44914 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket Number EERE–2006–STD–0125] 

RIN 1904–AB58 

Energy Conservation Program: Energy 

Conservation Standards for 

Refrigerated Bottled or Canned 

Beverage Vending Machines 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule. 

SUMMARY: The U.S. Department of 

Energy (DOE) is adopting new energy 

conservation standards for refrigerated 

bottled or canned beverage vending 

machines. DOE has determined that 

energy conservation standards for these 

types of equipment would result in 

significant conservation of energy, and 

are technologically feasible and 

economically justified. 

DATES: The effective date of this rule is 

October 30, 2009, except that the 

standards in 10 CFR 431.296 are 

effective August 31, 2011. The 

incorporation by reference of certain 

publications listed in this rule was 

approved by the Director of the Federal 

Register on October 30, 2009. 

ADDRESSES: For access to the docket to 

read background documents, the 

technical support document, transcripts 

of the public meetings 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, Washington, DC 20024, (202) 

586–2945, between 9 a.m. and 4 p.m., 

Monday through Friday, except Federal 

holidays. Please call Brenda Edwards at 

the above telephone number for 

additional information regarding 

visiting the Resource Room. (Note: 

DOE’s Freedom of Information Reading 

Room no longer houses rulemaking 

materials.) You may also obtain copies 

of certain previous rulemaking 

documents in this proceeding (i.e., 

framework document, advance notice of 

proposed rulemaking, notice of 

proposed rulemaking), draft analyses, 

public meeting materials, and related 

test procedure documents from the 

Office of Energy Efficiency and 

Renewable Energy’s Web site at http:// 

www1.eere.energy.gov/buildings/ 

appliance_standards/commercial/ 

beverage_machines.html. 

FOR FURTHER INFORMATION CONTACT: 

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 

of Energy, Office of General Counsel, 

GC–72, 1000 Independence Avenue, 

SW., Washington, 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 Beverage 

Vending Machines 

C. Impact on Manufacturers 

D. National Benefits 

II. Introduction 

A. Authority 

B. Background 

1. History of Standards Rulemaking for 

Beverage Vending Machine Equipment 

2. Miscellaneous Rulemaking Issues 

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 

2. Rebuttable Presumption 

IV. Methodology and Discussion of 

Comments on Methodology 

A. Market and Technology Assessment 

1. Definitions Related to Refrigerated 

Beverage Vending Machines 

2. Equipment Classes 

B. Screening Analysis 

C. Engineering Analysis 

1. Approach 

2. Analytical Models 

D. Markups To Determine Equipment Price 

E. Energy Use Characterization 

F. Life-Cycle Cost and Payback Period 

Analyses 

G. Shipments Analysis 

1. Split Incentives 

2. Sustainability of Sales Less Than 100 

Thousand Units 

3. Distribution of Equipment Classes and 

Sizes 

4. Future Sales Decline 

H. National Impact Analysis 

1. Choice of Discount Rate 

2. Discounting of Physical Values 

I. Life-Cycle Cost Subgroup Analysis 

J. Manufacturer Impact Analysis 

K. Utility Impact Analysis 

L. Employment Impact Analysis 

M. Environmental Assessment 

N. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

V. Discussion of Other Comments 

A. Information and Assumptions Used in 

Analyses 

1. Engineering Analysis 

B. Benefits and Burdens 

VI. Analytical Results and Conclusions 

A. Trial Standard Levels 

B. Significance of Energy Savings 

C. Economic Justification 

1. Economic Impact on Commercial 

Customers 

2. Economic Impact on Manufacturers 

3. National Impact Analysis 

4. Impact on Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

D. Conclusion 

1. Class A Equipment 

2. Class B Equipment 

VII. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

B. Review Under the Regulatory Flexibility 

Act 

1. Need for and Objectives of the Final 

Rule 

2. Significant Issues Raised by Public 

Comments 

3. Description and Estimated Number of 

Small Entities Regulated 

4. Description and Estimate of Reporting, 

Recordkeeping, and Other Compliance 

Requirements 

5. Steps DOE Has Taken To Minimize the 

Economic Impact on Small 

Manufacturers 

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 General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

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. 6295 et seq.; 

EPCA), directs the Department of Energy 

(DOE) to establish mandatory energy 

conservation standards for refrigerated 

bottled or canned beverage vending 

machines. (42 U.S.C. 6295(v)(1), (2) and 

(3)) These types of equipment are 

referred to collectively hereafter as 

‘‘beverage vending machines.’’ Any 

such standard must be designed to 

‘‘achieve the maximum improvement in 

energy efficiency * * * which the 

Secretary determines is technologically 

feasible and economically justified.’’ (42 

U.S.C. 6295(o)(2)(A) and 6316(e)(1)) 

Furthermore, the new standard must 

‘‘result in significant conservation of 

energy.’’ (42 U.S.C. 6295(o)(3)(B)) The 

standards in today’s final rule, which 

apply to all beverage vending machines, 

satisfy these requirements. Currently, no 

mandatory Federal energy conservation 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44915 

standards exist for the beverage vending 

machine equipment covered by this 

rulemaking. 

Table I.1 shows the standard levels 

that DOE is adopting today. These 

standards will apply to all beverage 

vending machines manufactured for sale 

in the United States, or imported to the 

United States, starting 3 years after 

publication of the final rule. 

TABLE I.1—STANDARD LEVELS FOR

BEVERAGE VENDING MACHINES

Equipment 

class * 

Proposed standard level ** 

maximum daily energy 

consumption (MDEC) 

kWh/day *** 

A .................. MDEC = 0.055 × V + 2.56.†

B .................. MDEC = 0.073 × V + 3.16.††

*See section IV.A.2 of the NOPR for a discussion of equipment classes. 

** ‘‘V’’ is the refrigerated volume (ft 3) of the 

refrigerated bottled or canned beverage vending machine, as measured by the American 

National Standards Institute (ANSI)/Association of Home Appliance Manufacturers 

(AHAM) HRF–1–2004, ‘‘Energy, Performance 

and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.’’ V is the volume of the case, as measured in ARI Standard 1200–2006, Appendix C. 

*** Kilowatt hours per day. 

†Trial Standard Level (TSL) 6. 

††TSL 3. 

B. Benefits to Customers of Beverage 

Vending Machines 

Table I.2 indicates the impacts on 

commercial customers of today’s 

standards. 

TABLE I.2—IMPLICATIONS OF NEW STANDARDS FOR COMMERCIAL CUSTOMERS

Equipment class 

Energy 

conservation 

standard 

Total installed 

cost 

$ 

Total installed 

cost increase 

$ 

Life-cycle cost 

savings 

$ 

Payback period 

years 

Class A ............................................................. TSL 6 2,935 233 277 4.1 

Class B ............................................................. TSL 3 2,070 86 37 6.8 

The economic impacts on commercial 

customers (i.e., the average life-cycle 

cost [LCC] savings) are positive for most 

equipment classes. For example, fully 

cooled (Class A) medium-capacity 

vending machines—the most common 

type currently being sold—have 

installed prices of $2,625 and annual 

energy costs of $188, respectively at 

national average values. To meet the 

new standards, DOE estimates that the 

installed prices of such equipment will 

be $2,864, an increase of $239, which 

will be offset by annual energy savings 

of approximately $69 and an increase in 

maintenance and repair cost of $13. 

C. Impact on Manufacturers 

Using a real corporate discount rate of 

7 percent, DOE estimates the industry 

net present value (INPV) of the beverage 

vending machine industry to be $44.1 

million for Class A units, and $33.7 

million for Class B units (both figures in 

2008$). For Class A machines, DOE 

expects the impact of today’s standards 

on the INPV of manufacturers of 

beverage vending machines to be a loss 

of 18.0 to 25.1 percent ($7.9 million to 

$11.1 million) for Class A machines and 

a loss of 1.9 to 3.5 percent ($0.6 million 

to $1.2 million) for Class B machines. 

Based on DOE’s interviews with 

manufacturers of beverage vending 

machines, DOE expects minimal plant 

closings or loss of employment as a 

result of the standards. 

D. National Benefits 

DOE estimates that the standards will 

save approximately 0.159 quads 

(quadrillion, or 10 15) British thermal 

units (Btu) of energy over 30 years 

(2012–2042). This is equivalent to all 

the energy consumed by more than 830 

thousand American households in a 

single year. 

By 2042, DOE expects energy savings 

from the standards to eliminate the need 

for approximately 0.118 new 1,000- 

megawatt (MW) power plants. These 

energy savings will result in cumulative 

greenhouse gas emission reductions of 

approximately 9.6 million metric tons 

(Mt) of carbon dioxide (CO2), an amount 

equal to that produced by 

approximately 2.0 million cars every 

year. Additionally, the standards will 

help alleviate air pollution by resulting 

in 3.28 kilotons (kt) of cumulative 

nitrogen oxide (NOX) emission 

reductions and between 0 and 0.188 

tons of cumulative mercury (Hg) 

emission reductions from 2012–2042. 

The estimated net present monetary 

values of these emissions reductions 

(expressed in 2007$) are between $5.5 

and $266.3 million for CO2, (expressed 

in 2007$), $354,000 and $3.6 million for 

NOX (expressed in 2007$), and $0 and 

$1.5 million for Hg (expressed in 2007$) 

at a 7-percent discount rate (discounted 

to 2009). At a 3 percent discount rate, 

the estimated net present values of these 

emissions reductions are between $11.3 

and $543.5 million (2007$) for CO2, 

$749,000 and $7.7 million (2007$) for 

NOX, and $0 and $3.2 million (2007$) 

for Hg. 

The national NPV of the standards is 

$0.182 billion using a 7 percent 

discount rate and $0.476 billion using a 

3 percent discount rate, cumulative 

from 2012–2057 in 2008$. This is the 

estimated total value of future savings 

minus the estimated increased 

equipment costs, discounted to 2009. 

The benefits and costs of today’s final 

rule can also be expressed in terms of 

annualized (2008$) values from 2012– 

2042. Separate estimates of values for 

Class A and Class B equipment are 

shown in Table I.3 and Table I.4, 

respectively. In each table, the 

annualized monetary values are the sum 

of the annualized national economic 

value of operating savings benefits 

(energy, maintenance and repair), 

expressed in 2008$, plus the monetary 

values of the benefits of carbon dioxide 

emission reductions, otherwise known 

as the Social Cost of Carbon (SCC) 

expressed as $19 per metric ton of 

carbon dioxide, in 2007$. The $19 value 

is a central interim value from a recent 

interagency process. The derivation of 

this value is discussed in section VI.C.6. 

Although summing the value of 

operating savings to the values of CO2

reductions provides a valuable 

perspective, please note the following: 

(1) The national operating savings are 

domestic U.S. consumer monetary 

savings found in market transactions 

while the CO2 value is based on a range 

of estimates of imputed marginal social 

cost of carbon from $1.14 to $55 per 

metric ton (2007$), which are meant to 

reflect, for the most part, the global 

benefits of carbon dioxide reductions; 

(2) the national operating savings are 

measured in 2008$ while the CO2 saving 

are measured in 2007$; and (3) the 

assessments of operating savings and 

CO2 savings are performed with 

different computer models, leading to 

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44916 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

different time frames for analysis. The 

present value of national operating 

savings is measured for the period 

2012–2057 (31 years from 2012 to 2042 

inclusive, plus the lifetime of the 

longest-lived equipment shipped in the 

31st year), then converted the 

annualized equivalent for the 31 years. 

The value of CO2, on the other hand is 

meant to reflect the present value of all 

future climate related impacts, even 

those beyond 2057. 

Using a 7 percent discount rate for the 

annualized cost analysis, the combined 

cost of the standards established in 

today’s final rule for Class A and Class 

B beverage vending machines is $24.0 

million per year in increased equipment 

and installation costs, while the 

annualized benefits are $41.8 million 

per year in reduced equipment 

operating costs and $9.0 million in CO2

reductions, for a net benefit of $26.8 

million per year. Using a 3 percent 

discount rate, the cost of the standards 

established in today’s final rule is $23.1 

million per year in increased equipment 

and installation costs, while the benefits 

of today’s standards are $49.1 million 

per year in reduced operating costs and 

$10.3 million in CO2 reductions, for a 

net benefit of $36.3 million per year. 

The separate estimates of values for 

Class A and Class B equipment are 

shown in Table I.3 and Table I.4 

respectively. 

TABLE I.3—ANNUALIZED BENEFITS AND COSTS FOR CLASS A EQUIPMENT

Category 

Primary estimate 

(AEO reference 

case) 

Low estimate 

(low growth 

case) 

High estimate 

(high growth 

case) 

Units 

Year 

dollars 

Disc 

(percent) 

Period 

covered 

Benefits 

Annualized Monetized (millions$/year) 37.7 .................. 34.2 .................. 40.0 .................. 2008 ............ 7 31 

44.2 .................. 39.9 .................. 46.8 .................. 2008 ............ 3 31 

Annualized Quantified ........................... 0.25 CO2 (Mt) ... 0.25 CO2 (Mt) ... 0.25 CO2 (Mt) ... NA ............... 7 31 

0.07 NOX (kt) ... 0.07 NOX (kt) ... 0.07 NOX (kt) ... NA ............... 7 31 

0.004 Hg (t) ...... 0.004 Hg (t) ...... 0.004 Hg (t) ...... NA ............... 7 31 

0.26 CO2 (Mt) ... 0.26 CO2 (Mt) ... 0.26 CO2 (Mt) ... NA ............... 3 31 

0.039 NOX (kt) 0.039 NOX (kt) 0.039 NOX (kt) NA ............... 3 31 

0.005 Hg (t) ...... 0.005 Hg (t) ...... 0.005 Hg (t) ...... NA ............... 3 31 

CO2 Monetized Value (at $19/Metric 

Ton, millions$/year).

7.9 .................... 7.9 .................... 7.9 .................... 2007 ............ 7 31 

9.0 .................... 9.0 .................... 9.0 .................... 2007 ............ 3 31 

Total Monetary Benefits (millions$/ 

year)*.

45.5 .................. 42.1 .................. 47.9 .................. 2008 & 2007 7 31 

53.2 .................. 48.9 .................. 55.8 .................. 2008 & 2007 3 31 

Qualitative 

Costs 

Annualized Monetized (millions$/year) 19.6 .................. 19.6 .................. 19.6 .................. 2008 ............ 7 31 

18.8 .................. 18.8 .................. 18.8 .................. 2008 ............ 3 31 

Qualitative 

Net Benefits/Costs 

Annualized Monetized, including Carbon Benefits* (million$/year).26.0 .................. 22.6 .................. 28.4 .................. 2008 & 2007 7 31 

34.4 .................. 30.1 .................. 36.9 .................. 2008 & 2007 3 31 

Qualitative 

* Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$. 

TABLE I.4—ANNUALIZED BENEFITS AND COSTS FOR CLASS B EQUIPMENT

Category 

Primary estimate 

(AEO reference 

case) 

Low estimate 

(low growth 

case) 

High estimate 

(high growth 

case) 

Units 

Year 

dollars 

Disc 

(percent) 

Period 

covered 

Benefits 

Annualized Monetized (millions$/year) 4.1 .................... 3.6 .................... 4.4 .................... 2008 ............ 7 31 

4.9 .................... 4.3 .................... 5.2 .................... 2008 ............ 3 31 

Annualized Quantified ........................... 0.03 CO2 (Mt) ... 0.03 CO2 (Mt) ... 0.03 CO2 (Mt) ... NA ............... 7 31 

0.01 NOX (kt) ... 0.01 NOX (kt) ... 0.01 NOX (kt) ... NA ............... 7 31 

0.001 Hg (t) ...... 0.001 Hg (t) ...... 0.001 Hg (t) ...... NA ............... 7 31 

0.04 CO2 (Mt) ... 0.04 CO2 (Mt) ... 0.04 CO2 (Mt) ... NA ............... 3 31 

0.012 NOX (kt) 0.012 NOX (kt) 0.012 NOX (kt) NA ............... 3 31 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44917 

TABLE I.4—ANNUALIZED BENEFITS AND COSTS FOR CLASS B EQUIPMENT—Continued 

Category 

Primary estimate 

(AEO reference 

case) 

Low estimate 

(low growth 

case) 

High estimate 

(high growth 

case) 

Units 

Year 

dollars 

Disc 

(percent) 

Period 

covered 

0.001 Hg (t) ...... 0.001 Hg (t) ...... 0.001 Hg (t) ...... NA ............... 3 31 

CO2 Monetized Value (at $19/Metric 

Ton, millions$/year).

1.1 .................... 1.1 .................... 1.1 .................... 2007 ............ 7 31 

1.3 .................... 1.3 .................... 1.3 .................... 2007 ............ 3 31 

Total Monetary Benefits (millions$/ 

year)*.

5.2 .................... 4.7 .................... 5.6 .................... 2008 & 2007 7 31 

6.1 .................... 5.5 .................... 6.5 .................... 2008 & 2007 3 31 

Qualitative 

Costs 

Annualized Monetized (millions$/year) 4.4 .................... 4.4 .................... 4.4 .................... 2008 ............ 7 31 

4.3 .................... 4.3 .................... 4.3 .................... 2008 ............ 3 31 

Qualitative 

Net Benefits/Costs 

Annualized Monetized, including Carbon Benefits (million$/year)*.0.8 .................... 0.3 .................... 1.1 .................... 2008 & 2007 7 31 

1.9 .................... 1.3 .................... 2.2 .................... 2008 & 2007 3 31 

Qualitative 

* Per the above discussion, this represents a simplified estimate that includes both 2007$ and 2008$. 

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 

Automobiles. The amendments to EPCA 

contained in the Energy Policy Act of 

2005 (EPACT 2005), Public Law 109–58, 

include new or amended energy 

conservation standards and test 

procedures for some of these products, 

and direct DOE to undertake 

rulemakings to promulgate such 

requirements. In particular, section 

135(c)(4) of EPACT 2005 amends EPCA 

to direct DOE to prescribe energy 

conservation standards for beverage 

vending machines. (42 U.S.C. 6295(v)) 

Because of its placement in Part A of 

Title III of EPCA, the rulemaking for 

beverage vending machine energy 

conservation standards is bound by the 

requirements of 42 U.S.C. 6295. 

However, since beverage vending 

machines are commercial equipment, 

DOE intends to place the new 

requirements for beverage vending 

machines in Title 10 of the Code of 

Federal Regulations (CFR), Part 431 

(‘‘Energy Efficiency Program for Certain 

Commercial and Industrial 

Equipment’’), which is consistent with 

DOE’s previous action to address the 

EPACT 2005 requirements for 

commercial equipment. The location of 

the provisions within the CFR does not 

affect either their substance or 

applicable procedure, so DOE is placing 

them in the appropriate CFR part based 

on their nature or type. DOE will refer 

to beverage vending machines as 

‘‘equipment’’ throughout the notice 

because of their placement in 10 CFR 

part 431. DOE publishes today’s final 

rule pursuant to Title III, Part A of 

EPCA, which provides for test 

procedures, labeling, and energy 

conservation standards for beverage 

vending machines and certain other 

equipment. The test procedures for 

beverage vending machines appear at 

sections 431.293 and 431.294. 

EPCA provides criteria for prescribing 

new or amended standards for beverage 

vending machines. As indicated above, 

any new or amended standard for this 

equipment must be designed to achieve 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)) Additionally, EPCA 

provides specific 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 

procedure. (42 U.S.C. 6295(o)(3)) 

Further, DOE may not prescribe an 

amended or new standard if DOE 

determines by rule that such standard 

would not result in ‘‘significant 

conservation of energy’’ or ‘‘is not 

technologically feasible or economically 

justified.’’ (42 U.S.C. 6295(o)(3)(A) and 

(B)) 

EPCA also provides that in deciding 

whether such a standard is 

economically justified for equipment 

such as beverage vending machines, 

DOE must, after receiving comments on 

the proposed standard, determine 

whether the benefits of the standard 

exceed its burdens by considering, to 

the greatest extent practicable, the 

following seven factors: 

1. The economic impact of the 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

2. The savings in operating costs 

throughout the estimated average life of 

the covered equipment in the type (or 

class) compared to any increase in the 

price, or in the initial charges for, or 

maintenance expenses of, the 

equipment 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; 

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44918 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

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)) 

In addition, EPCA, as amended (42 

U.S.C. 6295(o)(2)(B)(iii) and 6316(a)), 

establishes a rebuttable presumption 

that any standard for covered products 

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 

applicable, 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. 

EPCA further provides that the 

Secretary may not prescribe an amended 

or new standard if interested persons 

have established by a preponderance of 

the evidence that the standard is ‘‘likely 

to result in the unavailability in the 

United States in any covered product 

type (or class) of performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available in the United States 

at the time of the Secretary’s finding.’’ 

(42 U.S.C. 6295(o)(4) and 6316(e)(1)) 

Section 325(q)(1) of EPCA is 

applicable to promulgating standards for 

most types or classes of equipment, 

including beverage vending machines 

that have two or more subcategories. (42 

U.S.C. 6295(q)(1) and 42 U.S.C. 

6316(e)(1)) Under this provision, DOE 

must specify a different standard level 

than that which applies generally to 

such type or class of equipment for any 

group of products ‘‘which 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 

products within such type (or class) do 

not have and such feature justifies a 

higher or lower 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 prescribing such a standard must 

include an explanation of the basis on 

which DOE established such a higher or 

lower level. (See 42 U.S.C. 6295(q)(2)) 

Federal energy conservation standards 

for commercial equipment generally 

supersede State laws or regulations 

concerning 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 

Beverage Vending Machine Equipment 

As discussed in the notice of 

proposed rulemaking (NOPR), 74 FR 

26022 (May 29, 2009) (the May 2009 

NOPR), the EPACT 2005 amendments to 

EPCA require that DOE issue energy 

conservation standards for the 

equipment covered by this rulemaking, 

which would apply to equipment 

manufactured 3 years after publication 

of the final rule establishing the energy 

conservation standards. (42 U.S.C. 

6295(v)(1), (2) and (3)) The energy use 

of this equipment has not previously 

been regulated by Federal law. 

Section 135(a)(3) of EPACT 2005 also 

amended section 321 of EPCA, in part, 

by adding definitions for terms relevant 

to this equipment. (42 U.S.C. 6291 (40)) 

EPCA defines ‘‘refrigerated bottled or 

canned beverage vending machine’’ as 

‘‘a commercial refrigerator that cools 

bottled or canned beverages and 

dispenses the bottled or canned 

beverages on payment.’’ (42 U.S.C. 6291 

(40)) Section 136(a)(3) of EPACT 2005 

amended section 340 of EPCA, in part, 

by adding a definition for ‘‘commercial 

refrigerator, freezer, and refrigeratorfreezer.’’ 

During the course of this rulemaking, 

Congress passed the Energy 

Independence Security Act of 2007 

(EISA 2007), which the President signed 

on December 19, 2007 (Pub. L. 110– 

140). Section 310(3) of EISA 2007 

amended section 325 of EPCA in part by 

adding subsection 325(gg) (42 U.S.C. 

6295(gg)). This subsection requires any 

new or amended energy conservation 

standards adopted after July 1, 2010, to 

incorporate ‘‘standby mode and off 

mode energy use.’’ (42 U.S.C. 

6295(gg)(3)(A)) In the NOPR, DOE stated 

that because any standards associated 

with this rulemaking are required by 

August 2009, the energy use 

calculations will not include ‘‘standby 

mode and off mode energy use.’’ To 

include standby mode and off mode 

energy use requirements for this 

rulemaking would take considerable 

analytical effort and would likely 

require changes to the test procedure. 

