FR 50106. For the NOPR, the Joint Comment restated that DOE should consider secondary coolant applications in its analysis. (Joint Comment, No. 34 at p. 8)

Section 340(9)(A)(vii) of EPCA (42 U.S.C. 6311((9)( A)(vii), added by EPACT 2005, section 136(a)(3)), states that the terms commercial refrigerator, freezer, and refrigerator-freezer refer to equipment that is connected to a self-contained condensing unit or to a remote condensing unit. DOE mainta ins that this language excludes secondary coolant applications from coverage in this rulemaking because such applications are not directly connected to self-contained or remote condensing units. 72 FR 41171. For this reason, DOE is excluding secondary c oolant applications from this rule.

C. Markups to Determine Equipment Price In the August 2008 NOPR, DOE explaine d how it developed the distribution channel markups it used. 73 FR 50093-95. DOE did not receive comments on these markups. However, DOE updated the distribution channel markups by including 2008 sales tax data, and updated the markups for commerc ial refrigeration equipment wholesalers using 2008 financial data. DOE used these ma rkups, along with sales taxes, installation costs, and manufacturer selling prices (MSPs) developed in the engineering analysis, to arrive at the final installed equipment prices for baseline and higher efficiency commercial refrigeration equipment. As explained in the August 2008 NOPR, 73 FR 50093-95, DOE defined three distribution channels for commercial refrigeration equipment to describe how

51EERE-2006-BT-STD-0126 COMMENT 47
the equipment passes from the manufacturer to the customer. DOE developed market shares by distribution channel for remote condensing and self-contained equipment. DOE retained the same distribution channel market sh ares described in the August 2008 NOPR.

The new overall baseline and incremental ma rkups for sales to supermarkets within each distribution channel are shown in Table IV-5 , Table IV-6 , Table IV-7 , and Table IV-8

. Chapter 6 of the TSD provides additional details on markups. Table IV-5 Baseline Markups by Distributio n Channel Including Sales Tax for SelfContained Equipment in Supermarkets Wholesaler Mechanical Contractor (includes wholesaler) National Account (manufacturer-direct) Overall Distributor(s) Markup 1.370 2.082 1.185 1.564 Sales Tax 1.069 1.069 1.069 1.069 Overall Markup 1.465 2.226 1.267 1.672 Table IV-6 Baseline Markups by Distributio n Channel Including Sales Tax for Remote Condensing Equipment in Supermarkets Wholesaler Mechanical Contractor (includes wholesaler) National Account (manufacturer-direct) Overall Distributor(s) Markup 1.370 2.082 1.185 1.347 Sales Tax 1.069 1.069 1.069 1.069 Overall Markup 1.465 2.226 1.267 1.440 Table IV-7 Incremental Markups by Distri bution Channel Including Sales Tax for Self-Contained Equipment in Supermarkets Wholesaler Mechanical Contractor (includes wholesaler) National Account (manufacturer-direct) Overall Distributor(s) Markup 1.114 1.370 1.057 1.186 Sales Tax 1.069 1.069 1.069 1.069 Overall Markup 1.191 1.465 1.130 1.268

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Table IV-8 Incremental Markups by Distri bution Channel Including Sales Tax for Remote Condensing Equipment in Supermarkets Wholesaler Mechanical Contractor (includes wholesaler) National Account (manufacturer-direct) Overall Distributor(s) Markup 1.114 1.370 1.057 1.112 Sales Tax 1.069 1.069 1.069 1.069 Overall Markup 1.191 1.465 1.130 1.189

D. Energy Use Characterization The energy use characterization estima tes the annual energy consumption of commercial refrigeration equipment systems (including remote condensing units). This estimate is used in the subsequent LCC and PB P analyses (chapter 8 of the TSD) and NIA (chapter 11 of the TSD). For the A ugust 2008 NOPR, DOE estimated the energy consumption of the 15 equipment classes analyzed in the engineering an alysis (chapter 5 of the NOPR TSD) using the relevant test pr ocedure. DOE then validated these energy consumption estimates with annual whole- building simulation m odeling of selected equipment classes and efficiency levels. 73 FR 50095. For the final rule analyses, DOE used the same methodology to estimate the annua l energy consumption of commercial refrigeration systems presented in the A ugust 2008 NOPR. See chapter 7 of the TSD for additional detail on the en ergy use characterization.

DOE assumed for the energy analysis 24-hour operation of case lighting based on input received during the ANOPR. The California Utilities Joint Comment stated that while many grocers in California may shut down case lighting for 8 hours per day, national trends may be closer to 24-hour operation. (Californi a Utilities Joint Comment, No. 41 at p. 12) The California Utilities Joint Comment also i ndicated that LED lighting may be more likely to be controlled on and off during the opera tional day or dimmed ba sed on motion sensors,
53EERE-2006-BT-STD-0126 COMMENT 47

and that this can be done w ithout the risk of moisture or startup problems common to fluorescent fixtures. They further speculated th at retailers would take advantage of these LED characteristics through diffe rent operational scenarios. (California Utilities Joint Comment, No. 41 at p. 12) However, they prov ided no data to indicate the likelihood of a different LED usage profile, a nd did not provide costs to im plement automatic or manual control to support this comment. While the potential for ad ditional lighting controls exists and LEDs may offer additional controllab ility, the actua l likelihood and costs of implementation are unknown. As a result, DOE di d not change its default assumption of 24- hour operation based on these comments. Additional detail on the energy use characterization can be found in chapter 7 of the TSD.

E. Life-Cycle Cost and Payback Period Analyses In response to the requirements of sec tion 325(o)(2)(B)(i) of EPCA, DOE conducted LCC and PBP analyses to evaluate the ec onomic impacts of possible new commercial refrigeration equipment standard s on individual customers. DOE used the same spreadsheet models to evaluate the LCC and PBP as it used for the NOPR; however, DOE updated certain specific inputs to the models. Details of the spreadsheet model and of all the inputs to the LCC and PBP analyses are in TSD chapter 8. DOE conducted the LCC and PBP analyses using a spreadsheet model deve loped in Microsoft Excel for Windows 2003.

The LCC is the total cost for a unit of commercial refrigeration equipment over the life of the equipment, incl uding purchase and installation expense and operating costs (energy expenditures and main tenance). To compute the LCC, DOE summed the installed

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price of the equipment and its lifetime operati ng costs discounted to the time of purchase. The PBP is the change in purchase expense due to a given energy conservation standard divided by the change in first-year operati ng cost that results from the standard. DOE expresses PBP in years. DOE measures the ch anges in LCC and in PBP associated with a given energy use standard level relative to a base case equipment energy use. The base case forecast reflects the market in the absence of mandatory energy conservation standards.

The data inputs to the PBP calculation are the purchase expense (otherwise known as the total installed customer cost or first cost) and the annual operating costs for each selected design. The inputs to the equipmen t purchase expense were the equipment price and the installation cost , with appropriate markups. The i nputs to the opera ting costs were the annual energy consumption, the electricity pr ice, and the repair and maintenance costs. The PBP calculation uses the same inputs as th e LCC analysis but, because it is a simple payback, the operating cost is for the year the standard takes effect, assumed to be 2012. For each efficiency level analyzed, the LCC analysis required input data for the total installed cost of the equipment, the opera ting cost, and the discount rate.

Table IV-9 summarizes the inputs and key assumptions DOE used to calculate the economic impacts of various energy consump tion levels on customers. Equipment price, installation cost, and base line and standard design selection affect the installed cost of the equipment. Annual energy use, electricity cost s, electricity price tr ends, and repair and maintenance costs affect the operating cost. The effective date of the standard, the discount rate, and the lifetime of equipment affect th e calculation of the present value of annual

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operating cost savings from a proposed standard. Table IV-9 also shows how DOE modified these inputs and key assumptions for the fina l rule, relative to th e August 2008 NOPR. The changes in the input data and the discussion of the overall approach to the LCC analysis are provided in chapter 8 of the TSD.

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Table IV-9 Summary of Inputs and Key Assumptions Used in the LCC and PBP Analyses Input NOPR Description Changes for Final Rule Baseline Manufacturer Selling Price Price charged by manufacturer to either a wholesaler or large customer for baseline equipment. Developed by using industry-supplied efficiency level data and a design option analysis. Data reflect updated engineering analysis.
Standard-Level Manufacturer Selling Price Increases Incremental change in manufacturer selling price for equipment at each of the hi gher efficiency standard levels. Developed by using a combination of energy consumption level and design option analyses. Data reflect updated engineering analysis.

Markups and Sales Tax Associated with convertin g the manufacturer selling price to a customer pri ce (chapter 6 of TSD). Developed based on product distribution channels and sales taxes. Markups updated based on revised data on sales tax and wholesaler financial data.

Installation Price Cost to the customer of installing the equipment. This includes labor, overhead, and any miscellaneous materials and parts. The total installed cost equals the customer equipment price pl us the installation price. Installation cost data provided by industry comment. No change.

Equipment Energy Consumption Site energy use associated with the use of commercial refrigeration equipment, which includes only the use of electricity by the equipment itself. Taken from engineering analysis and validated in energy use characterization. (chapter 7 of the TSD) Data reflect updated engineering analysis for each efficiency level.

Electricity Prices Established average commercial electricity price ($/kWh) from EIA data for 2007, in 2007$. DOE then established scaling factors for commercial refrigeration equipment consumers based on the 2003 Commercial Building Energy Consumption Survey

. No change.

Electricity Price Trends Used the AEO2007 reference case to forecast future electricity prices and extr apolated prices to 2042. Updated to AEO2008

.

Maintenance Costs Labor and material costs as sociated with maintaining the commercial refrigeration equipment (e.g. , cleaning heat exchanger coils, chec king refrigerant charge levels, lamp replacement). Estimated from data in RS Means Facilities Maintenance and Repair Cost Data 13

. Also considered lighting types and configurations for the refrigeration equipment. No change in methodology; however, LED fixture replacement costs reflect updated engineering analysis costs by equipment class.

Repair Costs Labor and material costs associated with repairing or replacing components that have failed. Estimated based on replacement frequenci es and costs for key components. No change in methodology from NOPR. Repair costs reflect estimates of individual component life and cost to replace. Repair costs increase with increasing component costs. Equipment Lifetime Age at which the commercial refrigeration equipment is retired from service. Used an average lifetime of 10 years for large grocery and multi-line retailers and an average lifetime of 15 y ears for small grocers and No change.

13 RS Means Company, Inc. 2006. Means Costworks 2006: Facility Maintenance & Repair Cost Data. Kingston, Massachusetts. 57EERE-2006-BT-STD-0126 COMMENT 47

convenience stores.

Discount Rate Computed by estimating the cost of capital for companies that purchase re frigeration equipment using business financial data from the Damodaran Online database. Updated based on data available in the 2008 version of the Damodaran website. Rebound Effect A rebound effect was not taken into account in the LCC analysis. No change.

The changes in the input data and the disc ussion of the overall approach to the LCC analysis are provided in chapter 8 of the TSD.

In response to the NOPR, DOE received co mments on two key issues affecting the LCC analysis: electricity pr ice forecasts and lighting ma intenance costs. Regarding electricity price forecasts, ACEEE asked DOE to confirm whether the Energy Information Administration (EIA) electricity price for ecasts take into acco unt well-documented regulatory-based changes in electricity prices an d are not just based on re sponses to fuel cost forecasts. (ACEEE, Public Meeting Transcript, No. 27 at p. 82) In response, DOE notes that the EIA electricity price forecasts are deve loped through NEMS modeling and rely on a comprehensive series of supply- and demand-based modules integrated to capture the market dynamics for various energy sources, in cluding oil, coal, and natural gas. These models also capture a wide range of cons umption purposes, including such events as changes in the price and supplies of fossil fuels, developments in electricity markets, likely improvements in technology, and the impact of economic growth and various other regulatory impacts that affect ma rket electricity prices. NEMS is regularly used to provide analyses to Congress and DOE. DOE believes that NEMS does attempt to capture many known regulatory changes.

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The Joint Comment stated that DOE should us e forecasts for electricity prices other than the Annual Energy Outlook (AEO ), and that electricity price mitigation effects of the proposed standard must be documented. (Joint Comment, No. 34 at p. 6) This comment addresses both the LCC and NIA analyses. While DOE considers AEO2008 reference case forecasts in its central case fuel price scen ario, DOE reviewed LCC and PBP results based on both the AEO2008 high price and low price electrici ty forecasts and discusses the resulting differences in the TSD. While th e Joint Comment suggests that DOE consider other forecasts, it does not point to specific forecast sources or provide justification for the selection or weighting of one forecast over the other. The AEO2008 high price forecast used in the commercial refrigeration equipment analys is provides sufficient insight into probable commercial electricity price variation base d on existing data and current regulatory schemes.

DOE considered reporting electricity price im pacts 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 hi ghly uncertain. As a resu lt, they should not be weighed heavily in the decision about the stan dard 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 imp acts on infrastructure costs and prices where there is likely to be significant overlap.

DOE develops estimates for repair and maintenance costs for commercial refrigeration equipment in the LCC analysis . In the August 2008 NOPR, DOE assumed that

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maintenance costs are constant and do not vary with time. AHRI commented that the costs of maintenance do not remain constant, as the cost of HFC refrigerants is expected to increase by 300 percent to 400 percent over the next decade. (AHRI, No. 33 at p. 6) DOE recognizes that refrigerant costs may increase . For remote condensing equipment, leakage during maintenance occurs throughout the en tire refrigeration system, including store refrigeration piping and remote condensing units, and is expect ed to be approximately the same for all standard levels since little refriger ant is stored in the evaporator coils of remotecondensing commercial refrigeration equipmen t. The law also requires that any HFC refrigerant removed during maintenance must be captured (recovered), and in supermarkets it is often reused within the supermarket ch ain. 69 FR 11946. Any loss of refrigerant during maintenance is essentially the same at all st andard levels analyzed, and therefore does not affect the results of DOE’s LCC or NPV an alysis. In self-contained equipment, the refrigeration system is sealed and little leak age is expected to o ccur over the life of the equipment. Consequently, DOE did not revise the maintenance costs from the NOPR to account for future changes in refrigerant costs.

DOE also included in the maintenance costs the cost of necessary lighting component replacements over the life of the commercial refrigeration equipment. DOE received comments on the lighting maintenan ce costs assumption for LED lamp fixtures. The California Utilities Joint Comment cited ev idence from recent assessments, as well as the physical properties of LEDs, suggesting that 50,000 hours is lik ely a conservative estimate. Fixtures may actually be replaced less frequently than the 5.7 years assumed in the NOPR analysis. (California Utilities Joint Comment, No. 41 at pp. 10–11) The comment

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noted that the LED light output degrades over time and the amount of degradation is a function of the junction temperature of th e LED. Reducing the junc tion temperature can result in increased time to failure.

While DOE agrees with this assessment, th e brightness of a particular LED chip and the corresponding heat rejecti on and junction temperature are largely a function of power supplied by the LED driver circuitry. As suc h, manufacturers of LED fi xtures can trade off brightness, total fixture cost, and design lif e for LED fixtures designed for commercial refrigeration equipment applications. The LED manufacturer equipment specification sheets that DOE examined for the final rule provide for a 50,000-hour life for the known commercial refrigeration equipment applications . Due to the recent availability of LED fixtures for use with commercial refrigeration e quipment, there are few instances of installed LED light fixtures in this equipment ex ceeding the 50,000-hour specification. Therefore, DOE did not modify its LED fixture re placement cycle assumptions beyond the manufacturers’ estimated life.

DOE also received comments on using a rebuttable presumption payback period to establish the economic justifica tion of an energy c onservation standard level. Earthjustice commented that DOE does not provide any rationa le for why it did not use or does not plan to use the rebuttable presumption payback period analysis to set the trial standard level for these products. Earthjustice stated that Congress specifically provided that once the rebuttable presumption payback period is satisf ied for a trial standard level, no further economic justification would be necessary for DOE’s selection of that TSL as the final

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standard. (Earthjustice, Public Meeting Transcript, No. 27 at p. 88) The Joint Comment also stated that DOE should give greater consider ation to the rebuttable presumption payback period when selecting an appropr iate standard level, reflectin g the intent of Congress in 42 USC section 6295(o)(2)(B)(iii) th at the highest standard le vel with a 3-year payback constitutes the presumptive lowest standard level that DOE must adopt. (Joint Comment, No. 34 at pp. 3–4)

DOE does consider both the rebuttable pres umption payback criteria, as well as a full analysis including all seven relevant stat utory criteria under 42 U.S.C. 6295(o)(2)(B)(i), when examining potential standard levels. DOE believes that the commenters may be misinterpreting the statutory provision in question. Earthjustice pr esents one possible reading of an ambiguous provision (i.e. , that DOE need not look beyond the results of the rebuttable presumption inquiry), but DOE believes that such an approach is neither required nor appropriate, because it could ask the agency to ignore other releva nt information that would affect the selection of the most stringent standard level that meets all applicable statutory criteria. The commenter’s interpretatio n would essentially restrict DOE from being able to rebut the findings of the preliminar y presumptive analysis. However, the statute contains no such restriction, and such an appr oach would hinder DOE’s efforts to base its regulations on the best available information.

Similarly, DOE believes that the Joint Comm ent misreads the statute in calling for a level that meets the rebuttable presumption test to serve as a minimum level when setting the final energy conservation standard. To do so would not only eliminate the “rebuttable”

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aspect of the presumption but would also lock in place a level that may not be economically justified based on the full complement of stat utory criteria. DOE is already obligated under EPCA to select the most stringent standard leve l that meets the applicable statutory criteria, so there is no need to tie the same requirement to the rebuttable presumption.

DOE also received a comment supporting its selection of commercial refrigeration equipment lifetimes. For the NOPR, DOE de termined the lifetim e of commercial refrigeration equipment by consulting industr y experts, other interested parties, and literature on equipment lifetimes. The Joint Comm ent stated that DOE’s assumptions in the NOPR regarding product life are reasonable. (Joi nt Comment, No. 34 at p. 2) Therefore, DOE has maintained the NOPR assumptions re garding product life for the final rule.

F. Shipments Analysis The shipments analysis develops future shipments for each class of commercial refrigeration equipment based on current sh ipments and equipment life assumptions, and takes into account the existing stock and expected growth of buildings using commercial refrigeration equipment. DOE received no comments on the shipments analysis or the resulting shipments during the NOPR. Therefor e, DOE used the same shipments model for the final rule analysis as the NOPR.

G. National Impact Analysis The national impact analysis (NIA) asse sses future NES and the national economic impacts of different efficiency levels. The analysis measures economic impacts using the

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NPV metric (i.e. , future amounts discounted to the pres ent) of total commercial customer costs, and savings expected to result from ne w standards at specific efficiency levels. For the final rule analysis, DOE used the same sp readsheet model used in the NOPR to calculate the energy savings and the national economic co sts and savings from new standards, but with updates to specific input data. Unlike the LCC analysis, the NES spreadsheet does not use distributions for inputs or outputs. DOE examined sens itivities by applying different scenarios. DOE used the NES spreadsheet to perform calculations of national energy savings and NPV using the annual energy consump tion and total installed cost data from the LCC analysis and estimates of national shipments for each of the 15 primary commercial refrigeration equipment classes. DOE forecas ted the energy savings from each TSL from 2012 through 2042. DOE forecasted the energy cost savings, equipment costs, and NPV of benefits for all primary commercial refrig eration equipment classes from 2012 through 2062. The forecasts provided annual and cumulativ e values for all four output parameters.

DOE calculated the NES by subtracting ener gy use under a standards scenario from energy use in a base case (no ne w standards) scenario. Energy use is reduced when a unit of commercial refrigeration equipment in the base case efficiency distribution is replaced by a more efficient piece of equipment. Energy sa vings for each equipment class are the same national average values as calcu lated in the LCC and payback period spreadsheet. However, these results are normalized on a per-unit-length basis by equipment class and applied to the total annual estimated shipments in terms of line-up length of a ll equipment with the class. Table IV-10 summarizes key inputs to the NIA analys is and the changes DOE made in the

64EERE-2006-BT-STD-0126 COMMENT 47
analysis for the final rule. Chapter 11 of th e TSD provides additional information about the NIA spreadsheet.

65EERE-2006-BT-STD-0126 COMMENT 47
Table IV-10 Summary of National Energy Savings and Net Present Value Inputs Input Data Description of NOPR Analysis Changes for Final Rule

Shipments Annual shipments from shipments model for 15 equipment classes. Shipments model based on projected growth in building stock using commercial refrigeration equipment (new stock) and annual replacements to stock based on an equipment life. Equipment lifetime distribution based on a 10-year average life in large grocery and multi-line retail, and a 15-year average life in small grocery and conv enience stores (chapter 10, Shipments Analysis). No change.

Effective Date of Standard 2012 No change.

Base Case Efficiencies Distribution of base case shipments by efficiency level. No change in methodology to derive base case shipments by efficiency level.

Standards Case Efficiencies Distribution of shipments by efficiency level for each base case and each standards case. Annual market shares by efficiency level remain constant over time for the base case and each standards case. No change in methodology to derive shipments by efficiency level in each standards case.

Annual Energy Consumption per Linear Foot Annual weighted-average values are a function of energy consumption level, which are established in the engineering analysis (chapter 5 of the TSD). Converted to a per linear foot basis. No change in methodology. Energy consumption estimates reflect the updated final rule engineering analysis.

Total Installed Cost per Linear Foot Annual weighted-average values are a function of energy consumption level (chapter 8 of the TSD). Converted to a per linear foot basis. No change in methodology. Installed costs reflect the updated final rule LCC. Repair Cost per Linear Foot Annual weighted-average values are constant in real dollar terms for each energy consumption level (chapter 8 of the TSD). Converted to a per linear foot basis. No change in methodology. Repair costs reflect the updated final rule LCC values.

Maintenance Cost per Linear Foot Annual weighted-average value equals $160 in 2007$ (chapter 8 of the TSD), plus lighting maintenance cost. Converted to a per linear foot basis. No change.

Escalation of Electricity Prices EIA AEO2007 forecasts (to 2030) and extrapolation for beyond 2030 (chapter 8 of the TSD). EIA AEO2008 forecasts (to 2030) and extrapolation for beyond 2030 (chapter 8 of the TSD).

Electricity Site-toSource Conversion Conversion varies yearly and is generated by DOE/EIA’s NEMS program (a time series conversion factor; includ es electric generation, transmission, and distribution losses) based on AEO2007

. Conversion factor varies yearly and is generated by EIA’s NEMS model. Includes the impact of electric generation, transmission, and distribution losses based on AEO2008

. Discount Rate 3 and 7 percent real. No change. Present Year Future costs are discounted to 2008. No change
Rebound Effect A rebound effect (due to changes in shipments resulting from standards) was not considered in the NIA. No change.

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The modifications DOE made to the NES and NIA analyses for the final rule primarily reflect updates to the same data s ources used in the NOPR, but not changes in methodology. In addition, the underlying input da ta on equipment costs and energy savings by TSL are based on the LCC analysis resu lts as revised in the final rule.

For the final rule, DOE developed marginal site-source conversion f actors that relate the national electrical energy savings at the po int of use to the fuel savings at the power plant. These factors use the NEMS model a nd the examination of the corresponding energy savings from standards scenarios considered in DOE’s utility analysis (chapter 14 of the TSD). The conversion factors vary over time , due to projected changes in electricity generation sources (i.e. , the power plant types pr ojected to provide elect ricity to the country) and power plant dispatch scenarios. DOE revi sed the stream of conversion factors based on the final rule utility impacts analysis and using a version of NEMS consistent with
AEO2008 . DOE also updated the electricity price forecasts used in the NIA to reflect forecasts found in AEO2008 compared to AEO2007

.