Given the statutory deadline, DOE has 

decided to address these additional 

requirements when the energy 

conservation standards for beverage 

vending machines are reviewed in 

August 2015. At that time, DOE will 

consider the need for possible 

amendment in accordance with 42 

U.S.C. 6295(m). (74 FR 26023) 

DOE commenced this rulemaking on 

June 28, 2006, by publishing a notice of 

a public meeting and of the availability 

of its framework document for the 

rulemaking. 71 FR 36715. The 

framework document described the 

approaches DOE anticipated using and 

issues to be resolved in the rulemaking. 

DOE held a public meeting in 

Washington, DC on July 11, 2006, to 

present the contents of the framework 

document, describe the analyses DOE 

planned to conduct during the 

rulemaking, obtain public comment on 

these subjects, and facilitate the public’s 

involvement in the rulemaking. After 

the public meeting, DOE also allowed 

the submission of written statements in 

response to the framework document. 

On June 16, 2008, DOE published an 

advance notice of proposed rulemaking 

(ANOPR) in this proceeding. 73 FR 

34094 (the June 2008 ANOPR). In the 

June 2008 ANOPR, DOE sought 

comment on its proposed equipment 

classes for the rulemaking, and on the 

analytical framework, models, and tools 

that DOE used to analyze the impacts of 

energy conservation standards for 

beverage vending machines. In 

conjunction with the June 2008 ANOPR, 

DOE published on its Web site the 

complete ANOPR technical support 

document (TSD), which included the 

results of DOE’s various preliminary 

analyses in this rulemaking. In the June 

2008 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 

June 26, 2008, to present the 

methodology and results of the ANOPR 

analyses 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 

breakdown, and were addressed in 

detail in the May 2009 NOPR. 

In the May 2009 NOPR, DOE 

proposed new energy conservation 

standards for beverage vending 

machines. 74 FR 26020. In conjunction 

with the May 2009 NOPR, DOE also 

published on its Web site the complete 

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TSD for the proposed rule, which 

incorporated the final analyses that DOE 

conducted, and contained technical 

documentation for each step of the 

analysis. The TSD included the 

engineering analysis spreadsheets, the 

LCC spreadsheet, and the national 

impact analysis spreadsheet. The 

standards DOE proposed for beverage 

vending machines are shown in Table 

II.1. 

TABLE II.1—MAY 2009 PROPOSED

STANDARD LEVELS FOR BEVERAGE

VENDING MACHINES

Equipment 

class *

Proposed standard level **

maximum daily energy 

consumption (MDEC) 

kWh/day ***

A .................. MDEC = 0.055 × V + 2.56.†

B .................. MDEC = 0.073 × V + 3.16.††

*See section IV.A.2 of the NOPR (74 FR 

26027) for a discussion of equipment classes. ** ‘‘V’’ is the refrigerated volume (ft3) of the 

refrigerated bottled or canned beverage vending machine, as measured by ANSI/AHAM 

HRF–1–2004, ‘‘Energy, Performance and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.’’ ***Kilowatt hours per day. †TSL 6. 

††TSL 3. 

In the May 2009 NOPR, DOE 

identified issues on which it was 

particularly interested in receiving 

comments and views of interested 

parties. These included the magnitude 

of the estimated decline in INPV and 

what impact this level could have on 

industry parties including small 

businesses; whether the proposed linear 

equation used to describe the maximum 

daily energy consumption standards 

should be based on a two-point, threepoint, or some other weighting strategy; 

whether the proposed standard risks 

industry consolidation; how small 

business manufacturers will be affected 

due to new energy conservation 

standards; the potential compliance 

costs and other impacts to small 

manufacturers that do not supply the 

high-volume customers of beverage 

vending machines; the impacts on small 

manufacturers for possible alternatives 

to the proposed rule; and whether the 

energy savings and related benefits 

outweigh the costs, including potential 

manufacturer impacts. After the 

publication of the May 2009 NOPR, 

DOE received written comments on 

these and other issues. DOE also held a 

public meeting in Washington, DC, on 

June 17, 2009, to hear oral comments on 

and solicit information relevant to the 

proposed rule. The May 2009 NOPR 

included additional background 

information on the history of this 

rulemaking. 74 FR 26023. 

2. Miscellaneous Rulemaking Issues 

a. Type of Standard 

For the ANOPR, DOE received 

comments from interested parties 

regarding the type of standards it would 

be developing as part of this 

rulemaking. Some interested parties 

recommended that DOE set prescriptive 

standards, while others suggested that 

the choice of technologies used to 

achieve standards should be left to the 

discretion of the manufacturer. (73 FR 

34100) 

In response, DOE noted in the ANOPR 

that EPCA provides that an ‘‘energy 

conservation standard’’ must be either 

(A) ‘‘a * * * level of energy efficiency’’ 

or ‘‘a * * * quantity of energy use,’’ or 

(B), for certain specified equipment, ‘‘a 

design requirement.’’ (42 U.S.C. 6291(6)) 

Thus, an ‘‘energy conservation 

standard’’ cannot consist of both a 

design requirement and a level of 

efficiency or energy use. In addition, 

beverage vending machines are not one 

of the specified types of equipment for 

which EPCA allows a standard be set 

with a design requirement. (42 U.S.C. 

6291(6)(B), 6292(a)) Item (A) above also 

indicates that, under EPCA, a single 

energy conservation standard cannot 

have measures of both energy efficiency 

and energy use. Furthermore, EPCA 

specifically requires DOE to base its test 

procedure for this equipment on ANSI/ 

American Society of Heating, 

Refrigerating and Air-Conditioning 

Engineers (ASHRAE) Standard 32.1– 

2004, Methods of Testing for Rating 

Vending Machines for Bottled, Canned 

or Other Sealed Beverages. (42 U.S.C. 

6293(b)(15)) The test methods in ANSI/ 

ASHRAE Standard 32.1–2004 consist of 

means to measure energy consumption, 

not energy efficiency. (73 FR 34100) 

During the NOPR public meeting, the 

Appliance Standards Awareness Project 

(ASAP), stated that DOE’s previous 

decisions to not allow multi-part 

standards needs to be revisited, but not 

as part of this rulemaking. Multi-part 

standards would allow performance 

standards and design requirements to be 

established. (ASAP, Public Meeting 

Transcript, No. 56 at p. 35) A notation 

in the form ‘‘ASAP, No. 56 at p. 35’’ 

identifies an oral comment that DOE 

received during the June 17, 2008, 

NOPR Public Meeting. This comment 

was recorded in the public meeting 

transcript in the docket for this 

rulemaking (Docket No. EERE–2006– 

BT–STD–0125). This particular notation 

refers to a comment (1) made during the 

public meeting by the Appliance 

Standards Awareness Project; (2) 

recorded in document number 35, 

which is the public meeting transcript 

filed in the docket of this rulemaking; 

and (3) appearing on page 35 of 

document number 56. In a written 

comment co-signed by Pacific Gas and 

Electric Company (PG&E), Southern 

California Edison, Southern California 

Gas Company (SCGC), San Diego Gas 

and Electric (SDGE), ASAP, and the 

National Resource Defense Council 

(NRDC), hereafter the Joint Comment, 

signatories urged DOE to include a 

design requirement for factory set 

controls in today’s final rule. (Joint 

Comment, No. 67 at p. 2) For the 

reasons given above, DOE maintains 

that it does not have authority to 

develop standards that consist of both a 

design requirement and a level of 

efficiency or energy use. Instead, DOE 

has developed standards that would 

require that each beverage vending 

machine be subject to a maximum level 

of energy consumption, and 

manufacturers could meet these 

standards with their own choice of 

design methods. 

In response to the NOPR, the 

University of Southern Maine (USM) 

recommended that DOE establish energy 

consumption standards that are based 

on beverage vending machines that have 

no lights, with the exception of lighting 

the coin slots. Or as an alternative, USM 

suggested that the standards be based on 

a machine that has lights controlled by 

proximity sensors that turn lights on 

only when prospective purchasers are 

nearby. (USM, No. 52 at p. 1) USM also 

supported setting a design standard that 

encourages the use of refrigerant gases 

that offer the lowest total life-cycle 

impacts. (USM, No. 52 at p. 1) As stated 

above, beverage vending machines are 

not one of the specified equipment for 

which EPCA allows a standard to 

consist of a design requirement. (42 

U.S.C. 6291(6)(B), 6292(a)) 

b. Combination Vending Machines 

Combination vending machines have 

a refrigerated volume for the purpose of 

cooling and vending ‘‘beverages in a 

sealed container,’’ and are therefore 

covered by this rule. However, beverage 

vending is not their sole function. 

Combination vending machines also 

have non-refrigerated volumes for the 

purpose of vending other, non-‘‘sealed 

beverage’’ merchandise. In the ANOPR, 

DOE addressed several comments from 

interested parties regarding combination 

vending machines. Specifically, these 

parties were concerned that regulating 

vending machines that contain both 

refrigerated and non-refrigerated 

products could result in confusion 

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about what this rulemaking covers, or 

could result in manufacturers taking 

advantage of loopholes to produce 

equipment that does not meet the 

standards. In response, DOE stated that 

the language used in EPCA to define 

beverage vending machines is broad 

enough to include any vending 

machine, including a combination 

vending machine, as long as some 

portion of that machine cools bottled or 

canned beverages and dispenses them 

upon payment. (42 U.S.C. 6291 (40)) 

DOE interprets this language to cover 

any vending machine that can dispense 

at least one type of refrigerated bottled 

or canned beverage, regardless of the 

other types of vended products (some of 

which may not be refrigerated). 73 FR 

34105–06. 

At the NOPR public meeting, DixieNarco stated that combination vending 

machines were not specifically included 

in the analysis, which focused on glass 

front and stack-style beverage vending 

machines, and should be studied 

further. (Dixie-Narco, Public Meeting 

Transcript, No. 56 at p. 204) Dixie-Narco 

asserted that the existing formulas for 

Class A and Class B machines create an 

energy threshold that cannot be met by 

combination machines. Dixie-Narco 

explained that with combination 

machines, the entire cabinet is 

illuminated, but they typically have 

smaller refrigerated volumes compared 

to other vending machines with similar 

exterior dimensions. Dixie-Narco 

suggested creating a Class C equipment 

class for zone-cooled glass front vending 

machines. It proposed the following 

equation: MDEC = 0.073 × V + 3.5. 

Dixie-Narco also stated that it is open to 

other possible solutions suggested by 

DOE or other concerned parties. (DixieNarco, No. 64 at p. 3) Coca-Cola stated 

that combination vending machines 

may not scale down in efficiency 

because refrigeration components may 

not be available in small sizes. (CocaCola, Public Meeting Transcript, No. 56 

at p. 210) Dixie-Narco noted that 

combination vending machines are not 

typically purchased by Coca-Cola and 

PepsiCo, and are manufactured by a 

group of manufacturers different from 

the beverage vending machine 

manufacturers. Dixie-Narco also stated 

that shipments for combination vending 

machines are very small. (Dixie-Narco, 

Public Meeting Transcript, No. 56 at pp. 

204, 212) 

In the analysis for the proposed rule, 

DOE did not consider combination 

vending machines as a separate 

equipment class. Rather, they were 

considered with all other Class A and 

Class B beverage vending machines. 

However, based on comments received, 

DOE recognizes that the design and 

manufacture of combination vending 

machines may be challenged by less 

component availability compared to 

other beverage vending machines. DOE 

concludes that combination vending 

machines have a distinct utility that 

limits the energy efficiency 

improvement potential possible for such 

beverage vending machines. While more 

efficient combination vending machines 

are technologically feasible, DOE does 

not have the data needed to estimate 

either the energy efficiency 

improvement potential or the cost of 

more efficient designs of combination 

vending machines. Furthermore, none 

of the interested parties’ comments 

provided an economic analysis 

demonstrating that efficiency standards 

for such beverage vending machines 

would be cost-justified. Without 

engineering cost and efficiency data, 

DOE was not able to perform an analysis 

of the impacts of standards on 

combination vending machines. Thus, 

DOE is not able to determine whether 

energy conservation standards for 

combination vending machines are 

economically justified and would result 

in significant energy savings. Based on 

the above, DOE concludes that 

combination vending machines are a 

class of beverage vending machines, 

and, since DOE cannot determine 

whether standards would meet EPCA’s 

statutory criteria, DOE is not setting 

standards for combination vending 

machines at this time. Instead, DOE is 

reserving standards for combination 

vending machines. EPCA does require 

that, not later than 6 years after issuance 

of any final rule establishing or 

amending a standard, the Secretary shall 

publish either a notice of determination 

that standards for the product do not 

need to be amended or a notice of 

proposed rulemaking including new 

proposed standards. 42 U.S.C. 6295(m). 

So that interested parties understand 

what constitutes a combination vending 

machine, DOE is incorporating into 

today’s final rule a definition for 

combination vending machine, and is 

modifying the definitions of Class A and 

Class B beverage vending machines (see 

section IV.A.2). DOE adopts the 

following definition for combination 

vending machine: ‘‘Combination 

vending machine means a refrigerated 

bottled or canned beverage vending 

machine that also has non-refrigerated 

volumes for the purpose of vending 

other, non-‘‘sealed beverage’’ 

merchandise.’’ 

DOE notes that this definition for 

combination vending machine could be 

refined if DOE initiates a rulemaking 

proceeding that evaluates energy 

conservation standards for combination 

vending machines. 

c. Installed Base 

USA Technologies stated that it does 

not believe that significant energy 

savings will be achieved by the standard 

unless the installed base is included. 

(USA Technologies, Public Meeting 

Transcript, No. 56 at p. 16) 

DOE acknowledges that additional 

energy savings can be obtained by 

regulating the installed base of beverage 

vending machines. This would require 

existing, used machines to be rebuilt or 

refurbished to comply with the 

standards. However, in the ANOPR, 

DOE carefully considered its authority 

to establish energy conservation 

standards for rebuilt and refurbished 

beverage vending machines and 

concluded that its authority does not 

extend to rebuilt and refurbished 

equipment. (73 FR 34106–07) 

As stated in the ANOPR, throughout 

the history of the energy conservation 

standards program, DOE has not 

regulated used consumer products or 

commercial equipment that has been 

refurbished, rebuilt, or undergone major 

repairs, since EPCA only covers new 

covered equipment distributed in 

commerce. Therefore, for this final rule, 

DOE maintains that rebuilt or 

refurbished beverage vending machines 

are not new covered equipment under 

EPCA and, therefore, are not subject to 

DOE’s energy conservation standards or 

test procedures. 

d. Rating Conditions 

In the ANOPR, DOE stated that it 

planned to use a 75 °F/45 RH rating 

condition for all beverage vending 

machines covered by this rulemaking. 

(73 FR 34102) In a written comment on 

the NOPR, the National Automatic 

Merchandising Association (NAMA) 

stated that these rating conditions were 

appropriate. (NAMA, No. 65 at p. 3) 

Dixie-Narco also commented that it 

supports the 75 °F/45 percent relative 

humidity (RH) rating condition because 

it is a more realistic temperature for 

measuring energy efficiency compared 

to the 90 °F/65 percent RH condition. 

Therefore, for this final rule, DOE 

continues to use the 75 °F/45 RH rating 

condition for all beverage vending 

machines covered by this rulemaking. 

e. Certification and Enforcement 

Regal Beloit asked how certification 

and enforcement will be conducted for 

the energy conservation standards that 

DOE establishes for beverage vending 

machines. (Regal Beloit, No. 59 at p. 1) 

To enforce energy conservation 

standards, DOE establishes both 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44921 

generally applicable regulations that 

apply to various types of products or 

equipment covered by standards, as 

well as a limited number of productspecific requirements. DOE has not 

adopted requirements that apply to 

beverage vending machines (an EPACT 

2005 addition to the program). DOE is 

developing enforcement regulations for 

the EPACT 2005 equipment, which it 

expects will be based on the existing 

enforcement regulations that require 

manufacturers to certify compliance 

with the standards by filing two 

separate documents: (1) A compliance 

statement in which the manufacturer 

certifies its equipment meets the 

requirements; and (2) a certification 

report in which the manufacturer 

provides equipment-specific 

information, such as the model number, 

energy consumption and other model 

specific information that would enable 

DOE to determine which equipment 

class and standard the equipment is 

subject to and whether the equipment 

meets the standard. 

In instances where there are questions 

whether equipment meets the standards, 

existing regulations require DOE to 

consult with the manufacturer. If DOE 

remains unsatisfied with the 

manufacturer’s explanation for the 

alleged noncompliance, DOE may test 

units of the allegedly non-complying 

product or equipment, to determine 

whether it meets the applicable 

standard. After DOE has completed 

testing, the manufacturer has the option 

to conduct additional tests for DOE to 

consider. DOE has never had to conduct 

enforcement testing, as it has been able 

to resolve all issues with manufacturers 

prior to taking that step. 

The beverage vending machine 

standards will go into effect 3 years after 

the publication of the final rule. DOE 

anticipates that it will have enforcement 

regulations in place, applicable to 

beverage vending machines, by that 

time. But if such regulations are not in 

place when the standards go into effect, 

manufacturers will not be required to 

report to DOE. Moreover, if there is a 

question regarding compliance with the 

standards, DOE will confer with the 

manufacturer before pursuing 

enforcement action. A violation of these 

standards could subject a manufacturer 

to injunctive action or other relief. See 

42 U.S.C. 6302–6305. 

III. General Discussion 

A. Test Procedures 

On December 8, 2006, DOE published 

a final rule (the December 2006 final 

rule) in the Federal Register that 

incorporated by reference ANSI/ 

ASHRAE Standard 32.1–2004, with two 

modifications, as the DOE test 

procedure for this equipment. 71 FR 

71340, 71375; 10 CFR 431.294. In 

section 6.2 of ANSI/ASHRAE Standard 

32.1–2004, Voltage and Frequency, the 

first modification specifies that 

equipment with dual nameplate 

voltages must be tested at the lower of 

the two voltages only. 71 FR 71340, 

71355 The second modification 

specifies that (1) any measurement of 

‘‘vendible capacity’’ of refrigerated 

bottled or canned beverage vending 

machines must be in accordance with 

the second paragraph of section 5 of 

ANSI/ASHRAE Standard 32.1–2004, 

Vending Machine Capacity; and (2) any 

measurement of ‘‘refrigerated volume’’ 

of refrigerated bottled or canned 

beverage vending machines must be in 

accordance with the methodology 

specified in section 5.2, Total 

Refrigerated Volume (excluding 

subsections 5.2.2.2 through 5.2.2.4) of 

ANSI/AHAM HRF–1–2004, ‘‘Energy, 

Performance and Capacity of Household 

Refrigerators, Refrigerator-Freezers and 

Freezers.’’ 

The current version of ANSI/ASHRAE 

Standard 32.1–2004 defines standard 

bottled, canned, or other sealed 

beverage storage capacity; establishes 

uniform methods of testing for 

determining laboratory performance of 

vending machines for bottled, canned, 

or other sealed beverages; and defines 

three tests/test conditions, as seen in 

Table III.1. 

TABLE III.1—ANSI/ASHRAE STANDARD 32.1–2004—STANDARD TEST CONDITIONS

Test and pretest conditions Energy consumption tests Vend test Recovery test 

Ambient Temperature .................... Perform twice: At 90 ± 2 °F (32.2 

± 1 °C) and at 75 °F ± 2 °F 

(23.9 ± 1 °C).

90 ± 2 °F (32.2 ± 1 °C) ................ 90 ± 2 °F (32.2 ± 1 °C). 

Relative Humidity ........................... 65 ± 5% for 90 ± 2 °F test and 45 

± 5% for 75 ± 2 °F test.

65 ± 5% ........................................ 65 ± 5%. 

Reloaded Product Temperature .... ....................................................... 90 ± 1 °F (32.2 ± 0.5 °C) ............. 90 ± 1 °F (32.2 ± 0.5 °C). 

Average Beverage Temperature 

(for test).

36 ± 1 °F (2.2 ± 0.5 °C) Throughout Test.40 °F or less (4.4 °C or less) 

Final Temperature.

33–40 °F (0.6–4.4 °C) Final 

Temperature. 

Average Beverage Temperature 

(for pretest conditions).

Not Applicable .............................. 36 ± 1 °F (2.2 ± 0.6 °C) Pretest 

Conditions.

36 ± 1 °F (2.2 ± 0.6 °C) Pretest 

Conditions. 

During the NOPR public meeting, 

ASAP stated that DOE’s test procedures 

for beverage vending machines should 

be revised to capture technologies such 

as variable speed technologies and 

advanced controls. ASAP stated that 

there are energy savings that are not 

being achieved because the test 

procedure does not account for these 

types of technologies. (ASAP, Public 

Meeting Transcript, No. 56 at p. 36) In 

addition, Coca-Cola stated that the DOE 

test procedure does not accurately 

reflect actual operating conditions, 

because it does not regulate or dictate 

the control of the operating methods for 

all the powered elements in the 

equipment. (Coca-Cola, Public Meeting 

Transcript, No. 56 at p. 147) Coca-Cola 

also stated that lighting controls would 

not save as much energy in real world 

applications as the test procedure 

indicates, resulting in ‘‘artificially low’’ 

test results. (Coca-Cola, No. 63 at p. 1) 

Coca-Cola commented that very few of 

its vending machines go into 

applications where they are inactive for 

long periods of time. (Coca-Cola, Public 

Meeting Transcript, No. 56 at p. 193) 

For these reasons, Coca-Cola and NAMA 

conclude that TSL 6 for Class A 

machines is not ‘‘practically feasible.’’ 

(Coca-Cola, No. 63 at p. 1 and NAMA, 

No. 65 at p. 3) The Joint Comment 

recommends that the next revision to 

the current test procedure address; (1) 

the limitations of steady-state testing 

conditions, (2) the current test 

procedure’s insufficient representation 

of real world conditions, and (3) the 

capture of increased energy use as a 

result of future, energy intensive 

beverage vending machine features, 

such as interactive displays. (Joint 

Comment, No. 67 at p. 4) Elstat stated 

that prohibiting the use of standby and 

off mode power does not support the 

goal of reduced energy consumption in 

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44922 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

beverage vending machines, and 

recommends that DOE revisit the use of 

energy management controls in 2010, or 

within one year of the rule statutory 

deadline (Elstat, No. 62 at p. 1) DOE 

notes, however, that it is not prohibiting 

the use of standby and off mode power 

consumption, but rather is not including 

standby mode and off mode power 

consumption in its calculation of energy 

use. As stated in the May 2009 NOPR, 

DOE has decided to address these 

additional requirements when the 

energy conservation standards for 

beverage vending machines are 

reviewed in August 2015 (see section 

II.B.1) and, as described below, must 

review the test procedures by 2013. 

As stated above, DOE’s test procedure 

for refrigerated beverage vending 

machines is based on ANSI/ASHRAE 

Standard 32.1–2004. Section 302(a) of 

EISA 2007 amended section 323 of 

EPCA, in part, by adding new 

subsection 323(b)(1). (42 U.S.C. 

6293(b)(1)) This subsection provides 

that the Secretary shall review test 

procedures at least once every 7 years. 

Therefore, the test procedure for 

refrigerated beverage vending machines 

must be reviewed by December 8, 2013, 

to determine whether an amendment is 

necessary. In addition, DOE is aware 

that ASHRAE, via its Standards Project 

Committee 32.1, is working on an 

update to ANSI/ASHRAE Standard 

32.1–2004. While specific changes to 

ASHRAE Standard 32.1–2004 are 

unknown at this time, DOE understands 

that the beverage vending machine 

industry is working closely with 

ASHRAE to develop an update to this 

test procedure. As part of the 7-year 

review of the test procedures for 

refrigerated beverage vending machines, 

DOE will consider any updates to 

ASHRAE Standard 32.1 standard, as 

well as any technologies to reduce 

energy consumption and/or increase 

energy efficiency and determine 

whether the test procedure and/or 

measure of energy efficiency warrant 

revisions. 