DOE did not receive information to support revising the shipments analysis or the methodology used in the NIA to estimate fu ture shipments by efficiency level. DOE requested input on this methodology or on additiona l data to estimate future shipments. True commented that because so many different f eatures and options can degrade a product’s efficiency, True cannot afford to test ev ery permutation’s efficiency. Traditionally, therefore, True tests the most severe case, wh ich includes all the opti ons, and makes sure it can exceed the standard. As a result, the units shipped out are often more efficient than the

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testing would indicate. (True, Public M eeting Transcript, No. 27 at p. 119) DOE acknowledges this comment, but did not receive sufficient detail to address this concern in the final rule analysis for i ndividual commercial refrigera tion equipment classes. Because the distribution of efficiencies of all TSLs as well as th e baseline would be similarly affected by some customers removing specific energy consuming options (e.g. , shelf lighting) from their purchased products, the impact of this particular issue on the potential national energy savings of one TSL over another may be insignificant.

To discount future impacts, DOE used disc ount rates of both 7 pe rcent and 3 percent, in accordance with the Office of Manage ment and Budget (OMB )’s guidelines (OMB Circular A-4, section E, Re gulatory Analysis (September 17, 2003)). ASAP commented that DOE leans too heavily on the 7-percent disc ount rate, and that OM B has DOE looking at both the 3-percent and 7-percent discount rate s. ASAP stated that DOE should be giving primacy to the lower discount rate, which is th e societal discount rate —the time value of the society as a whole. (ASAP, Public Meet ing Transcript, No. 27 at pp. 20–21 and p. 128) PG&E stated that a 3-percent discount rate is used for the California Energy Commission workshops on efficiency, and that it supports th e 3-percent rate for the Federal rulemaking. (PG&E, Public Meeting Transcript, No. 27 at p. 131) The Joint Comment stated that DOE improperly weighs the 7-percent discount rate more than the 3-perc ent discount rate. The Joint Comment noted that DOE should use the 3-percent discount rate because it is the required social discount ra te and because the actual weighted average cost of capital is lower than 7 percent. (Joint Comment, No. 34 at p. 6)

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DOE reports and uses both 3-percent and 7- percent discount rates in its analysis of net present value. OMB’s guidance to Federal agencies for developing regulatory analysis (OMB Circular A-4, September 17, 2003) 14 references OMB Circular A-94 15 for the development of discount rates for regulatory an alysis. OMB Circular A-94 states that, as a default position, constant-dollar benefit-cost analyses of proposed investments and regulations should report net pr esent value and other outcomes determined using a real discount rate of 3 percent. The 7- percent rate is an estimate of the average before-tax rate of return to private capital in the U.S. economy. It is a broad measure that re flects the returns to real estate and small business capital as we ll as corporate capital. It approximates the opportunity cost of capital, and it is the appropriate discount ra te whenever the main effect of a regulation is to displace or alter the us e of capital in the private sector. OMB A-94 states that regulatory analyses should show the sensitivity of the discounted net present value and other outcomes to variations in the discount rate. The importance of these alternative calculations will de pend on the specific economic ch aracteristics of the program under analysis. OMB A-4 notes that the effects of regulation do not al ways fall exclusively or primarily on the allocation of capital. When regulation primarily and directly affects private consumption (e.g. , through higher consumer prices for goods and services), a lower discount rate is appropriate. Th e alternative most often used is sometimes called the social rate of time preference, or th e rate at which society discounts future consumption flows to their present value. To represent these cases, OMB recommends using the rate the average saver uses to discount future consumption as the measure of the social rate of time preference, approximating this wi th the real rate of return on long-term Government debt

14 www.whitehouse.gov/omb/circulars/a004/a-4.pdf

. 15 www.whitehouse.gov/omb/circulars/a094/a094.html

. 69EERE-2006-BT-STD-0126 COMMENT 47
(e.g. , the yield on Treasury notes minus the 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. For the commercial refrigeration equipment rulemaking in particular, DOE notes that the purchasers of commercial refrigeration e quipment are indeed commercial businesses and not “savers.” Regarding the comment that the average cost of capital calculated for businesses purchasing commercial refrigeration equipment was less th an 7 percent, DOE notes that the average cost of capital calculated for the LCC analysis is the after-tax cost of capital. OMB A-4 specifically notes that pre-tax rates of return better measure society’s gains from investment. This is because corporate capit al, in particular, pays an a dditional layer of taxation: the corporate income tax. This tax requires corporat e capital to earn a hi gher pre-tax rate of return in order to provide investors with sim ilar after-tax rates of re turn compared with noncorporate investments. Based on the guidan ce provided in OMB A-4, DOE considers both 3-percent and 7-percent discount rates in the NIA analysis.

ASAP stated that discount rates should not be applied to quads because a discount rate is a financial instrument and a quad is a physical quantity. (ASAP, Public Meeting Transcript, No. 27 at p. 22) DOE understa nds ASAP’s concern about discounting of physical quantities. Unlike economic factors th at are discounted into the future, physical quantities are not discounted because they do not change over time. DOE reports the undiscounted energy savings in Table VI-31 of today’s final rule.

70EERE-2006-BT-STD-0126 COMMENT 47

H. Life-Cycle Cost Sub-Group Analysis In analyzing the potential impact of ne w or amended standards on commercial customers, DOE evaluates the im pact on identifiable groups (i.e. , sub-groups) of customers, such as different types of businesses that ma y be disproportionately affected by a National standard level. For this rulemaking, DOE identified independent small grocery and convenience stores as a commer cial refrigeration equipment customer sub-group that could be disproportionately affect ed, and examined the impact of proposed standards on this group. DOE determined the impact on this commercial refrigeration equipment customer sub-group using the LCC spreadsheet model. DOE conducted the LCC and PBP analyses for commercial refrigerati on equipment customers represented by the subgroup. DOE did not receive comments on its identification of th is class of users as the key sub-group or on the assumptions applied to those sub-groups. DOE relied on the same methodology outlined in the NOPR for the final rule analysis. The results of DOE’s LCC sub-group analysis are summarized in section VI.C.2.e and described in detail in chapter 12 of the TSD.

I. Manufacturer Impact Analysis DOE performed a manufactur er impact analysis (MIA) to estimate the financial impact of energy conservation standards on manufacturers of commercial refrigeration equipment, and to assess the impact of such standards on employment and manufacturing capacity. DOE conducted the MIA fo r commercial refrigeration equipment in three phases. Phase 1, Industry Profile, consisted of prepar ing an industry characte rization, including data on market share, sales volumes and trends, pr icing, employment, and financial structure. Phase 2, Industry Cash Flow Analysis, focused on the industry as a whole. In this phase,

71EERE-2006-BT-STD-0126 COMMENT 47
DOE used the GRIM to prepare an industry ca sh-flow analysis. Usi ng publicly available information developed in Phase 1, DOE adapted the GRIM's generic stru cture to perform an analysis of commercial refrig eration equipment energy conser vation standards. In Phase 3, Sub-Group Impact Analysis, DOE conducted in terviews with manufacturers representing the majority of domestic commercial refrig eration equipment sales. This group included large and small manufacturers, providing a repr esentative cross-section of the industry. During these interviews, DOE discussed e ngineering, manufacturing, procurement, and financial topics specific to each company and obtained each manufacturer's view of the industry. The interviews provided valuable inform ation DOE used to evaluate the impacts of an energy conservation standard on manufacturer cash flows, manufacturing capacities, and employment levels.

The GRIM inputs consist of the commercial refrigeration industry ’s cost structure, shipments, and revenues. This includes info rmation from many of the analyses described above, such as manufacturing costs and selli ng prices from the engineering analysis and shipments forecasts from the NES.

The GRIM uses the manufacturer production costs in the engin eering analysis to calculate the MSPs for each equipment class at each TSL. By mu ltiplying the production costs by different sets of markups, DOE deri ves the MSPs used to calculate industry revenues. Following the NOPR, DO E revised its engineering co st curves to derive new manufacturer production costs. DOE used these updated production co sts in the GRIM for the final rule.

72EERE-2006-BT-STD-0126 COMMENT 47

The GRIM estimates manufacturer revenues based on total-unit-shipment forecasts and the distribution of these shipments by effici ency. Changes in the efficiency mix at each standard level are a key driver of manufacturer finances. For the fina l rule analysis, DOE used the total shipments and efficiency di stribution found in the final rule NES. For additional detail on the manufact urer impact analysis, refer to chapter 13 of the TSD.

J. Utility Impact Analysis The utility impact analysis estimates the effects of reduced energy consumption due to improved equipment efficiency on the utility industry. This analysis compares forecast results for a case comparable to the AEO2008 reference case and forecast results for policy cases incorporating each of the commercial refrigeration equipment TSLs.

DOE analyzed the effects of proposed standards on electric utility industry generation capacity and fuel consumption usin g a variant of EIA's NEMS. EIA uses NEMS to produce its AEO , a widely recognized baseline ener gy forecast for the United States. DOE used a variant known as NEMS-BT. Th e NEMS-BT is run similarly to the AEO2008 NEMS, except that commercial refrigeration equipment energy usage is reduced by the amount of energy (by fuel type) saved due to the TSLs. DOE obtained the inputs of national energy savings from the NES spreadsheet m odel. In response to the August 2008 NOPR, DOE did not receive comments directly on the methodology used for the utility impact analysis. DOE revised the final rule inputs to use the NEMS-BT consistent with the

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AEO2008 and to use the NES impacts developed in the commercial refrigeration equipment final rule analysis.

In the utility impact analysis, DOE repor ted the changes in installed capacity and generation by fuel type that result for each TSL, as well as changes in end-use electricity sales. Chapter 14 of the TSD provides details of the utility analysis methods and results.

K. Employment Impact Analysis DOE considers direct and indi rect employment impacts wh en developing a standard. In this case, direct employment impacts are any changes in the number of employees for, commercial refrigeration equipment manufacturers, their suppliers, and related service firms. Indirect impacts are those changes in employment in the larger economy that occur due to the shift in expenditures and capital investment caused by the purchase and operation of more efficient commercial refrigeration equipment. In this rulemaking, the MIA addresses direct impacts (cha pter 13 of the TSD), and the employment impact analysis addresses indirect impacts (chapter 15 of the TSD)..

Indirect employment impacts from commercial refrigeration equipment standards consist of the net jobs created or eliminat ed in the national economy, other than in the manufacturing sector being regulated, as a consequence of: (1) re duced spending by end users on electricity (offset to some degree by the increased spending on maintenance and repair), (2) reduced spending on new energy s upply by the utility i ndustry, (3) increased spending on the purchase price of new commer cial refrigeration equipment, and (4) the

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effects of those three fact ors throughout the economy. DO E expects the net monetary savings from standards to be redirected to other forms of econo mic activity. DOE also expects these shifts in spending and economic activity to affect the demand for labor.

DOE used the same methodology describe d in the August 2008 NOPR to estimate indirect national employment impacts using an input/output model of the U.S. economy, called ImSET (Impact of Sector Energy T echnologies), which was developed by DOE’s Building Technologies Program. 73 FR 50072, 50107-108. The ImSET model estimates changes in employment, industr y output, and wage income in the overall U.S. economy resulting from changes in expenditures in va rious economic sectors. DOE estimated changes in expenditures using the NES spreadsheet. ImS ET then estimated the net national indirect employment impacts of potential commercial re frigeration equipment efficiency standards on employment by sector.

In response to the August 2008 NOPR, DOE received several comments on the employment impact analysis. ASAP commented that the discussion of the employment benefits resulting from the net increase in j obs follows a pattern of DOE trivializing these benefits in the rulemakings by stating that they are so small that they would be imperceptible in national labor statistics and might be offset by other unanticipated effects on employment. ASAP stated that it is important that DOE keep performing the employment analysis given the cumulative impact of possible DOE rulemakings over the next 4 years. (ASAP, Public Meet ing Transcript, No. 27 at p. 161)

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The Joint Comment also stated that TSL 5 would create more jobs than TSL 4, and that DOE cannot reject the diffe rence as statistically insignif icant because it must consider the combined effect of all rulemakings. (Joi nt Comment, No. 34 at p. 5) The Joint Comment further stated that DOE should consider indirect job creation as a seri ous factor weighing in favor of stronger standards. (J oint Comment, No. 34 at p. 5)

Earthjustice noted that both indirect and direct employment benefits are shown to provide positive employment in the respective employment and MIA an alyses and that DOE should consider this in the fina l rule. (Earthjustice, Public Meeting Transcript, No. 27 at p. 166)

DOE considers the employment impacts wi thout quantifying the net economic value of such impacts. DOE agrees that the indir ect employment analysis indicates that new energy conservation standards for commercial refrigeration equipment could increase the demand for labor in the economy and result in additional employment, a net benefit to society that DOE considers in establishi ng standards for commercial refrigeration equipment. Chapter 15 of the TSD describe s and provides results for the employment impact analysis.

L. Environmental Assessment DOE has prepared an environmental assessment (EA) pursuant to the National Environmental Policy Act and the require ments under 42 U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a) to determine the environmental impact s of the standards being established in

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today’s final rule. Specifically, DOE estimated the reduction in total emissions of CO 2 using the NEMS–BT computer model. DOE calculate d a range of estimates for reduction in NO X emissions and mercury (Hg) emissions using cu rrent power sector emi ssion rates. However, the EA does not include the estimated reduction in power sector impacts of sulfur dioxide (SO 2 ), because DOE has determined that any such reduction resulting from an energy conservation standard would not affect the overall level of SO 2 emissions in the United States due to the presence of national caps on SO 2 emissions as addressed below (see chapter 16 of the TSD).

The NEMS–BT is run similarly to the AEO2008 NEMS, except the energy use is reduced by the amount of energy saved due to the TSLs. DOE obtained the inputs of national energy savings from the NIA spreadsh eet model. For the EA, the output is the forecasted physical emissions. The net benefit of the standard is the difference between emissions estimated by NEMS–BT and the AEO2008 reference case. The NEMS–BT tracks
CO 2 emissions using a detailed module that prov ides results with a broad coverage of all sectors and inclusion of interactive effects.

The Clean Air Act Amendments of 1990 set an emissions cap on SO 2 for all power generation. Attaining this target , however, is flexible among generators and is enforced through emissions allowances a nd tradable permits. Because SO 2 emissions allowances have value, generators will almost certainly use them, although not necessarily immediately or in the same year with and without a standard in place. In other wo rds, with or without a standard, total cumulative SO 2 emissions will always be at or near the ceiling, while there

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may be some timing differences between yearly forecasts. Thus, it is unlikely that there will be an SO 2 environmental benefit from electricity sa vings as long as there is enforcement of the emissions ceilings.

Although there may not be an actual reduction in SO 2 emissions from electricity savings, there still may be an economic benefit from reduced demand for SO 2 emission allowances. Electricity savings decrease the generation of SO 2 emissions from power production, which can decrease the n eed to purchase or generate SO 2 emissions allowance credits, and decrease the costs of co mplying with regulatory caps on emissions.

Like SO 2 , future emissions of NO X and Hg would have been subject to emissions caps under the Clean Air Interstate Act (CAI R) and Clean Air Mercury Rule (CAMR). However, as discussed in section VI.C.6 , a Federal court has vacated these rules. The NEMS–BT model used for today’s fi nal rule assumed that both NO X and Hg emissions would be subject to CAIR and CAMR emissions caps. In the case of NO X emissions, CAIR would have permanently capped emissions in 28 eas tern states and the District of Columbia. Because the NEMS–BT modeling assumed NO X emissions would be subject to CAIR, DOE established a range of NO X reductions based on the use of a NO X low and high emissions rates (in kt of NO X emitted per terawatt-hours (TWh) of el ectricity generate d) derived from the AEO2008 . To estimate the reduction in NO X emissions, DOE multiplied these emission rates by the reduction in electr icity generation due to the st andards considered. However, because the emissions caps specified by CAMR would have applied to the entire country, DOE was unable to use NEMS–BT model to estimate the physical quantity changes in

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mercury emissions due to energy conservati on standards. To estimate mercury emission reductions due to standards, DOE used an Hg em ission rate (in metric tons of Hg per energy produced) based on AEO2008 . Because virtually all mercury emitted from electricity generation is from coal-fired power plants, DOE based the emission rate on the metric tons of mercury emitted per TWh of coal-generated electricity. To estimate the reduction in mercury emissions, DOE multiplied the emissi on rate by the reduction in coal-generated electricity associated wi th standards considered.

In comments on the August 2008 NOPR, ASAP stated that it was important for DOE to consider the economic impact calculations for carbon, noting that the economic savings are significant. In addition, until the CRE and packaged terminal air conditioner and heat pump (PTAC and PTHP) NOPRs, ASAP did not see that economic values for carbon emissions savings were factored into the an alysis in a way that could affect decision making. (ASAP, Public Meeting Transcript , No. 27 at p. 172) On the other hand, AHRI believes DOE has no statutory obligation to monetize CO 2 benefits. (AHRI, Public Meeting Transcript, No. 27 at p. 173)

AHRI further commented that if DOE decides to monetize CO 2 benefits, then it should account for CO 2 emissions that will result fr om manufacturing more efficient products. For example, DOE should consider the CO 2 emissions resulting from additional copper to be mined and incorporated into th e finished product. (AHRI, Public Meeting Transcript, No. 27 at p. 173) True also commen ted on types of manufact uring processes that should be considered in the emissions analysis . True stated that th e most significant impact

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of commercial refrigeration equipment on the environment is from welding agents and refrigerants. True further expl ained with the global warming pot entials (GWPs) of some of these substances at 1,300, 1,500, and 3,800, the im pacts are astronomica lly greater than other impacts the industry faces . (True, Public Meeting Tr anscript, No. 27 at p. 174)

On the contrary, ASAP emphasized that the congressional de adline of December 31, 2008, means that “paralysis by analysis” is not an option at this point in this rulemaking and that it is incumbent upon AHRI to demonstrate th at any proposed analysis changes would be significant. (ASAP, Public Me eting Transcript, No. 27 at p. 173) ACEEE commented that for buildings and the equipment used in them ( not specific for this cl ass of equipment), the energy use during the operating life is roughly 85 percent of the total lifecycle energy. Also, the incremental energy change from increased use of a largely recycled metals stock is likely have a small impact on this analysis. (ACEEE, Public Meeting Transcript, No. 27 at p. 173)

Several interested parties provide d comments on the economic value of CO 2 used in DOE’s monetization of carbon emissions for the August 2008 NOPR and the final rule for PTACs and PTHPs (73 FR 58772, October 7, 2008) . ASAP stated that the low range for monetization of carbon emission reductions shou ld not be zero. (ASAP, Public Meeting Transcript, No. 27 at p. 23) AHRI stated that DOE should not speculate on the value of CO 2 emissions because it has no statutory obligation to do so and that any value DOE used would be an estimate. There is no consensu s on any single estimate of the value of CO 2

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emissions. Therefore, DOE should not indulge in speculation to dete rmine a value when it has no statutory obligation to do so. (AHRI, No. 33 at p. 6)

Earthjustice commented that the upper a nd lower bounds of the values DOE uses for its carbon emissions are arbitr arily low. (Earthjustice, N o. 38 at pp. 7–14) Specifically, Earthjustice stated that by using the value of the social cost of carbon (SCC) estimated in Dr. Richard Tol’s 2005 meta-analysis, DOE excl uded critical damages and made optimistic assumptions that bias the damage cost downwar ds. (Earthjustice, No. 38 at p. 8) Earthjustice noted that Tol released an update of hi s 2005 meta-analysis in September 2007, which reports an increase in his peer-reviewed mean estimate of SCC from $14 to $20/ton CO 2 and from $43 to $71/ton carbon. 16 Earthjustice also asserted that the use of Tol’s mean as an upper bound is inconsistent with sound risk analysis and dist ributions of climate damage functions, leading to systematic undervaluation of damages. (Earthjustice, No. 38 at p. 9) Lastly, Earthjustice noted that Tol’s estimate re lies primarily on estimates that did not use the currently accepted climate change discountin g procedure of declining discount rate over time, and it fails to recognize the distinction between the ways in which scarcity affects the value of normal goods and environmental goods. (Earthjustice No. 38 at p. 11)

AHRI noted that Congress is now engage d in debating a possible cap and trade program for the United States. The size of the a llowance cap first set by such legislation or by implementing regulations and the pace of re duction of the emission allowances will largely determine the unit price or value of CO 2 emissions reductions. AHRI stated that it

16 Tol, R.S.J. (2007) The social cost of carbon: tren ds, outliers, and catastrophes. Research Unit Sustainability and Global Change, Working Paper FNU-144 , Hamburg University and Centre for Marine and Atmospheric Science, Hamburg, Germany. 81EERE-2006-BT-STD-0126 COMMENT 47
would be an arbitrary decision on DOE’s part to rely on valuations identified in the Intergovernmental Panel on Climate Change (IP CC) or valuations used in the European Union (EU) cap and trade program when the Unit ed States has not yet set an emissions cap itself. Further, AHRI stated that DOE should not allow evaluation of environmental impacts to negate or render moot what has always b een, and should remain, the core analysis in appliance standards rulemakings, i.e. consumer payback and life-cycle cost analyses. (AHRI, No. 33 at p. 6) NRDC also stated that the cost of carbon emissions will become an issue with California adopting a Climate Program and the Regional Greenhouse Gas Initiative in the Northeas t. (NRDC, Public Meeting Transcript, No. 27 at p. 105)

Earthjustice’s written comment stat es that DOE’s monetization of CO 2 emissions should reflect the potential U.S. legisl ation that would put a national cap on CO 2 emissions. This includes examining the effect of the st andard in reducing allo wance prices and the benefit of reduced emissions in the NPV. This is Earthjustice’s primary suggested consideration for DOE; otherwise, DOE s hould take into account existing regional CO 2 caps when monetizing CO 2. Finally, the most basic consideration DOE must make, according to Earthjustice, is to economically account fo r the avoided environm ental harm from CO 2 emissions. (Earthjustice, No. 38 at pp. 2–6)

The Joint Comment stated that DOE shoul d incorporate the m onetization of carbon emission reductions in the life-cycle cost an alysis and the national impact analysis. The Joint Comment further stated that DOE's ex clusion of carbon monetization in the LCC and NIA results in a systematic underestimati on of benefits of new energy conservation

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standards. (Joint Comment, No. 34 at p. 6) Ea rthjustice stated that DOE does not account for the economic value of CO 2 emissions reductions resulting fr om efficiency standards in any meaningful way. Although DOE has begun es timating a range of values for carbon emissions, it then ignores these values when choosing the new standard level. Earthjustice stated that DOE must address these issues by (1) accounting for th e value of emissions reductions resulting from a standard in the ec onomic analyses, the LCC, and NIA; and (2) using reasonable assumptions and sources wh en determining the value of carbon emission reductions because the current sources evaluate d are inadequate. (Earthjustice, No. 38 at p. 1) Specifically, Earthjustice stated that DOE should qua ntify the effect of a CO 2 emission cap on energy prices in the LCC anal ysis. (Earthjustice, No. 38 at p. 2)

DOE has made several additions to its monetization of environmental emissions reductions in today’s rule, wh ich are discussed in section VI.C.6 . DOE has chosen to continue to report these benefits separately fr om the net benefits of energy savings. Nothing in EPCA or in the National Environmental Policy Act (NEPA) requires that the economic value of emissions reduction be incorporated in the net present value analysis of energy savings. Unlike energy savings, the economic valu e of emissions reduction is not priced in the marketplace. However, DOE will consider both values when weighing the benefits and burdens of standards.

Although this rulemaking does not affect SO 2 emissions, there are markets for SO 2 emissions allowances. The market clearing price of SO 2 emissions is roughly the marginal cost of meeting the regulatory cap, not the margin al value of the cap itself. Further, because

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national SO 2 emissions are regulated by a cap and trade system, the need to meet these caps is already included in th e price of energy or ener gy savings. With a cap on SO 2 , the value of energy savings already includes the value of SO 2 control for those consumers experiencing energy savings. The economic cost savings associated with SO 2 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 savi ngs for commercial refrigeration equipment are 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 marginal costs of compliance with SO 2 emissions caps.

For those emissions currently not priced (CO 2 , Hg, and NO X ), only a range of estimated economic values based on environmen tal damage studies of varying quality and applicability is available. DOE is weighing thes e values separately and is not including them in the NPV analysis.

V. Discussion of Other Comments Since DOE opened the docket for this rulemaking, it has received more than 100 comments from a diverse set of parties, includ ing manufacturers and th eir representatives, trade associations, wholesalers and distributors, energy conserva tion advocates, and electric utilities. Section IV of th is preamble discusses comments DOE received on the analytic methodologies it used. Additional comments DO E received in response to the August 2008

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NOPR addressed the information DOE used in it s analyses, results of and inferences drawn from the analyses, impacts of standards, the merits of the different TSLs and standards options DOE considered, and other issues aff ecting adoption of standards for commercial refrigeration equipment. DOE addre sses these comments in this section.

A. Information and Assumptions Used in Analyses
1. Market and Technology Assessment

a. Data Sources DOE summarized its analysis for energy consumption in chapter 3 of the NOPR TSD. Traulsen stated that there are problems with the use of energy consumption data reported to government agencies because of in accurate data reporting. Tr aulsen cited several problems with U.S. Environmental Protection Agency’s (EPA’s) ENERGY STAR database for self-contained commercial solid-door food se rvice refrigerators and freezers, including equipment listed in the database that does not conform to the ENERGY STAR specifications. Traulsen suggested that sources such as these not be used in the technical analyses because of the errors they contain. (Traulsen, No. 25 at p. 1)

The ENERGY STAR requirements for commer cial solid door refrigerators and freezers cover self-contained comm ercial refrigerators, freezers, and refrigerator-freezers that have solid doors, which are not covered in this commercial refrigeration equipment rulemaking. In terms of equipment classes, there is no overlap be tween the ENERGY STAR program and DOE’s rulemaking on commercial refrigeration equipment, except for commercial ice-cream freezers. EPA’s commerci al ice-cream freezer equipment class does

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not coincide with DOE’s commercial ice-cream freezer equipment class because they are defined differently and tested at different rating temperatures . In addition, DOE understands that Traulsen has a large market in the comm ercial refrigeration indus try for self-contained commercial refrigerator and freezers with doors. However, these equipment classes are not covered in this rulemaking. Also, DOE did not use energy consumption databases from other government agencies such as EPA,. Ra ther, DOE conducted its own evaluation of energy consumption data for existing equipm ent from major manufacturers and compiled a performance database. The primary source of information for the database was equipment data sheets that were publicly available on manufacturers’ webs ites. From these data sheets, equipment information such as total refriger ation load, evaporator temperature, lighting power draw, defrost power draw, and moto r power draw allowed determination of calculated daily energy consumption (CDEC) according to the DOE test procedure. See chapter 3 of the TSD for additional in formation on market performance data.

b. Beverage Merchandisers In response to the NOPR, Coca-Cola submitted a comment questioning the market share and shipment data in DOE’s analysis . Coca-Cola stated that its own purchases contradict DOE’s figures. According to Coca- Cola, vertical closed transparent, selfcontained, medium temperature (VCT.SC.M) equipment makes up the majority of CocaCola’s purchases. DOE’s exclusion of this cl ass accounts for the differences between CocaCola’s purchases and the number of units sh ipped that DOE reported in the engineering analysis. (Coca-Cola, No. 21 at p. 1)

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As explained in the July 2007 ANOPR, VCT. SC.M equipment is currently covered by energy conservation standa rds established in EPCA. 72 FR 41176. Therefore, selfcontained glass-front beverage merchandisers (beverage coolers), which are included in the VCT.SC.M equipment class, are not covered in this commercial refrigeration equipment rulemaking. As a result, all the shipment and ma rket share data reported in the engineering analysis are valid for the classes of commerci al refrigeration equipment covered in this rulemaking.

2. Engineering Analysis

a. Design Options In the NOPR, DOE reevaluated the list of design options remaining after the ANOPR screening analysis. Based on public comments, DOE made the following design option changes in the NOPR and did not receiv e any further comment for the final rule: increasing insulation thickness as a design optio n; revising anti-sweat heater power values for certain equipment classes with glass doors; and revising assumptions made to estimate changes in cost and efficiency for high-effici ency, single-speed compressors used in selfcontained equipment. 73 FR 50087. However, th ere were certain design options for which DOE did receive comments and that warranted changes for the final rule. Specifically, LED cost and efficiency assumptions were updated.

For the NOPR, DOE could only identify LED luminaires on the market for use in vertical refrigerated cases with transparent doors (i.e. , the VCT equipment family). DOE used these LED luminaires as the basis for LED lighting for open refrigerated cases,

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because DOE could not identify LED luminair es for use in open refrigerated cases. However, when DOE reexamined the current st ate of LED lighting fo r the final rule, DOE identified LED luminaries on the market for use in open refrigerated cases. DOE updated the LED lighting prices for open refrigerat ed cases using these newly identified LED luminaires.

For the final rule, DOE also updated the LED prices for lighting used in the VCT equipment families using the actual reducti on in the lumen-based price of LED chips reported in DOE’s Multi-Year Program Plan between 2007 and 2008. DOE’s 2007 MultiYear Program Plan reported th at the latest available OEM device price for LED chips was $35/kilolumen. 17 DOE’s 2008 Multi-Year Program Plan re ported that the latest available OEM device price for LED chips was $25/kilolumen. 18 This equates to a 29-percent reduction in lumen-based LED chip costs fr om 2007-2008. For the final rule, DOE applied this 29-percent reduction in lumen-based LED chip costs to the LED lighting for the VCT equipment families, representing about a 9-percent reduction in LED system costs, assuming the costs of the power supply and LED fixtures did not change from the values used in the NOPR engineering analysis. For additional detail regarding LED costs, see section IV.B.2.a

.

In addition to expected price reductio ns, DOE received comments on the unique performance advantages of LED systems fo llowing the NOPR. Philips stated that LED

17 U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY08-FY13. 18 U.S. Department of Energy, Solid-State Lighting Research and Development, Multi-Year Program Plan FY09-FY14. 88EERE-2006-BT-STD-0126 COMMENT 47
systems are virtually maintenance-free. Without maintenance costs, LED payback periods amount to roughly half of their life expectan cy. (Philips, No. 29 at pp. 1–6) Philips also claimed that LED efficacy (lm/W) is expected to increase. Increases in efficacy effectively reduce the operational costs of the system by allowing for less energy consumption while maintaining output. (Philips, No. 29 at p. 1)

As mentioned above, for today’s final rule, DOE reexamined the LED lighting assumptions that were used in the NOPR. DOE identified more efficacious LED lighting options for use in both vertical refriger ated cases with transparent doors and open refrigerated cases than the LED lighting iden tified in the NOPR analysis. Based on the new LED lighting options, DOE updated case lighting configurations for each equipment class specific to LED lighting in th e engineering analysis. For mo re detail about the updated LED lighting performance assumptions, see ch apter 5 and appendix B of the TSD.

In addition to the life-cycle benefits afforded by LEDs, the California Utilities Joint Comment stated that LED systems have a highe r degree of controllability, which gives the systems dimming, cold start, and short cyc ling capabilities. (Calif ornia Utilities Joint Comment, No. 41 at p. 3) ASAP added that these features allo w LED systems to be turned off in situations in which fluorescents could not. This equates to improved energy efficiency for commercial refrigeration equipment that uses LED lighting. (ASAP, Public Meeting Transcript, No. 27 at p. 106)

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The enhanced controllability of LED lighting can offer multiple benefits over fluorescent lighting. Specifically, the ability to reduce the operating time of LED lighting can lead to increased energy efficiency for co mmercial refrigeration equipment. Therefore, in the July 2007 ANOPR, DOE specifically requested public comment on using 24 hours as the case lighting operational hours. 72 FR at 41187. In the August 2008 NOPR, based on public comment, DOE determined that 24 hours was an adequate assumption for case lighting operating hours regardless of lighting type. 73 FR at 50095. In addition, the test procedure DOE adopted for co mmercial refrigeration equi pment, ANSI/ARI Standard 1200–2006, is a steady-state test procedure, whic h is unable to capture significant energy savings due to dimming controls or motion sensors. 71 FR at 71370.

Following the NOPR, some manufacturers expressed concerns that implementing LED lighting would reduce the quali ty of their equipment. Speci fically, they disagreed with the use of general white light LEDs to develop a price specifically for LED lighting used in commercial refrigeration equipment. True and Southern Store Fixtur es stated that the grocery store market will be most affected by the use of LED lighti ng because certain food products, such as meat, dairy, deli, and produce, ha ve to have a special display color. (True, Public Meeting Transcript, No. 27 at p. 111; Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 108) Continental Refr igerator added that in low-temperature applications, there is degradation in LED color quality, requiri ng the technology to be developed further. (Continental Refrigerator, No .27 at p. 141) Southern Store Fixtures stated that LEDs used in commercial refrigeration equipment are more expensive because additional labor is required to test and sort the LEDs to meet the industry’s color quality

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requirements. (Southern Store Fixture, Pub lic Meeting Transcript , No. 27 at p. 108) Hill Phoenix agreed with Southern Store Fixtures and added that repeat ability and minimizing the LED output variance also factors in to this costly sorting process (i.e. , binning). (Hill Phoenix, Public Meeting Transcript, No. 27 at p. 109) PG&E estimated that this premium will remain constant independent of any futu re price reductions. (PG&E, Public Meeting Transcript, No. 27 at p. 110) AHRI and Hill Phoe nix suggested that prices for LED systems used in commercial refrigeration equipment w ill not experience the same price reductions that the rest of the LED industry will. Both interested parties agreed that, because the commercial refrigeration market for LEDs is small, there will not be a great demand for high-quality LEDs, providing little incentive for LED suppliers to offer low-price, highquality LEDs. (AHRI, No. 33 at p. 2 and Hill Phoenix, No. 32 at p. 2)

DOE acknowledges that a premium markup is applied to LED chips used in commercial refrigeration applications due to the binning process. This highly selective process requires LED chips to be chosen by hand to ensure the consistency in color temperature and light quality demanded by comm ercial refrigeration equipment customers. As LED technology advances (e.g ., efficacy or price), the binning process for quality remains the same, resulting in a constant markup on the price of LED chips used for commercial refrigeration equipment. DOE account ed for this premium in the pricing used for the NOPR analysis. In the update of LED prices between 2007 and 2008 for the final rule, DOE maintained the markup associated with the higher level of quality needed for LEDs used in commercial refrigeration equipment.

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DOE also received comments on the relative benefits of using LEDs in lowtemperature cases versus medium-temperature ca ses and in closed cases versus open cases. The California Utilities Join t Comment stated that LED luminous output is 10 percent higher at 0 °F than at 25 °F. (California Uti lities Joint Comment, No. 41 at p. 11) Southern Store Fixtures stated the heat from the LED fixture could be used to control condensate on closed case doors. It suggested using a re mote power module for open cases. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 98) Hill Phoenix also stated that it is still a challenge for LED lighting in open cases to provide the quality and quantity of light required by the food marketing industr y. (Hill Phoenix, No. 32 at p. 1)

As stated above, DOE was able to identify for the final rule LED luminaires currently available on the market for both open refrigerated cases and vertical refrigerated cases with transparent doors. The benefits of using LEDs vary de pending on the type of commercial refrigerated equipment in which th ey are used. However, the luminaires DOE identified for use in the final rule analysis were specifically develope d for individual types of commercial refrigeration equipment, and the luminaire manufacturers reported that the performance and quality of those luminaires were developed to m eet the specific light output requirements of the commercial refriger ation equipment manufacturers that use them. Therefore, although the LED luminous output may be about 10 percent higher for lowtemperature cases compared to medium-tempera ture cases, the luminaires chosen for the analysis were actual produc ts that commercial refriger ation equipment manufacturers specified provide appropriate li ghting levels. Likewise, the power configuration used in the analysis for LED fixtures was also based on ac tual products used in closed and open cases.

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However, DOE did modify the LED lighting co nfigurations assumed in the engineering analysis based on comments received and ligh ting manufacturer specif ication sheets. Most notably, for the final rule, DOE doubled the shelf lighting for open cases compared to that assumed for the NOPR. This increase in shel f lighting is needed to meet the lighting requirements of open cases due to the directio nal nature of LED lighting. See appendix B for more detail regarding the lighting configur ations assumed in the engineering analysis.

b. Baseline Models DOE established baseline specifications for each equipment class modeled in the engineering analysis by reviewing available manufacturer data, selecting several representative units, and then aggregating the physical charac teristics of those units. This process created a unit representative of co mmercial refrigeration equipment currently offered for sale in each equipment class, with average characteristics for physical parameters (e.g. , volume, TDA), and minimum performan ce of energy-consuming components (e.g. , fans, lighting). In the NOPR analysis, DOE made several revisions to the baseline specifications. These changes include updates to baseline lighting, T DA calculations, and baseline energy consumption. Appendix B of the NOPR TSD explained in detail the changes made to the baseline design specifi cations relative to th e ANOPR analysis. DOE received no comments specific to these changes, and is therefore maintaining them for the final rule.

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c. Consideration of Alternative Refrigerants The framework document stated that due to the phaseout of chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs) in refrigeration equipment, the industry would likely use HFC refrigerants in their products. Following the framework document, AHRI stated that most of the data it pr ovided to DOE was based on the use of HFC refrigerants. In the ANOPR TSD and NOPR, DO E assumed that HFC refrigerants were already in wide use in the refrigeration industr y, and therefore used HFC refrigerants as the basis for the technical analysis conducted in the rulemaking.

The Joint Comment in response to the NOPR stated that DOE should consider alternative primary refrigerants su ch as hydrocarbons, ammonia, and CO 2 in its analysis because of their potential energy benefits, and because of the current phase-out of CFCs and HCFCs as refrigerants. The Joint Comment pointed out that alternative primary refrigerants are widely used in countries other than the United States, principally in Europe. (Joint Comment, No. 34 at p. 8)

As stated in the ANOPR TSD and NOPR, DO E based its technical analysis on the use of HFC refrigerants. A Federal phaseout of CFC refrigerants has already occurred, and a Federal phaseout of HCFC re frigerants is pending in 2010. Thus, DOE did not consider CFCs and HCFCs in its analysis. Likewise, although alternative refrigerants such as hydrocarbons, ammonia, and CO 2 are used in Europe and elsewhere in the world, there is no evidence that they are widely used for commer cial refrigeration applications in the United States. In addition, current st ate and local building codes w ould not allow the use of many

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alternative refrigerants (Safety Class A3 - most hydrocarbon refrigerants) in remote condensing equipment covered by this rulema king due to flammability concerns. These codes would also severely limit the use of ammo nia due to toxicity concerns. Both could be considered for use with secondary loop refrigeration systems, but these are not the subject of this rulemaking. Hydrocarbon refrigerants could possibly be used for small self-contained commercial refrigeration equipment covered in this rulemaking if they contain less than 3 pounds of refrigerant and if they have been certified by Underwriters Laboratories or another product certification lab. However, DOE believes that no such equipment has been certified for the U.S. market, and it did not c onsider these refrigerant s as a viable design option in the engineering analysis.

The majority of the U.S. commercial refrig eration industry uses HFC refrigerants in commercial refrigeration equipment. Since the analysis should be based on the refrigerant most widely used in commercial refrigerati on equipment, it is unnecessary to consider alternative refrigerants. For th ese reasons, DOE has continued to use HFC refrigerants as the basis for its technical analysis. DOE used the HFC refrigerant R-404A for all remote condensing equipment and HFC refrigerant R- 404A or refrigerant R-134A for all selfcontained equipment.

d. Consideration of NSF 7 Type II Equipment On December 8, 2006, DOE published a fina l rule in which it adopted ANSI/ARI Standard 1200–2006 as the DOE test procedure for commercial refrigeration equipment. 71 FR at 71340, 71369–70. DOE incorporated the test pr ocedure into its regulations in 10 CFR

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431.63–431.64. The standard also require s performance tests to be conducted according to ANSI/ASHRAE Standard 72–2005. Following th e NOPR, DOE received comments from Southern Store Fixtures and Ze ro Zone stating that the DOE test procedure is insufficient because a subset of the equipment covered in this rulemaking is designed for and operates under harsher conditions than the 75.2 °F dry-bulb and 64.4 °F wet-bulb ambient temperature condition used in the DOE test procedure.

According to Southern Store Fixtures and Zero Zone, the hotter, more humid ambient condition requires additional energy cons umption to power larger compressors and the anti-condensate capabilities necessary in this environment. These conditions make it more difficult to meet the standards proposed by this rulemaking. As a result, both Zero Zone and Southern Store Fixtures suggested that DOE should account for the difference between test procedure ambient conditions and operating ambient conditions for this subset of equipment by making a distinction similar to the one currently used in the National Sanitation Foundation Standard 7 (NSF 7) standa rd. (Zero Zone Public Meeting Transcript, No. 27 at p. 17 and Southern Store Fixtures No. 27 at p. 18) Under NSF 7, equipment intended for use in more severe environments is designated as “Type II” equipment and is tested at 80 °F dry-bulb and 68 °F wet-bulb ambient conditions. NSF “Type I” equipment is tested at the same ambient conditions as th e DOE test procedure, namely the 75.2 °F drybulb and 64.4 °F wet-bulb temperature ambient condition.

To address this issue, AHRI suggested ex empting Type II equipment from coverage or instructing manufacturers of Type II equipment to apply for waivers. (AHRI, Public

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Meeting Transcript, No. 27 at p. 50) If the wa iver approach is pur sued, Southern Store Fixtures suggested using avai lable NSF Type II testing data to find the relationship among food temperature, the metric us ed in NSF testing, and energy consumption, the metric used in the DOE test procedure. This relationship w ould allow at least some Type II equipment to be considered fairly under this rule and mitig ate a spike in waiver applications. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 54)

After consideration of these comments, DOE believes that instituting a distinction between Type I and Type II commercial refrig eration equipment, as defined by NSF 7, is unnecessary in this rulemaking. The DOE test procedure, ARI Standard 1200-2006, requires that energy consumption testing for all commerci al refrigeration equipment covered in this rulemaking be conducted according to ANSI/AS HRAE Standard 72-2005, which prescribes specific ambient conditions. There is no requi rement to address the ambient conditions specified in the NSF 7 standard. The two st andards also serve different purposes. The ANSI/ASHRAE 72-2005 standard measures en ergy consumption for a specific ambient condition, whereas the NSF 7 standard measures food temperature at a specific ambient condition for food safety purposes. Although these test procedures have different purposes, including the NSF 7 Type II test procedure would have a minimal impact on the energy consumption of this equipment because the differences between the ANSI/ASHRAE 72- 2005 and NSF 7 Type II ambient test conditions are marginal. NSF 7 Type II equipment is defined as a unit intended for use in an environment in which the ambient dry-bulb temperature does not exceed 80 °F. This is at most 5 °F higher than the 75 °F ambient dry bulb temperature used in the DOE test procedur e. Therefore, the test procedure requires all

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commercial refrigeration equipment covered under this rulemaking to be tested for energy consumption according to the ambient conditio ns specified in ANSI/ASHRAE Standard 72- 2005 and will not include any distinction betwee n Type I and Type II equipment as defined by NSF 7.

e. Product Class Extension Factors In the NOPR, DOE developed multipliers to extend standards from the 15 equipment classes it directly analyzed to the remaining 23 secondary e quipment classes of commercial refrigeration equipment it did not directly anal yze. DOE’s approach involved a matched-pair analysis, which examined the relationship between several related pairs of equipment classes. Chapter 5 of the TSD discusses the development of the extension multipliers and the set of focused matched-pair analyses.

Following the NOPR, Southern Store Fixtur es questioned the extension multiplier for self-contained equipment that was based on the analytical results for open remote condensing equipment. Southern Store Fixtures believed that the extension multiplier of 2.51 DOE developed to correlate remote medium -temperature equipment without doors to self-contained medium-temperature equipment w ithout doors should be higher to adequately account for the more severe conditions in which self contained equipment are typically used, but did not offer a recommendation for the valu e. (Southern Store Fixtures, Public Meeting Transcript, No. 27 at p. 37)

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The DOE test procedure, ARI Sta ndard 1200-2006, requires that energy consumption testing for all commercial refrig eration equipment covered in this rulemaking be conducted according to ANSI/ASHRAE Sta ndard 72-2005, which prescribes specific ambient conditions. The ambient conditions sp ecified by the DOE test procedure are the same regardless of the condens ing unit configuration (i.e. , remote condensing or selfcontained). In addition, the 2.51 extension multiplier was developed based on the relationship between the medium temperature VOP, SVO, and HZO equipment classes that DOE directly analyzed. Because neither an alte rnative value nor contradicting analysis was offered, for today’s final rule, DOE will con tinue to use the 2.51 and other extension multipliers developed in the NOPR.

f. TSL Energy Limits After the NOPR, Hussman submitted a comment expressing its concern about the technologies required for equipment to meet minimum energy consumption levels for TSL 4. In particular, Hussman is reluctant to use the no-heat door de sign option in humid climates, such as Houston, Texas. In its expe rience, no-heat doors in humid climates result in more condensation on store floors. Acco rding to Hussman, wet floors have led to accidents and costly law suits, indirectly linki ng increased energy efficiency with increased safety risks. (Hussman, No. 42 at p. 1)

Energy conservation standards for today’ s final rule set a maximum allowable energy conservation level for commercial refr igeration equipment. DOE does not limit the technologies manufacturers can use to achieve st andards. Manufacturers are free to use any

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combination of technologies and design optio ns to achieve a required level of energy consumption. Manufacturers also have the ability to design equipment for use in specific regions where certain design options may cause safety concerns. Certain anti-condensate design options consume no energy and could be used to achieve the energy consumption levels TSL 4 requires. Anti-condensate films can be applied to the inner surface of glass doors to prevent condensation and fog formati on. By installing this film, some portion (and potentially all) of the glass and/or door mu llion heaters can be removed and still maintain fog-free operation. In addition, DOE does not have the authority to set regional standards for commercial refrigeration equipment, and theref ore cannot customize its analysis to exclude the use of design options in a specific climate region. Theref ore, in developing the energy conservation standards for today’s final rule , DOE did not make any modifications to accommodate concerns related to any particular climate regions.

g. Compressor Selection Oversize Factor DOE’s energy consumption model selects the most appropriate compressor by comparing each compressor’s capacity to the to tal refrigeration load in the case multiplied by the compressor oversize factor. For the ANOPR analysis, DOE listed capacity at the standard rating conditions used in ANSI/ARI Standard 540–2004. 19 However, the standard rating conditions differed from the operating c onditions used in the model, resulting in different capacity values. Because the standa rd conditions and modeled conditions differed,

19 18 ANSI/ARI Standard 540–2004: Performance Rating of Positive Displacement Refrigerant Compressorsand Compressor Units lists standard rating conditions for hermetic refrigeration compressors. For mediumtemperature equipment, compressors are rated at 20 °F suction dewpoint, 120 °F discharge dewpoint, 40 °F return gas, and 0 °F subcooling. For low-temperature equipment, compressors are rated at -10 °F suction dewpoint, 120 °F discharge dewpoint, 40 °F return gas, and 0 °F subcooling. For ice-cream-temperature equipment, compressors are rated at -25 °F suction dewpoint, 105 °F discharge dewpoint, 40 °F return gas, and 0 °F subcooling. 100EERE-2006-BT-STD-0126 COMMENT 47
the model typically overestimated the capacity of the selected compressors. To compensate, DOE adjusted the compressor oversize factor to an unrealistic level (typically level 1) for the ANOPR model to select the correct compresso r. In the NOPR analysis, DOE revised the capacity values used to select self-contained compressors in the energy consumption model. For the NOPR, DOE used capacities based on the same conditions used to calculate total refrigeration load and revised the oversize f actor (typically 1.4 in the NOPR model) for all self-contained equipment classes to maintain the selection of the correct compressor size. See chapter 5 of the TSD for more detail.