B. Technological Feasibility 

1. General 

As stated above, any standards that 

DOE establishes for beverage vending 

machines 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 feasible if it is in use by 

the respective industry or if research has 

progressed to the development of a 

working prototype. ‘‘Technologies 

incorporated in commercially available 

equipment 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 

May 2009 NOPR. (See chapter 4 of the 

TSD.) 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 notice are 

technologically feasible. 

2. Maximum Technologically Feasible 

Levels 

As required by EPCA, (42 U.S.C. 

6295(p)(2) and 42 U.S.C. 6316(e)(1)) in 

developing the May 2009 NOPR, DOE 

identified the energy use levels that 

would achieve the maximum reductions 

in energy use that are technologically 

feasible (‘‘max-tech’’ levels) for beverage 

vending machines. 74 FR 26025. For 

today’s final rule, the max-tech levels 

for all classes are the levels provided in 

Table III.2. DOE identified these 

maximum technologically feasible 

levels for the equipment classes 

analyzed as part of the engineering 

analysis (chapter 5 of the TSD). For both 

equipment classes, DOE applied the 

most efficient design options available 

for energy-consuming components. 

TABLE III.2—MAX-TECH ENERGY USE

LEVELS

Equipment 

class 

Max-tech level 

kWh/day * 

A ........................ MDEC = 0.045 × V + 2.42. 

B ........................ MDEC = 0.068 × V + 2.63. 

‘‘V’’ is the refrigerated volume of the refrigerated bottled or canned beverage vending 

machine, as measured by ANSI/AHAM HRF– 

1–2004. 

* Kilowatt hours per day. 

C. Energy Savings 

DOE forecasted energy savings in its 

national energy savings (NES) analysis 

through the use of a spreadsheet tool 

discussed in the May 2009 NOPR. 74 FR 

26020, 26039–43, 26057. 

One criterion that governs DOE’s 

adoption of standards for refrigerated 

beverage vending machines is 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,’’ the U.S. Court of Appeals 

in Natural Resources Defense Council v. 

Herrington 768 F.2d 1355, 1373 (DC Cir. 

1985) indicated that Congress intended 

‘‘significant’’ energy savings in this 

context to be savings that were not 

‘‘genuinely trivial.’’ DOE’s estimates of 

the energy savings for energy 

conservation standards at each of the 

TSLs in today’s final rule indicate that 

the energy 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 factors to evaluate in determining 

whether an energy conservation 

standard for refrigerated beverage 

vending machines 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 those seven factors in 

this rulemaking. 

a. Economic Impact on Commercial 

Customers and Manufacturers 

DOE considered the economic impact 

of the new refrigerated beverage vending 

machines standards on commercial 

customers and manufacturers. For 

customers, DOE measured the economic 

impact as the change in installed cost 

and life-cycle operating costs, i.e., the 

LCC. (See sections IV.F and VI.C.1.a and 

chapter 8 of the TSD.) DOE investigated 

the impacts on manufacturers through 

the manufacturer impact analysis (MIA). 

(See sections IV.J and VI.C.2, and 

chapter 13 of the TSD.) The economic 

impact on commercial customers and 

manufacturers is discussed in detail in 

the May 2009 NOPR. 74 FR 26033–38, 

26039–26044, 26044–47, 26050–53, 

26053–56, 26063–67. 

b. Life-Cycle Costs 

DOE considered life-cycle costs of 

beverage vending machines, as 

discussed in the May 2009 NOPR. 74 FR 

at 26033–38, 26050–53 

DOE calculated the sum of the 

purchase price and the operating 

expense (discounted over the lifetime of 

the equipment) to estimate the range in 

LCC benefits that commercial customers 

would expect to achieve due to the 

standards. 

c. Energy Savings 

Although significant conservation of 

energy is a separate statutory 

requirement for imposing an energy 

conservation standard, EPCA also 

requires DOE, in determining the 

economic justification of a 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 42 U.S.C. 

6316(e)(1)) As in the May 2009 NOPR 

(74 FR 26056–57), for today’s final rule, 

DOE used the NES spreadsheet results 

in its consideration of total projected 

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savings that are directly attributable to 

the standard levels DOE considered. 

d. Lessening of Utility or Performance of 

Equipment 

In selecting today’s standard levels, 

DOE sought to avoid new standards for 

beverage vending machines 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)); 74 FR 26059. Today’s 

standards do not involve changes in 

design or unusual installation 

requirements that would reduce the 

utility or performance of the equipment. 

e. Impact of Any Lessening of 

Competition 

DOE considers any lessening of 

competition likely to result from 

standards. Accordingly, as discussed in 

the May 2009 NOPR (74 FR 26059, 

26064–65, 26070–71), DOE requested 

that the Attorney General transmit to the 

Secretary a written determination of the 

impact (if any) of lessening of 

competition likely to result from today’s 

standard, 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 

making such a determination, DOE 

provided the Department of Justice 

(DOJ) with copies of May 2009 proposed 

rule and the NOPR TSD for review. 

(DOJ, No. 61 at pp. 1–2) The Attorney 

General’s response is discussed in 

section VI.C.5 and is reprinted at the 

end of this rule. For Class A machines, 

DOJ concluded that the proposed TSL 6 

could potentially lessen competition. 

DOJ requested that DOE ensure that the 

standard it adopts for Class A beverage 

vending machines will not require 

access to intellectual property owned by 

an industry participant, which would 

place other industry participants at a 

comparative disadvantage. For Class B 

machines, DOJ does not believe the 

proposed standard would likely lead to 

a lessening of competition. Compliance 

with a lesser standard does not appear 

to raise similar concerns. 

f. Need of the Nation To Conserve 

Energy 

In considering standards for 

refrigerated beverage vending machines, 

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 benefits of the standards 

are likely to be reflected in 

improvements to the security and 

reliability of the Nation’s energy system. 

Today’s standards will also result in 

environmental benefits. DOE has 

considered these factors in adopting 

today’s standards. 

g. Other Factors 

In determining whether a standard is 

economically justified, EPCA directs the 

Secretary to consider any other factors 

deemed relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII) and 42 U.S.C. 

6316(e)(1)) In adopting today’s standard, 

DOE considered LCC impacts on 

identifiable groups, such as customers 

of different business types who may be 

disproportionately affected by any 

national energy conservation standard. 

In particular, DOE examined the LCC on 

businesses with high financing costs 

and low energy prices that may not be 

able to afford a significant increase in 

the purchase price (‘‘first cost’’) of 

beverage vending machines. Some of 

these customers may retain equipment 

past its useful life. Large increases in 

first cost could also preclude the 

purchase and use of equipment entirely. 

DOE identified no factors for analysis 

other than those already considered 

above. 

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 that meets the standard level 

is less than three times the value of the 

first-year energy (and as applicable, 

water) savings resulting from the 

standard, as calculated under the 

applicable DOE test procedure. (42 

U.S.C. 6295(o)(2)(B)(iii) and 42 U.S.C. 

6316(e)(1)) DOE’s LCC and payback 

period (PBP) analyses generate values 

that calculate the PBP for customers of 

potential energy conservation standards, 

which includes, but is not limited to, 

the 3-year PBP 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 customer, 

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 evaluate 

definitively the economic justification 

for a potential standard level (thereby 

supporting or rebutting the results of 

any preliminary determination of 

economic justification). 

IV. Methodology and Discussion of 

Comments on Methodology 

DOE used several previously 

developed analytical tools in setting 

today’s standard. Each was adapted for 

this rule. One of these analytical tools 

is a spreadsheet that calculates LCC and 

PBP. Another calculates national energy 

savings and national NPV. A third tool 

is the Government Regulatory Impact 

Model (GRIM), the results of which are 

the basis for the MIA, among other 

methods. In addition, DOE developed 

an approach using the National Energy 

Modeling System (NEMS) to estimate 

impacts of energy efficiency standards 

for beverage vending machines on 

electric utilities and the environment. 

The TSD appendices discuss each of 

these analytical tools in detail. 74 FR 

26026–49. 

As a basis for this final rule, DOE has 

continued to use the spreadsheets and 

approaches explained in the May 2009 

NOPR. DOE used the same general 

methodology but has revised some of 

the assumptions and inputs for this final 

rule in response to comments from 

interested parties. 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 equipment, the industry 

structure, and market characteristics. 

This activity includes both quantitative 

and qualitative assessments based 

primarily on publicly available 

information. DOE presented its market 

and technology assessment for this 

rulemaking in the May 2009 NOPR and 

chapter 3 of the NOPR TSD. The 

assessment included equipment 

definitions, equipment classes, 

manufacturers, quantities and types of 

equipment offered for sale, retail market 

trends, and regulatory and nonregulatory programs. 

1. Definitions Related to Refrigerated 

Beverage Vending Machines 

a. Definition of Bottled or Canned 

Beverage 

EPCA defines the term ‘‘refrigerated 

bottled or canned beverage vending 

machine’’ as ‘‘a commercial refrigerator 

that cools bottled or canned beverages 

and dispenses the bottled or canned 

beverages on payment.’’ (42 U.S.C. 

6291(40)) Thus, coverage of equipment 

under EPCA as a beverage vending 

machine, in part, depends on whether it 

cools and dispenses ‘‘bottled beverages’’ 

and/or ‘‘canned beverages.’’ DOE 

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tentatively decided to consider a 

broader definition for the terms 

‘‘bottled’’ and ‘‘canned’’ as they apply to 

beverage vending machines based on 

comments on the framework document. 

A bottle or can in this broader definition 

refers to ‘‘a sealed container for 

beverages,’’ so a bottled or canned 

beverage is ‘‘a beverage in a sealed 

container.’’ Such a definition would 

avoid unnecessary complications 

regarding the material composition of 

the container and eliminate the need to 

determine whether a particular 

container is a bottle or a can. In the 

ANOPR, DOE sought comment on this 

broader definition and on whether it is 

consistent with the intent of EPCA. (73 

FR 34103) DOE did not receive any 

comments on this and thus proposed in 

the NOPR that a bottled or canned 

beverage mean ‘‘a beverage in a sealed 

container.’’ (74 FR 26027) Because DOE 

did not receive any comments in 

response to the proposed definition in 

the May 2009 NOPR, DOE is adopting 

the definition of bottled or canned 

beverage as proposed, without 

modification. 

2. Equipment Classes 

When evaluating and establishing 

energy conservation standards, DOE 

generally divides covered equipment 

into equipment classes by the type of 

energy used, capacity, or other 

performance-related features that affect 

efficiency and factors such as the utility 

of such feature(s). (42 U.S.C. 6295(q)) 

DOE routinely establishes different 

energy conservation standards for 

different equipment classes based on 

these criteria. 

Certain characteristics of beverage 

vending machines have the potential to 

affect their energy use and efficiency. 

Accordingly, these characteristics could 

be the basis for separate equipment 

classes for these machines. DOE 

determined that the most significant 

criterion affecting beverage vending 

machine energy use is the method used 

to cool beverages. In the NOPR, DOE 

divided covered equipment into two 

equipment classes according to method 

of refrigeration: Class A and Class B. (74 

FR 26027) 

The Class A beverage vending 

machine equipment class comprises 

machines that cool product throughout 

the entire refrigerated volume of the 

machine. Class A machines generally 

use ‘‘shelf-style’’ vending mechanisms 

and a transparent (glass or polymer) 

front. Because the next-to-be-vended 

product is visible to the customer and 

any product can be selected by the 

customer off the shelf, all bottled or 

canned beverage containers are 

necessarily enclosed within the 

refrigerated volume. 

In Class B beverage vending 

machines, refrigerated air is directed at 

a fraction (or zone) of the refrigerated 

volume of the machine. This cooling 

method is used to assure that the nextto-be-vended product will be the coolest 

product in the machine. These 

machines typically have an opaque front 

and use a ‘‘stack-style’’ vending 

mechanism. 

Therefore, DOE defines Class A and 

Class B as follows: 

• Class A means a refrigerated bottled 

or canned beverage vending machine 

that is fully cooled, and is not a 

combination vending machine. 

• Class B means any refrigerated 

bottled or canned beverage vending 

machine not considered to be Class A, 

and is not a combination vending 

machine. 

Because DOE did not receive any 

comments in response to the 

presentation of equipment classes in the 

May 2009 NOPR, DOE is adopting the 

equipment classes as proposed, with a 

modification to address combination 

vending machines as described in 

section II.B.2.b. 

B. Screening Analysis 

The purpose of the screening analysis 

is to evaluate the technology options 

identified as having the potential to 

improve the efficiency of equipment, to 

determine which technologies to 

consider further and which to screen 

out. DOE consulted with industry, 

technical experts, and other interested 

parties to develop a list of technologies 

for consideration. DOE then applied the 

following four screening criteria to 

determine which technologies are 

unsuitable for further consideration in 

the rulemaking: 

1. Technological Feasibility. 

Technologies incorporated in 

commercial equipment or in working 

prototypes will be considered 

technologically feasible. 

2. Practicability to Manufacture, 

Install, and Service. If mass production 

and reliable installation and servicing of 

a technology in commercial equipment 

could be achieved on the scale 

necessary to serve the relevant market at 

the time of the effective date of the 

standard, then that technology will be 

considered practicable to manufacture, 

install, and service. 

3. Adverse Impacts on Equipment 

Utility or Equipment Availability. If a 

technology is determined to have 

significant adverse impact on the utility 

of the equipment to significant 

subgroups of customers, or result in the 

unavailability of any covered equipment 

type with performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as equipment 

generally available in the United States 

at the time, it will not be considered 

further. 

4. Adverse Impacts on Health or 

Safety. If it is determined that a 

technology will have significant adverse 

impacts on health or safety, it will not 

be considered further. 

10 CFR part 430, Subpart C, Appendix 

A at 4(a)(4) and 5(b). 

In the ANOPR market and technology 

assessment, DOE developed an initial 

list of technologies expected to have the 

potential to reduce the energy 

consumption of beverage vending 

machines. In the screening analysis, 

DOE screened out technologies based on 

the four criteria discussed above. The 

list of remaining technologies became 

one of the key inputs to the engineering 

analysis. (73 FR 34108–09) For the 

engineering analysis each technology is 

referred to as a design option. 

After the ANOPR screening analysis, 

DOE did not receive any comments 

suggesting a change to its list of design 

options. As a result, no changes were 

made for the NOPR. During the NOPR 

public meeting, multiple manufacturers 

expressed the ability to meet today’s 

standard with the use of lighting 

controls. (Dixie-Narco, Public Meeting 

Transcript, No. 56 at p. 188 and Royal 

Vendors, Public Meeting Transcript, No. 

56 at p. 189) As a result, the signatories 

of the Joint Comment suggest that DOE 

consider lighting controls as a design 

option for the final rule because, if not 

considered, ‘‘cost-effective energysavings may be forgone.’’ (Joint 

Comment, No. 67 at p. 3) 

DOE disagrees with the Joint 

Commenters’ assessment of lighting 

controls. The Joint Comment infers that 

a lighting control design option meets 

the screening analysis criteria. 

According to the screening criteria, 

however, a technology cannot be 

considered as a design option if it has 

adverse impacts on equipment utility. 

10 CFR part 430, Subpart C, Appendix 

A at 4(a)(4) and 5(b) DOEs analysis 

ensures preservation of equipment 

utility by choosing design options that, 

when implemented, do not lessen utility 

relative to the engineering baseline unit. 

The energy-savings potential of lighting 

controls is realized when the control 

system automatically deactivates all or a 

portion of a machine’s lighting system. 

While the lighting system is deactivated, 

the light output of the machine is 

reduced, leaving the machine’s contents 

or signage less visible. If lighting 

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controls were a design option in the 

engineering analysis, this reduction 

would represent a loss in utility relative 

to the baseline unit. Therefore, lighting 

controls do not meet the screening 

criteria, and DOE will not consider them 

as a design option in its analysis for the 

final rule. 

In the ANOPR screening analysis, 

variable-speed compressors were 

eliminated from consideration. For the 

NOPR analysis, DOE did not receive any 

comments recommending that variablespeed compressors be reconsidered. For 

the final rule analysis, the Joint 

Comment recommended that DOE 

reconsider this technology, stating that 

it believes variable-speed compressors 

can provide some energy-use reduction, 

despite the current steady-state 

conditions that are prescribed in ANSI/ 

ASHRAE Standard 32.1–2004 test 

procedure. The Joint Comment asserted 

that when DOE screened out variablespeed compressors, DOE did not 

consider that beverage vending machine 

manufacturers oversize their 

compressors to meet purchasers’ pull 

down requirements. (Joint Comment, 

No. 67 at p. 2) 

DOE screened out variable-speed 

compressors in the ANOPR analysis 

because the resulting energy efficiency 

ratio of a variable-speed compressor 

operating at steady state, according to 

the test procedure, would not be greater 

than the energy efficiency ratio of a 

properly sized single-speed compressor. 

DOE acknowledges that a variable-speed 

compressor operating at steady state 

may have energy savings compared to 

an oversized single-speed compressor 

operating at the same conditions. 

However, DOE is unaware of any data 

that quantifies and compares these 

energy savings specifically for beverage 

vending machines under these 

conditions. DOE was also unable to 

determine whether variable-speed 

compressors are a cost-effective design 

option. Due to a lack of any comparative 

data on the performance of variable 

speed compressors for these 

applications and evidence of the cost 

effectiveness of variable-speed 

compressors, DOE did not consider 

variable-speed compressors in its 

analysis. 

In the framework document, DOE 

stated that, to the greatest extent 

possible, it would base its analysis on 

commercially available technologies 

that have not been screened out, 

including proprietary designs. DOE 

stated that it would consider a 

proprietary design in the subsequent 

analyses only if it is not a unique path 

to a given efficiency level. If the 

proprietary design is the only approach 

available to achieve a given efficiency 

level, then DOE will exclude that 

efficiency level from further analysis. 

During the NOPR public meeting, 

PepsiCo stated that the use of LED 

lighting in glass front vendors is a 

proprietary design patented by CocaCola, which PepsiCo is precluded from 

using. (PepsiCo, Public Meeting 

Transcript, No. 56 at p. 52) In a written 

comment, NAMA stated similar 

concerns. (NAMA, No. 65 at p. 3) CocaCola stated that there are control 

strategies used in beverage vending 

machines (e.g., certain lighting controls 

and certain motor controls) that are 

patented and are not widely available 

for use by all manufacturers. (Coca-Cola, 

No. 56 at p. 149 and Coca-Cola, No. 63 

at p. 1) Coca-Cola added that TSL 6 for 

Class A machines cannot be achieved 

without these ‘‘firmware’’ control 

strategies. (Coca-Cola, No. 63 at p. 1) 

According to USA Technologies, there 

are patented, after-market lighting 

control products widely used in the 

industry. (USA Technologies, Public 

Meeting Transcript, No. 56 at p. 200) In 

addition, Dixie-Narco stated that it is 

not aware of any intellectual property 

issues that would prevent other 

manufactures from adopting lighting 

strategies similar to those that it has 

been using in its equipment. (DixieNarco, No. 64 at p. 3) ASAP stated that 

certain patented technologies may 

provide a cost-effective way to achieve 

a certain efficiency level, but they do 

not preclude a manufacturer from 

achieving the same efficiency level in a 

different manner. ASAP submits that 

there are historically multiple paths to 

achieve any given efficiency level. 

(ASAP, Public Meeting Transcript, No. 

56 at p. 202) 

DOE recognizes that there are existing 

patents that involve specific screened-in 

beverage vending machine technologies. 

For example, there is a U.S. patent on 

a ‘‘Dispensing Apparatus with 

Directional LED Lighting’’ (Patent No. 

U.S. 6,550,269 B2, April 22, 2003). DOE 

is not screening out proprietary 

technologies such as LED lighting or 

certain control strategies, solely because 

they are proprietary. In contrast, DOE is 

incorporating these technologies into its 

analysis because DOE believes that there 

are alternate pathways to achieve the 

efficiency levels associated with these 

technologies. Providing LED lighting in 

a vending machine in a manner other 

than directionally, employing an 

alternative lighting type, and/or 

providing various other control 

strategies that are not patented, have the 

potential to result in a vending machine 

that meets equivalent efficiency levels. 

DOE notes that most patents do not 

convey market power to their owners 

because close substitutes for these 

inventions exist. Licensors will pay no 

more for patented technologies than the 

cost advantage they provide over the 

next best alternative pathway to 

compliance with the efficiency 

standard. Ultimately, the availability of 

cost-effective alternate technology 

pathways is what limits the ability of 

the owner of a proprietary technology to 

extract high fees for its use. It is DOE’s 

opinion that a standard level which can 

only be met with a single proprietary 

technology which comes without 

assurances of open and free technology 

access should be rejected because it 

carries great risk of resulting in an anticompetitive market. This principle has 

been consistently applied in past DOE 

rulemakings. If standard levels were set 

based on proprietary technologies 

representing a unique path to 

compliance and not available to all 

equipment manufacturers, the 

standards-setting process itself would 

convey great market power because 

there would be no alternative means to 

satisfy the standard. In consideration of 

these factors, DOE maintains that it can 

consider proprietary designs as long as 

it is not a unique path to a given 

efficiency level. For the reasons 

discussed, DOE believes that neither 

directional LED lighting nor lighting 

controls represent a unique path to 

compliance with TSL 6 for Class A 

equipment. 

C. Engineering Analysis 

The engineering analysis develops 

cost-efficiency relationships to show the 

manufacturing costs of achieving 

increased energy efficiency. As 

discussed in the May 2009 NOPR, DOE 

used the design-option approach, 

involving consultation with outside 

experts, review of publicly available 

cost and performance information, and 

modeling of equipment cost and energy 

consumption. 74 FR 26027–26030. 

Chapter 5 of the NOPR TSD contains a 

detailed discussion of the engineering 

analysis methodology. 

1. Approach 

In this rulemaking, DOE is adopting a 

design-option approach, which 

calculates the incremental costs of 

increased efficiency. Efficiency 

increases are modeled by implementing 

specific energy saving technologies, 

referred to as design options, to a 

baseline model. Using the design-option 

approach, cost-efficiency relationship 

estimates are based on manufacturer or 

component supplier data or derived 

from engineering computer simulation 

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44926 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

models. Chapter 5 of the TSD contains 

a detailed description of the equipment 

classes analyzed and analytical models 

used to conduct the design-option 

approach based beverage vending 

machine engineering analysis. 

2. Analytical Models 

a. Cost Model 

DOE used a cost model to estimate the 

core case cost of beverage vending 

machines. The core case cost is the cost 

of all non-energy-consuming 

components, such as the structure, 

walls, doors, shelving, and fascia. This 

model was adapted from a cost model 

developed for DOE’s rulemaking on 

commercial refrigeration equipment 

(refer to http://www1.eere.energy.gov/ 

buildings/appliance_standards/ 

commercial/ 

refrigeration_equipment.html for further 

detail on and validation of the 

commercial refrigeration equipment cost 

model). The approach for commercial 

refrigeration equipment involved 

disassembling a self-contained 

refrigerator, analyzing the materials and 

manufacturing processes for each 

component, and developing a 

parametric spreadsheet to model the 

cost to fabricate (or purchase) each 

component and the cost of assembly. 

Because of the similarities in 

manufacturing processes between selfcontained commercial refrigeration 

equipment and beverage vending 

machines, DOE was able to adapt the 

commercial refrigeration equipment cost 

model for use in this rule. This 

adaptation involved maintaining many 

of the assumptions about materials and 

manufacturing processes but modifying 

the dimensions and types of 

components specific to beverage 

vending machines. To confirm the 

accuracy of the cost model, DOE 

obtained input from interested parties 

on beverage vending machine 

production cost estimates and on other 

assumptions DOE used in the model. 

Chapter 5 of the TSD provides details of 

the cost model. 

b. Energy Consumption Model 

The energy consumption model 

estimates the daily energy consumption 

(DEC) of beverage vending machines at 

various performance levels using the 

previously discussed design-option 

approach. The model is specific to the 

categories of equipment covered under 

this rulemaking, but is sufficiently 

generalized to model the energy 

consumption of both covered equipment 

classes. For a given equipment class, the 

model estimates the DEC for the 

baseline design and the energy 

consumption of several levels of 

performance above the baseline design. 

DOE uses the model to calculate each 

performance level separately. For the 

NOPR, DOE made updates to the energy 

consumption model by altering Class A 

can capacities (or vendible capacities) 

and verifying Class B can capacities. For 

both classes, DOE modified exterior case 

dimensions, which resulted in changes 

in infiltration loads, refrigerated 

volumes, and exterior wall areas. These 

alterations and their effects are detailed 

in chapter 5 of the TSD. DOE did not 

receive any comments in response to 

these changes. Therefore, DOE 

maintained these revised calculation 

methodologies for the final rule. DOE 

did, however, receive a comment 

regarding the energy consumption 

model DEC results. Royal Vendors and 

NAMA commented that, without 

lighting, a Class B machine will always 

consume less energy than a similarly 

equipped Class A machine due to 

differences in their thermodynamic 

properties. Royal Vendors cites the 

divergence from this expected outcome 

at TSL 4 as the origin of their skepticism 

for DOE’s Class A analysis. (Royal 

Vendors, No. 60 at pp. 1 and 2; NAMA, 

No. 65 at pp. 3 and 4) 

DOE’s analysis results and selected 

TSLs adequately reflect the 

thermodynamic differences between 

Class A and Class B machines. DOE 

agrees that a Class B machine stripped 

of electricity consuming components 

that are not essential to the refrigeration 

system (i.e., lighting) will consume less 

energy than a similarly equipped Class 

A machine. As described in chapter 5 of 

the final rule TSD, the engineering 

analysis’ DEC results are modeled as the 

sum of the component electricity 

consumption and compressor electricity 

consumption. The physical and 

thermodynamic equipment differences 

described by Royal affect the total 

refrigeration load, which is factored into 

the compressor electricity consumption 

in DOE’s energy consumption model. 

When comparing compressor electricity 

consumption results between a Class A 

and Class B machine with the same 

volume, the Class B machine 

compressor consumes less electricity at 

all engineering efficiency levels. The 

divergence in DEC described by Royal 

Vendors at higher TSLs occurs because 

the modeled Class A and Class B 

machines being compared are no longer 

‘‘similarly equipped.’’ Different design 

options are implemented for each 

machine class at each TSL, and each 

design option has unique energy savings 

potential. For instance, at TSL 4 for 

Class A machines, LED lighting is 

implemented which has an incremental 

component energy savings of 0.89 kWh/ 

day. At TSL 4 for Class B machines, an 

electronically commutated motor (ECM) 

condenser fan motor is implemented 

which has an incremental component 

energy savings of 0.05 kWh/day. These 

incremental component energy savings 

manifest themselves as reductions in the 

component electricity consumption 

addend of the DEC. The greater energy 

savings potential of some Class A design 

options results in component electricity 

consumption reductions significant 

enough to drive the overall DEC of Class 

A machines below that of Class B 

machines. See chapter 5 of the TSD for 

a detailed explanation of the 

engineering analysis energy 

consumption model. 

Based on public comments, DOE 

proposed to use refrigerated volume 

instead of vendible capacity as the 

normalization metric for setting 

standards for beverage vending 

machines in the NOPR. (74 FR 26029) 

Following the NOPR, NAMA 

commented that volume was an 

appropriate normalization metric, rather 

than the number of cans. (NAMA, No. 

65 at p. 3) Therefore, DOE will continue 

to use refrigerated volume as the 

normalization metric in the standard. 

D. Markups To Determine Equipment 

Price 

In the May 2009 NOPR, DOE 

explained how it developed the 

distribution channel markups used. 74 

FR 26036. DOE did not receive 

comments on these markups; however, 

it updated the distribution channel 

markups by including 2009 sales tax 

data as well as the markups for 

refrigerated beverage vending machines 

wholesalers using 2009 financial data. 

DOE used these markups, 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 

refrigerated beverage vending machines. 

As explained in the May 2009 NOPR (74 

FR 26036), DOE defined three 

distribution channels for refrigerated 

beverage vending machines to describe 

how the equipment passes from the 

manufacturer to the customer. DOE 

retained the same distribution channel 

market shares described in the May 

2009 NOPR. 

The new overall baseline and 

incremental markups for sales within 

each distribution channel are shown in 

Table IV.1 and Table IV.2. Chapter 6 of 

the TSD provides additional details on 

markups. 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44927 

TABLE IV.1—OVERALL AVERAGE BASELINE MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX

Markup category Manufacturer 

direct 

Wholesaler/ 

distributor 

Overall weighted 

average 

Markup ....................................................................................................................... 1.000 1.460 1.069 

Sales tax .................................................................................................................... 1.071 1.071 1.071 

Overall markup .......................................................................................................... 1.071 1.564 1.145 

TABLE IV.2—OVERALL AVERAGE INCREMENTAL MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX

Markup category Manufacturer 

direct 

Wholesaler/ 

distributor 

Overall weighted 

average 

Markup ....................................................................................................................... 1.000 1.200 1.030 

Sales tax .................................................................................................................... 1.071 1.071 1.071 

Overall markup .......................................................................................................... 1.071 1.285 1.103 

E. Energy Use Characterization 

The energy use characterization 

estimates the annual energy 

consumption of beverage vending 

machines. This estimate is used in the 

subsequent LCC and PBP analyses 

(chapter 8 of the TSD) and NIA (chapter 

11 of the TSD). DOE estimated the 

energy use for machines in the two 

equipment classes examined (74 FR 

26027) in the engineering analysis 

(chapter 5 of the TSD) based on the DOE 

test procedure. DOE incorporated ANSI/ 

ASHRAE Standard 32.1–2004 by 

reference with two modifications as the 

DOE test procedure for the beverage 

vending machines. 71 FR 71340, 71375 

(Dec. 8, 2006); 10 CFR 431.294. DOE 

assumed all Class A machines to be 

installed indoors and subject to a 

constant air temperature of 75 °F and 

relative humidity of 45 percent, 

matching test conditions in the DOE test 

procedure. 73 FR 34114–15. Based on 

market data and discussions with 

several beverage vending machine 

distributors, DOE assumed that 25 

percent of Class B machines are placed 

outdoors, with the remaining 75 percent 

placed indoors. DOE sought but did not 

receive comments on this distribution; 

thus, DOE maintained the same 

distribution of Class B machines for this 

final rule. 

F. Life-Cycle Cost and Payback Period 

Analyses 

In response to the requirements of 

section 325(o)(2)(B)(i) of EPCA, DOE 

conducted LCC and PBP analyses to 

evaluate the economic impacts of 

possible new beverage vending machine 

standards on individual customers. DOE 

used the same spreadsheet models to 

evaluate the LCC and PBP as it used for 

the NOPR analysis; 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 

developed in Microsoft Excel for 

Windows 2003. 

The LCC is the total cost for a unit of 

beverage vending machine equipment 

over the life of the equipment, including 

purchase and installation expense and 

operating costs (energy expenditures 

and maintenance). To compute the LCC, 

DOE summed the installed price of the 

equipment and its lifetime operating 

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 operating cost that 

results from the standard. DOE 

expresses PBP in years. DOE measures 

the changes 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 equipment purchase 

expense were the equipment price and 

the installation cost, with appropriate 

markups. The inputs to the operating 

costs were the annual energy 

consumption, electricity price, and 

repair and maintenance costs. The PBP 

calculation uses the same inputs as the 

LCC analysis, but because it is a simple 

payback, the operating cost is for the 

year the standard takes effect, assumed 

to be 2012. DOE believes LCC is a better 

indicator of economic impacts on 

customers. For each efficiency level 

analyzed, the LCC analysis required 

input data for the total installed cost of 

the equipment, operating cost, and 

discount rate. 

Table IV.3 summarizes the inputs and 

key assumptions DOE used to calculate 

the economic impacts of various energy 

consumption levels on customers. 

Equipment price, installation cost, and 

baseline and standard design selection 

affect the installed cost of the 

equipment. Annual energy use, 

electricity costs, electricity price trends, 

and repair and maintenance costs affect 

the operating cost. The effective date of 

the standard, the discount rate, and the 

lifetime of equipment affect the 

calculation of the present value of 

annual operating cost savings from 

today’s standard. Table IV.3 also shows 

how DOE modified these inputs and key 

assumptions for the final rule relative to 

the May 2009 NOPR. Chapter 8 of the 

TSD provides the changes to the input 

data and discusses the overall approach 

to the LCC analysis. 

TABLE IV.3—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. 

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44928 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

TABLE IV.3—SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES—Continued 

Input NOPR description Changes for final rule 

Standard-Level Manufacturer Selling Price Increases.Incremental change in manufacturer selling price for equipment at 

each of the higher 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 converting the manufacturer selling price to a customer price (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 plus the installation price. Installation cost data provided by industry comment.

Data reflect updated installation 

costs. 

Equipment Energy Consumption .... Site energy use associated with the use of beverage vending machines, 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 2008 in 2007$. DOE then established scaling factors for 

beverage vending machine customers based on the 2003 Commercial Building Energy Consumption Survey.

No change. 

Electricity Price Trends ................... Used the AEO2009 Reference Case to forecast future electricity 

prices and extrapolated prices to 2042.

All price cases revised to reflect 

April 2009 update to AEO2009 

values. 

Maintenance Costs ......................... Labor and material costs associated with maintaining the beverage 

vending machines (e.g., cleaning heat exchanger coils, checking 

refrigerant charge levels, lamp replacement). Based on industry 

comment on the NOPR, included an updated annualized cost of 

one refurbishment/remanufacturing cycle.

No change in methodology; however, reinterpreted year’s values. 

Repair Costs ................................... Labor and material costs associated with repairing or replacing components that have failed. Estimated based on replacement frequencies and costs for key components.No change. 

Equipment Lifetime ......................... Age at which the beverage vending machine is retired from service. 

Based on industry comment on the ANOPR, reduced average 

service life to 10 years, with 15 years as a maximum.

No change. 

Discount Rate .................................. Computed by estimating the cost of capital for companies that purchase refrigeration equipment using business financial data from 

the Damodaran Online database from 2008.

Updated based on data available 

in the 2009 version of the 

Damodaran Web site. 

Rebound Effect ............................... A rebound effect was not taken into account in the LCC analysis ....... No change. 

Analysis Period ............................... The time span over which DOE calculated the LCC (i.e., 2012–2042) No change. 

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. 

G. Shipments Analysis 

The shipments analysis develops 

future shipments for each class of 

beverage vending machines based on 

current shipments and equipment life 

assumptions, and takes into account the 

existing stock and expected trends in 

markets that use beverage vending 

machines. DOE received several 

comments on the shipments analysis 

and the resulting shipments during the 

NOPR. Although DOE used the same 

shipments model for the final rule 

analysis as the NOPR, many of the 

underlying assumptions concerning 

future market behavior were changed as 

a result of the interested party 

comments. 

1. Split Incentives 

Coca-Cola (Coca-Cola, Public Meeting 

Transcript, No. 56 at p. 196 and CocaCola, No. 63 at p. 2) and PepsiCo 

(PepsiCo, Public Meeting Transcript, 

No. 56 at p. 94) stated that if costlier 

components and expensive control 

schemes are necessary to produce 

higher efficiency equipment, it would 

purchase less equipment. While DOE 

recognizes the principle that higher 

costs of equipment might possibly affect 

sales, neither major purchaser provided 

any data that would allow a quantitative 

assessment of the effect of higher prices 

on overall purchases (price elasticity) to 

be calculated. However, DOE notes that 

for Class A equipment, the increase in 

installed cost at TSL 6 is in the range 

of 5 to 10 percent; for Class B machines, 

the increase in installed cost is in the 

range of 2 to 4 percent. Even if 

shipments fell by the same percentage 

that installed cost increased by (i.e., 

price elasticity equaled 1.0, a relatively 

large number), neither the net present 

value of TSL 6 for Class A equipment 

nor the net present value of TSL 3 for 

Class B equipment would be noticeably 

affected, nor would the choice of 

standard levels. 

2. Sustainability of Sales Less Than 100 

Thousand Units 

USA Technologies (USA Tech, Public 

Meeting Transcript, No. 56 at pp. 78, 79, 

and 85) expressed a concern that the 

industry’s current number of 

manufacturers could not stay in 

business if total production were under 

100,000 machines per year. DOE 

acknowledges the concern about 

industry sustainability. However, for the 

final rule, DOE assumes a level of 

shipments of 190,000 units per year, as 

explained in section IV.G.4. This 

assumption mitigates the concern about 

sales declining below 100,000 units. 

One major manufacturer (Dixie-Narco, 

Public Meeting Transcript, No. 56 at p. 

86) stated that it can survive even at 

today’s low sales levels (less than 

100,000 units) by operating on one shift; 

additionally, neither manufacturer with 

a large market share believed that a 

costly investment was necessary to meet 

the proposed standard. (Dixie-Narco, 

Public Meeting Transcript, No. 56 at p. 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44929 

186; Royal Vendors, Public Meeting 

Transcript, No. 56 at p. 188) 

3. Distribution of Equipment Classes 

and Sizes 

In the analysis conducted for the 

NOPR, DOE assumed based on 

interested party comments that Class A 

equipment would constitute 55 percent 

of new sales and Class B equipment 

would constitute 45 percent of new 

sales. PepsiCo (PepsiCo, Public Meeting 

Transcript, No. 56 at p. 89) commented 

that Class A sales would be between 50 

and 60 percent and Coca-Cola (CocaCola, Public Meeting Transcript, No. 56 

at p. 90) commented that, although they 

expected Class A equipment would be 

the majority of sales, currently Class B 

machines are more than 50 percent of 

sales. DOE has decided to shift to a ratio 

of 60 percent Class A machines to 40 

percent Class B sales for the final rule. 

DOE also assumed in the analysis for 

the NOPR that small-size units would 

constitute approximately zero percent of 

future sales, medium-size units at 75 

percent, and large-size units at 25 

percent of sales. Coca-Cola (Coca-Cola, 

Public Meeting Transcript, No. 56 at p. 

107) confirmed the distribution used for 

the NOPR. Dixie-Narco (Dixie-Narco, 

Public Meeting Transcript, No. 56 at p. 

107) commented that the small-size unit 

sales were zero, but that the large 

equipment share might be higher—by as 

much as 40 percent. Dixie-Narco also 

recommended that the NAMA could act 

as an intermediary to compile the data 

on sales and provide it to DOE. DOE 

asked NAMA, and NAMA was able to 

provide an estimate of the distribution 

between Class A and Class B units for 

a subset of the manufacturers, 

approximately 60 percent Class B 

machines and 40 percent Class A 

machines (NAMA, No. 65 at p. 2). To 

take account of all of the comments 

received, DOE has decided to shift to a 

ratio of 50 percent Class A machines to 

50 percent Class B sales for the final 

rule. NAMA was not able to provide 

data on the size distribution within 

classes. In the absence of that data and 

to account for all comments received, 

DOE has modified its distribution of 

sales to account for as follows for both 

Class A and Class B units: Small-size 

units, zero percent; medium-size units, 

67 percent; and large-size units, 33 

percent. 

4. Future Sales Decline 

For the analysis at the NOPR stage, 

DOE assumed based on comments from 

interested parties on the ANOPR that 

future sales would all be replacement 

sales and would be flat at the thencurrent level of sales of about 90,000 

units per year for the entire period of 

analysis. This level of replacements 

would result in a reduction in stock 

from today’s level of about 2.3 million 

units to about 1 million units by 2020. 

The commenters agreed that the current 

economic situation would result in 

additional decline in the number of 

deployed units (Royal Vendors, Public 

Meeting Transcript, No. 56 at p. 74; 

Dixie-Narco, Public Meeting Transcript, 

No. 56 at p. 76); Coca-Cola, Public 

Meeting Transcript, No. 56 at pp. 77 and 

91), but with a possibility of a near-term 

recovery based on the need to replace 

older equipment as it reaches the end of 

its lifetime and to continue to serve the 

current customer base. (Dixie-Narco, 

Public Meeting Transcript, No. 56 p. 79– 

80; Pepsi, Public Meeting Transcript, 

No. 56 at p. 88; Coca-Cola, Public 

Meeting Transcript, No. 56 at p. 91) 

Several commenters (Dixie-Narco, 

Public Meeting Transcript, No. 56 at p. 

76; Coca-Cola, Public Meeting 

Transcript, No. 56 at pp. 77 and 83; 

ASAP, Public Meeting Transcript, No. 

56 at p. 87) stated that 1 million units 

was too small to sustain the current 

customer base and that the shipments 

would therefore have to be higher than 

the current level. During the public 

meeting, participants estimated the 

ultimate stock ranged from about 1.6 

million (Dixie-Narco, Public Meeting 

Transcript, No. 56 at p. 84) to above 2 

million units. (Coca-Cola, Public 

Meeting Transcript, No. 56 at p. 83) In 

view of these comments that there 

would be some additional shrinkage of 

stock but that the eventual level of stock 

in 2020 will need to be approximately 

2 million units, DOE assumed that 

future shipments would quickly recover 

to 190,000 units per year by 2011 and 

continue at that level for the foreseeable 

future. This allows for some continued 

stock shrinkage to about 1.6 million 

units in the short run as the 1998–2000 

vintage equipment retires faster than it 

is replaced, but with stock recovering to 

1.9 million units by 2020 and to 

approximately 2 million units by 2022. 

As ASAP observed (ASAP, Public 

Meeting Transcript, No. 56 at p. 87), this 

change in assumptions for the final rule 

significantly increases the overall 

economic benefit of the rule, but its 

effect is proportional to sales and does 

not significantly affect the choice 

between potential levels of the 

standards. 

H. National Impact Analysis 

The national impact analysis (NIA) 

assesses future NES and the national 

economic impacts of different efficiency 

levels. The analysis measures economic 

impacts using the NPV (future amounts 

discounted to the present) of total 

commercial customer costs and savings 

expected to result from new standards at 

specific efficiency levels. For the final 

rule analysis, DOE used the same 

spreadsheet model used in the NOPR to 

calculate the energy savings and the 

national economic costs and savings 

from new standards, but did so with 

updates to specific input data. Unlike 

the LCC analysis, the NES spreadsheet 

does not use distributions for inputs or 

outputs. DOE examined sensitivities by 

applying different scenarios. DOE used 

the NIA spreadsheet to perform 

calculations of NES and NPV using; (1) 

the annual energy consumption and 

total installed cost data from the LCC 

analysis, and (2) estimates of national 

shipments and stock for each beverage 

vending machine class from the 

shipments analysis. DOE forecasted the 

energy savings from each TSL from 2012 

to 2042. DOE forecasted the energy cost 

savings, equipment costs, and NPV of 

benefits for all refrigerated beverage 

vending machines classes from 2012 to 

2057. The forecasts provided annual 

and cumulative values for all four 

output parameters. 

DOE calculated the NES by 

subtracting energy use under a 

standards scenario from energy use in a 

base case (no new standards) scenario. 

Energy use is reduced when a unit of 

refrigerated beverage vending machines 

in the base case efficiency distribution 

is replaced by a more efficient piece of 

equipment as a result of the standard. 

Energy savings for each equipment class 

are the same national average values as 

calculated in the LCC and PBP 

spreadsheet. Table IV.4 summarizes key 

inputs to the NIA analysis and the 

changes DOE made in the analysis for 

the final rule. Chapter 11 of the TSD 

provides additional information about 

the NIA spreadsheet. 

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44930 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

TABLE IV.4—SUMMARY OF NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE INPUTS

Input data Description of NOPR analysis Changes for final rule 

Shipments ....................................... No growth in shipments; based on industry comments on the NOPR, 

all shipments are replacements.

Shipments grow to 190,000 per 

year. 

Effective Date of Standard .............. 2012 ....................................................................................................... No change. 

Base Case Efficiencies ................... Distribution of base case shipments by efficiency level ........................ No change. 

Standards Case Efficiencies ........... Distribution of shipments by efficiency level for each standards case. 

Standards case annual market shares by efficiency level remain 

constant over time for the base case and each standards case.

No change. 

Annual Energy Consumption per 

Unit.

Annual weighted-average values are a function of energy consumption level per unit, which are established in chapter 7 of the TSD.No change. 

Total Installed Cost per Unit ........... Annual weighted-average values are a function of energy consumption level (chapter 8 of the TSD).No change in methodology. Installed costs reflect the updated 

final rule LCC. 

Repair Cost per Unit ....................... Annual weighted-average values are constant in real dollar terms for 

each energy consumption level (chapter 8 of the TSD).

No change in methodology. Repair 

costs reflect the updated final 

rule LCC values. 

Maintenance Cost per Unit ............. Annual weighted-average value (chapter 8 of the TSD), plus lighting 

maintenance cost.

No change in methodology. 

Escalation of Electricity Prices ........ Energy Information Administration (EIA) Annual Energy Outlook 2009 

(AEO2009) forecasts (to 2030) and extrapolates beyond 2030 

(chapter 8 of the TSD).

All cases updated to April 2009 

update to AEO2009 forecasts 

(chapter 8 of the TSD). 

Electricity Site-to-Source Conversion.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.

Site-to-source ratio follows April 

2009 update to AEO2009. 

Discount Rate .................................. 3 and 7 percent real .............................................................................. No change. 

Present Year ................................... Future costs are discounted to 2009 ..................................................... No change. 

Rebound Effect ............................... A rebound effect (due to changes in shipments resulting from standards) was not considered in the NIA.No change. 

The modifications DOE made to the 

NES and NIA analyses for the final rule 

primarily reflect the latest available 

updates to the same data sources used 

in the NOPR, but not changes in 

methodology. In addition, the 

underlying input data on equipment 

costs and energy savings by TSL are 

based on the LCC analysis results as 

revised in the final rule. 

Maintenance Costs Savings for LED 

Lighting in Machines 

At the NOPR stage, the Joint Comment 

(No. 67 at p. 3) indicated that there are 

maintenance costs savings and therefore 

potential life-cycle cost savings when 

LED lighting is used in place of the 

baseline T8 fluorescent lighting for 

beverage vending machines. The Joint 

Comment referenced an article in the 

September 3, 2008, edition of 

‘‘Automatic Merchandiser,’’ Energize 

Displays with LED Lighting, accessed on 

Vendingmarketwatch.com for 

information on LED lighting 

maintenance costs versus maintenance 

costs for a beverage vending machine 

with a fluorescent lighting system (last 

accessed July 25, 2009). DOE also 

reviewed a more recent industry 

publication on maintenance cost savings 

for LED display lights in beverage 

vending machines in the April 15, 2009, 

edition of ‘‘Automatic Merchandiser,’’ 

Tools to Enhance Energy Savings, which 

was accessed on 

Vendingmarketwatch.com (last accessed 

July 25, 2009). 

In response to this comment, DOE 

conducted a sensitivity analysis for 

today’s final rule to estimate the net 

economic effect of reduced maintenance 

costs for using LED lighting in place of 

baseline T8 fluorescent lighting in 

beverage vending machine equipment. 

The sensitivity analysis estimated the 

annualized life cycle cost savings for 

LED lighting. For machines with T8 

lighting, the analysis assumes two 

maintenance visits to a machine to 

change out three T8 lamps and a change 

out of the T8 lamps and the ballast at 

refurbishment (at 5 years) DOE assumed 

there was no additional labor for this 

change out, since this is undertaken at 

refurbishment. DOE estimated the total 

cost for maintenance (labor and 

materials) for machines with T8 lighting 

over the machine lifetime (10 years) to 

be $194. 