Following the NOPR, Structural Concepts commented that the compressor selection criteria in the engineering analysis results in the selection of unreasonable compressors for the refrigeration load. Specifically, Structural Co ncepts stated that the refrigeration load is 6,990 Btu/h for the VOP.SC.M equipment class, and the compressor sizing value is 9,787 Btu/h. Using the oversize factor value of 1.4, the compressor selected in the engineering analysis has a capacity of 13,219 Btu/h. The selection of an unr ealistically large compressor unfairly skews the energy efficiency ratio because the larger compressor has a higher efficiency rating than the next smallest comp ressor that has a rated capacity closer to the compressor sizing value. (Structu ral Concepts, No. 30 at p. 3)

The energy consumption model selects a compressor assuming that the rated capacity of the compressor must be at or above the compressor sizing va lue. This prevents the selection of a compressor that is unable to meet the refrigeration load. The example Structural Concepts selected highlights one of the more extreme cases of how this model

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can select a compressor that is larger than necessary. However, Structural Concepts did not provide a recommendation that would result in the selection of a more appropriate compressor, or a more appropriate compressor ov ersize factor value to use for all the selfcontained equipment classes. Because manufactur ers previously agreed that the compressor oversize factor of 1.4 was appropriate to use for all the self-contai ned equipment classes used in the analysis, DOE maintained its assumptions from the NOPR.

h. Offset Factors for Self-Contained Equipment For the NOPR, DOE developed offset fact ors to adjust the energy consumption calculations to accommodate smaller equipmen t for the equipment classes it directly analyzed. These offset factors account for th e components of the refrigeration load that remain constant even when equipment sizes vary (i.e. , the conduction en d effects) and disproportionately affect sma ller cases. In the equation that describes the relationship between energy consumption and the corres ponding TDA or volume metric, the offset factors are intended to approximate these consta nt loads and provide a fixed end point that corresponds to a zero TDA or zer o volume case. See chapter 5 of the TSD for further details on the development of these offset factors for each equipment class. Following the NOPR, Structural Concepts requested that DOE in crease the offset factor for self-contained equipment because DOE’s analysis selected compressors that were too large and had unrealistically high efficiencies. (Struc tural Concepts, No. 30 at p. 4)

The compressors suggested by Structural C oncepts for DOE’s model would, in some cases, be undersized for the refrigera tion load. As mentioned in section V.A.2.g , DOE

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maintained the methodology used to select co mpressors in the energy consumption model. Because DOE did not receive any comments on necessary improvements or data on which its analysis can be reevaluated, and because th e compressor selections used to develop the offset factors have not changed, DOE maintained the offset factors developed in the NOPR.

i. Self-Contained Condensing Coils Following the NOPR, Structural Concepts revealed a discrepancy about the running temperature for self-contained equipment usi ng coil enhancements. (Structural Concepts, No. 30 at p. 1) Chapter 5, section 5.6.3.7 of the NOPR TSD stated that self-contained equipment condenser coil enhancements would allow the condenser to run at a saturated condenser temperature (SCT) 10 °F cooler than a standard coil. However, the engineering analysis spreadsheet showed a decrease of 14 °F for this design option. There was a typographical error in the NOPR TSD and the 14 °F decrease in the engi neering analysis is correct. In chapter 5 of the fi nal rule TSD, DOE updated its fi gure to reflect the correct SCT 14 °F cooler temperature for the coil e nhancements design option for self-contained equipment.

Structural Concepts also questioned the validity of using 98 °F as the baseline SCT in the engineering analysis. According to Structural Concepts, this value is not representative of the current “off the shelf” self-contained condensing units available. It believes the baseline SCT value should be clos er to 105 °F or 110 °F. (Structural Concepts, No. 30 at p. 2)

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There are condensing coils available that ope rate at both higher and lower SCT than the standard coil used in its m odel. This discrepancy exists b ecause the standard coil used in DOE’s model is not an actual condensing coil. DOE reviewed a range of available manufacturer data, selected several repres entative units, and ag gregated the physical characteristics of the selected units to create a representative unit for each equipment class. The 98 °F operating SCT is an average characteristic. DOE also conducted a sensitivity analysis to evaluate Structural Concept’s cl aim that baseline SCT was too low. In this sensitivity analysis in which the SCT wa s raised to 105 °F, DOE observed only minor changes in the energy consumption of the self-contained units. For these reasons, DOE will continue to use 98 °F as the baseline SCT for self-contained equipment condensers for today’s final rule.

For the NOPR, DOE used data from t eardowns by Southern California Edison’s Refrigeration and Thermal Test Center (RTTC) to model the enhanced condenser coil used in the engineering analysis. Based on this information, DOE considered both minimum and maximum technology levels for this design optio n. For each level, DOE specified an overall UA-value and a coil cost. The UA-value is normaliz ed to the standard coil, and the coil cost is normalized to the heat removal capacity of the coil. This approach allowed DOE to apply the details of coil design across all self-contai ned equipment classes. In consultation with outside experts, DOE determined that appl ying the same coil improvements to different sized coils would result in similar performan ce improvements. See chapter 5 of the TSD for more detail on the development of the enhanced condenser coil specifications.

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Following the NOPR, Structural Concepts st ated that DOE overstates the magnitude of the UA-value increase achievable with an enhanced condenser coil. It claimed the enhanced condenser prototype DOE used as a model for this design option is too large for use in self-contained equipment and, because UA-value primarily depends on surface area, the use of a smaller, practical condenser w ould yield a lower UA-valu e. As a result, it requested that DOE base the UA-value on coils that are closer in size to the standard coil. (Structural Concepts , No. 30 at p. 2)

The specifications for the enhanced coil used in DOE’s analysis are based on a model developed specifically for use in a self-contained refrig eration system. The details of the coil construction are based on data from teardowns by Southern California Edison’s Refrigeration and Thermal Test Center (RTTC). 20 Therefore, DOE is confident that it modeled an appropriately sized high efficiency condenser coil. In addition to increased exterior dimensions, DOE’s enhanced condenser coil also uses a higher fin pitch, rifled tubing, and different tube spaci ng to achieve a higher UA-valu e than the standard coil. Structural Concepts also did not provide costs for their suggested coil model. Because DOE did not receive additional information or data that would suggest that the UA-value is not representative of enhanced condenser coils, a nd the data that was pr ovided were incomplete, DOE maintained its assumptions from th e NOPR for the enhanced condenser coil.

3. Manufacturer Impact Analysis The Joint Comment stated that DOE gives exclusive consideration to the

20 Refrigeration and Thermal Test Center. Personal communication . Southern California Edison. March 29, 2007. 105EERE-2006-BT-STD-0126 COMMENT 47
preservation-of-gross-margin (absolute dollars ) scenario. According to the Joint Comment, relying solely on this scenario only cons iders manufacturers’ e xpectations about the manufacturing impacts at the proposed standar d. (Joint Comment, No. 7 at p. 2) The Joint Comment stated the preservation-of-gross-margin-percentage markup scenario provides a more plausible representation of impacts on manufacturers due to new energy conservation standards. (Joint Comment, No. 7 at p. 3)

DOE developed two markup scenarios: the preservation-of-gross-margin-percentage and the preservation-of-gross-margin (absolut e dollars). DOE used these scenarios to bound the potential impacts on the indus try value as a result of new energy conservation standards and presented its findings in the August 2008 NOPR for public comment. 73 FR 50107. The preservation-of-gross-margin-percentage ma rkup scenario is a lower bound estimate on manufacturer impacts because it assumes that manufacturers will be able to fully recover all the increases in production costs due to ener gy conservation standards requirements. The preservation-of-gross-margin (absolute dolla rs) markup scenario is an upper bound estimate on manufacturer impacts because it assumes that manufacturers will be able to only partially recover cost increases (to maintain an ab solute dollar gross margin) due to energy conservation standards. The markup scenarios DOE modeled in the GRIM reflect both its interpretation of qualitative information learned during manufacturer interviews and the analysis of limited profit margin data provided under confidentiality agreements.

DOE notes the large uncertainty about th e actual impacts on the industry due to standards. The commercial refrigeration equi pment industry has never been regulated for

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energy efficiency and manufacturers do not have previous experience on how energy conservation standards affect their business. The seven manuf acturers that DOE interviewed for the NOPR expressed a divergence of views on how prices would change after standards. Most manufacturers stated that they expect pr ofit levels to decrease due to new energy conservation standards based on their recent inability to pass on increases in material and component costs to their customers. The por tion of production costs reflected in selling prices varied significantly from manufacturer to manufacturer . In general, companies with lower market shares face greater challenges in passing along costs and would suffer larger margin impacts due to new energy conservati on standards. Manufactur ers with relatively large market shares have been more successf ul passing through costs and they are more confident of maintaining profit levels over th e long term. Because of the divergence of experience with cost pass-thr ough and the implication for prices and profitability after standards, DOE considers the full range of potential impacts bounded by the markup scenarios and does not consider one scenario to be more likely.

In response to the NOPR, Earthjustice noted that the direct empl oyment benefits are shown to provide positive employment in the MIA analysis. Earthjus tice stated DOE should consider these benefits in the final rule. (Ear thjustice, Public Meeti ng Transcript, No. 27 at p. 166)

For the MIA, DOE calculated the direct employment impacts on the commercial refrigeration industry. DOE calculated total la bor expenditures for the industry using the production costs from the engineering analys is, labor information from U.S. Census

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Bureau’s 2006 Annual Survey of Manufactures, and the total industry shipments from the NES. DOE translated the total labor expenditures for the indus try into the total number of domestic jobs using the domestic share of commercial refrigeration equipment manufacturing, the labor rate for the industry, and the annual hours per worker. DOE calculated its estimate of the domestic employ ment for the base case and each TSL. The direct employment results characterized by the MIA represent U.S. production and nonproduction workers that are affected by this rulemaking in the commercial refrigeration equipment manufacturing industry.

For the final rule, DOE examined the im pacts of energy conservation standards on domestic manufacturing employment levels. The direct employment impact analysis conducted as part of the MIA estimates the num ber of domestic workers who are affected by this rulemaking in the co mmercial refrigeration equi pment manufacturing industry, assuming that shipment levels and product ava ilability remain at current levels. Because labor costs are assumed to be a fixed percen tage of total manufacturing production costs, which increase with more efficient equipmen t, the GRIM predicts a gradual increase in employment after standards. DOE has consider ed all employment impacts in weighing the benefits and the burdens, incl uding direct (as calculated by the MIA) and indirect (as calculated by the employment impact analysis). For further details on the direct employment impact analysis, see chapter 13 of the accompanying TSD.

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VI. Analytical Results and Conclusions

A. Trial Standard Levels DOE selected between four and eight energy consumption levels for each commercial refrigeration equipment class in th e LCC analysis. Based on the results of the analysis, DOE selected five trial standard le vels above the baseline level for each equipment class for the NOPR. The range of TSLs sele cted includes the most energy efficient combination of design options with a positive NPV at the 7-percent discount rate, and the combination of design options with the minimum LCC. TSLs also were selected that filled large gaps between the baseline and the level with the minimum LCC.

For the NOPR, DOE developed offset fact ors to adjust the energy efficiency requirements for smaller equipment in each equipment class analyzed. These offset factors account for certain components of the refrigerat ion load (such as the conduction end effects) that remain constant even when equipment si zes vary. These constant loads affect smaller cases disproportionately. The offset factors are intended to approximate these constant loads and provide a fixed end point , corresponding to a zero TDA or zero volume case, in an equation that describes the relationship betw een energy consumption and the corresponding TDA or volume metric. See chap ter 5 of the TSD for further details on the development of these offset factors for each equipment class.

For the final rule, DOE preserved the ge neral methodology it used for the selection of efficiency levels in the NOPR in establis hing specific efficiency levels for equipment classes. These levels are based on the result s of the updated LCC analysis and made up the

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TSLs used in the NOPR. Table VI-1 shows the TSL levels DOE selected for energy use for the equipment classes analyzed. TSL 5 is the ma x-tech level for each equipment class. TSL 4 is the maximum efficiency level with a posit ive NPV at the 7-percent discount rate, except for VOP.RC.M. In this class, the minimal difference in energy efficiency between the minimum life-cycle cost level as determin ed by the LCC analysis and the maximum efficiency level with positive NPV prompted DOE to select the minimum life-cycle cost level instead of the maximum level with pos itive NPV. TSL 4 is a combination of the efficiency levels selected for TSL 3 and TSL 5. For a given equipment class, the efficiency levels selected for TSL 4 are either equivale nt to those of TSL 3 or TSL 5. TSL 3 is the efficiency level that provides the minimum life-cycle cost determined by the LCC analysis. TSL 2 and TSL 1 represent lower efficiency leve ls that fill in the gap between the current baseline and the levels determined to have the minimum LCC.

Table VI-1 shows the same TSL levels in terms of proposed equations that establish an MDEC limit through a linear equation of the form:

MDEC = A × TDA + B (for equipment using TDA as a normalizing metric)

or MDEC = A × V + B (for equipment us ing volume as a normalizing metric)

Coefficients A and B are uniquely derived for each equipment class based on the calculated offset factor B (see chapter 5 of the TSD for offset factors) and the equation slope
A. Equation slope A would be used to describe the effi ciency requirements for equipment of

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different sizes within the same equipment class. Chapter 9 of the TSD explains the methodology DOE used for selecting TSLs a nd developing the coefficients shown in Table
VI-2

.

Table VI-1 Trial Standard Levels for An alyzed Equipment Expressed in Terms of Daily Energy Consumption Trial Standard Levels for Equipment Analyzed Expressed in Terms of Energy Consumption (kWh/day) Equipment Class Normalization Metric Normalization Value* Test Metric Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5
VOP.RC.M TDA [ft 2 ] ** 53.30 CDEC kWh/day 57.90 51.99 50.68 47.69 47.69 43.75
VOP.RC.L TDA [ft 2 ] 44.66 CDEC kWh/day 133.60 118.44 113.28 112.00 108.40 108.40
VOP.SC.M TDA [ft 2 ] 14.93 TDEC †† kWh/day 39.60 35.95 33.38 30.70 30.70 29.33
VCT.RC.M TDA [ft 2 ] 65.00 CDEC kWh/day 33.18 31.77 30.00 16.36 16.18 16.18
VCT.RC.L TDA [ft 2 ] 65.00 CDEC kWh/day 69.31 65.73 46.90 39.60 39.18 39.18
VCT.SC.I TDA [ft 2 ] 26.00 TDEC kWh/day 45.63 33.35 23.39 21.17 20.81 20.81
VCS.SC.I V [ft 3 ] † 48.00 TDEC kWh/day 27.13 24.31 21.64 19.07 19.07 19.07 SVO.RC.M TDA [ft 2 ] 40.00 CDEC kWh/day 43.56 39.58 38.59 36.34 36.34 33.61
SVO.SC.M TDA [ft 2 ] 12.80 TDEC kWh/day 33.11 30.66 28.87 26.74 26.74 25.74 SOC.RC.M TDA [ft 2 ] 51.00 CDEC kWh/day 31.70 30.01 27.93 26.24 26.24 20.62
HZO.RC.M TDA [ft 2 ] 33.00 CDEC kWh/day 19.63 17.89 15.73 14.69 14.54 14.54
HZO.RC.L TDA [ft 2 ] 46.00 CDEC kWh/day 38.38 35.30 33.41 32.97 32.97 32.97 HZO.SC.M TDA [ft 2 ] 12.00 TDEC kWh/day 19.23 17.85 16.51 14.93 14.81 14.81
HZO.SC.L TDA [ft 2 ] 12.00 TDEC kWh/day 38.69 36.02 33.52 30.31 30.14 30.14
HCT.SC.I TDA [ft 2 ] 5.12 TDEC kWh/day 7.25 6.37 3.70 3.53 3.32 3.32 * This is the assumed baseline size for each equipment class used in DOE’s analyses. ** TDA is total display area of the case. † V is gross refrigerated volume of the case. †† TDEC is total daily energy consumption of the case.

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Table VI-2 Trial Standard Levels Expresse d in Terms of Equations and Coefficients for Each Primary Equipment Class Trial Standard Levels for Primary Equipment Classes Analyzed Equipment Class Test Metric Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 VOP.RC.M CDEC kWh/day 1.01 x TDA + 4.07 0.9 x TDA + 4.07 0.87 x TDA + 4.07 0.82 x TDA + 4.07 0.82 x TDA + 4.07 0.74 x TDA + 4.07 VOP.RC.L CDEC kWh/day 2.84 x TDA + 6.85 2.5 x TDA + 6.85 2.38 x TDA + 6.85 2.35 x TDA + 6.85 2.27 x TDA + 6.85 2.27 x TDA + 6.85 VOP.SC.M TDEC kWh/day 2.34 x TDA + 4.71 2.09 x TDA + 4.71 1.92 x TDA + 4.71 1.74 x TDA + 4.71 1.74 x TDA + 4.71 1.65 x TDA + 4.71 VCT.RC.M CDEC kWh/day 0.48 x TDA + 1.95 0.46 x TDA + 1.95 0.43 x TDA + 1.95 0.22 x TDA + 1.95 0.22 x TDA + 1.95 0.22 x TDA + 1.95 VCT.RC.L CDEC kWh/day 1.03 x TDA + 2.61 0.97 x TDA + 2.61 0.68 x TDA + 2.61 0.57 x TDA + 2.61 0.56 x TDA + 2.61 0.56 x TDA + 2.61 VCT.SC.I TDEC kWh/day 1.63 x TDA + 3.29 1.16 x TDA + 3.29 0.77 x TDA + 3.29 0.69 x TDA + 3.29 0.67 x TDA + 3.29 0.67 x TDA + 3.29 VCS.SC.I TDEC kWh/day 0.55 x V + 0.88 0.49 x V + 0.88 0.43 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88 SVO.RC.M CDEC kWh/day 1.01 x TDA + 3.18 0.91 x TDA + 3.18 0.89 x TDA + 3.18 0.83 x TDA + 3.18 0.83 x TDA + 3.18 0.76 x TDA + 3.18 SVO.SC.M TDEC kWh/day 2.23 x TDA + 4.59 2.04 x TDA + 4.59 1.9 x TDA + 4.59 1.73 x TDA + 4.59 1.73 x TDA + 4.59 1.65 x TDA + 4.59 SOC.RC.M CDEC kWh/day 0.62 x TDA + 0.11 0.59 x TDA + 0.11 0.55 x TDA + 0.11 0.51 x TDA + 0.11 0.51 x TDA + 0.11 0.4 x TDA + 0.11 HZO.RC.M CDEC kWh/day 0.51 x TDA + 2.88 0.45 x TDA + 2.88 0.39 x TDA + 2.88 0.36 x TDA + 2.88 0.35 x TDA + 2.88 0.35 x TDA + 2.88 HZO.RC.L CDEC kWh/day 0.68 x TDA + 6.88 0.62 x TDA + 6.88 0.58 x TDA + 6.88 0.57 x TDA + 6.88 0.57 x TDA + 6.88 0.57 x TDA + 6.88 HZO.SC.M TDEC kWh/day 1.14 x TDA + 5.55 1.03 x TDA + 5.55 0.91 x TDA + 5.55 0.78 x TDA + 5.55 0.77 x TDA + 5.55 0.77 x TDA + 5.55 HZO.SC.L TDEC kWh/day 2.63 x TDA + 7.08 2.41 x TDA + 7.08 2.2 x TDA + 7.08 1.94 x TDA + 7.08 1.92 x TDA + 7.08 1.92 x TDA + 7.08 HCT.SC.I TDEC kWh/day 1.33 x TDA + 0.43 1.16 x TDA + 0.43 0.64 x TDA + 0.43 0.6 x TDA + 0.43 0.56 x TDA + 0.43 0.56 x TDA + 0.43

In addition to the standards for the 15 primary equipment classes DOE analyzed, DOE is adopting standards for the remaining 23 secondary equipment classes of commercial refrigeration equipment covered in this rulema king that were not directly analyzed in the engineering analysis due to low annual ship ments (less than 100 units per year). DOE’s approach involved extension multipliers developed using both the 15 primary equipment classes analyzed and a set of focused matche d-pair analyses. In addition, standards for certain primary equipment classes could be di rectly applied to other similar secondary

112EERE-2006-BT-STD-0126 COMMENT 47
equipment classes. Chapter 5 of the TSD di scusses the development of the extension multipliers and the set of focused matched-pair analyses.

Using this approach, DOE developed an additional set of TSLs for these secondary equipment classes that corresponds to each of the equations shown in Table VI-2 at each
TSL. Table VI-3 shows this additional set of corresponding TSL levels.

113EERE-2006-BT-STD-0126 COMMENT 47
Table VI-3 Trial Standard Levels Expressed in Terms of Equations and Coefficients for Each Secondary Equipment Class Trial Standard Levels for Secondary Equipment Classes Analyzed Equipment Class Test Metric Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 SVO.RC.L CDEC kWh/day 2.84 x TDA + 6.85 2.5 x TDA + 6.85 2.38 x TDA + 6.85 2.35 x TDA + 6.85 2.27 x TDA + 6.85 2.27 x TDA + 6.85 VOP.RC.I CDEC kWh/day 3.6 x TDA + 8.7 3.17 x TDA + 8.7 3.03 x TDA + 8.7 2.99 x TDA + 8.7 2.89 x TDA + 8.7 2.89 x TDA + 8.7 SVO.RC.I CDEC kWh/day 3.6 x TDA + 8.7 3.17 x TDA + 8.7 3.03 x TDA + 8.7 2.99 x TDA + 8.7 2.89 x TDA + 8.7 2.89 x TDA + 8.7 HZO.RC.I CDEC kWh/day 0.87 x TDA + 8.74 0.78 x TDA + 8.74 0.73 x TDA + 8.74 0.72 x TDA + 8.74 0.72 x TDA + 8.74 0.72 x TDA + 8.74 VCT.RC.I CDEC kWh/day 1.2 x TDA + 3.05 1.14 x TDA + 3.05 0.8 x TDA + 3.05 0.67 x TDA + 3.05 0.66 x TDA + 3.05 0.66 x TDA + 3.05 HCT.RC.M CDEC kWh/day 0.39 x TDA + 0.13 0.34 x TDA + 0.13 0.19 x TDA + 0.13 0.18 x TDA + 0.13 0.16 x TDA + 0.13 0.16 x TDA + 0.13 HCT.RC.L CDEC kWh/day 0.81 x TDA + 0.26 0.71 x TDA + 0.26 0.39 x TDA + 0.26 0.37 x TDA + 0.26 0.34 x TDA + 0.26 0.34 x TDA + 0.26 HCT.RC.I CDEC kWh/day 0.95 x TDA + 0.31 0.83 x TDA + 0.31 0.46 x TDA + 0.31 0.43 x TDA + 0.31 0.4 x TDA + 0.31 0.4 x TDA + 0.31 VCS.RC.M CDEC kWh/day 0.16 x V + 0.26 0.14 x V + 0.26 0.13 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 VCS.RC.L CDEC kWh/day 0.33 x V + 0.54 0.3 x V + 0.54 0.26 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 VCS.RC.I CDEC kWh/day 0.39 x V + 0.63 0.35 x V + 0.63 0.31 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 HCS.RC.M CDEC kWh/day 0.16 x V + 0.26 0.14 x V + 0.26 0.13 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 0.11 x V + 0.26 HCS.RC.L CDEC kWh/day 0.33 x V + 0.54 0.3 x V + 0.54 0.26 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 0.23 x V + 0.54 HCS.RC.I CDEC kWh/day 0.39 x V + 0.63 0.35 x V + 0.63 0.31 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 0.27 x V + 0.63 SOC.RC.L CDEC kWh/day 1.3 x TDA + 0.22 1.23 x TDA + 0.22 1.15 x TDA + 0.22 1.08 x TDA + 0.22 1.08 x TDA + 0.22 0.84 x TDA + 0.22 SOC.RC.I CDEC kWh/day 1.52 x TDA + 0.26 1.44 x TDA + 0.26 1.34 x TDA + 0.26 1.26 x TDA + 0.26 1.26 x TDA + 0.26 0.99 x TDA + 0.26 VOP.SC.L TDEC kWh/day 5.87 x TDA + 11.82 5.25 x TDA + 11.82 4.82 x TDA + 11.82 4.37 x TDA + 11.82 4.37 x TDA + 11.82 4.14 x TDA + 11.82 VOP.SC.I TDEC kWh/day 7.45 x TDA + 15.02 6.67 x TDA + 15.02 6.13 x TDA + 15.02 5.55 x TDA + 15.02 5.55 x TDA + 15.02 5.26 x TDA + 15.02 SVO.SC.L TDEC kWh/day 5.59 x TDA + 11.51 5.11 x TDA + 11.51 4.76 x TDA + 11.51 4.34 x TDA + 11.51 4.34 x TDA + 11.51 4.15 x TDA + 11.51 SVO.SC.I TDEC kWh/day 7.11 x TDA + 14.63 6.5 x TDA + 14.63 6.05 x TDA + 14.63 5.52 x TDA + 14.63 5.52 x TDA + 14.63 5.27 x TDA + 14.63 HZO.SC.I TDEC kWh/day 3.35 x TDA + 9. 3.06 x TDA + 9. 2.8 x TDA + 9. 2.46 x TDA + 9. 2.44 x TDA + 9. 2.44 x TDA + 9. SOC.SC.I TDEC kWh/day 2.13 x TDA + 0.36 2.02 x TDA + 0.36 1.88 x TDA + 0.36 1.76 x TDA + 0.36 1.76 x TDA + 0.36 1.38 x TDA + 0.36 HCS.SC.I TDEC kWh/day 0.55 x V + 0.88 0.49 x V + 0.88 0.43 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88 0.38 x V + 0.88

114EERE-2006-BT-STD-0126 COMMENT 47

1. Miscellaneous Equipment As stated in the August 2008 NOPR, certain types of equipment meet the definition of “commercial refrigerati on equipment” (Section 136(a)(3 ) of EPACT 2005), but do not fall directly into any of the 38 equipment cl asses defined in the market and technology assessment. One of these types is hybrid cases, in which two or more compartments are in different equipment families and are contained in one cabin et. Another is refrigeratorfreezers, which have two compartments in the same equipment family but have different operating temperatures. Hybrid re frigerator-freezers, where tw o or more compartments are in different equipment families and have diffe rent operating temperatures, may also exist. Another is wedge cases, which form miter tr ansitions (a corner section between two refrigerated display merchandisers) between st andard display case lineups. DOE is using language that will allow manufact urers to determine appropriate standard levels for these types of equipment.

An example of a pure hybrid case (one with two or more compartments in different equipment families and operating at the same te mperature) is a unit with one open and one closed medium-temperature compartment, such as those seen in coffee shops that sell baked goods and beverages. These hybrid cases ma y be either self-contained or remote condensing, and may be cooled by one or more condensing units. They may also have one evaporator cooling both compartments or one evaporator feeding each compartment separately.

115EERE-2006-BT-STD-0126 COMMENT 47
An example of a refrigerator-freezer is a unit with doors where one compartment operates at medium temperature and one compar tment operates at low temperature. Remote condensing commercial refrigerator-freezers (w ith and without doors) and self-contained commercial refrigerator-freezers without doors ma y operate in one of two ways. They may operate as separate chilled and frozen compar tments with evaporator s fed by two sets of refrigerant lines or two compressors. Alternativ ely, they may operate as separate chilled and frozen compartments fed by one set of low-te mperature refrigerant lines (with evaporator pressure regulator (EPR) valves or similar devi ces used to raise the evaporator pressure) or

one compressor.

An example of a hybrid refrigerator-freeze r is a unit with one open compartment at medium temperature and one closed compartmen t at low temperature. As with pure hybrid cases, these cases may be either self-containe d or remote condensing, and may be cooled by one or more condensing units. In the case of remote condensing equipment, they may operate as separate chilled and frozen compar tments with evaporator s fed by two sets of refrigerant lines or two compressors, or they may operate as separate chilled and frozen compartments fed by one set of low-temperat ure refrigerant lines (with EPR valves or similar devices used to raise the evaporat or pressure of one compartment) or one

compressor.

In the August 2008 NOPR, DOE proposed using the following language for requiring manufacturers to meet standards for hy brid cases, refrigerator-freezers, and hybrid refrigerator-freezers:

116EERE-2006-BT-STD-0126 COMMENT 47

• For commercial refrigeration equipment with two or more compartments (i.e. , hybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator freezers), the MDEC for each model shall be the sum of the MDEC values for all of its compartments. For each compartment, measure the TDA or volume of that compartment, and determine the appropriate equipment class based on that compartment’s equipment famil y, condensing unit configuration, and designed operating temperature. The MDEC limit for each compartment shall be the calculated value obtained by entering that compartment’s TDA or volume into the standard equation for that compartment’s equipment class. Measure the calculated daily energy consumption (CDEC) or to tal daily energy consumption (TDEC) for the entire case as follows:

o For remote condensing commercial h ybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybr id refrigerator-freezers, where two or more independent condensing units each separately cool only one compartment, measure the total refrigeration load of each compartment separately according to the ANS I/ASHRAE Standard 72-2005 test procedure. Calculate compressor energy consumption (CEC) for each compartment using Table 1 in ARI St andard 1200-2006 using the saturated evaporator temperature for that compartment. The calculated daily energy consumption (CDEC) for the entire case shall be the sum of the CEC for each compartment, fan energy consumption (FEC), lighting energy consumption (LEC), anti-condensate energy cons umption (AEC), defrost energy

117EERE-2006-BT-STD-0126 COMMENT 47
consumption (DEC), and condensate evaporator pan energy consumption (PEC) (as measured in ARI Standard 1200-2006).

o For remote condensing commercial h ybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybr id refrigerator-freezers, where two or more compartments are cooled collectively by one condensing unit, measure the total refrigeration load of the entire case according to the ANSI/ASHRAE Standard 72-2005 test pr ocedure. Calculate a weighted saturated evaporator temperature for the entire case by (i) multiplying the saturated evaporator temperature of each compartment by the volume of that compartment (as measured in ARI St andard 1200-2006), (ii) summing the resulting values for all compartments, and (iii) dividing th e resulting total by the total volume of all compartments. Calculate the CEC for the entire case using Table 1 in ARI Standard 1200-2006, using the total refrigeration load and the weighted average saturated evaporator temperature. The CDEC for the entire case shall be the sum of the CEC, FEC, LEC, AEC, DEC, and
PEC.

o For self-contained commercial hybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refr igerator-freezers, measure the total daily energy consumption (TDEC) for the entire case according to the ANSI/ASHRAE Standard 72-2005 test procedure.

In response to the NOPR, Traulsen s uggested that DOE address commercial refrigerator-freezers by summing the maximum da ily energy consumption values for all of

118EERE-2006-BT-STD-0126 COMMENT 47
its individual compartments. (Traulsen, No. 25 at p. 2)

DOE agrees with this suggestion and notes that it is in alignment with the proposal in the August 2008 NOPR for commercial refrig eration equipment with two or more compartments. Therefore, DOE is adopti ng the language above for hybrid cases, refrigerator-freezers, and hybrid refrige rator freezers in its final rule.

Additionally, DOE is adopting the followi ng language to address wedge cases: For remote condensing and self-contained wedge cases, measure the CDEC or TDEC according to the ANSI/ARI 1200-2006 test proced ure. The MDEC for each model shall be the amount derived by incorporating into th e standard equation for the appropriate equipment class a value for the TDA that is the product of: (1) the vertical height of the air curtain (or glass in a transparent door), and (2 ) the largest overall wi dth of the case when viewed from the front.

B. Significance of Energy Savings To estimate the energy savings through 2042 due to new standards, DOE compared the energy consumption of commercial refri geration equipment unde r the base case (no standards) to energy consumption of this equipment under each TSL that DOE considered. Table VI-4 shows DOE’s NES estimates, which it based on the AEO2008 reference case, for each TSL. Chapter 11 of the TSD describes these estimates in more detail. DOE reports both undiscounted and discounted values of energy savings. Discounted energy savings represent a policy perspective where energy savi ngs farther in the future are less significant

119EERE-2006-BT-STD-0126 COMMENT 47
than energy savings closer to the present. E ach TSL considered in this rulemaking resulted in significant energy savings, and the amount of savings increased with higher energy conservation standards. Energy savings range d from an estimated 0.168 quads to 1.298 quads for TSLs 1 through 5 (undiscounted).

Table VI-4 Summary of Cumulative Na tional Energy Savings for Commercial Refrigeration Equipment (Energy Savings for Units Sold from 2012 to 2042) Primary National Energy Savings (quads) (sum of all equipment classes) Trial Standard Level Undiscounted 3% Discounted 7% Discounted 1 0.168 0.088 0.041 2 0.645 0.339 0.159 3 1.013 0.532 0.250 4 1.035 0.544 0.256 5 1.298 0.683 0.321

C. Economic Justification
1. Economic Impact on Commercial Customers

a. Life-Cycle Costs and Payback Period Commercial customers will be affected by the standards because they will experience higher purchase prices and lower ope rating costs. Generally, these impacts are best captured by changes in lif e-cycle costs and payback period. Therefore, DOE calculated the LCC and PBP for the standard levels c onsidered in this rulemaking. DOE’s LCC and PBP analyses provided five key outputs for each TSL, reported in Table VI-5 through Table
VI-19 . The first three outputs are the proportion of purchases of commercial refrigeration equipment where the purchase of a design that complies with the TSL would create: (1) a net life-cycle cost, (2) no impact, or (3) a net life-cycle savings for the consumer. The fourth output is the average net life-cycle savings from purchasing a complying design. The fifth

120EERE-2006-BT-STD-0126 COMMENT 47
output is the average PBP for the customer purchasing a design that complies with the TSL compared with purchasing baseline equipmen t. The PBP is the number of years it would take for the customer to rec over the increased costs of highe r-efficiency equipment through energy savings based on the operating cost savi ngs from the first year of ownership. The PBP is an economic benefit-cost measure that uses benefits and cost s without discounting.

Table VI-5 Summary LCC and PBP Results for VOP.RC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 99 Equipment with No Change in LCC (%) 64 46 29 29 1 Equipment with Net LCC Savings (%) 36 54 71 71 0 Mean LCC Savings ($)* 1,344 1,308 1,788 1,788 (3,959) Mean Payback Period (years) 0.8 1.3 2.0 2.0 138.1 * Numbers in parentheses indicate negative savings.

Table VI-6 Summary LCC and PBP Resu lts for VOP.RC.L Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 69 52 23 8 8 Equipment with Net LCC Savings (%) 31 48 77 92 92 Mean LCC Savings ($) 3,501 4,500 4,610 3,938 3,938 Mean Payback Period (years) 0.7 1.1 1.2 2.8 2.8

Table VI-7 Summary LCC and PBP Resu lts for VOP.SC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 69 Equipment with No Change in LCC (%) 67 35 21 21 1 Equipment with Net LCC Savings (%) 33 65 79 79 30 Mean LCC Savings ($) 842 1,209 1,549 1,549 (451) Mean Payback Period (years) 0.8 1.6 2.4 2.4 11.2

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Table VI-8 Summary LCC and PBP Re sults for VCT.RC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 80 60 17 8 8 Equipment with Net LCC Savings (%) 20 40 83 92 92 Mean LCC Savings ($) 320 657 2,375 2,339 2,339 Mean Payback Period (years) 0.8 1.3 3.8 3.9 3.9

Table VI-9 Summary LCC and PBP Re sults for VCT.RC.L Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 62 43 20 10 10 Equipment with Net LCC Savings (%) 38 57 80 90 90 Mean LCC Savings ($) 762 4,137 5,450 5,419 5,419 Mean Payback Period (years) 1.1 2.4 2.5 2.6 2.6

Table VI-10 Summary LCC and PBP Results for VCT.SC.I Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 55 41 20 9 9 Equipment with Net LCC Savings (%) 45 59 80 91 91 Mean LCC Savings ($) 2,941 4,893 5,234 5,217 5,217 Mean Payback Period (years) 1.0 1.5 1.6 1.7 1.7

Table VI-11 Summary LCC and PBP Results for VCS.SC.I Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 76 50 11 11 11 Equipment with Net LCC Savings (%) 24 50 89 89 89 Mean LCC Savings ($) 704 1,321 1,757 1,757 1,757 Mean Payback Period (years) 0.4 0.6 1.3 1.3 1.3

Table VI-12 Summary LCC and PBP Results for SVO.RC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 99 Equipment with No Change in LCC (%) 65 47 30 30 1 Equipment with Net LCC Savings (%) 35 53 70 70 0 Mean LCC Savings ($) 907 896 1,274 1,274 (2,974) Mean Payback Period (years) 0.8 1.3 1.9 1.9 196.8

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Table VI-13 Summary LCC and PBP Results for SVO.SC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 69 Equipment with No Change in LCC (%) 68 36 22 22 2 Equipment with Net LCC Savings (%) 32 64 78 78 29 Mean LCC Savings ($) 583 853 1,136 1,136 (355) Mean Payback Period (years) 0.6 1.4 2.3 2.3 11.5

Table VI-14 Summary LCC and PBP Results for SOC.RC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 92 Equipment with No Change in LCC (%) 82 64 29 29 3 Equipment with Net LCC Savings (%) 18 36 71 71 5 Mean LCC Savings ($) 405 851 945 945 (1,458) Mean Payback Period (years) 0.5 0.8 1.7 1.7 19.4

Table VI-15 Summary LCC and PBP Resu lts for HZO.RC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 80 60 39 19 19 Equipment with Net LCC Savings (%) 20 40 61 81 81 Mean LCC Savings ($) 419 887 1,063 1,040 1,040 Mean Payback Period (years) 0.5 0.8 1.2 1.6 1.6

Table VI-16 Summary LCC and PBP Resu lts for HZO.RC.L Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 59 39 19 19 19 Equipment with Net LCC Savings (%) 41 61 81 81 81 Mean LCC Savings ($) 668 1,047 1,102 1,102 1,102 Mean Payback Period (years) 1.0 1.4 1.6 1.6 1.6

Table VI-17 Summary LCC and PBP Resu lts for HZO.SC.M Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 73 45 21 10 10 Equipment with Net LCC Savings (%) 27 55 79 90 90 Mean LCC Savings ($) 344 615 861 826 826 Mean Payback Period (years) 0.4 1.0 1.8 2.3 2.3

123EERE-2006-BT-STD-0126 COMMENT 47
Table VI-18 Summary LCC and PBP Resu lts for HZO.SC.L Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 73 46 21 10 10 Equipment with Net LCC Savings (%) 27 54 79 90 90 Mean LCC Savings ($) 670 1,215 1,784 1,761 1,761 Mean Payback Period (years) 0.3 0.8 1.5 1.7 1.7

Table VI-19 Summary LCC and PBP Results for HCT.SC.I Equipment Class Trial Standard Level 1 2 3 4 5 Equipment with Net LCC Increase (%) 0 0 0 0 0 Equipment with No Change in LCC (%) 65 47 30 14 14 Equipment with Net LCC Savings (%) 35 53 70 86 86 Mean LCC Savings ($) 211 775 797 785 785 Mean Payback Period (years) 0.6 1.4 1.5 1.9 1.9

For five equipment classes (VOP.RC. M, VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M), TSL 5 resulted in negative LCC sa vings compared to the purchase of baseline equipment. For all other equipment classes, TSL 5 showed positive LCC savings. For equipment classes with lighting, including LED lighting at TSL 5 had a significant impact on the calculated LCC savings. For equi pment classes without lighting (i.e. , VCS.SC.I, HZO.RC.L, HZO.SC.M, HZO.SC.L, and HCT. SC.I), the difference in LCC savings between TSL 3 and TSL 5 was small, between $0 and $35 less at TSL 5 than at TSL 3. For VCT.RC.L, VCT.RC.I, and VCT.SC.I, the diffe rence in LCC savings between TSL 3 and TSL 5 was small as well (between $17 and $36 less savings at TSL 5 than at TSL 3). VOP.RC.L showed a more signif icant reduction in LCC savings at TSL 5 compared to TSL 3 at $672.

124EERE-2006-BT-STD-0126 COMMENT 47

b. Commercial Customer Sub-Group Analysis Using the LCC spreadsheet model, DOE estimated the impact of the TSLs on small businesses, a customer sub-group. DOE estimated the LCC and PBP for small food sales businesses defined by the Small Business Administration (SBA) by presuming that most small business customers could be represented by the analysis performed for small grocery and convenience store owners. DOE further assu med that the smaller, independent grocery and convenience store chains may not have ac cess to national accounts, but would instead purchase equipment primarily through distribut ors and grocery wholes alers. DOE modified the distribution channels for remote condensi ng and self-contained equipment to these small businesses as follows:

• For remote condensing equipment, 15 pe rcent of the sales were assumed to pass through a manufacturer-to-dist ributor-to-contractor-to-customer channel, and 85 percent were assu med to be purchased through a manufacturer-to-distributo r-to-customer channel.

• For self-contained equipment, 35 per cent of sales were assumed to pass through a manufacturer-to-dist ributor-to-contractor-to- customer channel, and 65 percent were assumed to be pur chased through a manufacturer-todistributor-to-customer channel.

In both cases, the distri bution chain markups were calculated with these revised shipment weights. Table VI-20 shows the mean LCC savings from proposed energy conservation standards for the small business sub-group, and Table VI-21 shows the mean

125EERE-2006-BT-STD-0126 COMMENT 47
payback period (in years) for this sub-gr oup. More detailed discussion on the LCC subgroup analysis and results can be found in chapter 12 of the TSD. Table VI-20 Mean Life-Cycle Cost Savings for Commercial Refrigeration Equipment Purchased by LCC Su b-Group (Small Business) (2007$) * Equipment Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 VOP.RC.M 1,746 1,764 2,443 2,443 (3,463) VOP.RC.L 4,534 5,882 6,064 5,549 5,549 VOP.SC.M 1,094 1,624 2,145 2,145 131 VCT.RC.M 416 868 3,484 3,458 3,458 VCT.RC.L 1,001 5,639 7,454 7,447 7,447 VCT.SC.I 3,811 6,451 6,944 6,949 6,949 VCS.SC.I 902 1,703 2,314 2,314 2,314 SVO.RC.M 1,177 1,209 1,738 1,738 (2,637) SVO.SC.M 752 1,138 1,565 1,565 61 SOC.RC.M 521 1,106 1,290 1,290 (948) HZO.RC.M 538 1,152 1,397 1,383 1,383 HZO.RC.L 875 1,383 1,466 1,466 1,466 HZO.SC.M 440 803 1,156 1,129 1,129 HZO.SC.L 857 1,574 2,364 2,352 2,352 HCT.SC.I 272 1,022 1,055 1,057 1,057 * Numbers in parentheses indicate negative savings.

Table VI-21 Mean Payback Period for Commercial Refrigeration Equipment Purchased by LCC Sub-Gro up (Small Business) (Years) Equipment Class TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 VOP.RC.M 0.71 1.19 1.77 1.77 51.97 VOP.RC.L 0.64 0.99 1.10 2.53 2.53 VOP.SC.M 0.70 1.43 2.17 2.17 9.50 VCT.RC.M 0.73 1.14 3.54 3.64 3.64 VCT.RC.L 1.00 2.17 2.32 2.42 2.42 VCT.SC.I 0.90 1.32 1.47 1.57 1.57 VCS.SC.I 0.33 0.53 1.17 1.17 1.17 SVO.RC.M 0.70 1.19 1.73 1.73 106.71 SVO.SC.M 0.55 1.26 2.09 2.09 9.71 SOC.RC.M 0.48 0.75 1.55 1.55 15.62 HZO.RC.M 0.46 0.72 1.13 1.47 1.47 HZO.RC.L 0.93 1.26 1.50 1.50 1.50 HZO.SC.M 0.36 0.92 1.66 2.06 2.06 HZO.SC.L 0.29 0.71 1.35 1.55 1.55 HCT.SC.I 0.58 1.24 1.32 1.74 1.74

For commercial refrigeration equipment, the LCC and PBP impacts for small businesses are similar to those of all customers as a whole. While the discount rate for small

126EERE-2006-BT-STD-0126 COMMENT 47
grocery stores is higher than the rate for commercial refriger ation equipment customers as a whole and equipment prices are higher due to the higher markups, these small business customers appear to retain commercial refri geration equipment over longer periods. Also, smaller stores generally tend to pay higher elec tric prices. The average LCC savings for the small business sub-group is sli ghtly higher than that calculat ed for the average commercial refrigeration equipment customer, and the average PBP is slightly shorter than the national average. DOE concluded that the small f ood sales businesses defined by SBA will not experience economic impacts significantly differe nt or more negative than those impacts on food sales businesses as a whole.

2. Economic Impact on Manufacturers DOE determined the economic impacts of today’s standard on manufacturers, as described in the proposed rule. 73 FR at 50118-21. For the final rule, DOE analyzed manufacturer impacts under two distinct mar kup scenarios: (1) the preservation-of-grossmargin-percentage markup scenario, and (2) the preservation-of-gross-margin (absolute dollars) markup scenario. 73 FR 50107. Under the first scenario, DOE applied a single uniform “gross margin percentage” markup that represents the current markup for manufacturers in the commercia l refrigeration equipment industry. This markup scenario implies that as production costs increase with efficiency, the absolute dollar markup will also increase. DOE calculated that the non- production cost markup—w hich consists of selling, general, and administ rative (SG&A) expenses; rese arch and development (R&D)

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expenses; interest; and profit—is 1.32. This markup is consistent with the one DOE used in its engineering and GRIM analyses for the base case.

The implicit assumption behind the second scenario is that the industry can only maintain its gross margin from the baseline (in absolute dollars) after the standard. The industry would do so by passing its increased production costs on to customers without passing on its increased R&D and SG&A expenses so the gross profit per unit is the same in absolute dollars. DOE implemented this ma rkup scenario in the GRIM by setting the production cost markups at each TSL to yield a pproximately the same gross margin in the standards cases in 2012 as they yielded in the base case.

Together, these two markup scenarios charac terize the range of possible conditions the commercial refrigeration equipment mark et will experience as a result of new energy conservation standards. See chapter 13 of th e TSD for additional details of the markup scenarios and analysis. DOE also examined bot h of these scenarios for this final rule.

a. Industry Cash-Flow Analysis Results Using two different markup scenarios, 73 FR at 50107, 50118-20, DOE estimated the impact of new standards for commercial refrigeration equipment on the INPV of the commercial refrigeration equipment industry. The impact consists of the difference between INPV in the base case and INPV in the standard s case. INPV is the primary metric used in the MIA, and represents one measure of the fa ir value of the industry in today’s dollars.

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DOE calculated the INPV by summing all of the net cash flows, discounted at the commercial refrigeration equipment industr y’s cost of capital or discount rate.