For machines with LED lighting, no 

lighting maintenance visits would be 

required over the lifetime of the 

machine. The cost of replacing three 

LED strips at $50 each would take place 

during refurbishment and would be 

$150. DOE assumed there would be no 

additional labor charge for this change 

out since this was being undertaken at 

refurbishment. 

The analysis estimated that the 

annualized net maintenance cost 

savings is $4.68 for a LED lighting 

system used to light a machine 

compared to the baseline T8 lighting 

system for a machine. This net 

annualized maintenance cost savings is 

very small and does not significantly 

affect the life cycle cost analysis and 

thus does not impact the standards 

levels for today’s final rule. Chapter 8 of 

the TSD provides additional details of 

this sensitivity analysis. 

1. Choice of Discount Rate 

ASAP commented that the balance of 

DOE’s discussion of the choice of 

proposed standard overemphasized the 

7 percent discount rate when both 7 

percent and 3 percent are mandated by 

the Office of Management and Budget 

(OMB). (ASAP, Public Meeting 

Transcript, No. 56 at p. 144) ASAP 

argued that the actual cost of capital the 

Department chose for the purchase of 

the machine was lower than 7 percent 

so that the 3 percent rate should be 

considered in the Department’s analysis, 

and is required to be considered by 

OMB. In response, DOE notes that it 

follows the guidelines on discount 

factors set forth in guidance that OMB 

provides to Federal agencies on the 

development of regulatory analysis 

(OMB Circular A–4 (September 17, 

2003), particularly section E, 

‘‘Identifying and Measuring Benefits 

and Costs’’). Accordingly, DOE is 

continuing to use 3 percent and 7 

percent real discount rates for the 

relevant calculations for this final rule. 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44931 

2. Discounting of Physical Values 

ASAP commented that DOE should 

not be applying financial discount rates 

to physical values such as energy 

savings. (ASAP, Public Meeting 

Transcript, No. 56 at p. 37) It said that 

doing so is an inappropriate application 

of financial evaluation tools and should 

be discontinued. 

DOE continues to report both 

undiscounted and discounted values of 

energy savings and carbon emission 

reductions. DOE believes this allows for 

consideration of a range of policy 

perspectives, one of which is the view 

that a reduction in emissions today is 

more valuable than one in 30 years. 

I. Life-Cycle Cost Subgroup Analysis 

In analyzing the potential impact of 

new or amended standards on 

commercial customers, DOE evaluates 

the impact on identifiable groups (i.e., 

subgroups) of customers, such as 

different types of businesses that may be 

disproportionately affected by a 

National standard level. For this 

rulemaking, DOE identified 

manufacturing and industrial facilities 

that purchase their own beverage 

vending machines as a relevant subgroup. This customer subgroup is likely 

to include owners of high-cost beverage 

vending machines because it has the 

highest capital costs. This group also 

faces the lowest electricity prices of any 

customer subgroup. These two 

conditions make it likely that this 

subgroup will have the lowest life-cycle 

cost savings of any major customer subgroup. 

DOE determined the impact on this 

refrigerated beverage vending machines 

customer subgroup using the LCC 

spreadsheet model. DOE conducted the 

LCC and PBP analyses for customers 

represented by the subgroup. DOE did 

not receive comments on its 

identification of this class of customers 

as the key sub-group or on the 

assumptions applied to those 

subgroups. DOE relied on the same 

methodology outlined in the NOPR for 

the final rule analysis. The results of 

DOE’s LCC subgroup analysis are 

summarized in section VI.C.1.b and 

described in detail in chapter 12 of the 

TSD. 

J. Manufacturer Impact Analysis 

DOE performed an MIA to estimate 

the financial impact of energy 

conservation standards on 

manufacturers of beverage vending 

machine equipment, and to assess the 

impact of such standards on 

employment and manufacturing 

capacity. DOE conducted the MIA for 

beverage vending machine equipment in 

three phases. Phase 1, Industry Profile, 

consisted of preparing an industry 

characterization, including data on 

market share, sales volumes and trends, 

pricing, employment, and financial 

structure. Phase 2, Industry Cash Flow 

Analysis, focused on the industry as a 

whole. In this phase, DOE used the 

GRIM to prepare an industry cash-flow 

analysis. Using publicly available 

information developed in Phase 1, DOE 

adapted the GRIM’s generic structure to 

perform an analysis of beverage vending 

machine equipment energy conservation 

standards. In Phase 3, Subgroup Impact 

Analysis, DOE conducted interviews 

with manufacturers representing the 

majority of domestic beverage vending 

machine equipment sales. This group 

included large and small manufacturers, 

providing a representative cross-section 

of the industry. During these interviews, 

DOE discussed engineering, 

manufacturing, procurement, and 

financial topics specific to each 

company, and obtained each 

manufacturer’s view of the industry. 

The interviews provided valuable 

information 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 

beverage vending machine industry’s 

cost structure, shipments, and revenues. 

This includes information from many of 

the analyses described above, such as 

manufacturing costs and selling prices 

from the engineering analysis and 

shipments forecasts from the NES. 

The GRIM uses the manufacturer 

selling prices in the engineering 

analysis to calculate the manufacturer 

production costs for each equipment 

class at each TSL. By multiplying the 

production costs by different sets of 

markups, DOE derives the MSPs used to 

calculate industry revenues. 

The GRIM estimates manufacturer 

revenues based on total-unit-shipment 

forecasts and the distribution of these 

shipments by efficiency. Changes in the 

efficiency mix at each standard level are 

a key driver of manufacturer finances. 

For the final rule analysis, DOE used the 

total shipments and efficiency 

distribution found in the final rule NES. 

DOE estimates the equipment 

conversion costs and capital conversion 

costs that the industry would incur at 

each TSL. Equipment conversion costs 

include engineering, prototyping, 

testing, and marketing expenses 

incurred by a manufacturer as it 

prepares to comply with a standard. 

Capital conversion costs are the onetime outlays for tooling and plant 

changes required for the industry to 

comply. 

During the NOPR public meeting, 

DOE asked manufacturers to discuss 

their ability to meet the proposed TSLs 

and describe the impacts of those 

standards. Both Royal Vendors and 

Dixie-Narco discussed their ability to 

meet the proposed standards in terms of 

the conversion costs each would incur 

to develop higher efficiency equipment. 

Royal Vendors stated that, in the past, 

considerable costs were incurred to get 

from pre-ENERGY STAR efficiency 

levels to ENERGY STAR Tier I 

efficiency levels. These costs included 

implementation of ECM fan motors, 

magnetic ballasts, and higher efficiency 

compressors. (Royal Vendors, Public 

Meeting Transcript, No. 56 at p. 185) 

Dixie-Narco agreed with Royal Vendors 

and stated that it faced a costly 

transition from ENERGY STAR Tier I to 

ENERGY STAR Tier II efficiency levels. 

(Dixie-Narco, Public Meeting Transcript, 

No. 56 at p. 186) In a written comment, 

NAMA also noted the considerable 

funds already spent by its members to 

comply with ENERGY STAR standards. 

(NAMA, No. 65 at p. 2) For Class B 

machines, Royal Vendors expects 

meeting TSL 3 will not require a 

tremendous effort. (Royal Vendors, 

Public Meeting Transcript, No. 56 at p. 

220) Dixie-Narco also stated that it will 

be able to achieve the proposed 

standard for Class B machines without 

investing significant costs that would 

need to be passed on to its customers. 

(Dixie-Narco, No. 64 at p. 4) Dixie-Narco 

noted that it achieved the TSL 6 energy 

consumption level with one of its Class 

A vending machines this year, using a 

lighting management system. (DixieNarco, Public Meeting Transcript, No. 

56 at p. 188) Royal Vendors stated that 

it could meet TSL 6 for Class A 

machines at relatively minor cost if it 

were not precluded by proprietary 

design restrictions from adopting a 

lighting management system similar to 

Dixie-Narco’s. (Royal Vendors, Public 

Meeting Transcript, No. 56 at p. 189) 

Royal Vendors stated that implementing 

an energy management system is not an 

expensive addition to the machine and 

that it can be passed on at essentially no 

additional cost. (Royal Vendors, Public 

Meeting Transcript, No. 56 at p. 188) 

Based on public comments, DOE 

believes that it accurately estimated the 

conversion costs for Class B vending 

machines and did not make any changes 

for the final rule. However, for Class A 

vending machines, DOE believes that 

the use of energy management systems 

(e.g., lighting) could provide a method 

of achieving energy savings at minimal 

cost to manufacturers. To account for 

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this possibility, DOE modified the 

assumed conversion costs required for 

manufacturers to meet the Class A 

energy consumption levels. In the 

NOPR, DOE assumed that since almost 

all of the market was already reaching 

TSL 1 (i.e., ENERGY STAR Tier II) for 

Class A machines, the conversion costs 

at TSL 1 were zero. The conversion 

costs progressively increased from TSL 

2 through TSL 7 (i.e., max-tech). For the 

final rule, DOE accounted for the 

potential use of an energy management 

system by assuming there would be 

negligible conversion costs through TSL 

2 for all Class A machines, shifting the 

conversion costs for TSLs 2 through 5 

from the NOPR to TSLs 3 through 6 for 

the final rule. For TSL 7, DOE 

maintained the conversion costs from 

the NOPR since they represent the 

maximum possible conversion costs for 

the max-tech level. For more 

information about DOE’s manufacturer 

impact assumptions, see chapter 13 of 

the TSD. 

In a comment submitted on the 

NOPR, NAMA stated that one of its 

manufacturers would have difficulty 

achieving the reduction in energy 

consumption required by the proposed 

standard levels. The manufacturer could 

only meet the standards by changing the 

cabinet insulation thickness, which 

would require retooling its production 

lines at an estimated cost of over $1 

million. (NAMA, No. 65 at p. 3) 

DOE estimated the conversion costs to 

manufacturers of the standard levels for 

both equipment classes and reports the 

values in chapter 13 of the TSD. DOE’s 

total estimated costs exceed the 1 

million dollars reported by the 

manufacturer. Because DOE has 

accounted for conversion costs of this 

magnitude for the industry, DOE 

maintained the conversion costs 

reported in chapter 13 of the TSD. 

For the final rule, DOE analyzed 

manufacturer impacts under two 

distinct markup scenarios: (1) The 

preservation-of-gross-margin-percentage 

markup scenario, and (2) the 

preservation-of-operating-profit markup 

scenario. 

Under the first scenario, DOE applied 

a single uniform ‘‘gross margin 

percentage’’ markup that represents the 

current markup for manufacturers in the 

beverage vending machine 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— 

which consists of selling, general, and 

administrative (SG&A) expenses; 

research and development (R&D) 

expenses; interest; and profit—is 1.26. 

Under the second scenario, the 

implicit assumption behind the 

‘‘preservation-of-operating-profit’’ 

scenario is that the industry can only 

maintain its operating profit (earnings 

before interest and taxes) from the 

baseline after implementation of the 

standard in 2012. The industry impacts 

occur in this scenario when 

manufacturers expand their capital base 

and production costs to make more 

expensive equipment, but the operating 

profit does not change from current 

conditions. DOE implemented this 

markup scenario in the GRIM by setting 

the manufacturer markups at each TSL 

to yield approximately the same 

operating profit in both the base case 

and the standard case in the standards 

effective year of 2012. Together, these 

two markup scenarios characterize the 

range of possible conditions that the 

beverage vending machine market will 

experience as a result of new energy 

conservation standards. 

In the NOPR, DOE sought comments 

on whether and to what extent parties 

estimate they will be able to transfer 

costs of implementing TSL 6 to 

consumers. 74 FR 26022. During the 

NOPR public meeting, Coca-Cola stated 

that, 10 years ago, it only had to sell 20 

cases for a vending machine to make a 

profit. Now, it has to sell 100 cases for 

a vending machine to make a profit. It 

continued that there are many factors 

driving the profitability model of a 

vending machine, and to assume that 

model will not change is erroneous. 

(Coca-Cola, Public Meeting transcript, 

No. 56 at p. 91) Coca-Cola stated that, 

historically, cost increases in equipment 

could not be passed through to the 

customer. It does not believe the 

increased cost of manufacturing higher 

efficiency equipment can be passed on 

to the consumer. As a result, the profit 

margin for each machine diminishes, 

resulting in an overall reduction in 

purchases. (Coca-Cola, Public Meeting 

Transcript, No. 56 at p. 183, Coca-Cola, 

No. 63 at p. 2, and NAMA, No. 65 at p. 

5) As a result, Coca-Cola concluded that 

any increase in cost resulting from 

installing more energy-efficient 

technologies into a vending machine 

cannot be transferred over to consumers. 

(Coca-Cola, Public Meeting Transcript, 

No. 56 at p. 182 and NAMA, No. 65 at 

p. 2) Coca-Cola estimates that today’s 

standard will result in an overall 

weighted average price markup of 141⁄2. 

(Coca-Cola, No. 63 at p. 2) 

The inability to pass on costs starts at 

the consumer level and ultimately 

travels throughout the entire 

distribution chain. As stated in 

comments from the NOPR public 

meeting, consumers are typically 

unwilling to incur additional costs for 

more energy-efficient equipment. In 

addition, end-users (e.g., bottlers) are 

typically unwilling to incur additional 

costs for energy-efficient equipment, 

primarily due to the split-incentive 

issue. The split incentive issue is 

described in detail in the ANOPR. 73 FR 

34101. Therefore, it is very difficult for 

manufacturers to transfer any cost 

increases for more energy-efficient 

equipment to their customers. The 

preservation-of-operating-profit scenario 

models the more negative potential 

impacts on the refrigerated beverage 

vending machine industry, and 

accounts for manufacturers’ inability to 

transfer additional costs to end-users. 

For additional detail on the 

manufacturer impact analysis, refer to 

chapter 13 of the TSD. In addition, as 

stated earlier in section IV.J, multiple 

major manufacturers stated that their 

equipment could meet today’s standard 

at little or no added cost. (Dixie-Narco, 

No. 64 at p. 2 and Royal Vendors, Public 

Meeting Transcript, No. 56 at p. 189) 

K. 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 April 2009 updated AEO2009 

Reference Case and forecast results for 

policy cases incorporating each of the 

beverage vending machines proposed 

TSLs. 

DOE analyzed the effects of proposed 

standards on electric utility industry 

generation capacity and fuel 

consumption using a variant of EIA’s 

NEMS model. EIA uses NEMS to 

produce its AEO, a widely recognized 

baseline energy forecast for the United 

States. DOE used a variant known as 

NEMS–BT, run similar to the April 2009 

update to the NEMS, except that 

refrigerated beverage vending machines 

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 model. In response to the 

May 2009 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 April 

2009 update to AEO2009 and to use the 

NES impacts developed in the beverage 

vending machines final rule analysis. 

In the utility impact analysis, DOE 

reported the changes in installed 

capacity and generation by fuel type 

that result for each TSL as well as 

changes in end-use electricity sales. 

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Chapter 14 of the TSD provides details 

of the utility analysis methods and 

results. 

L. Employment Impact Analysis 

DOE considers direct and indirect 

employment impacts when developing a 

standard. In this case, direct 

employment impacts are any changes in 

the number of employees for beverage 

vending machines 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 

beverage vending machines. In this 

rulemaking, the MIA addresses direct 

impacts (chapter 13 of the TSD), and the 

employment impact analysis addresses 

indirect impacts (chapter 15 of the 

TSD). 

Indirect employment impacts from 

beverage vending machines standards 

consist of the net jobs created or 

eliminated in the national economy 

(other than in the manufacturing sector 

being regulated) as a consequence of (1) 

reduced spending by end users on 

electricity (offset to some degree by the 

increased spending on maintenance and 

repair); (2) reduced spending on new 

energy supply by the utility industry; (3) 

increased spending on the purchase 

price of new refrigerated beverage 

vending machines; and (4) the effects of 

those three factors throughout the 

economy. DOE expects the net monetary 

savings from standards to be redirected 

to other forms of economic activity. 

DOE also expects these shifts in 

spending and economic activity to affect 

the demand for labor. 

DOE used a different methodology to 

estimate indirect national employment 

impacts using an input-output model of 

the U.S. economy called ImSET (Impact 

of Sector Energy Technologies) 

developed by DOE’s Building 

Technologies Program. 74 FR 26047, 

26058. The new method uses the most 

recent version of the U.S. input-output 

table and updated sector employment 

intensities. The ImSET model estimates 

changes in employment, industry 

output, and wage income in the overall 

U.S. economy resulting from changes in 

expenditures in various economic 

sectors. DOE estimated changes in 

expenditures using the NES 

spreadsheet. ImSET then estimated the 

net national indirect employment 

impacts of potential refrigerated 

beverage vending machines efficiency 

standards on employment by sector. In 

response to the May 2009 NOPR, DOE 

did not receive comments directly on 

the methodology used for the utility 

impact analysis. DOE updated its 

indirect employment impact analysis 

using Version 3 of the ImSET model in 

the final rule. 

M. Environmental Assessment 

Pursuant to the National 

Environmental Policy Act of 1969 

(NEPA) (42 U.S.C. 4321 et seq.) and 42 

U.S.C. 6295(o)(2)(B)(i)(VI), DOE 

prepared an environmental assessment 

(EA) of the potential impacts of the 

proposed standards it considered for 

today’s final rule, which it has included 

as chapter 16 of the TSD for the final 

rule. DOE found that the environmental 

effects associated with the standards for 

beverage vending machines were not 

significant. Therefore, DOE is issuing a 

Finding of No Significant Impact 

(FONSI), pursuant to NEPA, the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and DOE’s regulations for 

compliance with NEPA (10 CFR part 

1021). The FONSI is available in the 

docket for this rulemaking. 

In the EA, DOE estimated the 

reduction in total emissions of CO2 and 

NOX using the NEMS–BT computer 

model. DOE calculated a range of 

estimates for reduction in Hg emissions 

using current power sector emission 

rates. The EA does not include the 

estimated reduction in power sector 

impacts of sulfur dioxide (SO2), because 

DOE is uncertain that an energy 

conservation standard would not affect 

the overall level of SO2 emissions in the 

United States due to the presence of 

national caps on SO2 emissions. These 

topics are addressed further below; see 

chapter 16 of the TSD for additional 

detail. 

The NEMS–BT is run similarly to the 

April 2009 update of NEMS, except that 

the refrigeration energy use is reduced 

by the amount of energy saved due to 

the trial standard levels. The inputs of 

national energy savings come from the 

NIA analysis. For the EA, the output is 

the forecasted physical emissions. The 

net benefit of the standard is the 

difference between emissions estimated 

by NEMS–BT and the April 2009 

updated AEO2009 Reference Case. The 

NEMS–BT tracks CO2 emissions using a 

detailed module that provides results 

with a broad coverage of all sectors and 

inclusion of interactive effects. 

Title IV of the Clean Air Act sets an 

annual emissions cap on SO2 for all 

affected Electric Generating Units. The 

attainment of the emissions cap is 

flexible among generators and is 

enforced through the use of emissions 

allowances and tradable permits. Thus, 

DOE is not certain that there will be 

reduced overall SO2 emissions from the 

standards. However, there may be an 

economic benefit from reduced demand 

for SO2 emission allowances. Electricity 

savings decrease the generation of SO2

emissions from power production, 

which can lessen the need to purchase 

SO2 emissions allowance credits, and 

thereby decrease the costs of complying 

with regulatory caps on emissions. 

NOX emissions from 28 eastern States 

and the District of Columbia (DC) are 

limited under the Clean Air Interstate 

Rule (CAIR), published in the Federal 

Register on May 12, 2005. 70 FR 25162 

(May 12, 2005). Although CAIR has 

been remanded to EPA by the DC 

Circuit, it will remain in effect until it 

is replaced by a rule consistent with the 

Court’s July 11, 2008 opinion in North 

Carolina v. EPA. 531 F.3d 896 (D.C. Cir. 

2008); see also North Carolina v. EPA, 

550 F.3d 1176 (DC Cir. 2008). These 

court positions were taken into account 

in the May 2009 NOPR. Thus, the same 

methodology was followed in estimating 

future NOX in the May 2009 NOPR as 

in the final rule. Because all States 

covered by CAIR opted to reduce NOX

emissions through participation in capand-trade programs for electric 

generating units, emissions from these 

sources are capped across the CAIR 

region. 

For the 28 eastern States and DC 

where CAIR is in effect, no NOX

emissions reductions will occur due to 

the permanent cap. Under caps, 

physical emissions reductions in those 

States would not result from the energy 

conservation standards under 

consideration by DOE, but standards 

might have produced an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits, if they 

were large enough. However, DOE 

determined that in the present case, 

such standards would not produce an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits, because 

the estimated reduction in NOX

emissions or the corresponding 

allowance credits in States covered by 

the CAIR cap would be too small to 

affect allowance prices for NOX under 

the CAIR. In contrast, new or amended 

energy conservation standards would 

reduce NOX emissions in those 22 States 

not affected by the CAIR. As a result, 

DOE used the NEMS–BT to forecast 

emission reductions from the beverage 

vending machine standards that are 

considered in today’s final rule. 

Similar to SO2 and NOX, future 

emissions of Hg would have been 

subject to emissions caps under the 

Clean Air Mercury Rule (CAMR) [70 FR 

28606 (May 18, 2005)], which would 

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have permanently capped emissions of 

mercury for new and existing coal-fired 

power plants in all States beginning in 

2010, but the CAMR was vacated by the 

DC Circuit in its decision in New Jersey 

v. Environmental Protection Agency 

prior to publication of the May 2009 

NOPR. 517 F 3d 574 (DC Cir. 2008). 

After CAMR was vacated, DOE was 

unable to use the NEMS–BT model to 

estimate any changes in the quantity of 

mercury emissions (anywhere in the 

country) that would result from 

standard levels it considered for the 

proposed rule. Instead, DOE used a 

range of Hg emissions rates (in tons of 

Hg per unit energy produced) based on 

the AEO2008 for the May 2009 NOPR. 

Because virtually all mercury emitted 

from electricity generation is from coalfired power plants, DOE based the highend emissions rate on the tons of 

mercury emitted per terawatt hour 

(TWh) of coal-generated electricity. To 

estimate the reduction in mercury 

emissions, DOE multiplied the 

emissions rate by the reduction in coalgenerated electricity associated with the 

standards considered. DOE’s low 

estimate assumed that future standards 

would displace electrical generation 

only from natural gas-fired power 

plants, thereby resulting in an effective 

emission rate of zero. The low end of 

the range of Hg emissions rates is zero 

because natural gas-fired powered 

power plants have virtually no Hg 

emissions associated with their 

operations. Because the CAMR remains 

vacated, DOE continued to use the 

approach it used for the May 2009 

NOPR to estimate the Hg emission 

reductions due to standards for today’s 

final rule. To estimate the reduction in 

Hg emissions, DOE multiplied the 

emissions rates by the reduction in 

electricity generation associated with 

the standards proposed in today’s final 

rule. 

Earthjustice commented that DOE’s 

approach to estimating mercury 

emissions arbitrarily ignores the results 

of the Department’s own utility impact 

analysis, which models cumulative 

avoided electricity from all sources and 

a breakout disclosing cumulative 

generation from several sources (coal, 

petroleum, natural gas, and renewables). 

(Earthjustice, No. 66 at pp. 1–2) Given 

that DOE’s own utility impact analysis 

models the energy savings from each 

source of electricity generation, DOE 

may not refuse to apply that information 

to estimate the cumulative mercury 

emissions reductions without a rational 

explanation. EarthJustice added that 

DOE need only refer to the AEO 

Reference Case average emissions rates 

to obtain updated projections for future 

Hg emissions factors. 