Table VI-22 and Table VI-23 show the changes in INPV that DOE estimates would result from the TSLs DOE considered for th is final rule. The tables also present the equipment conversion expenses and capital in vestments that the industry would incur at each TSL. Product conversion expenses include engineering, prototyping, testing, and marketing expenses incurred by a manufacturer as it prepares to comply with a standard. Capital investments are the one-time outlays fo r tooling and plant changes required for the industry to comply (i.e. , conversion capital expenditures). Table VI-22 Manufacturer Impact Analysis Re sults, Including INPV Estimates, for Commercial Refrigeration Equipment Und er the Preservation of Gross Margin Percentage Markup Scenario

Preservation of Gross Margin Percentage Markup Scenario with a Rollup Shipment Scenario Trial Standard Level Units Base Case 1 2 3 4 5 INPV 2007$ millions 540 540 548 530 501 560

2007$ millions - 0 8 (11) (39) 20 Change in INPV* (%) - 0.02 1.42 (1.95) (7.29) 3.73 New Energy Conservation Standards Equipment Conversion Expenses 2007$ millions - 0.5 2.8 20.6 40.4 51.6
New Energy Conservation Standards Capital Investments 2007$ millions - 0.8 5.0 36.3 71.2 90.8

Total Investment Required 2007$ millions - 1.3 7.8 57.0 111.6 142.4 * Values in Table VI-22 may not appear to sum due to rounding. Table VI-23 Manufacturer Impact Analysis Re sults, Including INPV Estimates, for Commercial Refrigeration Equipment Und er the Preservation of Gross Margin (Absolute Dollars) Markup Scenario Preservation of Gross Margin Absolute Dollars Markup Scenario with a Rollup Shipment Scenario

129EERE-2006-BT-STD-0126 COMMENT 47

Trial Standard Level Units Base Case 1 2 3 4 5 INPV 2007$ millions 540 533 502 442 392 200

2007$ millions - (7) (39) (99) (148) (340) Change in INPV* (%) - (1.27) (7.16) (18.26) (27.35) (63.01) New Energy Conservation Standards Equipment Conversion Expenses 2007$ millions - 0.5 2.8 20.6 40.4 51.6
New Energy Conservation Standards Capital Investments 2007$ millions - 0.8 5.0 36.3 71.2 90.8

Total Investment Required 2007$ millions - 1.3 7.8 57.0 111.6 142.4 * Values in Table VI-23 may not appear to sum due to rounding. The August 2008 NOPR discusses the esti mated impact of new commercial refrigeration equipment standards on INPV for each equipment class. 73 FR 50118–20. See chapter 13 of the TSD for details.

b. Cumulative Regulatory Burden DOE’s assesses manufacturer burden through the cumulative impact of multiple DOE standards and other regulatory actions that affect manufacturers of the same covered equipment and other equipment produced by th e same manufacturers or their parent companies. 73 FR at 50120. For the August 2008 NOPR, DOE listed the EPA-mandated phaseout of HCFCs as refrigerants and blow ing agents, and energy conservation standards for residential central air conditioners and heat pumps and room air conditioners as examples of other Federal re gulations that could affect manufacturers of commercial refrigeration equipment. 73 FR 50120.

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Following the August 2008 NOPR, public comments made DOE aware that commercial refrigeration equipment manufacturer s must test equipment using the NSF 7 test procedure in addition to the DOE test procedur e. As mentioned previ ously, NSF 7 measures product temperature for food safety requirement s, while the DOE test procedure measures energy consumption for energy conservation st andards. Although NSF 7 is not a Federal regulation, the commercial refr igeration equipment industry in general already tests its equipment using this procedure to meet food safety requirements.

For this final rule, DOE also identifie d the other DOE regulations commercial refrigeration equipment manufacturers are fa cing for other equipment. DOE identified several regulations that go into effect 3 years before and after the effective date of the new energy conservation standards fo r commercial refrigeration e quipment. DOE recognizes that each regulation can significantly affect manuf acturers’ financial operations. Multiple regulations affecting the same manufacturer can quickly re duce manufacturers’ profits and possibly cause an exit from the market.

DOE requested information about th e cumulative regulatory burden during manufacturer interviews. Manufacturers indica ted that they had already begun using other non-HCFC refrigerants and blowing agents. Ma nufacturers did not indicate that the DOE regulations on residential central air conditioners and heat pu mps or room air conditioners were a great concern. DOE sought comment on these and other potential regulations affecting manufacturers for the final rule. From its own research, DOE learned that manufacturers of commercial re frigeration equipment or their parent companies could also

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be affected by rulemakings on PTACs and PT HPs, room air conditioners, residential furnaces, and walk-in freezers and coolers. DOE identified the costs of additional regulations when these estimates were availa ble from other DOE rulemakings. For example, two commercial refrigeration equipment manuf acturers (or their parent companies) also manufacture PTACs and PTHPs. DOE estimated that in the PTAC and PTHP industry, manufacturers may incur an estimated total conversion expense of $17.3 million (2007$). However, DOE has limited data on the importance of these other regulated products for manufacturers of commercial refrigeration equipment. Differences in market shares and manufacturing processes of other regulated products for each manufacturer could cause varying degrees of burdens on these manuf acturers. See chapter 13 of the TSD for additional information regarding the cu mulative regulatory burden analysis.

c. Impacts on Employment As discussed in the August 2008 NOPR, DOE expects that employment by commercial refrigeration equipment manufactur ers would increase under all of the TSLs considered for today’s rule. However, this does not take into account any relocation of domestic jobs to countries with lower labor costs that might be influenced by the level of investment required by new standards. 73 FR at 50120-21. Table VI-24 shows the direct employment impacts at each TSL. Further suppor t for this conclusion is set forth in chapter 13 of the TSD.

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Table VI-24 Commercial Refrigeratio n Equipment Estimated Employment Impacts in 2012 Trial Standard Level Base Case TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Total Number of Domestic Production Employees in 2012 2,199 2,205 2,291 2,371 2,396 2,978 Change in Total Number of Domestic Production Employees in 2012 Due to Standards* - 6 92 172 197 779
Total Number of Domestic NonProduction Employees in 2012* 681 683 709 734 742 922 Total Number of Domestic Employees in 2012* 2,880 2,888 3,000 3,105 3,137 3,900 * Figures do not take into account any relocation of domestic jobs to countries with lower labor costs that might be influenced by the level of investment required by new standards.

d. Impacts on Manufacturing Capacity According to the majority of commercial refrigeration equipment manufacturers, new energy conservation standards will not si gnificantly affect manufacturers’ production capacity. Any necessary redesign of commercial refrigeration equipment will not change the fundamental assembly of the equipment. Howe ver, manufacturers an ticipate some minor changes to tooling. Thus, manufacturers will be able to maintain manufacturing capacity levels and continue to meet market dema nd under new energy conservation standards.

e. Impacts on Manufacturers That Are Small Businesses As discussed in the August 2008 NOPR, DOE e xpects today’s standard to have little or no differential impact on small manufacturer s of commercial refri geration equipment. 73 FR at 50121, 50130-31. DOE found that small ma nufacturers generally have the same concerns as large manufacturers regarding en ergy conservation standards. DOE also found no significant differences in the R&D emphasis or marketing strategi es between small and large manufacturers. Therefore, DOE believe s the GRIM analysis, which models each equipment class separately and aggregates the results to produce an industry-wide impact, is 133EERE-2006-BT-STD-0126 COMMENT 47
representative of the small ma nufacturers that would be aff ected by standards. The impacts on small manufacturers are disc ussed further in section VII.B of this preamble (“Review Under the Regulatory Flexibility Act”).

3. National Net Present Value and Net National Employment The NPV analysis estimates the cumulative benefits or costs to the Nation that would result from particular standard levels . While the NES analysis estimates the energy savings from each standard level DOE considers, relative to the base case, the NPV analysis estimates the national economic impacts of each level relative to the base case. Table VI-25 provides an overview of the NPV results for each TSL considered for this final rule, using both a 7-percent and a 3-perc ent real discount rate.

Table VI-25 shows the estimated cumulative NPV for commercial refrigeration equipment resulting from the sum of the NPV calculated for each of the 15 primary equipment classes analyzed. Table VI-25 assumes the AEO2008 reference case forecast for electricity prices. At a 7-percent discount rate, TSLs 1-4 show positive cumulative NPVs. The highest NPV is provided by TSL 3 at $1.45 billion. TSL 4 provide d $1.41 billion, close to that of TSL 3. TSL 5 showed a negative NPV at -$2.59 billion, the result of negative NPV observed in five equipment clas ses (VOP.RC.M, VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M).

At a 3-percent discount rate, the picture is similar across the equipment classes. TSL 5 showed a negative NPV at -$3.79 billion, wher eas the highest NPV was provided at TSL 3

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(i.e. , $3.97 billion). TSL 4 provided a near equiva lent NPV at $3.93 billion. TSL 5 provided a NPV of -$3.79 billion dollars. Five e quipment classes (VOP.RC.M, VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M) were determined to have negative NPVs at a 3- percent discount rate at TS L 5. See TSD chapter 11 for more detailed NPV results.

Table VI-25 Overview of National Net Present Value Results NPV (billion 2007$) Trial Standard Level 7% Discount Rate 3% Discount Rate 1 0.33 0.83 2 0.98 2.60 3 1.45 3.97 4 1.41 3.93 5 (2.59) (3.79)

DOE also estimated the national employmen t impacts that would result from each TSL. As discussed in the August 2008 NOPR, 73 FR at 50107-08, 50122-23, DOE expects the net monetary savings from standards to be redirected to other forms of economic activity. DOE also expects these shifts in sp ending and economic activity to affect the demand for labor. As shown in Table VI-26 , DOE estimates net indirect employment impacts—those changes of employment in the larger economy (other than in the manufacturing sector being regulated)—from commercial re frigeration equipment energy conservation standards to be pos itive but very small relative to total national employment. These impacts might be offset by other, unant icipated effects on empl oyment. For details on the employment impact analysis methods and results, see TSD chapter 15.

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Table VI-26 Net National Change in I ndirect Employment, Thousands of Jobs in 2042 Net National Change in Jobs

Trial Standard Level 2012 2022 2032 2042 1 0 202 289 332 2 (6) 1,056 1,482 1,699 3 (15) 1,591 2,238 2,559 4 (18) 1,658 2,337 2,670 5 (40) 1,856 2,645 3,011 Maximum Job Impact (40) 1,856 2,645 3,011

4. Impact on Utility or Performance of Equipment As indicated in section V.B.4 of the August 2008 NOPR, the new standards DOE is adopting today will not lessen the utility or performance of any commercial refrigeration equipment. 73 FR at 50123.

5. Impact of Any Lessening of Competition As discussed in the August 2008 NOPR, 73 FR at 50079, 50123, and in section
III.D.1.e of this preamble, DOE considers any lessen ing of competition likely to result from standards. The Attorney Ge neral determines the impact, if any, of any lessening of competition.

DOJ concluded that the commercial refriger ation equipment standards contained in the proposed rule would not adversely affect competition. In reaching this conclusion, DOJ noted that the proposed standards took in to account comments from commercial refrigeration equipment manufacturers, ASHRAE , ACEEE, and electric utilities. DOJ noted further that all key components are available for purchase by any manufacturer; therefore, no manufacturer has a technological advantage in meeting the proposed standards. Finally,

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DOJ noted that DOE found no significant differe nces between the concerns of large and small manufacturers, and DOJ found no eviden ce that certain manu facturers would be placed at a competitive disadvantage to other manufacturers.

6. Need of the Nation to Conserve Energy When economically justified, an improvement in the energy efficiency of commercial refrigeration equipment is likely to improve th e security of the Nation by reducing overall energy demand, thus reducing the Nation’s relia nce on foreign sources of energy. Reduced demand is also likely to improve the reliability of the electricity system, particularly during peak-load periods. As a measure of this re duced demand, DOE expect s the new standards covered under this rulemaking to eliminate th e need for the construction of approximately 121 megawatts to 2,989 megawatts of new power by 2042.

Enhanced energy efficiency also produces environmental benefits. The expected energy savings from new standards for the equipment covered by this rulemaking will reduce the emissions of air pollutants and greenhouse gases associated with electricity production. Table VI-27 provides DOE’s estimate of cumulative CO 2 , NO X , and Hg emissions reductions that would result from th e TSLs considered in this rulemaking. The expected energy savings from new standards for commercial refrigeration equipment may also reduce the cost of maintaining nationw ide emissions standards and constraints.

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Table VI-27 Summary of Emissions Reductions for Commercial Refrigeration Equipment (cumulative reductions for equipment sold from 2012 to 2042) Trial Standard Levels †† TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 CO 2 (Mt*) 8.5 32.8 50.7 52.6 66.0 NO X (kt**) 0.59 to 14.58 2.27 to 56.04 3.51 to 86.77 3.64 to 89.97 4.56 to 112.84 Hg (t † ) 0 to 0.224 0 to 0.86 0 to 1.332 0 to 1.381 0 to 1.732 * Mt = million metric tons ** kt = thousand tons † t = tons †† Negative values indicate emission increases. Detail ma y not appear to sum to total due to rounding.

The estimated cumulative CO 2 , NO X , and Hg emissions reductions for the new energy conservation standards range up to 66 Mt for CO 2 , 1.56 to 112.84 kt for NO X , and 0 to 1.732 t for Hg for commercial refrigera tion equipment from 2012 to 2042. In the EA (chapter 16 of the TSD), DOE repor ts estimated annual changes in CO 2 , NO X , and Hg emissions attributable to each TSL. As discussed in section IV.L of this final rule, DOE does not report SO 2 emissions reduction from power pl ants because reductions from an energy conservation standard would not affect the overall level of SO 2 emissions in the United States due to emissions caps for SO 2 .

The NEMS-BT modeling assumed that NO X would be subject to CAIR, issued by the U.S. Environmental Protection Agency on March 10, 2005. 21 70 FR 25162 (May 12, 2005). On July 11, 2008, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) issued its decision in Nort h Carolina v. Environmental Protection Agency , 22
in which the court vacated the CAIR. 531 F.3d 896 (D.C. Cir. 2008). If left in place, CAIR would have permanently capped emissions of NO X in 28 eastern States and the District of Columbia. As with the SO 2 emissions cap, a cap on NO X emissions would have meant that

21 See www.epa.gov/clean airinterstaterule. 22 Case No. 05-1244, 2008 WL 2698180 at *1 (D.C. Cir. July 11, 2008). 138EERE-2006-BT-STD-0126 COMMENT 47
energy conservation standards are not lik ely to have a physical effect on NO X emissions in states covered by the CAIR caps. While the caps would have meant that physical emissions reductions in those States w ould not have resulted from th e energy conservation standards that DOE is establishing today, the standards mi ght have produced an environmental-related economic impact in the form of lower prices for emissions allowance credits, if large enough. DOE notes that the estimated total reduction in NO X emissions, including projected emissions or corresponding allowance credits in States covered by the CAIR cap, was insignificant and too small to a ffect allowance prices for NO X under CAIR.

Even though the D.C. Circuit vacated CAIR , DOE notes that the D.C. Circuit left intact EPA's 1998 NO X SIP Call rule, which cap ped seasonal (summer) NO X emissions from electric generating units and other s ources in 23 jurisdictions, and gave those jurisdictions the option to participate in a cap and trade program. 63 FR 57356, 57359 (Oct. 27, 1998). 23 The SIP Call rule may provide a simila r, although less extensive, regional cap and may limit actual reduction in NO X emissions from revised standards occurring in states participating in the SIP Call rule. However, the possibility that the SIP Call rule may have the same effect as CAIR is highly uncertai n. Therefore, DOE esta blished a range of NO X reductions due to the standards being established in today’s final rule. DOE’s low estimate

23 In the NOx SIP Call rule, EPA found that sources in the District of Columbia and 22 “upwind” states were emitting NOx (an ozone precursor) at levels that significantly contributed to “downwind” states not attaining the ozone NAAQS or at levels that interfered with states in attainment maintaining the ozone NAAQS. To ensure that downwind states attain or continue to a ttain the ozone NAAQS, EPA established a region-wide cap for NOx emissions from certain large combustion sources and set a NOx emissions budget for each State. Unlike the cap that CAIR would have established, the NOx SIP Call Rule’s cap only constrains seasonal (summertime) emissions. To comply with the NOx SIP Call Rule, states could elect to participate in the NOx Budget Trading Program. Under this pr ogram, each emission source is requi red to have one allowance for each ton of NOx emitted during the ozone season. States have flexibility in how they allocate allowances through their State Implementation Plans, but states must remain within the EPA- established budget. Emission sources are allowed to buy, sell, and bank NOx allowances as appropriate. On April 16, 2008, EPA determined that Georgia is no longer subject to the NOx SIP Call rule. 73 FR 21528 (April 22, 2008). 139EERE-2006-BT-STD-0126 COMMENT 47

was based on the emission rate of the cleanes t new natural gas combined-cycle power plant available for electricity generated, assumi ng that energy conservation standards would displace the generation of only the cleanest available fossil fuels. DOE used the emission rate, specified as 0.0341 t of NO X emitted per TWh of electricity generated, associated with an advanced natural gas combined-cycle pow er plant, as specified by NEMS-BT. To estimate the reduction in NO X emissions, DOE multiplied this emission rate by the reduction in electricity generation due to the new energy conservation standards considered. DOE’s high estimate of 0.843 t of NO X per TWh was based on a nationwide NO X emission rate for all electrical generation. Use of such an emission rate assumes that future power plants displaced are no cleaner than the plants that are being used currently to generate electricity. Under the high estimate assumpti on, energy conservation standards also would have little to no effect on th e generation mix. Based on AEO2008 for 2006, when no regulatory or non-regulatory measur es were in effect to limit NO X emissions, DOE multiplied this emission rate by the reduction in electricity generation due to the standards considered. Table VI-27 shows the range in NO X emission changes calcul ated using the low and high estimate scenarios by TSL. NO X emission reductions range from 0.59 to 112.84 kt for the TSLs considered. These changes in NO X emissions are extremely small, ranging from 0.001 to 0.168 percent of the national base case emissions forecast by NEMS-BT, depending on the TSL.

As noted in section IV.L , DOE is able to report an estimate of the physical quantity changes in Hg emissions associated with an energy conservation standard. Rather than using the NEMS-BT model, DOE established a range of Hg rates to estimate the Hg emissions

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that could be reduced through standards. DOE’s low estimate assumed that future standards would displace electrical generation from natura l gas-fired power plants, resulting in an effective emission rate of zero. The low-end em ission rate is zero beca use natural gas-fired power plants have virtually zero Hg em issions associated with their operation. DOE’s high estimate was based on a na tionwide mercury emission rate from
AEO2008 . Because power plant emission rates are a function of local regulation, scrubbers, and the mercury content of coal, it is extrem ely difficult to identif y a precise high-end emission rate. Therefore, DOE believes the most reasonable estimate is based on the assumption that all displaced coal generati on would have been emitting at the average emission rate for coal gene ration as specified by AEO2008 . 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. The estima ted changes in Hg emissions are shown in Table
VI-27 for commercial refrigeration equipment from 2012 to 2042. Hg emission reductions range from 0 to 1.732 tons for the TSLs considered. These changes in Hg emissions are extremely small, ranging from 0 to 0.003 perc ent of the national base case emissions forecast by NEMS-BT, depending on the TSL.

The NEMS-BT model used for today’s ru lemaking could not estimate Hg emission reductions due to new energy conservation stan dards, as it assumed that Hg emissions

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would be subject to EPA’ s Clean Air Mercury Rule 24 (CAMR). CAMR would have permanently capped emissions of mercury for new and existing coal-fired plants in all states by 2010. As with SO 2 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 environmental-rela ted economic benefit in the form of a lower price for emissions allowance cr edits, if large enough. DOE estimated that the change in the Hg emissions from energy conservation standa rds would not be larg e enough to influence allowance prices under CAMR.

On February 8, 2008, the D.C. Circuit i ssued its decision in New Jersey v. Environmental Protection Agency 25 to vacate CAMR. In light of this development and because the NEMS-BT model could not be us ed to directly calculate Hg emission reductions, DOE used the current Hg emissi on rates discussed above to calculate the emissions reductions in Table VI-27

.

In the August 2008 NOPR, DOE considered accounting for a monetary benefit of
CO 2 emission reductions associated with this rulemaking. To put the potential monetary benefits from reduced CO 2 emissions into a form that is like ly to be most useful to decisionmakers and interested parties, DOE used th e same methods it used to calculate the net present value of consumer cost savings. DOE converted the estimated year-by-year reductions in CO 2 emissions into monetary values, which were then discounted over the life of the affected equipment to the present using both 3-percent and 7-pe rcent discount rates.

24 70 FR 28606 (May 18, 2005). 25 No. 05-1097, 2008 WL 341338, at * (D.C. Cir. Feb. 9, 2008). 142EERE-2006-BT-STD-0126 COMMENT 47

In the August 2008 NOPR, DOE proposed to use the range $0 to $14 per ton. These estimates were based on an assumption of no be nefit to an average be nefit value reported by the Intergovernmental Panel on Climate Change (IPCC). 26 DOE derived the IPCC estimate used as the upper bound value from an estimate of the mean value of worldwide impacts due to climate change, and not just the effects likel y to occur within the United States. As DOE considers a monetary value for CO 2 emission reductions, the valu e should, if possible, be restricted to a representation of those costs a nd benefits likely to be experienced in the United States. DOE explained in the August 2008 NOPR that it expects such values would be lower than comparable global values; however, there currently are no consensus estimates for the U.S. benefits likely to result from CO 2 emission reductions. However, it is appropriate to use U.S. benefit values, where available, and not world benefit values, in its analysis. 27 Because U.S.-specific estimates are unavailable, and DOE did not receive any additional information that would help narro w the proposed range of domestic benefits, DOE used the global mean value as an upper bound U.S. value for purposes of the sensitivity analysis.

26 During the preparation of its most recent review of the state of climate science, the IPCC identified various estimates of the present value of reducing CO 2 emissions by 1 ton over the life that these emissions would remain in the atmosphere. The estimates reviewed by the IPCC spanned a range of values. Absent a consensus on any single estimate of the monetary value of CO 2 emissions, DOE used the estimates identified by the study cited in “Summary for Policymaker s,” prepared by Workin g Group II of the IP CC’s Fourth Assessment Report, to estimate the potential monetary value of CO 2 reductions likely to result from standards finalized in this rulemaking. According to IPCC, the mean social cost of carbon (SCC) reported in studies published in peer-reviewed journals was $43 per ton of carbon. This translates into about $12 per ton of CO 2 . The literature review (Tol 2005) from which this mean was derived did not report the year in which these dollars were denominated. However, DOE understands this estimate was denominated in 1995$. Updating that estimate to 2007$ yields a SCC of $15 per ton of CO 2 . 27 In contrast, most of the estimated costs and benefits of increasing the e fficiency of commercial refrigeration equipment include only economic values of impacts that would be experienced in the United States. DOE generally does not consider impacts on manufacturers that occur solely outside of the United States. 143EERE-2006-BT-STD-0126 COMMENT 47

DOE received several comments in res ponse to the proposed estimated value of CO 2 emissions reductions. In a comment submitte d by Earthjustice on behalf of itself and NRDC, Earthjustice questione d both the upper and lower bounds of DOE’s range of estimated CO 2 values, which it argued were too low. (Earthjustice, No. 38 at p. 7) Earthjustice also stated that it would be inappropriate to lim it the consideration to the value of CO 2 to a domestic value. (Earthjustice, No. 38 at p. 13) Earthjusti ce suggested that DOE consider relying on the estimate used in DOE’s analysis of the impacts of the LiebermanWarner Climate Security Act of 2007 (S. 2191). 28 (Earthjustice, No. 38 at p. 2) AHRI stated that DOE should not rely on the IPCC study or values under the European Union cap and trade program, because such a program has not yet been established in the United States. (AHRI, No. 33 at p. 6)

Given the uncertainty surrounding estimates of the social cost of carbon, relying on any single estimate may be inadvisable because any 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 la rge part to differences in assumptions regarding climate sensitivity, response la gs, the treatment of risk and equity,

28 According to Earthjustice’s analysis of the Li eberman-Warner Climate Security Act of 2007, implementation of this legislation would lead to a CO 2 allowance price of $30 per ton in 2020, rising to $61 per ton in 2030. 144EERE-2006-BT-STD-0126 COMMENT 47
economic and non-economic impacts, the in clusion of potentially catastrophic losses, and discount rates. 29

Because of this uncertainty, DOE used the SCC value from Tol (2005), which was presented in the IPCC’s Fourth Assessment Re port and provided a comprehensive metaanalysis of estimates for the value of SCC. Earthjustice commented th at this value was out of date, because Tol released an update of his 2005 meta-ana lysis in September 2007. This update reported an increase in his mean es timate of SCC from $43 to $71/ton carbon. Earthjustice stated that DOE should not cont inue to use old data and should update its sources. (Earthjustice, No. 38 at p. 9)

Although the Tol study was updated in 2007, the IPCC has not adopted the updated Tol study for its report. As a result, DOE conti nues to rely on the same study used by the IPCC. Moreover, DOE notes that the conclu sions of Tol (2007) are similar to the conclusions of Tol (2005). Tol (2007) continues to indicate that there is no consensus regarding the monetary value of reducing CO 2 emissions by 1 ton. The broad range of values in both Tol studies are the result of significant differen ces in the methodologies used in the studies Tol summarized. According to To l, all of the studies have shortcomings, largely because the subject is inherently complex and uncertain and requires broad multidisciplinary knowledge. Thus, it is not certain that the values reported in Tol (2007) are more accurate or representative than the values reported in Tol (2005).