DOE estimates its emission factors 

based on marginal emissions rates for 

energy savings for the primary energy 

saved by the standard. Diagnosis of 

NEMS–BT model runs leaves significant 

uncertainty concerning which 

generating fuels would be affected at the 

margin at the scale of energy savings 

expected as a result of the standard. The 

differences in emission rates are 

particularly important for Hg because 

some fuels generate almost no Hg. 

Therefore, DOE has elected to keep a 

range of emissions values in this rule. 

DOE also notes that the average Hg 

emissions values suggested by 

Earthjustice fell between the two values 

used by DOE. 

DOE notes that neither EPCA nor 

NEPA requires that the economic value 

of emissions reductions be incorporated 

in the LCC or NPV analysis of energy 

savings. DOE has chosen to report these 

benefits separately from the net benefits 

of energy savings. A summary of the 

monetary results is shown in section 

VI.C.6 of this final rule. DOE considered 

both values when weighing the benefits 

and burdens of standards. 

N. Monetizing Carbon Dioxide and 

Other Emissions Impacts 

DOE also calculated the possible 

monetary benefit of CO2, NOX, and Hg 

reductions. Cumulative monetary 

benefits discounted from the year of the 

emission reduction to the present using 

discount rates of 3 and 7 percent. DOE 

monetized reductions in CO2 emissions 

due to the standards proposed in this 

final rule based on a range of monetary 

values drawn from studies that attempt 

to estimate the present value of the 

marginal economic benefits (based on 

the avoided marginal social costs of 

carbon) likely to result from lowering 

future atmospheric concentrations of 

greenhouse gases. The marginal social 

cost of carbon is an estimate of the 

monetary value to society of the 

environmental damages of CO2

emissions. One comment was provided 

on the economic valuation of CO2 at the 

NOPR public meeting. 

ASAP stated that it is important for 

DOE to reevaluate its approach to 

carbon valuation. (ASAP, Public 

Meeting Transcript, No. 56 at p. 37) 

ASAP believes that DOE’s estimate for 

the value of carbon is low, but did not 

provide data for analysis. As discussed 

in section VI.C.6, DOE has updated the 

approach described in the May 2009 

NOPR for its monetization of 

environmental emissions reductions for 

today’s final rule. DOE continues to 

work with other Federal agencies on a 

common approach and values to be 

used in monetizing carbon and other 

emissions. 

Although this rulemaking may not 

affect SO2 emissions nationwide and 

does not affect NOX emissions in the 28 

eastern States and D.C. where CAIR is 

in effect, there are markets for SO2 and 

NOX emissions allowances. The market 

clearing price of SO2 and NOX

emissions allowances is roughly the 

marginal cost of meeting the regulatory 

cap, not the marginal value of the cap 

itself. Further, because national SO2 and 

NOX emissions are regulated by a capand-trade system, the cost of meeting 

these caps is included in the price of 

energy. Thus, the value of energy 

savings already includes the value of 

SO2 and NOX control for those 

customers experiencing energy savings. 

The economic cost savings associated 

with SO2 and NOX emissions caps is 

approximately equal to the change in 

the price of traded allowances resulting 

from energy savings multiplied by the 

number of allowances that would be 

issued each year. That calculation is 

uncertain because the energy savings 

from new standards for beverage 

vending machines would be so small 

relative to the entire electricity 

generation market that the resulting 

emissions savings would have almost no 

impact on price formation in the 

allowances market. These savings 

would most likely be outweighed by 

uncertainties in the marginal costs of 

compliance with SO2 and NOX

emissions caps. 

The current NEMS–BT model used in 

projecting the environmental impacts 

includes the CAIR rule, as described 

above, which is projected to reduce SO2

and NOX emissions. NEMS–BT also 

takes into account the current set of 

State level renewable portfolio 

standards, the effect of the Northeastern 

states Regional Greenhouse Gas 

Initiative (RGGI), and utility investor 

reactions to the possibility of future CO2

cap and trade programs, all of which 

affect electricity prices and reduce the 

projected carbon intensity of generation. 

The most recent Reference Case, 

AEO2009, is available at http:// 

www.eia.doe.gov/oiaf/servicerpt/ 

stimulus/index.html, and 

documentation of the AEO2009 

assumptions is available at http:// 

www.eia.doe.gov/oiaf/aeo/assumption/ 

index.html. 

V. Discussion of Other Comments 

Since DOE opened the docket for this 

rulemaking, it has received more than 

100 written comments from a diverse set 

of parties, including manufacturers and 

their representatives, wholesalers and 

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distributors, energy conservation 

advocates, State officials and agencies, 

and electric utilities. Section IV of this 

preamble discusses comments DOE 

received on the analytic methodologies 

it used. Additional comments DOE 

received in response to the May 2009 

NOPR addressed the information DOE 

used in its 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 

affecting adoption of standards for 

beverage vending machines. DOE 

addresses these comments in this 

section. 

A. Information and Assumptions Used 

in Analyses 

1. Engineering Analysis 

During the NOPR public meeting, 

Royal Vendors commented that the data 

used for Class A fluorescent lighting 

systems in the engineering analysis is 

not consistent with the specifications of 

the fluorescent lighting systems it uses 

in its glass-front machines. Specifically, 

it stated that DOEs estimated energy 

consumption of 32 watts (W) per fixture 

is too high. Royal Vendors claims its 

fluorescent fixtures only consume 22 W 

(Royal Vendors, Public Meeting 

Transcript, No. 56 at p. 68). 

DOE uses aggregate values for its 

engineering analysis inputs. These 

values are derived using publicly 

available data or information provided 

by multiple manufacturers and/or 

component suppliers. Analysis inputs 

are generalized so as to better represent 

the industry as a whole. DOE’s estimate 

of 32 W of energy consumed for T8 

fluorescent fixtures in Class A machines 

is adequate for the beverage vending 

machine industry and it has not made 

any adjustments for the final rule. 

B. Benefits and Burdens 

Royal Vendors stated that the 

proposed standards appeared to be 

reversed for Class A machines and Class 

B machines. It stated that Class A 

machines typically use more energy 

than Class B machines. (Royal Vendors, 

Public Meeting Transcript, No. 56 at p. 

27) Dixie-Narco disagreed with Royal 

Vendors, stating that the proposed 

standards are correct and appropriate. 

(Dixie-Narco, Public Meeting Transcript, 

No. 56 at p. 29) ASAP stated that it 

generally supports DOE’s proposed 

standard levels. It stated that for Class 

A machines, DOE’s proposal, TSL 6, is 

the maximum level that is cost effective. 

However, for Class B machines, ASAP 

suggested that DOE consider selecting 

TSL 4 rather than TSL 3 because the 

economic results for these two levels are 

very similar. (ASAP, Public Meeting 

Transcript, No. 56 at p. 31) Dixie-Narco 

stated that when you consider that the 

standards equations are based on 

refrigerated volume and not can 

capacity (or vendible capacity), the 

equations for the standards are 

appropriate for both equipment classes. 

(Dixie-Narco, Public Meeting Transcript, 

No. 56 at p. 152) Dixie-Narco further 

stated that it is currently achieving the 

proposed efficiency level for Class A 

machines but not for Class B machines, 

and therefore would have to make 

modifications to meet the proposed 

level for Class B machines. (DixieNarco, Public Meeting Transcript, No. 

56 at p. 163, 219) Royal Vendors stated 

that for Class A machines, they do not 

currently meet those levels, but given no 

proprietary design problems, they could 

meet them fairly easily. For Class B 

machines, Royal Vendors stated that 

they do not meet the proposed 

standards currently, but could without 

tremendous effort. (Royal Vendors, 

Public Meeting Transcript, No. 56 at p. 

220) Coca-Cola commented that an 

appropriate standard for Class A 

equipment would be one that is ‘‘on 

par’’ with the ENERGY STAR Tier II 

level. (Coca-Cola, No. 63 at p. 2) 

In a written comment, NAMA stated 

that it received a mixed response from 

its members regarding the technological 

feasibility and economic benefits of the 

standard levels proposed by DOE. One 

manufacturer stated that it would have 

difficulty achieving additional 

reductions for Class A and Class B 

machines, while another stated that it 

could achieve the standard for both 

Class A and Class B machines without 

significant costs to them or their 

customers. However, most responses to 

NAMA’s request for information 

indicated that the proposed standard for 

Class B machines was appropriate and 

achievable. One manufacturer 

specifically stated that TSL 3 for Class 

B could be reached without significant 

costs. The proposed standard for Class 

A, on the other hand, raised questions 

among many manufacturers, although 

one manufacturer stated that it already 

exceeds the Class A standard without 

adding significant costs. (NAMA, No. 65 

at pp. 3, 4) DOE considers these 

comments on its selection of the final 

energy conservation standard level for 

beverage vending machines. See section 

VI.D. 

VI. Analytical Results and Conclusions 

A. Trial Standard Levels 

DOE analyzed seven energy 

consumption levels for Class A 

equipment and six energy consumption 

levels for Class B equipment in the LCC 

and NIA analyses. For the May 2009 

NOPR, DOE determined that each of 

these levels should be presented as a 

possible TSL and correspondingly 

identified seven TSLs for Class A and 

six TSLs for Class B equipment. For 

each equipment class, the range of TSLs 

selected includes the energy 

consumption level providing the 

maximum NES level for the class, the 

level providing the maximum NES 

while providing a positive NPV, the 

level providing the maximum NPV, and 

the level approximately equivalent to 

ENERGY STAR Tier II. Many of the 

higher levels selected correspond to 

equipment designs that incorporate 

specific noteworthy technologies that 

can provide energy savings benefits. For 

Class A machines, DOE also included 

two intermediate efficiency levels to fill 

in significant energy consumption gaps 

between the levels identified above the 

ENERGY STAR Tier II equivalent level. 

For Class A equipment, the ENERGY 

STAR Tier II level is equivalent to TSL 

1, which allows for the highest energy 

consumption. For Class B equipment, 

DOE included one TSL with energy 

consumption higher than that provided 

by ENERGY STAR Tier II level. 

For the May 2009 NOPR, four of the 

TSLs for each equipment class were 

based on the levels that provided 

maximum energy savings, maximum 

efficiency level with positive LCC 

savings, maximum LCC savings, and the 

highest efficiency level with a payback 

of less than 3 years. 

DOE preserved energy consumption 

levels from the NOPR that met the same 

economic criteria in the final rule but 

also included the ENERGY STAR Tier II 

equivalency level and several additional 

TSLs. These additional levels either 

provide additional intermediate 

efficiency levels or include specific 

noteworthy technologies examined in 

the engineering analysis. Table VI.1 and 

Table VI.2 show the TSL levels DOE 

selected for the equipment classes and 

sizes analyzed. For Class A equipment, 

TSL 7 is the max-tech level for each 

equipment class. TSL 6 is the maximum 

efficiency level with a positive NPV at 

the 7 percent discount rate, achieved by 

incorporating an ECM condenser fan. 

TSL 5 is the efficiency level with the 

maximum NPV and maximum LCC 

savings, achieved by using an advanced 

refrigerant condenser design. TSL 4 is 

the level that first incorporated lightemitting diode (LED) lighting as a 

design feature in the engineering 

analysis. TSL 3 and TSL 2 were 

intermediate efficiency levels chosen to 

bridge the gap between TSL 4, and the 

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ENERGY STAR Tier II equivalent level, 

which is TSL 1. 

TABLE VI.1—TRIAL STANDARD LEVELS FOR CLASS A EQUIPMENT EXPRESSED IN TERMS OF DAILY ENERGY CONSUMPTION

(KWH/DAY) 

Size TSL 

Trial standard level in order of efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

LCC Efficiency 

level.

1 2 3 4 5 6 7 8 

Small ................. Engineering 

Level.

1 5 *NA *NA 6 7 9 11 

kWh/day ........... 6 .10 5 .27 4 .75 4 .25 3 .95 3 .73 3 .58 3 .25 

Medium .............. Engineering 

Level.

1 5 *NA *NA 6 7 9 11 

kWh/day ........... 6 .53 5 .51 5 .25 4 .75 4 .19 3 .95 3 .79 3 .43 

Large ................. Engineering 

Level.

1 4 *NA *NA 5 6 8 10 

kWh/day ........... 6 .75 6 .21 5 .75 5 .25 4 .89 4 .60 4 .41 3 .94 

* Not applicable. These levels established as intermediate points along the engineering cost curves. 

TABLE VI.2—TRIAL STANDARD LEVELS FOR CLASS B EQUIPMENT EXPRESSED IN TERMS OF DAILY ENERGY CONSUMPTION

(KWH/DAY) 

Size TSL 

Trial standard level in order of efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

LCC Efficiency Level ... 1 2 3 4 5 6 7 

Small ............................ Engineering Level ........ 1 2 4 4 5 6 7 

kWh/day ....................... 4 .96 4 .62 4 .31 4 .31 4 .28 3 .78 3 .69 

Medium ........................ Engineering Level ........ 1 2 4 5 6 7 8 

kWh/day ....................... 5 .56 5 .20 4 .99 4 .76 4 .72 4 .22 4 .12 

Large ............................ Engineering Level ........ 1 2 3 4 5 6 7 

kWh/day ....................... 5 .85 5 .48 5 .33 5 .07 5 .03 4 .52 4 .41 

* Not applicable. These levels established as intermediate points along the engineering cost curves. 

For Class B equipment, TSL 6 is the 

max-tech level for each equipment size. 

TSL 5 is the level that first incorporated 

LED lighting as a design option in the 

engineering analysis. TSL 4 is the next 

highest efficiency level incorporating an 

ECM condenser fan motor. TSL 3 was 

achieved by using an advanced 

refrigerant condenser design. This TSL 

provided an NPV value of essentially 0, 

with total capital expenditures for new 

equipment balanced by total operating 

cost savings over the NIA analysis 

period, based on a 7 percent discount 

rate. TSL 2 is the ENERGY STAR Tier 

II level for Class B machines. This TSL 

provided the maximum LCC savings 

and maximum NPV savings at a 7 

percent discount rate. TSL 1, which 

provided an energy consumption level 

approximately 4 percent higher than 

TSL 2, was also included in the 

analysis. TSL 1 represented the first 

level incorporating an evaporator fan 

driven by an ECM in the engineering 

analysis. 

As stated in the May 2009 NOPR, 

DOE chose to characterize the proposed 

TSL levels in terms of equations that 

establish a maximum daily energy 

consumption (MDEC) limit through a 

linear equation of the following form: 

MDEC = A × V + B 

Where: 

A is expressed in terms of kWh/day/ft 3 of 

measured volume, 

V is the measured refrigerated volume (ft 3) 

calculated for the equipment, and 

B is an offset factor expressed in kWh/day. 

Coefficients A and B are uniquely 

derived for each equipment class based 

on a linear equation passing between 

the daily energy consumption values for 

equipment of different refrigerated 

volumes. For the A and B coefficients, 

DOE used the energy consumption 

values shown in Table VI.1 and Table 

VI.2 for the medium and large 

equipment sizes within each class of 

beverage vending machine. DOE did not 

use the small sizes in either equipment 

class because information from the May 

2009 NOPR indicated that there are no 

significant shipments of this equipment 

size. Results are described in more 

detail in chapter 9 of the TSD. 

Chapter 9 of the TSD also explains the 

methodology DOE used for selecting 

TSLs and developing the equations 

shown in Table VI.3. 

TABLE VI.3—TRIAL STANDARD LEVELS EXPRESSED IN TERMS OF EQUATIONS AND COEFFICIENTS FOR CLASS A AND

CLASS B EQUIPMENT

Trial standard level Test metric Class A Class B 

Baseline ............................ kWh/day .......................... MDEC = 0.019 × V + 6.09 ........................................ MDEC = 0.068 × V + 4.07. 

1 ........................................ kWh/day .......................... MDEC = 0.062 × V + 4.12 ........................................ MDEC = 0.066 × V + 3.76. 

2 ........................................ kWh/day .......................... MDEC = 0.044 × V + 4.26 ........................................ MDEC = 0.080 × V + 3.24. 

3 ........................................ kWh/day .......................... MDEC = 0.044 × V + 3.76 ........................................ MDEC = 0.073 × V + 3.16. 

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TABLE VI.3—TRIAL STANDARD LEVELS EXPRESSED IN TERMS OF EQUATIONS AND COEFFICIENTS FOR CLASS A AND

CLASS B EQUIPMENT—Continued 

Trial standard level Test metric Class A Class B 

4 ........................................ kWh/day .......................... MDEC = 0.062 × V + 2.80 ........................................ MDEC = 0.073 × V + 3.12. 

5 ........................................ kWh/day .......................... MDEC = 0.058 × V + 2.66 ........................................ MDEC = 0.070 × V + 2.68. 

6 ........................................ kWh/day .......................... MDEC = 0.055 × V + 2.56 ........................................ MDEC = 0.068 × V + 2.63. 

7 ........................................ kWh/day .......................... MDEC = 0.045 × V + 2.42. ....................................... NA. * 

* Not applicable. There is no TSL 7 for Class B equipment. 

B. Significance of Energy Savings 

To estimate the energy savings 

through 2042 due to new standards, 

DOE compared the energy consumption 

of beverage vending machines under the 

base case (no standards) to energy 

consumption of this equipment under 

each TSL that DOE considered. Table 

VI.4 and Table VI.5 show DOE’s NES 

estimates, which it based on the April 

2009 update of the AEO2009 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 savings farther in the future are 

less significant than energy savings 

closer to the present. Table VI.4 shows 

the forecasted aggregate national energy 

savings, both discounted and 

undiscounted, of Class A equipment at 

each TSL. The table also shows the 

magnitude of the estimated energy 

savings if the savings are discounted at 

the 7 percent and 3 percent real 

discount rates. Each TSL considered in 

this rulemaking would result in 

significant energy savings, and the 

amount of savings increases with higher 

energy conservation standards (ranging 

from an estimated 0.007 quads to 0.170 

quads, undiscounted, for TSLs 1 

through 7) (see chapter 11 of the TSD). 

TABLE VI.4—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS A EQUIPMENT

[Energy savings for units sold from 2012 to 2042] 

Trial standard level 

Primary national energy savings (quads) 

Undiscounted 3% Discounted 7% Discounted 

1 ....................................................................................................................................... 0.007 0.004 0.002 

2 ....................................................................................................................................... 0.031 0.018 0.010 

3 ....................................................................................................................................... 0.069 0.040 0.021 

4 ....................................................................................................................................... 0.107 0.061 0.032 

5 ....................................................................................................................................... 0.127 0.073 0.038 

6 ....................................................................................................................................... 0.139 0.080 0.042 

7 ....................................................................................................................................... 0.170 0.097 0.051 

In Table VI.5, DOE reports both 

undiscounted and discounted values of 

energy savings for Class B equipment. 

As with Class A equipment, each TSL 

considered would result in significant 

energy savings, and the amount of 

energy savings increases with higher 

energy conservation standards (ranging 

from an estimated 0.003 quads to 0.068 

quads, undiscounted, for TSLs 1 

through 6. 

TABLE VI.5—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS B EQUIPMENT ] 

[Energy savings for units sold from 2012 to 2042] 

Trial standard level 

Primary national energy savings (quads) 

Undiscounted 3% Discounted 7% Discounted 

1 ....................................................................................................................................... 0.003 0.002 0.001 

2 ....................................................................................................................................... 0.004 0.002 0.001 

3 ....................................................................................................................................... 0.020 0.012 0.006 

4 ....................................................................................................................................... 0.023 0.013 0.007 

5 ....................................................................................................................................... 0.061 0.035 0.018 

6 ....................................................................................................................................... 0.068 0.039 0.020 

C. Economic Justification 

1. Economic Impact on Commercial 

Customers 

a. Life-Cycle Costs and Payback Period 

To evaluate the economic impact of 

the TSLs on customers, DOE conducted 

an LCC analysis for each TSL. More 

efficient beverage vending machines are 

expected to affect customers in two 

ways: Annual operating expense is 

expected to decrease and purchase price 

is expected to increase. DOE analyzed 

the net effect by calculating the LCC. 

Inputs used for calculating the LCC 

include total installed costs (i.e., 

equipment price plus installation costs), 

annual energy savings, average 

electricity costs by customer, energy 

price trends, repair costs, maintenance 

costs, equipment lifetime, and discount 

rates. 

DOE’s LCC and PBP analyses 

provided five outputs for each TSL that 

are reported in Table VI.6 through Table 

VI.8 for Class A equipment. The first 

three outputs are the percentages of 

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standard-compliant machine purchases 

that would result in (1) a net LCC 

increase, (2) no impact, or (3) a net LCC 

savings for the customer. DOE used the 

estimated distribution of shipments by 

efficiency level for each equipment class 

to determine the affected customers. 

The fourth output is the average net LCC 

savings from standard-compliant 

equipment. The fifth output is the 

average PBP for the customer 

investment in standard-compliant 

equipment. The PBP is the number of 

years it would take for the customer 

through energy savings to recover the 

increased costs of higher efficiency 

equipment compared to baseline 

efficiency equipment. 

TABLE VI.6—SUMMARY LCC AND PBP RESULTS FOR CLASS A EQUIPMENT—LARGE

Results 

Trial standard level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase (%) ... 0 1 3 3 3 5 100 

Equipment with No Change in LCC (%) .. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings (%) .... 10 99 97 97 97 95 0 

Mean LCC Savings ($) ............................ 84 132 184 222 244 240 (1,481) 

Mean Payback Period (years) ................. 2 .3 3 .1 3 .4 3 .6 3 .8 4 .3 83 .8 

Note: Numbers in parentheses indicate negative values. 

TABLE VI.7—SUMMARY LCC AND PBP RESULTS FOR CLASS A EQUIPMENT—MEDIUM

Results 

Trial standard level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase (%) ... 0 0 1 1 3 5 100 

Equipment with No Change in LCC (%) .. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings (%) .... 10 100 99 99 97 95 0 

Mean LCC Savings ($) ............................ 162 207 235 296 305 295 (1,183) 

Mean Payback Period (years) ................. 2 .1 2 .0 3 .1 3 .3 3 .6 4 .0 71 .0 

Note: Numbers in parentheses indicate negative values. 

TABLE VI.8—SUMMARY LCC AND PBP RESULTS FOR CLASS A EQUIPMENT—SMALL

Results 

Trial standard level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase (%) ... 0 1 3 3 3 5 100 

Equipment with No Change in LCC (%) .. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings (%) .... 10 99 97 97 97 95 0 

Mean LCC Savings ($) ............................ 130 179 227 255 265 255 (1,153) 

Mean Payback Period (years) ................. 2 .1 2 .9 3 .3 3 .5 3 .8 4 .2 80 .9 

Note: Numbers in parentheses indicate negative values. 

For the Class A equipment, there are 

positive net LCC savings on average for 

TSL 1 through 6. Only 10 percent of all 

equipment purchased is expected to 

achieve a net LCC savings at TSL 1, 

since about 90 percent of the equipment 

on the market in 2012 is expected to 

meet that standard. LCC savings 

consistently peak at TSL 5, but about 95 

percent of purchasers of Class A 

equipment are projected to achieve LCC 

savings even at TSL 6. Simple average 

PBPs are projected to be less than 3 

years for all Class A equipment for TSL 

1, and PBPs are less than 4 years from 

TSL 1 through 5. 

DOE’s LCC and PBP analyses 

provided the same five outputs for each 

TSL for Class B equipment. These 

outputs are reported in Table VI.9 

through Table VI.11. 

TABLE VI.9—SUMMARY LCC AND PBP RESULTS FOR CLASS B EQUIPMENT—LARGE

Results 

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase (%) ................................................... 0 9 27 35 100 100 

Equipment with No Change in LCC (%) .................................................. 90 0 0 0 0 0 

Equipment with Net LCC Savings (%) .................................................... 10 91 73 65 0 0 

Mean LCC Savings ($) ............................................................................ 43 46 40 30 (545) (2,414) 

Mean Payback Period (years) ................................................................. 3 .3 4 .5 6 .5 7 .5 83 .8 100 .0 

Note: Numbers in parentheses indicate negative values. 

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TABLE VI.10—SUMMARY LCC AND PBP RESULTS FOR CLASS B EQUIPMENT—MEDIUM

Results 

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase (%) ................................................... 0 9 29 39 100 100 

Equipment with No Change in LCC (%) .................................................. 90 0 0 0 0 0 

Equipment with Net LCC Savings (%) .................................................... 10 91 71 61 0 0 

Mean LCC Savings ($) ............................................................................ 41 49 36 26 (558) (2,230) 

Mean Payback Period (years) ................................................................. 3 .4 4 .6 6 .9 7 .9 85 .4 99 .9 

Note: Numbers in parentheses indicate negative values. 

TABLE VI.11—SUMMARY LCC AND PBP RESULTS FOR CLASS B EQUIPMENT—SMALL

Results 

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase (%) ................................................... 1 41 41 55 100 100 

Equipment with No Change in LCC (%) .................................................. 90 0 0 0 0 0 

Equipment with Net LCC Savings (%) .................................................... 10 59 59 45 0 0 

Mean LCC Savings ($) ............................................................................ 35 16 16 2 (612) (2,129) 

Mean Payback Period (years) ................................................................. 3 .9 8 .7 8 .7 10 .9 94 .7 100 .0 

Note: Numbers in parentheses indicate negative values. 

For Class B equipment, there are 

positive net LCC savings on average for 

TSLs 1 through 4. Only 10 percent of all 

equipment purchased is expected to 

achieve a net LCC savings at TSL 1, 

since about 90 percent of the equipment 

on the market in 2012 is expected to 

meet that standard. LCC savings 

consistently peak at TSL 2, but for 26 to 

65 percent of purchasers, Class B 

equipment is projected to achieve LCC 

savings at TSL 4. Simple average PBPs 

are projected to be 3.3 to 3.4 years for 

large and medium size Class B 

equipment at TSL 1. PBPs are about 4.5 

to 4.6 years for large and medium size 

Class B equipment for TSLs 1 and 2 and 

under 7 years for TSLs 1 through 3. 

b. Life-Cycle Cost Subgroup Analysis 

Using the LCC spreadsheet model, 

DOE estimated the impact of the TSLs 

on the following customer subgroup: 

Manufacturing facilities that have 

purchased their own beverage vending 

machines. This is the largest component 

of the 5 percent of site owners, who also 

own their own beverage vending 

machines, and comprises about 2 

percent of all beverage vending 

machines. About 95 percent of beverage 

vending machines are owned by bottlers 

and vendors. The manufacturing 

facilities subgroup was analyzed 

because, in addition to being the largest 

independent block of owners, it had 

among the highest financing costs 

(based on weighted average cost of 

capital) and faced the lowest energy 

costs of any customer subgroup. The 

group was therefore expected to have 

the least LCC savings and longest PBP 

of any identifiable customer subgroup. 

DOE estimated the LCC and PBP for 

the manufacturing facilities subgroup. 

Table VI.12 shows the mean LCC 

savings for equipment that meets the 

energy conservation standards in 

today’s final rule for the manufacturing 

facilities subgroup, and Table VI.13 

shows the mean PBP (in years) for this 

subgroup. Chapter 12 of the TSD 

provides more detailed discussion on 

the LCC subgroup analysis and results. 

TABLE VI.12—MEAN LIFE-CYCLE COST SAVINGS FOR REFRIGERATED BEVERAGE VENDING MACHINE EQUIPMENT

PURCHASED BY THE MANUFACTURING FACILITIES LCC SUBGROUP (2008$) 

Equipment class Size 

Trial standard level 

1 2 3 4 5 6 7 

A ..................................... S .............. 92 118 143 158 159 142 (1,258 ) 

M .............. 115 148 154 190 188 171 (1,302 ) 

L ............... 62 86 116 137 146 134 (1,585 ) 

B ..................................... S .............. 28 24 8 (3 ) (590 ) (2,433 ) NA 

M .............. 26 26 4 (8 ) (603 ) (2,251 ) NA 

L ............... 28 24 8 (3 ) (590 ) (2,433 ) NA 

Note: Numbers in parentheses indicate negative values. NA = not applicable. 

TABLE VI.13—MEAN PAYBACK PERIOD FOR REFRIGERATED BEVERAGE VENDING MACHINE EQUIPMENT PURCHASED BY

THE MANUFACTURING FACILITIES LCC SUBGROUP (YEARS) 

Equipment class Size 

Trial standard level 

1 2 3 4 5 6 7 

A ......................................... S .............. 2.6 3.6 4.1 4.3 4.7 5.2 90.6 

M .............. 2.6 2.4 3.7 4.0 4.4 5.0 82.7 

L ............... 2.7 3.8 4.2 4.4 4.7 5.3 92.2 

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TABLE VI.13—MEAN PAYBACK PERIOD FOR REFRIGERATED BEVERAGE VENDING MACHINE EQUIPMENT PURCHASED BY

THE MANUFACTURING FACILITIES LCC SUBGROUP (YEARS)—Continued 

Equipment class Size 

Trial standard level 

1 2 3 4 5 6 7 

B ......................................... S .............. 4.9 11.9 11.9 15.5 99.5 100.0 NA 

M .............. 4.2 5.8 9.0 10.5 94.1 100.0 NA 

L ............... 4.1 5.7 8.4 9.9 93.0 100.0 NA 

Note: NA = not applicable. 

For beverage vending machines, the 

positive LCC and PBP impacts for 

manufacturing facilities that own their 

own beverage vending machines are less 

than those of all customers. Because 

they face lower energy costs, the lower 

value of energy savings lengthens the 

period over which the original 

investment is paid back and also 

reduces operating cost savings over the 

lifetime of more efficient beverage 

vending machines. In addition, because 

they face higher financing costs, these 

customers sites have a relatively high 

opportunity cost for investment, so the 

value of future electricity savings from 

higher efficiency equipment is further 

reduced. Even so, for this subgroup of 

customers, LCC savings are still positive 

for all but TSL 7 for Class A and is 

positive at TSL 3 and below for Class B. 

PBP is lengthened by about a year for 

Class A and 2 years for Class B but is 

still less about 5 years at TSL 6 for Class 

A and less than 9 years for medium-size 

Class B equipment (which is less than 

the equipment lifetime) at TSL 3. 

2. Economic Impact on Manufacturers 

DOE determined the economic 

impacts of today’s standard on 

manufacturers, as described in the 

proposed rule. 74 FR 26053–56. As 

updated for today’s final rule, DOE 

analyzed manufacturer impacts under 

two distinct markup scenarios: (1) The 

preservation-of-gross-margin-percentage 

markup scenario, and (2) the 

preservation-of-operating-profit 

(absolute dollars) markup scenario. 

Together, these two markup scenarios 

characterize the range of possible 

conditions the beverage vending 

machine market will experience as a 

result of new energy conservation 

standards. See chapter 13 of the TSD for 

additional details of the markup 

scenarios and analysis. 

a. Industry Cash-Flow Analysis Results 

Using two different markup scenarios, 

DOE estimated the impact of new 

standards for beverage vending 

machines on the INPV of the beverage 

vending machine industry. The impact 

consists of the difference between INPV 

in the base case and INPV in the 

standards case. INPV is the primary 

metric used in the MIA, and represents 

one measure of the fair value of the 

industry in today’s dollars. DOE 

calculated the INPV by summing all of 

the net cash flows, discounted at the 

beverage vending machine industry’s 

cost of capital or discount rate. 

Table VI.14 through Table VI.17 show 

the changes in INPV that DOE estimates 

would result from the TSLs DOE 

considered for this final rule using the 

preservation-of-gross-margin-percentage 

and preservation-of-operating-profit 

scenarios described above. The tables 

also present the equipment conversion 

costs and capital conversion costs that 

the industry would incur at each TSL. 

Equipment conversion costs include 

engineering, prototyping, testing, and 

marketing expenses incurred by a 

manufacturer as it prepares to comply 

with a standard. Capital conversion 

costs are the one-time outlays for tooling 

and plant changes required for the 

industry to comply. 

TABLE VI.14—MANUFACTURER IMPACT ANALYSIS FOR CLASS A REFRIGERATED BEVERAGE VENDING MACHINE

EQUIPMENT UNDER THE PRESERVATION-OF-GROSS-MARGIN-PERCENTAGE MARKUP SCENARIO

Preservation of gross margin percentage markup scenario 

Metric Units Base 

case 

Trial standard level 

1 2 3 4 5 6 7 

INPV ...................................... 2008$ millions ....................... 44.1 44.2 44.3 44.5 42.9 42.8 36.2 41.0 

Change in INPV .................... 2008$ millions ....................... ............ 0.0 0.2 0.3 (1.3 ) (1.3 ) (7.9 ) (3.2 ) 

% ........................................... ............ 0.1 0.5 0.7 (2.9 ) (3.0 ) (18.0 ) (7.2 ) 

Equipment Conversion Costs 2008$ millions ....................... ............ 0.0 0.0 0.6 0.6 1.2 2.9 3.5 

Capital Conversion Costs ..... 2008$ millions ....................... ............ 0.0 0.0 0.0 2.2 2.2 9.1 14.1 

Total Investment Required .... 2008$ millions ....................... ............ 0.0 0.0 0.6 2.8 3.4 11.9 17.6 

Numbers in parentheses indicate negative values. 

TABLE VI.15—MANUFACTURER IMPACT ANALYSIS FOR CLASS A REFRIGERATED BEVERAGE VENDING MACHINE

EQUIPMENT UNDER THE PRESERVATION-OF-OPERATING-PROFIT MARKUP SCENARIO

Preservation of operating profit markup scenario 

Metric Units Base 

case 

Trial standard level 

1 2 3 4 5 6 7 

INPV ................................... 2008$ millions ................... 44.1 44.1 43.9 43.0 40.6 40.1 33.1 15.8 

Change in INPV ................. 2008$ millions ................... ............ (0.0 ) (0.3 ) (1.1 ) (3.5 ) (4.1 ) (11.1 ) (28.3 ) 

% ....................................... ............ (0.1 ) (0.6 ) (2.5 ) (7.9 ) (9.3 ) (25.1 ) (64.2 ) 

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TABLE VI.15—MANUFACTURER IMPACT ANALYSIS FOR CLASS A REFRIGERATED BEVERAGE VENDING MACHINE

EQUIPMENT UNDER THE PRESERVATION-OF-OPERATING-PROFIT MARKUP SCENARIO—Continued 

Preservation of operating profit markup scenario 

Metric Units Base 

case 

Trial standard level 

1 2 3 4 5 6 7 

Equipment Conversion 

Costs.

2008$ millions ................... ............ 0.0 0.0 0.6 0.6 1.2 2.9 3.5 

Capital Conversion Costs .. 2008$ millions ................... ............ 0.0 0.0 0.0 2.2 2.2 9.1 14.1 

Total Investment Required 2008$ millions ................... ............ 0.0 0.0 0.6 2.8 3.4 11.9 17.6 

Numbers in parentheses indicate negative values. 

TABLE VI.16—MANUFACTURER IMPACT ANALYSIS FOR CLASS B REFRIGERATED BEVERAGE VENDING MACHINE

EQUIPMENT UNDER THE PRESERVATION-OF-GROSS-MARGIN-PERCENTAGE MARKUP SCENARIO

Preservation of gross margin percentage markup scenario 

Units Base 

case 

Trial standard level 

1 2 3 4 5 6 

INPV ....................................... 2008$ millions ....................... 33.7 33.7 33.7 33.1 32.7 26.3 30.5 

Change in INPV ..................... 2008$ millions ....................... .............. 0.0 0.0 (0.6 ) (1.0 ) (7.4 ) (3.2 ) 

% ........................................... .............. 0.1 0.1 (1.9 ) (3.0 ) (21.9 ) (9.5 ) 

Equipment Conversion Costs 2008$ millions ....................... .............. 0.0 0.0 1.7 2.6 3.5 6.9 

Capital Conversion Costs ...... 2008$ millions ....................... .............. 0.0 0.0 0.0 0.0 11.0 14.7 

Total Investment Required ..... 2008$ millions ....................... .............. 0.0 0.0 1.7 2.6 14.5 21.6 

Numbers in parentheses indicate negative values. 

TABLE VI.17—MANUFACTURER IMPACT ANALYSIS FOR CLASS B REFRIGERATED BEVERAGE VENDING MACHINE

EQUIPMENT UNDER THE PRESERVATION-OF-OPERATING-PROFIT MARKUP SCENARIO

Preservation of operating profit markup scenario 

Units Base 

case 

Trial standard level 

1 2 3 4 5 6 

INPV ..................................... 2008$ millions ...................... 33.7 33.7 33.7 32.5 32.0 17.2 0.2 

Change in INPV ................... 2008$ millions ...................... .............. (0.0 ) (0.0 ) (1.2 ) (1.7 ) (16.5 ) (33.5 ) 

% .......................................... .............. (0.1 ) (0.2 ) (3.5 ) (5.0 ) (48.9 ) (99.4 ) 

Equipment Conversion 

Costs.

2008$ millions ...................... .............. 0.0 0.0 1.7 2.6 3.5 6.9 

Capital Conversion Costs .... 2008$ millions ...................... .............. 0.0 0.0 0.0 0.0 11.0 14.7 

Total Investment Required .. 2008$ millions ...................... .............. 0.0 0.0 1.7 2.6 14.5 21.6 

Numbers in parentheses indicate negative values. 

The May 2009 NOPR discusses the 

estimated impact of new beverage 

vending machine standards on INPV for 

each equipment class. 74 FR 26053–55. 

See chapter 13 of the TSD for details. 

b. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several regulations may have serious 

consequences for some manufacturers, 

groups of manufacturers, or an entire 

industry. Assessing the impact of a 

single regulation may overlook this 

cumulative regulatory burden. 

DOE recognizes that each regulation 

can significantly affect manufacturers’ 

financial operations. Multiple 

regulations affecting the same 

manufacturer can reduce manufacturers’ 

profits and possibly cause 

manufacturers to exit from the market. 

During the public meeting, PepsiCo 

stated that pending regulation would 

mandate that the beverage vending 

machine industry add nutrition labels to 

the exterior of all machines that specify 

the nutritional information for its 

contents. (PepsiCo, Public Meeting 

Transcript, No. 56 at p. 178) 

On May 14, 2009, the Menu 

Education and Labeling (MEAL) Act, a 

bill to amend the Federal Food, Drug, 

and Cosmetic Act to extend the food 

labeling requirements of the Nutrition 

Labeling and Education Act of 1990, 

was introduced into Congress. The bill 

includes a provision to require the 

vending machine industry to post labels 

on their machines containing certain 

nutrition information about their 

contents. While this legislation may 

potentially result in an additional 

labeling requirement for beverage 

vending machine manufacturers, DOE 

cannot consider in its cumulative 

regulatory burden analysis any 

legislation that has not yet been enacted. 

Furthermore, DOE has not found or 

received any quantitative or qualitative 

information regarding the magnitude of 

the financial burden that may 

accompany the pending nutritional 

information regulation. 

DOE did not identify any other DOE 

regulations that would affect the 

manufacturers of beverage vending 

machines or their parent companies. 

DOE requested information about the 

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cumulative regulatory burden during 

manufacturer interviews. In general, 

manufacturers were not greatly 

concerned about other Federal, State, or 

international regulations. The 

requirements of their major customers 

have a greater impact on their business 

than any of these other regulations. For 

further information about the 

cumulative regulatory burden, see 

chapter 13 of the TSD. 

c. Impacts on Employment 

DOE used the GRIM to assess the 

impacts of energy conservation 

standards on beverage vending machine 

industry employment. DOE used 

statistical data from the U.S. Census 

Bureau’s 2006 Annual Survey of 

Manufacturers, the results of the 

engineering analysis, and interviews 

with manufacturers to estimate the 

inputs necessary to calculate industrywide labor expenditures and 

employment levels. Results of the U.S. 

Census Bureau’s 2007 Annual Survey of 

Manufacturers are not yet available. 

The vast majority of beverage vending 

machines are manufactured in the 

United States. Based on results of the 

GRIM, DOE expects that there would be 

slightly positive direct employment 

impacts among domestic beverage 

vending machine manufacturers for 

TSLs 1 through 6 for Class A equipment 

and TSLs 1 through 5 for Class B 

equipment. The GRIM estimates that 

employment would increase by fewer 

than 36 employees for Class A 

equipment at TSLs 1 through 6 and 

fewer than 97 employees for Class B 

equipment at TSLs 1 though 5. The 

employment impacts are more positive 

at the max-tech levels (TSL 7 for Class 

A equipment and TSL 6 for Class B 

equipment) because more labor is 

required and the production costs of the 

most efficient equipment greatly 

increase. The employment impacts 

calculated in the GRIM are shown in 

Table VI.35 and Table VI.36 in section 

VI.D. 

The results calculated in the GRIM do 

not account for the possible relocation 

of domestic jobs to lower-labor-cost 

countries, which may occur 

independently of new standards or may 

be influenced by the level of 

investments new standards require. 

Manufacturers stated that although there 

are no current plans to relocate 

production facilities, higher TSLs would 

increase pressure to cut costs, which 

could result in relocation. The labor 

impacts would be different if 

manufacturers chose to relocate to lower 

cost countries or if manufacturers 

consolidated. In addition, standards 

could increase pressure to consolidate 

within the industry due to the low 

profitability and existing excess 

production capacity. Chapter 13 of the 

TSD further discusses how the 

employment impacts are calculated and 

shows the projected changes in 

employment levels by TSL. 

The conclusions in this section are 

independent of any conclusions 

regarding employment impacts from the 

broader U.S. economy estimated in the 

employment impact analysis. Those 

impacts are documented in chapter 15 

of the TSD. 

d. Impacts on Manufacturing Capacity 

According to the majority of beverage 

vending machine manufacturers, new 

energy conservation standards will not 

affect manufacturers’ production 

capacity. Within the last decade, annual 

shipments of beverage vending 

machines have decreased almost threefold. Due to the decline in shipments, it 

is likely that any of the major 

manufacturers has the capacity to meet 

most of the recent market demand. 

Consequently, the industry has the 

capacity to make many times more units 

than are currently sold each year. Thus, 

DOE believes manufacturers will be able 

to maintain manufacturing capacity 

levels and continue to meet market 

demand under new energy conservation 

standards. 

e. Impacts on Subgroups of 

Manufacturers 

As discussed in the May 2009 NOPR, 

74 FR 26044–45, 26056, 26069–72, DOE 

evaluated the impacts of new energy 

conservation standards on small 

manufacturers as defined by the U.S. 

Small Business Administration (SBA). 

DOE identified six small manufacturers 

and requested information that would 

determine if there are differential 

impacts that may result from new 

energy conservation standards. In the 

NOPR, DOE specifically requested 

comments on how small business 

manufacturers will be affected by new 

energy conversation standards. 74 FR 

26071. However, DOE did not receive 

any comments in response to this 

request. For a discussion of the impacts 

on small business manufacturers, see 

chapter 13 of the TSD and section VII.B 

of this preamble (‘‘Review Under the 

Regulatory Flexibility Act’’). 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

Because the pattern and strategies for 

improving the energy performance of 

beverage vending machines is somewhat 

different between Class A and B 

equipment, energy savings are reported 

separately for each class of equipment 

by TSL. The national energy savings are 

between 0.003 and 0.170 quads, beyond 

that achieved in ENERGY STAR Tier 1 

equipment, depending on the TSL and 

equipment class, an amount of energy 

savings that DOE considers significant. 

As stated previously, energy savings 

increase as TSLs grow progressively 

more stringent than the baseline 

efficiency level. 

To estimate the energy savings 

through 2042 due to new energy 

conservation standards, DOE compared 

the energy consumption of beverage 

vending machines under the base case 

to energy consumption under a new 

standard. The energy consumption 

calculated in the NIA is source energy, 

taking into account energy losses in the 

generation and transmission of 

electricity as discussed in section VI.B. 

DOE tentatively determined the 

amount of energy savings at each of the 

seven TSLs being considered for Class A 

equipment and six TSLs for Class B 

equipment, then analyzed and 

aggregated the results across the three 

sizes for each equipment class. 

Table VI.18 shows the forecasted 

aggregate national energy savings, both 

discounted and undiscounted, of Class 

A equipment at each TSL. The table also 

shows the magnitude of the estimated 

energy savings if the savings are 

discounted at the 7 percent and 3 

percent real discount rates. Each TSL 

considered in this rulemaking would 

result in significant energy savings, and 

the amount of savings increases with 

higher energy conservation standards 

(ranging from an estimated 0.007 to 

0.170 quads, undiscounted, for Class A 

equipment for TSLs 1 through 7). See 

chapter 11 of the TSD for details of the 

NIA. 

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TABLE VI.18—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS A EQUIPMENT (ENERGY SAVINGS FOR

UNITS SOLD FROM 2012 TO 2042) 

Trial standard level 

Primary national energy savings 

quads 

Undiscounted 3% Discounted 7% Discounted 

1 ....................................................................................................................................... 0.007 0.004 0.002 

2 ....................................................................................................................................... 0.031 0.018 0.010 

3 ....................................................................................................................................... 0.069 0.040 0.021 

4 ....................................................................................................................................... 0.107 0.061 0.032 

5 ....................................................................................................................................... 0.127 0.073 0.038 

6 ....................................................................................................................................... 0.139 0.080 0.042 

7 ....................................................................................................................................... 0.170 0.097 0.051 

In Table VI.19, DOE reports both 

undiscounted and discounted values of 

energy savings for Class B equipment. 

Each TSL considered would result in 

significant energy savings, and the 

amount of savings increases with higher 

energy conservation standards (ranging 

from an estimated 0.003 to 0.068 quads, 

undiscounted, for Class B equipment for 

TSLs 1 through 6). 

TABLE VI.19—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS B EQUIPMENT (ENERGY SAVINGS FOR

UNITS SOLD FROM 2012 TO 2042) 

Trial standard level 

Primary national energy savings 

quads 

Undiscounted 3% Discounted 7% Discounted 

1 ....................................................................................................................................... 0.003 0.002 0.001 

2 ....................................................................................................................................... 0.004 0.002 0.001 

3 ....................................................................................................................................... 0.020 0.012 0.006 

4 ....................................................................................................................................... 0.023 0.013 0.007 

5 ....................................................................................................................................... 0.061 0.035 0.018 

6 ....................................................................................................................................... 0.068 0.039 0.020 

b. Net Present Value 

The NPV analysis is a measure of the 

cumulative benefit or cost of standards 

to the Nation. In accordance with OMB 

guidelines on regulatory analysis (OMB 

Circular A–4, section E, September 17, 

2003), DOE calculated an estimated 

NPV using both a 7 percent and 3 

percent real discount rate. The 7 percent 

rate is an estimate of the average beforetax rate of return to private capital in the 

U.S. economy. This rate reflects the 

returns to real estate and small business 

capital as well as corporate capital. DOE 

used this discount rate to approximate 

the opportunity cost of capital in the 

private sector, since recent OMB 

analysis has found the average rate of 

return to capital to be near this rate. 

DOE also used the 3 percent discount 

rate to capture the potential effects of 

standards on private consumption (e.g., 

through higher prices for equipment and 

purchase of reduced amounts of energy). 

This rate represents the rate at which 

society discounts future consumption 

flows to their present value. This rate 

can be approximated by the real rate of 

return on long-term Government debt 

(e.g., 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. 