29 Climate Change 2007 – Impacts, Adaptation and Vulnerability. Contribution of Working Group II to the Fourth Assessment Report of the IPCC, 17. Availabl e at www.ipcc-wg2.org (las t accessed Aug. 7, 2008).

145EERE-2006-BT-STD-0126 COMMENT 47

In today’s final rule, DOE is relying on th e range of values proposed in the August 2008 NOPR, which was based on the values pr esented in Tol (2005), as proposed. DOE does note that DOE mistakenly assumed that th e values presented in Tol (2005) were in 2000 dollars. In actuality, the values in Tol (2005) were indi cated to be approximately 1995 values in 1995 dollars. Had DOE at the NOPR st age applied the correct dollar year of the values presented in Tol (2005), DOE would ha ve proposed the range of $0 to $15 in the August 2008 NOPR. Additionally, DOE has applied an annual growth rate of 2.4 percent to the value of SCC, as suggested by the IP CC Working Group II (2007, p. 822). This growth rate is based on estimated incr eases in damage from future emissions that published studies have reported. As a result, for today’s final rule, DOE is assigning a range for SCC of $0 to $20 ($2007) per ton of CO 2 emissions.

Earthjustice questioned the use of the mean estimated social cost of CO 2 as an upper bound of the range. (Earthjustice, No. 38 at p. 9) However, the upper bound of the range DOE used is based on Tol (2005), which revi ewed 103 estimates of SCC from 28 published studies. Tol concluded that when only peer -reviewed studies published in recognized journals are considered, “climat e change impacts may be very uncertain but [it] is unlikely that the marginal damage costs of carbon dioxide emissions exceed $50 per ton carbon [comparable to a 2007 value of $20 per ton ca rbon dioxide when expressed in 2007 U.S. dollars with a 2.4 per cent growth rate.]”

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Earthjustice also questioned using $0 as the lower bound of DOE’s estimated range. (Earthjustice, No. 38 at p. 10) In setting a lower bound, DOE agrees with the IPCC Working Group II (2007) report that “si gnificant warming across the globe and the locations of significant observed changes in many systems c onsistent with warming is very unlikely to be due solely to natura l variability of temperatures or natu ral variability of the systems” (p. 9), and thus tentatively concludes that a global value of zero for re ducing emissions cannot be justified. However, it is reasonable to allow for the possibility that the U.S. portion of the global cost of CO 2 emissions may be quite low. In fact , some of the studies examined by Tol (2005) reported negative values for the SCC. As stated in the August 2008 NOPR, DOE is using U.S. benefit values, and not world bene fit values, in its analysis. Further, U.S. domestic values will be lower than the global values. Additionally, the statutory criteria in EPCA do not require consideration of global e ffects. Therefore, DOE is using a lower bound of $0 per ton of CO 2 emissions in estimating the potential benefits of today’s final rule.

Table VI-28 presents the resulting estimates of the potential range of net present value benefits associated with reducing CO 2 emissions.

Table VI-28 Estimates of Savings from CO 2 Emissions Reductions Under Commercial Refrigeration Equipment Trial Standard Leve ls at a Seven-Percent Discount Rate and Three-Percent Discount Rate

TSL Estimated Cumulative CO 2 (Mt) Emission Reductions Value of Estimated CO 2 Emission Reductions (Million

2007$) at 7% Discount Rate Value of Estimated CO 2 Emission Reductions (Million

2007$) at 3% Discount Rate 1 8.52 $0 to $76.01 $0 to $154.73 2 32.76 $0 to $292.26 $0 to $594.94 3 50.71 $0 to $452.49 $0 to $921.1 4 52.59 $0 to $469.19 $0 to $955.1 5 65.95 $0 to $588.44 $0 to $1,197.85

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DOE also investigated the potential monetary impact from today’s energy conservation standards of reducing SO 2 , NO X , and Hg emissions. As previously stated, DOE’s initial analysis assumed the pr esence of nationwide emission caps on SO 2 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 re ductions in power sector emi ssions would occur, but that the lower generation requirements associated with energy conservation 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 pri ces. DOE has further concluded that the effect from energy conservation standards on SO 2 allowance prices is likely to be negligible, based on runs of the NEMS-BT model. See chapter 16 (Environm ental Assessment) of the TSD for further details.

Because the courts have vacated the CAIR rule, projected annual NO X allowances from NEMS-BT are no longer relevant. In DOE’s subsequent analysis, NO X emissions are not controlled by a nationwide regulatory system. DOE estimated the national monetized benefits of NO X and Hg emissions reductions from today’s rule based on environmental damage estimates from the literature. Availa ble estimates suggest a very wide range of monetary values for NO X emissions, ranging from $370 per ton to $3,800 per ton of NO X from stationary sources, measured in 2001$, 30 or a range of $432 per ton to $4,441 per ton in 2007$.

30 2006 Report to Congress on the Costs and Benefits of Federal Regulations and Unfunded Mandates on State, Local, and Tribal Entities. Office of Management and Budget Office of Information and Regulatory Affairs, Washington, D.C. 148EERE-2006-BT-STD-0126 COMMENT 47
DOE has conducted research for today’s fina l rule and determin ed that the basic science linking mercury emissions from power plants to impacts on humans is considered highly uncertain. However, DOE identified two estimates of the environmental damage of mercury based on two estimates of the adve rse impact of childhood exposure to methyl mercury on IQ for American children, a nd 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 th e loss of IQ in American childr en that results from exposure to mercury of U.S. power plant origin ($1.3 bi llion per year in year 2000$), which works out to $32.6 million per ton emitted per year (2007$). 31 The low-end estimate was $664,000 per ton emitted in 2004$ or $729,000 per ton in 2007$ , which DOE derived from a published evaluation of mercury control using different methods and as sumptions from the first study, but also based on the present value of the lifetime earnings of children exposed. 32 Table
VI-29 and Table VI-30 present the resulting estimates of th e potential range of present value benefits associated w ith reducing national NO X and Hg emissions .

31 Trasande, L., et al., “Applying Cost Analyses to Drive Policy that Pr otects Children,” 1076 ANN. N.Y. ACAD. SCI. 911 (2006). 32 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, D.C., 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. 149EERE-2006-BT-STD-0126 COMMENT 47

Table VI-29 Estimates of Savings from Reducing NO X and Hg Emissions Under Commercial Refrigeration Equipment TSLs at a Seven-Percent Discount Rate

TSL Estimated Cumulative NO X

(kt) Emission Reductions* Value of Estimated NO X Emission

Reductions (Thousand 2007$) Estimated Cumulative

Hg (tons) Emission Reductions* Value of Estimated Hg Emission Reductions

(Thousand 2007$)
1 0.59 to 14.58 $64 to $1,578 0 to 0.224 $0 to $46 2 2.27 to 56.04 $245 to $6,067 0 to 0.86 $0 to $177 3 3.51 to 86.77 $380 to $9,394 0 to 1.332 $0 to $274 4 3.64 to 89.97 $394 to $9,741 0 to 1.381 $0 to $284 5 4.56 to 112.84 $494 to $12,216 0 to 1.732 $0 to $356 * Values in Table VI-29 may not appear to sum to the cumulative values in Table VI-27 due to rounding. Table VI-30 Estimates of Savings from Reducing NO X and Hg Emissions Under Commercial Refrigeration Equipment TSLs at a Three-Percent Discount Rate.

TSL Estimated Cumulative NO X

(kt) Emission Reductions* Value of Estimated NO X Emission

Reductions (Thousand 2007$) Estimated Cumulative

Hg (tons) Emission Reductions* Value of Estimated Hg Emission Reductions

(Thousand 2007$)
1 0.59 to 14.58 $135 to $3,329 0 to 0.224 $0 to $91 2 2.27 to 56.04 $518 to $12,799 0 to 0.86 $0 to $349 3 3.51 to 86.77 $802 to 19,815 0 to 1.332 $0 to $540 4 3.64 to 89.97 $831 to $20,547 0 to 1.381 $0 to $560 5 4.56 to 112.84 $1,042 to $25,769 0 to 1.732 $0 to $702 * Values in Table VI-30 may not appear to sum to the cumulative values in Table VI-27 due to rounding.

7. Other Factors EPCA allows the Secretary of Energy, in determining whether a standard is economically justified, to consider any other fact ors that the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) and 6316(e)(1 )) Under this provision, DOE considered LCC impacts on identifiable groups of customer s, such as customers of different business types who may be disproportionately affected by any national energy conservation standard level. DOE also considered the reduction in generated capacity that could result from the imposition of any national energy conservation standard level.

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D. Conclusion EPCA contains criteria for prescribin g new or amended energy conservation standards. It provides that a ny such standard for commercial refrigeration equipment 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) and 42 U.S.C. 6316(e)(1)) As stated above, th e Secretary must determine whether the benefits of the standards exceed its burdens considering the seven factors discussed in section II.A . (42 U.S.C. 6295(o)(2)(B)(i) and 42 U.S. C. 6316(e)(1)) A determination is not made based on any one of these factors in isol ation. The Secretary must weigh each of these seven factors in total. Further, the Secretary may not establish a new or amended standard if such standard would not result in “signi ficant conservation of energy.” (42 U.S.C. 6295(o)(3)(B) and 42 U.S.C. 6316(e)(1))

In selecting today’s ener gy conservation standards for commercial refrigeration equipment, DOE started by examining the maximum technologically fe asible levels to determine whether those levels were econom ically justified. Upon finding the maximum technologically feasible levels not to be justified, DOE anal yzed the next lower TSL. DOE followed this procedure until it identified a TSL that is economically justified.

Table VI-31 summarizes DOE’s quantitative analysis results for each TSL it considered for this final rule. This table presen ts the results or a range of results for each TSL, and will aid the reader in understanding th e costs and benefits of each one. The range

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of values for industry impacts represents the results for the different markup scenarios that DOE used to estimate manufacturer impacts.

Table VI-31 Summary of Results Based Upon the AEO2008 Reference Case Energy Price Forecast* TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 Primary Energy Saved (quads) 0.168 0.645 1.013 1.035 1.298

7% Discount Rate 0.041 0.159 0.250 0.256 0.321 3% Discount Rate 0.088 0.339 0.532 0.544 0.683 Generation Capacity Reduction (GW)** (0.121) (0.465) (0.720) (0.747) (0.936) $ 0.33 $ 0.98 $ 1.45 $1.414 $ (2.59) NPV (2007$billion)

7% Discount Rate 3% Discount Rate $ 0.83 $ 2.60 $ 3.97 $3.930 $ (3.79) Industry Impacts

Industry NPV (2007$ million) Industry NPV (% change) 0–(7) 0–(1) 8–(39) 1–(7) (11)–(99) (2)–(18) (39)–(148) (7)–(27) 20–(340) 4–(63) Cumulative Emissions Impacts † CO 2 (Mt) 8.52 32.76 50.71 52.59 65.95 NO X (kt) 0.59-14.58 2.27-56.04 3.51-86.77 3.64-89.97 4.56-112.84 Hg (t) 0-0.224 0-0.86 0-1.332 0-1.381 0-1.732 Employment Impacts

Indirect Employment Impacts (2042) 332 1,699 2,559 2,670 3,011 Direct, Domestic Employment Impacts (2012) †† 6 92 172 197 779 Life-Cycle Cost Net Savings (%) 18–45 36–65 61–89 70–92 0–92 Net Increase (%) 0–0 0–0 0–0 0–0 0–99 No Change (%) 55–82 35–64 11–39 8–30 1–19 Mean LCC Savings (2007$) 211–3501 615–4893 797–5450 785–5419 (3959)–5419 Mean PBP (years) 0.3–1.1 0.6–2.4 1.2–3.8 1.3–3.9 1.3–196.8 * Parentheses indicate negative (-) values. For LCCs, a negative value means an increase in LCC by the amount indicated. ** Change in installed generation capacity by 2042 based on AEO2008 Reference Case. † CO 2 emissions impacts include physical reductions at power plants. NO X emissions impacts include physical reductions at power plants as well as production of emissions allowance credits where NO X emissions are subject to emissions caps. †† Change in total number of domestic production employees in 2012 due to standards.

First, DOE considered TSL 5, the most effi cient level for all equipment classes. TSL 5 would likely save an estimated 1.298 qua ds of energy through 2042, an amount DOE considers significant. Discounted at 7 percen t, the projected energy savings through 2042 would be 0.321 quads. For the Nation as a whole, DOE projects that TSL 5 would result in a 152EERE-2006-BT-STD-0126 COMMENT 47 net decrease of $2.59 billion in NPV, using a discount rate of 7 percent. Five equipment classes (VOP.RC.M, VOP.SC.M, SVO.RC.M, SVO.SC.M, and SOC.RC.M)) show negative NPV at TSL 5, primarily due the us e of LED lighting for these cases. 33 The emissions reductions at TSL 5 are 65.95 Mt of CO 2 and up to 112.84 kt of NO X . DOE also estimates that under TSL 5, total generati ng capacity in 2042 will decrease compared to the base case by 0.936 gigawatts (GW).

At TSL 5, DOE projects that the averag e commercial refrigeration equipment customer will experience a reduction in LCC compared to the baseline for 10 of the 15 equipment classes analyzed, while they will experience an increase in LCC for five equipment classes (VOP.RC.M, VOP.SC.M, SVO.RC.M, SOC.RC.M). These equipment classes are the five that DOE showed had negative NPV. Mean LCC savings for all 15 equipment classes vary from -$3,959 to $5,419. At TSL 5, DOE estimates the fraction of customers experiencing LCC increases will vary between 0 and 99 percent depending on equipment class. The mean payback period for the average commercial refrigeration equipment customer at TSL 5 compared to the baseline level is projected to be between 1.3 and 196.8 years, depending on equipment class.

At TSL 5, there is the risk of very large negative impacts on the industry if manufacturers’ profit margins are reduce d. The investments required to modify all equipment lines at the max-tech levels are larg e. At this level, manuf acturers have to make

33 LED lighting for open cases was updated from the August 2008 NOPR to reflect LED lighting fixtures currently available for, and specific to, open cases. . DOE also increased the amount of LED lighting assumed for open cases. See section V.A.2.a and appendix B of the TSD. 153EERE-2006-BT-STD-0126 COMMENT 47
costly changes to their produc tion lines. In addition, the incr emental cost of adding LED lights at TSL 5 are extremely large. Because customers put a much higher priority on marketing and displaying their goods than they do on energy efficien cy, most manufacturers expressed a concern that they would be unable to fully recover the additional cost incurred when only manufacturing the most efficient eq uipment possible. If manufacturers are not able to fully pass along these large incrementa l production costs, the industry could lose up to 63 percent of the INPV.

Although TSL 5 is the most efficient level and thus saves the most energy of all TSLs, four of the 15 equipment classes show a reduction in LCC compar ed to the baseline. The energy savings at TSL 5 would reduce installed generating capacity by 0.94 GW, or roughly 2.5 large, 400-MW power plants. DOE estimates the associated emissions reductions at 66 Mt of CO 2 . DOE concludes that at TSL 5, the benefits of energy savings, generating capacity reductions, and emi ssion reductions would be outweighed by the economic burdens on customers as indicated by the net decrease in NPV, long payback periods of up to 197 years, and a drop in INPV of up to 63 percent. Consequently, DOE concludes that TSL 5 is not economically justified.

DOE then considered TSL 4, which provide s for all equipment classes the maximum efficiency levels that the analysis showed to have positive NPV to the Nation. DOE projects that the average commercial refrigeration equi pment customer will experience a reduction in LCC compared to the baseline for all 15 equipm ent classes analyzed, ranging from $785 to $5,419 depending on equipment class. The mean payback period for the average

154EERE-2006-BT-STD-0126 COMMENT 47
commercial refrigeration equipment customer at TSL 4 is projected to be between 1.3 and 3.9 years compared to the purch ase of baseline equipment.

TSL 4 would likely save an estimated 1.035 quads of energy through 2042, an amount DOE considers significant. Discounted at 7 percent, the projected energy savings through 2042 would be 0.256 quads. For the Nati on as a whole, DOE projects that TSL 4 would result in a net increase of $1.41 billion in NPV, using a discount rate of 7 percent. The estimated emissions reducti ons at TSL 4 are 42.6 Mt of CO 2 and up to 90 kt of NO X .

Similar to TSL 5, there is a risk at TSL 4 of large negative impacts on the industry if manufacturers’ profit margins are reduced. The investments required at TSL 4 are also large because, based on the construction of the TSL, many equipment classes are at the max-tech level. Because a large portion of the equipm ent classes are at max-tech, the incremental manufacturing costs are also la rge. If manufacturers are not able to fully pass along these large incremental production cost s, the industry could lose up to 27 percent of the INPV.

After carefully considering the analysis and weighing the benefits and burdens of TSL 4, DOE concludes that the benefits of TS L 4 (in terms of energy savings to the Nation of 1.035 quads through 2042, economic benefits of $1.41 billion in NPV using a discount rate of 7 percent, significant environmental be nefits in terms of reduced emissions from power plants, and national empl oyment benefits) outweigh the bur dens in terms of the range of possible reductions in INPV of up to 27 perc ent, and that TSL 4 represents the maximum improvement in energy efficiency that is technologically feasible and economically

155EERE-2006-BT-STD-0126 COMMENT 47
justified. Therefore, DOE is adopting the ener gy conservation standard s for this equipment
at TSL 4.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 Section 1(b)(1) of Executiv e Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (October 4, 1993), requires each agency to identify in writing the market failure or other problem that it intends to address that warrants agency action such as today’s final rule, and to assess the significance of that pr oblem in evaluating whether any new regulation is warranted.

In the August 2008 NOPR for this rulemaki ng, DOE requested feedback related to the possible existence of a market failure in the commercial refrigeration equipment industry. Because the commercia l refrigeration equipment industry is part of the food merchandising industry, energy efficiency and energy cost savings are not the primary drivers of the business. Selling f ood products to shoppers is the primary driver. It is difficult for store personnel to identify cost-effective e fficiency levels for commercial refrigeration equipment given reasons identified in the NOP R, and doing so may incur transaction costs, thus reducing cost-effectiven ess of the energy efficiency investment. 73 FR 50128. DOE sought data on the efficiency levels of ex isting commercial refr igeration equipment by owner, electricity price, a nd equipment class. Following th e publication of the August 2008 NOPR and subsequent public co mment period, DOE did not receiv e any feedback related to this request.

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Because today’s regulatory action is a si gnificant regulatory action under section 3(f)(1) of Executive Order 12866, section 6(a)(3 ) of the Executive Order requires DOE to prepare and submit for review to the Office of Information and Regulatory Affairs (OIRA) in OMB an assessment of the costs and be nefits of today’s ru le. Accordingly, DOE presented to OIRA for review the draft final rule and other documents prepared for this rulemaking, including a regulatory impact analys is (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 a.m. and 4 p.m., Monday through Friday, except Federal holidays.

The August 2008 NOPR contained a summary of the RIA, which evaluated the extent to which major alternatives to sta ndards for commercial refrigeration equipment could achieve significant energy sa vings at reasonable cost, as compared to the effectiveness of the proposed rule. 73 FR 50128–29. The comple te RIA (Regulatory Impact Analysis for Proposed Energy Conservation Standards fo r Commercial Refrigeration Equipment ) 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 alterna tives to this regulation, (3) a quantitative comparison of the impacts of th e alternatives, and (4) the national economic impacts of today’s standards.

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As explained in the August 2008 NOPR, none of the alternatives DOE examined would save as much energy or have an NPV as high as the proposed standards. That same conclusion applies to the standards in today’s rule. Also, several of the alternatives would require new enabling legislation, because authority to carry out those alternatives does not exist. Additional detail on the regulatory altern atives 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 an alysis (IRFA) for any rule th at by law must be proposed for public comment, and a final regulatory flexibility analysis (FRFA) 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 nega tive impacts. Also, as required by Executive Order 13272, “Proper Consideration of Sma ll 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 prop erly considered during the rulemaking process. 68 FR 7990. DOE has ma de its procedures and policies available on the Office of General Counsel’s website: www.gc.doe.gov

.

Small businesses, as defined by the Sma ll Business Administration (SBA) for the commercial refrigeration equipment manufact uring industry, are manufacturing enterprises with 750 employees or fewer. DOE used th e small business size standards published by

158EERE-2006-BT-STD-0126 COMMENT 47
SBA to determine whether any small entities woul d be required to comply with the rule. 61 FR 3286 and codified at 13 CFR part 121. The size standards are listed by North American Industry Classification System (NAICS) c ode and industry description. Commercial refrigeration equipment manufactur ing is classified under NAICS 333415.

DOE interviewed two of the nine manuf acturers of commercial refrigeration equipment it identified as small businesse s affected by this rulemaking. 73 FR at 50130. DOE reviewed the proposed rule under the provi sions of the Regulator y Flexibility Act and the procedures and policies published on February 19, 2003. Id . On the basis of this review, DOE determined that it could not certify that the proposed standards (TSL 4) would have no significant economic impact on a substa ntial number of small entities. Id . DOE made this determination because of the potential imp acts of the proposed standard levels on commercial refrigeration equipment manufactur ers generally, including small businesses. Id

.

Because of these potential impacts on sma ll manufacturers, DOE prepared an IRFA during the NOPR stage of this rulemaking. DOE provided the IRFA in its entirety in the August 2008 NOPR, 73 FR 50130–31, and also tran smitted a copy to the Chief Counsel for Advocacy of the SBA for review. Chapter 13 of the TSD contains more information about the impact of this rulemaking on manufacturers.

The IRFA divided potential impacts on sma ll businesses into two broad categories: (1) impacts associated with commercial re frigeration equipment design and manufacturing,

159EERE-2006-BT-STD-0126 COMMENT 47
and (2) impacts associated with the effect on customers’ ability to merchandise products by limiting the flexibility in choos ing design options. The commerc ial refrigeration industry is highly customized, and manufacturers were concerned that limiting the choices in design options would commoditize the industry and redu ce profit margins. However, this concern was echoed by all manufacturers, not just small business manufacturers.

DOE has prepared a FRFA for this rulemaking, which is presented in the following discussion. DOE has transmitted a copy of this FRFA to the Chief Counsel for Advocacy of the SBA for review. The FRFA below is written in accordance with th e requirements of the Regulatory Flexibility Act.

1. Reasons for the Final Rule Part A-1 of Title III of EPCA addresses the energy efficiency of certain types of commercial and industrial equipment. ( 42 U.S.C. 6311-6317) EPACT 2005, Pub. L. 109– 58, included an amendment to Part A-1 requi ring that DOE prescribe energy conservation standards for the commercial refrigeration equipm ent that is the subject of this rulemaking. (EPACT 2005, Section 136(c); 42 U.S.C. 6313(c)(4)(A)) DOE publishes today’s final rule pursuant to Part A-1. The commercial refrigera tion equipment test procedures appear at 10 CFR parts 430-431.

2. Objectives of, and Legal Basis for, the Rule EPCA requires new and amended standards to be designed to achieve the maximum improvement in energy efficiency that is tec hnologically feasible and economically justified

160EERE-2006-BT-STD-0126 COMMENT 47
(see section II.B of this preamble). To determine wh ether economic justification exists, DOE reviews comments received and conducts analysis to determine whether the economic benefits of the new standard exceed the burde ns to the greatest extent practicable, taking into consideration seven fact ors set forth in 42 U.S.C. 6295( o)(2)(B) and 6316(e)(1) (see section II.B of this preamble). Further information concerning the background of this rulemaking is provided in chapter 1 of the TSD.

3. Description and Estimated Number of Small Entities Regulated DOE reviewed AHRI’s listing of commercia l refrigeration equipment manufacturer members and surveyed the industry to develop a list of every manufact urer. DOE also asked interested parties and AHRI repr esentatives within the industry if they were aware of any other small business manufacturers. DOE then looked at publicly available data and contacted manufacturers, when needed, to determ ine if they meet the SBA’s definition of a small business manufacturing facility and if their manufacturing facilities are located within the United States. Based on this analysis, DOE identified nine small commercial refrigeration equipment manufacturers and condu cted on-site interviews with two of them. See chapter 13 of the TSD for further disc ussion about the methodology DOE used in the manufacturer impact analysis.

4. Description and Estimate of Compliance Requirements Potential impacts on manufacturers, includi ng small businesses, come from impacts associated with commercial refrigerat ion equipment design and manufacturing. All manufacturers, including small businesses, woul d have to develop designs to comply with

161EERE-2006-BT-STD-0126 COMMENT 47
higher TSLs. Product redesign costs tend to be fixed and do not scale with sales volume. Thus, small manufacturers would be at a re lative disadvantage at higher TSLs because research and development efforts would be on th e same scale as those for larger companies. Furthermore, the level of research and development needed to meet energy conservation standards increases with more stringent ener gy conservation standards. DOE expects that small manufacturers will have more diffi culty funding the required research and development necessary to meet energy conser vation standards than larger manufacturers. However, as explained in part 6 of the IR FA, “Significant Alternatives to the Proposed Rule,” DOE explicitly considered the impacts on small manufacturers of commercial refrigeration equipment in selecting TSL 4, rath er than selecting a higher standard level. DOE expects that the differential impact on sm all manufacturers of commercial refrigeration equipment would be smaller in moving from TSL 3 to TSL 4 than it would be in moving from TSL 4 to TSL 5.

5. Significant Issues Raised by Public Comments DOE summarized comments from inte rested parties, including commercial refrigeration equipment manufacturers, in sections IV and V of this preamble. However, DOE did not receive any comments regardi ng impacts specific to small business manufacturers for the adoption of TSL 4 or the alternatives identified in section 6 of the IRFA, “Significant Alternatives to the Rule.”

6. Steps DOE Has Taken to Minimize the Economic Impact on Small Manufacturers

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In consideration of the benefits and bu rdens of standards, including the burdens posed on small manufacturers, DOE concluded that TSL 4 is the highest level that can be justified for commercial refrigeration equipmen t. As explained in part 6 of the IRFA, “Significant Alternatives to the Rule,” DOE explicitly considered the impacts on small manufacturers of commercial re frigeration equipment in selec ting TSL 4. Levels at TSL 5 would place excessive burdens on manufacturer s, including small manufacturers, of commercial refrigeration equipment. Such burde ns would include research and development costs and also a potential reduction of profit margins by limiting the flexibility of customers to choose design options. However, the differential impact on small businesses is expected to be lower in moving from TSL 3 to TSL 4 than in moving from TSL 4 to TSL 5, because research and development efforts are less at lower TSLs. Chapter 13 of the TSD contains additional information about the impact of this rulemaking on manufacturers.

Section VI.C.2 discusses how small business imp acts entered into DOE’s selection of today’s standards for commercial refrig eration equipment. DOE made its decision regarding standards by beginning with the highest level considered (TSL 5) and successively eliminating TSLs until it found a TSL that is both technically feasible and economically justified, taking into account othe r EPCA criteria. As discussed in section
VI.C.2.e , DOE expects today’s standard to have little or no differential impact on small manufacturers of commercia l refrigeration equipment.

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Finally, in the NOPR, DOE requested co mment on the impacts on small business manufacturers of TSL 4 and any other alterna tives to the proposed rule. DOE received no comments in reference to any undue bur den placed on small manufacturers.

C. Review Under the Paperwork Reduction Act DOE stated in the August 2008 NOPR that this rulemaking would impose no new information and recordkeeping requirements, a nd that OMB clearance is not required under the Paperwork Reduction Act (44 U.S.C. 3501 et seq .). 73 FR at 50131-32. DOE received no comments on this in response to the Augus t 2008 NOPR, and, as with the proposed rule, today’s rule imposes no information and reco rdkeeping requirements. Therefore, DOE has taken no further action in this rulemaking w ith respect to the Paperwork Reduction Act.

D. Review Under the National Environmental Policy Act DOE prepared an environmental assessmen t of the impacts of today’s standards which it published as chapter 16 within th e TSD for the final rule. DOE found the environmental effects associated with today’ s various standard levels for commercial refrigeration equipment to be insignificant. Therefore, DOE 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 C ouncil 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.

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E. Review Under Executive Order 13132 DOE reviewed this rule pursuant to Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), which imposes certain re quirements 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 pr ocess it will follow in the deve lopment 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 distri bution of power and responsibilities among the various levels of Government. 73 FR at 50132. DOE received no comments on this issue in response to the August 2008 NOPR, and its conclusions on this issue are the same for the fi nal rule as they were for the proposed rule. 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 (February 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) eliminate drafting errors a nd ambiguity, (2) write re gulations to minimize litigation, and (3) provide a clear legal standard for affected conduct rather than a general standard and promote simplifi cation and burden reduction. Secti on 3(b) of Executive Order 12988 specifically requires that executive agencies make every reasonable effort to ensure

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that the regulation: (1) clearly specifies the pr eemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulati on; (3) provides a clear legal standard for affected conduct while promoting simplifica tion 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 draf tsmanship under any guidelines issued by the Attorney General. Section 3( c) of Executive Order 12988 requ ires executive agencies to review regulations in light of applicable st andards in section 3(a) and section 3(b) to determine whether they are met or it is unreas onable 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 st andards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995 As indicated in the August 2008 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. 73 FR at 50132. 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 August 2008 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 th e UMRA in response to the August 2008 NOPR, and its conclusions on this issue are the sa me for the final rule as they were for the

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proposed rule. Therefore, DOE is taking no furthe r action in today’s final rule with respect to the UMRA.

H. Review Under the Treasury and General Government Approp riations Act, 1999 DOE determined that, for this rule making, 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 August 2008 NOPR, and, therefore, takes no further action in today’s final rule with respect to this provision.

I. Review Under Executive Order 12630 DOE determined under Executive Order 12630, “Governmental Actions and Interference with Constituti onally Protected Property Ri ghts,” 53 FR 8859 (March 18, 1988), that today’s rule would not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution. 73 FR at 50132. DOE received no comments concerning Executive Order 12630 in response to the August 2008 NOPR, and, therefore, takes no further action in today’s final rule with resp ect to this Executive Order.

J. Review Under the Treasury and General Government Approp riations Act, 2001 Section 515 of the Treasury and General G overnment Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for ag encies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by

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OMB. OMB’s guidelines were published at 67 FR 8452 (February 22, 2002), and DOE’s guidelines were published at 67 FR 62446 (Oct ober 7, 2002). DOE has reviewed today’s final rule under the OMB and DOE guidelines a nd has concluded that it is consistent with applicable policies in those guidelines.

K. Review Under Executive Order 13211 Executive Order 13211, “Actions Concerning Re gulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001) requires Federal agencies to prepare and submit to OIRA a Stat ement 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. 73 FR at 50133. Accordingly, it did not prepare a Statement of Energy Effects on the proposed rule. DOE received no comments on this issue in response to the August 2008 NOP R. As with the proposed rule, DOE has concluded that today’s final ru le is not a significant energy action within the meaning of Executive Order 13211, and has not prepared a Statement of Energy Effects on the rule.

L. Review Under the Information Qua lity Bulletin for Peer Review On December 16, 2004, OMB, in consulta tion with the Office of Science and Technology, issued its “Final Information Qual ity Bulletin for Peer Review (the Bulletin). 70 FR 2664 (January 14, 2005). The purpose of th e Bulletin is to enhance the quality and credibility of the Government’s scientific information. The Bu lletin establishes that certain scientific information shall be peer reviewed by qualified specialists before it is disseminated by the Federal Government. As indicated in the August 2008 NOPR, this

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includes influential scientific information related to agency regulatory actions, such as the analyses in this rulemaking. 73 FR at 50133.

As set forth in the August 2008 NOPR, DOE he ld formal in-progress peer reviews of the types of analyses and processes that DOE has used to develop the energy efficiency standards in today’s rule, and issued a report on these peer reviews. Id

.

M. Congressional Notification As required by 5 U.S.C. 801, DOE will subm it to Congress a report regarding the issuance of today’s final rule prior to the effectiv e date set forth at the outset of this notice. The report will state that it has b een determined that the rule is a “major rule” as defined by 5 U.S.C. 804(2). DOE also will submit the s upporting analyses to the Comptroller General in the U.S. Government Accountability Offi ce (GAO) and make them available to each House of Congress.

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VIII. Approval of the Office of the Secretary

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

Issued in Washington, DC, on

___________________________________ John F. Mizroch Acting Assistant Secretary Energy Efficiency and Renewable Energy.

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List of Subjects in 10 CFR Part 431

Administrative practice a nd procedure, Confidential business information, Energy conservation, Incorporation by reference. For the reasons set forth in the preamble , chapter II of title 10, Code of Federal Regulations, part 431 is amended to read as set forth below.

PART 431 - ENERGY EFFICIENCY PR OGRAM FOR CERTAIN COMMERCIAL AND INDUSTRIAL EQUIPMENT

1. The authority citation for part 431 continues to read as follows: Authority: 42 U.S.C. 6291-6317.

2. Section 431.62 of subpart C is amended by ad ding in alphabetical order new definitions for “air-curtain angle,” “commercial hybrid refri gerator, freezer, and re frigerator-freezer,” “door angle,” “horizontal closed,” “horizontal open,” “semiverti cal open,” “vertical closed,” “vertical open,” and “wedge case” to read as follows:

§ 431.62 Definitions concerning commerci al refrigerators, freezers, and refrigerator-freezers.

Air-curtain angle means:

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(1) For equipment without doors and without a discharge air grille or discharge air honeycomb, the angle between a vertical lin e extended down from the highest point on the manufacturer’s recommended load limit line and the load limit line itself, when the equipment is viewed in cross-section; and (2) For all other equipment without doors, the angle formed between a vertical line and the straight line drawn by c onnecting the point at the inside edge of the discharge air opening with the point at the in side edge of the return air opening, when the equipment is viewed in cross-section.
* * * * * Commercial hybrid refrigerator, freezer, and refrigerator-freezer means a commercial refrigerator, freezer, or refrigerator-freezer that has two or more chilled and/or frozen compartments that are: (1) In two or more different equipment families, (2) Contained in one cabinet, and (3) Sold as a single unit.
* * * * * Door angle means: (1) For equipment with flat doors, the angle between a vertical line and the line formed by the plane of the door, when the equi pment is viewed in cross-section; and (2) For equipment with curved doors, the angle formed between a vertical line and the straight line drawn by connecting the top and bottom points where the display area glass joins the cabinet, when the equipm ent is viewed in cross-section.
* * * * *

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Horizontal Closed means equipment with hinged or sliding doors and a door angle greater than or equal to 45°.
* * * Horizontal Open means equipment without doors a nd an air-curtain angle greater than or equal to 80° from the vertical.
* * * * * Semivertical Open means equipment without doors a nd an air-curtain angle greater than or equal to 10° and less than 80° from the vertical.
* * * * *
Vertical Closed means equipment with hinged or sliding doors and a door angle less than 45°. Vertical Open means equipment without doors and an air-curtain angle greater than or equal to 0° and less th an 10° from the vertical. Wedge case means a commercial refrigerator, fr eezer, or refrigerator-freezer that forms the transition between two regularly-shaped display cases.

3. Section 431.63 of subpart C is revised to read as follows:

IX. 431.63 Materials incorporated by reference. (a) General. We incorporate by reference the foll owing standards into Subpart C of Part 431. The material listed has been a pproved for incorporation by reference by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR 51. Any subsequent amendment to a standard by the st andard-setting organization will not affect the DOE regulations unless and until amended by DOE. Material is incorporated as it exists on

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the date of the approval and a notice of any change in the material will be published in the Federal Register . All approved material is available fo r inspection at the National Archives and Records Administration (NARA). For informati on on the availability of this material at NARA, call 202-741-6030 or go to http://www.archives.gov/federal_register/code _of_federal_regulations/ibr_locations.html. Also, this material is available for inspecti on at U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Buil ding Technologies Program, 6th Floor, 950 L’Enfant Plaza, SW, Washington, DC 20024, 202-586-2945, or go to: http://www1.eere.energy.gov/build ings/appliance_standards/. Standards can be obtained from the sources listed below. (b) ANSI. American National Standards Institute, 25 W. 43 rd Street, 4 th Floor, New York, NY 10036, 212-642-4900, or go to http://www.ansi.org: (1) ANSI /AHAM HRF-1-2004, Energy, Performance and Capacity of Household Refrigerators, Refriger ator-Freezers and Freezers , approved July 7, 2004, IBR approved for §431.64. (2) [Reserved] (c) ARI . Air-Conditioning and Refrigeration Institute, 4100 N. Fairfax Dr., Suite 200, Arlington, VA 22203, or http://www. ari.org/std/standards.html: (1) ARI Standard 1200–2006, Performance Rating of Commercial Refrigerated Display Merchandisers and Storage Cabinets , 2006, IBR approved for §§ 431.64 and
431.66. (2) [Reserved]

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4. Section 431.66 of subpart C is amended by adding new paragra phs (a)(3) and (d) to read as follows: §431.66 Energy conservation standards and their effective dates.

(a) * * * (3) The term “TDA” means the total display area (ft 2 ) of the case, as defined in the ARI Standard 1200-2006, appendix D (i ncorporated by reference, see §431.63).

* * * * *

(d) Each commercial refrigerator, freez er, and refrigerator-freezer with a selfcontained condensing unit and without door s; commercial refrigerator, freezer, and refrigerator-freezer with a remote condensi ng unit; and commercial ice-cream freezer manufactured on or after January 1, 2012, shall have a daily energy consumption (in kilowatt hours per day) that does not exceed the levels specified:

(1) For equipment other than hybrid equipm ent, refrigerator-freezers or wedge cases:

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Equipment Category Condensing Unit Configuration Equipment Family Rating Temp. (°F) Operating Temp. (°F) Equipment Class Designation* Maximum Daily Energy Consumption

(kWh/day) 38 (M) ≥ 32 VOP.RC.M 0.82 x TDA + 4.07 Vertical Open (VOP) 0 (L) < 32 VOP.RC.L 2.27 x TDA + 6.85 38 (M) ≥ 32 SVO.RC.M 0.83 x TDA + 3.18 Semivertical Open (SVO) 0 (L) < 32 SVO.RC.L 2.27 x TDA + 6.85 38 (M) ≥ 32 HZO.RC.M 0.35 x TDA + 2.88 Horizontal Open (HZO) 0 (L) < 32 HZO.RC.L 0.57 x TDA + 6.88 38 (M) ≥ 32 VCT.RC.M 0.22 x TDA + 1.95 Vertical Closed Transparent (VCT) 0 (L) < 32 VCT.RC.L 0.56 x TDA + 2.61 38 (M) ≥ 32 HCT.RC.M 0.16 x TDA + 0.13 Horizontal Closed Transparent (HCT) 0 (L) < 32 HCT.RC.L 0.34 x TDA + 0.26 38 (M) ≥ 32 VCS.RC.M 0.11 x V + 0.26 Vertical Closed Solid (VCS) 0 (L) < 32 VCS.RC.L 0.23 x V + 0.54 38 (M) ≥ 32 HCS.RC.M 0.11 x V + 0.26 Horizontal Closed

Solid (HCS) 0 (L) < 32 HCS.RC.L 0.23 x V + 0.54 38 (M) ≥ 32 SOC.RC.M 0.51 x TDA + 0.11 Remote Condensing Commercial Refrigerators and Commercial

Freezers Remote (RC)

Service Over Counter (SOC) 0 (L) < 32 SOC.RC.L 1.08 x TDA + 0.22 38 (M) ≥ 32 VOP.SC.M 1.74 x TDA + 4.71 Vertical Open (VOP) 0 (L) < 32 VOP.SC.L 4.37 x TDA + 11.82 38 (M) ≥ 32 SVO.SC.M 1.73 x TDA + 4.59 Semivertical Open (SVO) 0 (L) < 32 SVO.SC.L 4.34 x TDA + 11.51 38 (M) ≥ 32 HZO.SC.M 0.77 x TDA + 5.55 Self-Contained

Commercial Refrigerators and Commercial

Freezers without Doors Self-Contained (SC) Horizontal Open 0 (L) < 32 HZO.SC.L 1.92 x TDA + 7.08 Vertical Open (VOP) VOP.RC.I 2.89 x TDA + 8.7 Semivertical Open (SVO) SVO.RC.I 2.89 x TDA + 8.7 Horizontal Open (HZO) HZO.RC.I 0.72 x TDA + 8.74 Vertical Closed Transparent (VCT) VCT.RC.I 0.66 x TDA + 3.05 Horizontal Closed Transparent (HCT) HCT.RC.I 0.4 x TDA + 0.31 Vertical Closed Solid (VCS) VCS.RC.I 0.27 x V + 0.63 Horizontal Closed

Solid (HCS) HCS.RC.I 0.27 x V + 0.63 Remote

(RC)

Service Over Counter (SVO) SOC.RC.I 1.26 x TDA + 0.26 Vertical Open (VOP) VOP.SC.I 5.55 x TDA + 15.02 Semivertical Open (SVO) SVO.SC.I 5.52 x TDA + 14.63 Horizontal Open (HZO) HZO.SC.I 2.44 x TDA + 9. Vertical Closed Transparent (VCT) VCT.SC.I 0.67 x TDA + 3.29 Horizontal Closed Transparent (HCT) HCT.SC.I 0.56 x TDA + 0.43 Vertical Closed Solid (VCS) VCS.SC.I 0.38 x V + 0.88 Horizontal Closed

Solid (HCS) HCS.SC.I 0.38 x V + 0.88 Commercial Ice-Cream Freezers

Self-Contained (SC)

Service Over Counter (SVO) -15 (I) ≤ -5**

SOC.SC.I 1.76 x TDA + 0.36 * The meaning of the letters in this column is indicated in the three columns to the left. ** Ice-cream freezer is defined in 10 CFR 431.62 as a comme rcial freezer that is designed to operate at or below - 5 °F (-21 °C) and that the manufacturer designs, markets, or intends for the storing, displaying, or dispensing of ice cream.

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(2) For commercial refrigeration equipment with two or more compartments (i.e. , hybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator freezers), the maximum daily energy consumption (MDEC) for each model shall be the sum of the MDEC values for all of its compartments. For each compartment, measure the TDA or volume of that compartment, and determine the appropriate equipment class based on that compartment’s equipment family, condensing unit configuration, and designed operating temperature. The MDEC limit for each compartment shall be the calculated value obtained by entering that compartment’s TDA or volume into the standard equation in paragraph (d)(1) of this section for that compartment’s equipment class. Measure the calculated daily energy cons umption (CDEC) or total daily energy consumption (TDEC) for the entire case:

(i) For remote condensing commercial hybrid refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refrigerat or-freezers, where two or more independent condensing units each separately cool only one compartment, measure the total refrigeration load of each compartment separately according to the ARI Standard 1200-2006 test procedure (incorporated by reference, see §431.63).. Calculate compressor energy consumption (CEC) for each compartment using Table 1 in ARI Standard 1200-2006 using the saturated evaporator temperature for that compartment. The CDEC for the entire case shall be the sum of the CEC for each compartm ent, fan energy consumption (FEC), lighting energy consumption (LEC), anti-condensate energy consumption (AEC), defrost energy

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consumption (DEC), and condensate evapor ator pan energy consumption (PEC) (as measured in ARI Standard 1200-2006).

(ii) For remote condensing commercial hybri d refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-freezers, where two or more compartments are cooled collectively by one condensing unit, measure the total refrig eration load of the entire case according to th e ARI Standard 1200-2006 test procedure (incorporated by reference, see §431.63). Calculate a weighted saturated evaporator temperature for the entire case by: (A) multiplying the saturated evaporator temperature of each compartment by the volume of that compartment (as meas ured in ARI Standard 1200-2006), (B) summing the resulting values for all compartments, and (C) dividing the resulting total by the total volume of all compartments. Calculate the CEC for the entire case using Table 1 in ARI Standard 1200-2006 (incorporated by reference, s ee §431.63), using the total refrigeration load and the weighted average saturated evaporator temperature. The CDEC for the entire cas e shall be the sum of the CEC, FEC, LEC, AEC, DEC, and PEC.

(iii) For self-contained commercial hybr id refrigerators, hybrid freezers, hybrid refrigerator-freezers, and non-hybrid refrigerator-freezers, measure the TDEC for the entire case according to the ARI Standard 1200-2006 te st procedure (incorporated by reference, see §431.63).

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(3) For remote-condensing and self-contai ned wedge cases, measure the CDEC or TDEC according to the ARI Standard 1200-2006 te st procedure (incorporated by reference, see §431.63). The MDEC for each model shall be the amount derived by incorporating into the standards equation in paragr aph (d)(1) of this section for the appropriate equipment class a value for the TDA that is the product of: (i) the vertical height of the air-curt ain (or glass in a transparent door) and (ii) the largest overall wi dth of the case, when viewed from the front.

APPENDIX [The following letter from the Department of Ju stice 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@jus tice.usdoj.gov http://www.usdoj.gov October 24, 2008 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 August 12, 2008 letter seeking the views of the Attorney General about the potential impact on competition of the proposed energy efficiency

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standards for commercial refrigeration equipment. The Energy Policy and Conservation Act (“EPCA”) authorizes the Department of Energy (“DOE”) to establish energy conservation standards for a number of appliances where DOE determines that thos e standards would be technologically feasible , economically justified, and result in significant energy savings.

Your request was submitted pursuant to Section 325(o)(2)(B)(i) of the Energy Policy and Conservation Act, 42 U.S.C. §6295 (“EPCA”), which states that, before the Secretary of Energy may prescribe a new or amended energy conservation standard, the Secretary shall ask the Attorney General to make a determin ation of “the impact of any lessening of competition ... that is likely to result from the imposition of standard.” The Attorney General’s responsibility for responding to request s from other departments about the effect of a program on competition has been delegate d to the Assistant Attorney General for the Antitrust Division in 28 CFR § 0.40(g). In conduc ting its analysis the Antitrust Division examines whether a proposed standard ma y lessen competition, for example, by placing certain manufacturers of a product at an unjusti fied competitive disadvantage compared to other manufacturers, or by induci ng avoidable inefficiencies in production or distribution of particular products. In additi on to harming consumers direct ly through higher prices, these effects could undercut the ultima te goals of the legislation.

Along with your request, you sent us the dr aft final rule and a number of other documents relating to commercial refrigerati on equipment, including a hearing transcript and the names of parties interviewed by DOE’s consultant.

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181 We have concluded that the proposed standards would not adversely affect competition. In reaching this conclusion, we note that the proposed standards were developed taking into account comments by commercial refrigeration equipment manufacturers, the American Society of Heating, Refrigerating, and Air-Conditioning Engineers, the American Council for an Energy Efficient Economy and electric utilities. We note further that all key components are available for purchase by any manufacturer; therefore no manufacturer has a technological advantage in mee ting the proposed standards. Finally, DOE found no significant differences be tween the concerns of large and small manufacturers, and we found no evidence that certain manufacturers would be placed at a competitive disadvantage to other manufacturers.

In conclusion, the Antitrust Division does not believe the proposed final rule would adversely affect competition.

Yours sincerely, Deborah A. Garza, Acting Assistant Attorney General