Table VI.20 shows the estimated 

cumulative NPV calculated for all Class 

A equipment. Table VI.20 assumes the 

AEO2009 Reference Case forecast for 

electricity prices. At a 7 percent 

discount rate, TSLs 1 through 6 show 

positive cumulative NPVs. The highest 

NPV is provided by TSL 5 at $0.192 

billion. TSL 6 showed an NPV at $0.185 

billion. TSL 7 showed an NPV at 

¥$1.449 billion, the result of negative 

NPV observed in all sizes of this 

equipment class. 

TABLE VI.20—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR CLASS A EQUIPMENT (AEO2009 REFERENCE CASE) 

Trial standard level 

NPV* billion 2008$ 

7% Discount 

rate 

3% Discount 

rate 

1 ............................................................................................................................................................................... 0.015 0.034 

2 ............................................................................................................................................................................... 0.068 0.153 

3 ............................................................................................................................................................................... 0.112 0.268 

4 ............................................................................................................................................................................... 0.175 0.415 

5 ............................................................................................................................................................................... 0.192 0.464 

6 ............................................................................................................................................................................... 0.185 0.465 

7 ............................................................................................................................................................................... (1.449 ) (2.466 ) 

Note: Numbers in parentheses indicate negative NPV (i.e., net cost). 

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At a 3 percent discount rate, all but 

TSL 7 showed a positive NPV, with the 

highest NPV provided at TSL 6 ($0.465 

billion). TSL 5 showed a near equivalent 

NPV at $0.464 billion. TSL 7 showed an 

NPV of ¥$2.466 billion. DOE observed 

that all Class A equipment at TSL 7 has 

a negative NPV at a 3 percent discount 

rate. 

Table VI.21 shows the estimated 

cumulative NPV for beverage vending 

machines resulting from the sum of the 

NPV calculated for Class B equipment. 

This table assumes the AEO2009 

Reference Case forecast for electricity 

prices. At a 7 percent discount rate, 

TSLs 1 and 2 show positive cumulative 

NPVs. The highest NPV is provided by 

TSL 2 at $0.006 billion. TSL 3 showed 

¥$0.003 billion NPV. TSLs 4 through 6 

also show a negative NPV. TSL 6 has a 

¥$2.452 billion NPV, the result of 

negative NPV observed in all sizes of 

Class B equipment. 

TABLE VI.21—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR CLASS B EQUIPMENT (AEO2009 REFERENCE CASE) 

Trial standard level 

NPV billion 2008$ 

7% Discount 

rate 

3% Discount 

rate 

1 ............................................................................................................................................................................... 0.005 0.011 

2 ............................................................................................................................................................................... 0.006 0.014 

3 ............................................................................................................................................................................... (0.003 ) 0.011 

4 ............................................................................................................................................................................... (0.014 ) (0.006 ) 

5 ............................................................................................................................................................................... (0.621 ) (1.083 ) 

6 ............................................................................................................................................................................... (2.452 ) (4.427 ) 

Note: Numbers in parentheses indicate negative NPV (i.e., net cost). 

At a 3 percent discount rate, TSLs 1 

through 3 showed a positive NPV, with 

the highest NPV of $0.014 billion 

provided at TSL 2. TSL 1 and 3 

provided a near equivalent NPV at 

$0.009 billion. TSL 4 showed an NPV of 

¥$0.006 billion. DOE observed that all 

Class B equipment sizes at TSL 5 have 

a negative NPV at a 3 percent discount 

rate. 

In addition to the Reference Case, 

DOE examined the NPV under the 

AEO2009 high-growth and low-growth 

electricity price forecasts. Chapter 11 of 

the TSD presents the results of this 

examination. 

c. Impacts on Employment 

Besides the direct impacts on 

manufacturing employment discussed 

in section VI.C.2.c, DOE develops 

general estimates of the indirect 

employment impacts of proposed 

standards on the economy. As discussed 

above, DOE expects energy conservation 

standards for beverage vending 

machines to reduce energy bills for 

commercial customers, and the resulting 

net savings to be redirected to other 

forms of economic activity. DOE also 

realizes that these shifts in spending 

and economic activity by beverage 

vending machine operators and site 

owners could affect the demand for 

labor. The impact comes in a variety of 

businesses not directly involved in the 

decision to make, operate, or pay the 

utility bills for beverage vending 

machines. Thus, the economic impact is 

‘‘indirect.’’ To estimate these indirect 

economic effects, DOE used an input/ 

output model of the U.S. economy using 

U.S. Department of Commerce, Bureau 

of Economic Analysis (BEA) and Bureau 

of Labor Statistics (BLS) data (as 

described in section IV.L. See chapter 

15 of the TSD for details of the net 

national employment impact. 

In this input/output model, the 

spending of the money saved on utility 

bills when more efficient vending 

machines are deployed is centered in 

economic sectors that create more jobs 

than are lost in electric utilities when 

spending is shifted from electricity to 

other products and services. Thus, 

today’s refrigerated beverage vending 

machine energy conservation standards 

are likely to slightly increase the net 

demand for labor in the economy. 

However, the net increase in jobs is so 

small that it would be imperceptible in 

national labor statistics and might be 

offset by other, unanticipated effects on 

employment. Neither the BLS data nor 

the input/output model used by DOE 

includes the quality of jobs. As shown 

in Table VI.22 and Table VI.23, DOE 

estimates that net indirect employment 

impacts from a proposed beverage 

vending machine standard are likely to 

be very small. 

TABLE VI.22—NET NATIONAL CHANGE IN INDIRECT EMPLOYMENT FROM CLASS A EQUIPMENT: NUMBER OF JOBS FROM

2012 TO 2042 

Trial standard level 

Net national change in employment 

2012 2022 2032 2042 

1 ....................................................................................................................... 0 13 13 13 

2 ....................................................................................................................... 4 67 69 82 

3 ....................................................................................................................... 17 142 159 172 

4 ....................................................................................................................... 30 221 238 265 

5 ....................................................................................................................... 42 256 285 313 

6 ....................................................................................................................... 44 286 316 344 

7 ....................................................................................................................... 157 402 444 475 

Note: Numbers in parentheses indicate negative values. 

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TABLE VI.23—NET NATIONAL CHANGE IN INDIRECT EMPLOYMENT FROM CLASS B EQUIPMENT: NUMBER OF JOBS FROM

2012 TO 2042 

Trial standard level 

Net national change in employment 

2012 2022 2032 2042 

1 ....................................................................................................................... 1 6 6 6

2 ....................................................................................................................... 1 9 9 10 

3 ....................................................................................................................... 8 41 45 49 

4 ....................................................................................................................... 9 47 52 55 

5 ....................................................................................................................... 58 138 150 162 

6 ....................................................................................................................... 166 193 204 216 

Note: Numbers in parentheses indicate negative values. 

4. Impact on Utility or Performance of 

Equipment 

As indicated in section V.B.4 of the 

May 2009 NOPR, the new standards 

DOE is adopting today will not lessen 

the utility or performance of any 

beverage vending machine. 74 FR 

26059. 

5. Impact of Any Lessening of 

Competition 

As discussed in the May 2009 NOPR, 

74 FR 26059, and in section III.D.1.e of 

this preamble, DOE considers any 

lessening of competition likely to result 

from standards. The Attorney General 

determines the impact, if any, of any 

lessening of competition. 

The DOJ believes that the Class B 

standards contained in the proposed 

rule would not likely lead to a lessening 

of competition. (DOJ, No. 61 at p. 1) 

For Class A machines, DOJ concluded 

that the proposed TSL 6 could 

potentially lessen competition. DOJ 

commented that beverage vending 

machine manufacture is a highly 

concentrated industry in the United 

States, and compliance with the 

proposed Class A standard could 

require a disproportionate investment 

by some manufacturers, potentially 

placing them at a disadvantage with 

respect to others and leading to greater 

concentration. DOJ requested that DOE 

take this possible competitive impact 

into account and to ensure that the 

standard it adopts for Class A beverage 

vending machines will not require 

access to intellectual property owned by 

an industry participant, which would 

place other industry participants at a 

comparative disadvantage. (DOJ, No. 61 

at pp. 1–2) 

DOE agrees with DOJ that the market 

is highly concentrated, with three major 

manufacturers supplying the vast 

majority of the U.S. market. In the May 

2009 NOPR, DOE stated that it did not 

believe there would be differential 

impacts among manufacturers at TSL 6 

for Class A equipment. At this level the 

manufacturers would have to redesign 

all their existing equipment and make 

capital investments in their production 

lines to comply with the standard, but 

the investments would be similar for 

each manufacturer at this level. (74 FR 

26054) 

For today’s final rule, DOE modified 

the assumed conversion costs required 

for manufacturers to meet the Class A 

energy consumption levels by 

accounting for the potential use of an 

energy management system (see section 

IV.J). This change mitigates the overall 

impacts at TSL 6, but does not impose 

disproportionate investments on some 

manufacturers. 

In addition, DOE received a written 

comment on the NOPR from NAMA 

suggesting that there could be a 

differential impact among 

manufacturers for part of the standards 

proposed in the NOPR. NAMA stated 

that it received a mixed response from 

its members regarding the technological 

feasibility and economic benefits of the 

standard levels proposed by DOE. One 

manufacturer stated that it would have 

difficulty achieving additional 

reductions for Class A and Class B 

machines, while another stated that it 

could achieve the standards for both 

Class A and Class B machines without 

significant costs to them or their 

customers. However, most responses to 

NAMA’s request for information 

indicated that the proposed standard for 

Class B machines was appropriate and 

achievable, but the proposed standard 

for Class A raised questions among 

some manufacturers. (NAMA, No. 65 at 

p. 3) Dixie-Narco indicated for the 

NOPR that they could achieve the 

proposed TSL 6 for Class A machines 

without the use of intellectual property 

owned by an industry participant. 

Dixie-Narco stated that it is currently 

achieving the proposed efficiency level 

for Class A machines. (Dixie-Narco, 

Public Meeting Transcript, No. 56 at pp. 

163 and 219) Royal Vendors stated that 

for Class A machines, they do not 

currently meet those levels, but given no 

proprietary design issues, they could 

meet them fairly easily. (Royal Vendors, 

Public Meeting Transcript, No. 56 at p. 

220; Royal Vendors, No. 60 at p. 1) 

Dixie-Narco addressed the proprietary 

design issue by stating that it is not 

aware of any intellectual property issues 

that would prevent its competitors from 

achieving the levels in the proposed 

standards (Dixie-Narco, No. 64 at p. 2) 

The Joint Comment also stated that the 

proposed standards could be met 

without using LED lighting, which 

addresses concerns raised by interested 

parties concerning patent limitations on 

LED lighting use in vending machines. 

(Joint Comment, No. 67 at p. 1). 

For today’s final rule, DOE did not 

receive comments that indicated that 

the energy conservation standards 

would result in the unavailability of 

standards-compliant products. DOE 

recognizes that there was a mixed 

response from manufacturers regarding 

their ability to meet the standards for 

Class A machines. However, DOE notes 

that the technology options that could 

be used to meet the standard are 

available to all manufacturers, and DOE 

does not believe manufacturers will 

have to obtain proprietary technologies 

to meet the energy conservation 

standards set forth by today’s rule. As 

stated in section IV.B, all major 

manufacturers have access to alternative 

technology pathways to meet the 

efficiency levels in the analysis, 

including TSL 6, without the use of 

proprietary technology. DOE did not 

receive any information or comments 

that would indicate that the identified 

alternative technologies that could be 

used to meet energy conservation 

standards set forth by today’s final rule 

will lead to any lessening of 

competition. Section IV.B of today’s 

final rule further discusses alternative 

technology pathways and proprietary 

technologies. 

In the NOPR, DOE requested 

comment on whether the proposed 

standard could result in industry 

consolidation. NAMA submitted a 

comment stating that the industry has 

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44946 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

experienced a trend of industry 

consolidation that would continue, if 

not accelerate, if equipment costs 

escalate due to the proposed standard. 

(NAMA, No. 65 at p. 6) 

DOE believes that an increase in 

equipment costs due to standards would 

have a comparable impact on all 

manufacturers. Therefore, industry 

participants would not be placed at a 

comparative disadvantage. 

The Attorney General’s response is 

reprinted at the end of today’s 

rulemaking. 

6. Need of the Nation To Conserve 

Energy 

Improving the energy efficiency of 

beverage vending machines, where 

economically justified, would likely 

improve the security of the Nation’s 

energy system by reducing overall 

demand for energy, thus reducing the 

Nation’s reliance on foreign sources of 

energy. Reduced demand would also 

likely improve the reliability of the 

electricity system, particularly during 

peak-load periods. As a measure of this 

reduced demand, DOE expects the 

energy savings from the adopted 

standards to eliminate the need for 

approximately 0.103 Gigawatts (GW) of 

generating capacity for Class A 

equipment and 0.015 GW for Class B 

equipment by 2042. 

Enhanced energy savings also 

produces environmental benefits in the 

form of reduced emissions of air 

pollutants and greenhouse gases 

associated with energy production. 

Table VI.24 provides DOE’s estimate of 

cumulative CO2, NOX, and Hg emissions 

reductions that would result from the 

TSLs considered in this rulemaking for 

both Class A and Class B equipment. 

The expected energy savings from these 

standards for beverage vending 

machines may also reduce the cost of 

maintaining nationwide emissions 

standards and constraints. In the EA 

(chapter 16 of the TSD), DOE reports 

estimated annual changes in CO2, NOX, 

and Hg emissions attributable to each 

TSL. 

TABLE VI.24—CUMULATIVE CO2 NOX AND HG EMISSIONS REDUCTIONS FOR CLASSES A AND B EQUIPMENT

[Cumulative reductions for equipment sold from 2012 to 2042] 

Results 

Trial standard levels for Class A equipment 

1 2 3 4 5 6 7 

Emissions reductions 

CO2 (Mt) ................................................................. 0 .40 1 .89 4 .18 6 .45 7 .63 8 .40 10 .22 

NOX (kt) ................................................................. 0 .13 0 .65 1 .43 2 .20 2 .60 2 .87 3 .49 

Hg (tons) 

Low ......................................................................... 0 0 0 0 0 0 0 

High ........................................................................ 0 .008 0 .037 0 .082 0 .127 0 .150 0 .165 0 .201 

Results 

Trial standard levels for Class B equipment 

1 2 3 4 5 6 

Emissions reductions 

CO2 (Mt) ....................................................................................... 0 .16 0 .24 1 .19 1 .36 3 .66 4 .08 

NOX (kt) ....................................................................................... 0 .05 0 .08 0 .41 0 .46 1 .25 1 .39 

Hg (tons) 

Low ............................................................................................... 0 0 0 0 0 0 

High .............................................................................................. 0 .003 0 .005 0 .023 0 .027 0 .072 0 .080 

Mt = million metric tons. 

kt = thousand tons. 

Note: Detail may not sum to total due to rounding. 

As noted in section IV.M of this final 

rule, DOE does not report SO2 emissions 

reductions from power plants because 

DOE is uncertain that an energy 

conservation standard would affect the 

overall level of U.S. SO2 emissions due 

to emissions caps. 

NOX emissions from 28 eastern States 

and the District of Columbia (DC) are 

limited under the CAIR, published in 

the Federal Register on May 12, 2005. 

70 FR 25162 (May 12, 2005). Although 

CAIR has been remanded to EPA by the 

DC. Circuit, it will remain in effect until 

it is replaced by a rule consistent with 

the Court’s December 23, 2008, opinion 

in North Carolina v. EPA. North 

Carolina v. EPA, 550 F.3d 1176 (DC Cir. 

2008). These court positions were taken 

into account in the May 2009 NOPR. 

Thus, the same methodology was 

followed in estimating future NOX

emission reductions in the May 2009 

NOPR as in the final rule. Because all 

States covered by CAIR opted to reduce 

NOX emissions through participation in 

cap-and-trade programs for electric 

generating units, emissions from these 

sources are capped across the CAIR 

region. 

For the 28 eastern States and DC 

where CAIR is in effect, no NOX

emissions reductions will occur due to 

the permanent cap. Under caps, 

physical emissions reductions in those 

States would not result from the energy 

conservation standards under 

consideration by DOE, but standards 

might have produced an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits, if they 

were large enough. However, DOE 

determined that in the present case, 

such standards would not produce an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits, because 

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the estimated reduction in NOX

emissions or the corresponding 

allowance credits in States covered by 

the CAIR cap would be too small to 

affect allowance prices for NOX under 

the CAIR. In contrast, new or amended 

energy conservation standards would 

reduce NOX emissions in those 22 States 

that are not affected by the CAIR, and 

these emissions could be estimated from 

NEMS–BT. As a result, DOE used the 

NEMS–BT to forecast emission 

reductions from the beverage machine 

standards in today’s final rule. 

As noted in section IV.M, DOE was 

able to estimate the changes in Hg 

emissions associated with an energy 

conservation standard as follows. DOE 

notes that the NEMS–BT model used for 

the NOPR, and used as an integral part 

of today’s rulemaking, does not estimate 

Hg emission reductions due to new 

energy conservation standards, as it 

assumed that Hg emissions would be 

subject to EPA’s CAMR. 70 FR 28606 

(May 18, 2005). CAMR would have 

permanently capped emissions of 

mercury for new and existing coal-fired 

plants in all States by 2010. DOE 

assumed that under such a system, 

energy conservation standards would 

have resulted in no physical effect on 

these NOX emissions, but might have 

resulted in an environmentally related 

economic benefit in the form of a lower 

price for emissions allowance credits if 

those credits were large enough. DOE 

estimated that the change in the Hg 

emissions from energy conservation 

standards would not be large enough to 

influence allowance prices under 

CAMR. 

On February 8, 2008, the DC Circuit 

issued its decision in New Jersey v. 

Environmental Protection Agency to 

vacate CAMR. 517 F.3d 574 (DC Cir. 

2008). In light of this development and 

because the NEMS–BT model could not 

be used to directly calculate Hg 

emission reductions, DOE used the Hg 

emission rates discussed below to 

calculate emissions reductions in the 

NOPR. This same methodology is used 

for the final rule as well due to the 

continued fluid environment ‘‘* * * 

with many States planning to enact new 

laws or make existing laws more 

stringent.’’ EIA AEO2009 (March 2009), 

p. 18. The NEMS–BT has only rough 

estimates of mercury emissions, and it 

was felt that the range of emissions used 

in the NOPR remain appropriate given 

these circumstances. 

Therefore, rather than using the 

NEMS–BT model, DOE established a 

range of Hg emission rates to estimate 

the Hg emissions that could be reduced 

through energy conservation standards. 

The estimate should provide the full 

range of possible outcomes and DOE has 

therefore selected the low and high 

values to bracket the uncertainties 

associated with estimating mercury 

emission reductions. DOE’s low 

estimate assumed that future standards 

would displace electrical generation 

only from natural gas-fired power 

plants, thereby resulting in an effective 

emission rate of zero. (Under this 

scenario, coal-fired power plant 

generation would remain unaffected.) 

The low-end emission rate is zero 

because natural gas-fired power plants 

have virtually zero Hg emissions 

associated with their operation. 

DOE’s high estimate, which assumed 

that standards would displace only coalfired power plants, was based on a 

nationwide Hg emission rate from 

AEO2008. (Under this scenario, gasfired power plant generation would 

remain unaffected.) Because power 

plant emission rates are a function of 

local regulation, scrubbers, and the 

mercury content of coal, it is extremely 

difficult to identify a precise high-end 

emission rate. Therefore, the most 

reasonable estimate is based on the 

assumption that all displaced coal 

generation would have been emitting at 

the average emission rate for coal 

generation as specified in the April 

update to AEO2009. As noted 

previously, because virtually all Hg 

emitted from electricity generation is 

from coal-fired power plants, DOE based 

the emission rate on the tons of Hg 

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 Hg 

emissions, DOE multiplied the emission 

rate by the reduction in coal-generated 

electricity due to the standards 

considered in the utility impact 

analysis. These changes in Hg emissions 

are extremely small, ranging from 0 to 

0.04 percent of the national base-case 

emissions forecast by NEMS–BT, 

depending on the TSL. 

In the May 2009 NOPR, DOE 

indicated that it intended to consider 

the likely monetary benefits of CO2

emission reductions associated with 

standards. 74 FR 102, 26020 (May 29, 

2009). To put the potential monetary 

benefits from reduced CO2 emissions 

into a form that would likely be most 

useful to decision makers and interested 

parties, DOE used methods that were 

similar to those it used to calculate the 

net present value of consumer cost 

savings. DOE converted the estimated 

yearly reductions in CO2 emissions into 

monetary values that represented the 

present value, in that year, of future 

benefits resulting from that reduction in 

emissions, which were then discounted 

from that year to the present using both 

3 percent and 7 percent discount rates. 

In the May 2009 NOPR, DOE 

proposed to use the range $0 to $20 per 

ton for 2007 in 2007$. These estimates 

were originally derived to represent the 

lower and upper bounds of the costs 

and benefits likely to be experienced in 

the United States. The lower bound was 

based on an assumption of no benefit 

and the upper bound was based on an 

estimate of the mean value of 

worldwide impacts due to climate 

change that was reported by the 

Intergovernmental Panel on Climate 

Change (IPCC) in its ‘‘Fourth 

Assessment Report.’’ For today’s final 

rule, DOE is relying on a new set of 

values recently developed by an 

interagency process that conducted a 

more thorough review of existing 

estimates of the social cost of carbon 

(SCC). 

The SCC is intended to be a monetary 

measure of the incremental damage 

resulting from greenhouse gas (GHG) 

emissions, including, but not limited to, 

net agricultural productivity loss, 

human health effects, property damages 

from sea level rise, and changes in 

ecosystem services. Any effort to 

quantify and to monetize the harms 

associated with climate change will 

raise serious questions of science, 

economics, and ethics. But with full 

regard for the limits of both 

quantification and monetization, the 

SCC can be used to provide estimates of 

the social benefits of reductions in GHG 

emissions. 

For at least three reasons, any single 

estimate of the SCC will be contestable. 

First, scientific and economic 

knowledge about the impacts of climate 

change continues to grow. With new 

and better information about relevant 

questions, including the cost, burdens, 

and possibility of adaptation, current 

estimates will inevitably change over 

time. Second, some of the likely and 

potential damages from climate 

change—for example, the value society 

places on adverse impacts on 

endangered species—are not included 

in all of the existing economic analyses. 

These omissions may turn out to be 

significant, in the sense that they may 

mean that the best current estimates are 

too low. Third, controversial ethical 

judgments, including those involving 

the treatment of future generations, play 

a role in judgments about the SCC (see 

in particular the discussion of the 

discount rate, below). 

To date, regulations have used a range 

of values for the SCC. For example, a 

regulation proposed by the U.S. 

Department of Transportation (DOT) in 

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44948 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

2008 assumed a value of $7 per ton CO2

(2006$) for 2011 emission reductions 

(with a range of $0–14 for sensitivity 

analysis). Regulation finalized by DOE 

used a range of $0–$20 (2007$). Both of 

these ranges were designed to reflect the 

value of damages to the United States 

resulting from carbon emissions, or the 

‘‘domestic’’ SCC. In the final Model 

Year 2011 Corporate Average Fuel 

Economy rule, DOT used both a 

domestic SCC value of $2/tCO2 and a 

global SCC value of $33/tCO2 (with 

sensitivity analysis at $80/tCO2), 

increasing at 2.4 percent per year 

thereafter. 

In recent months, a variety of agencies 

have worked to develop an objective 

methodology for selecting a range of 

interim SCC estimates to use in 

regulatory analyses until improved SCC 

estimates are developed. The following 

summary reflects the initial results of 

these efforts and proposes ranges and 

values for interim social costs of carbon 

used in this rule. It should be 

emphasized that the analysis described 

below is preliminary. These complex 

issues are of course undergoing a 

process of continuing review. Relevant 

agencies will be evaluating and seeking 

comment on all of the scientific, 

economic, and ethical issues before 

establishing final estimates for use in 

future rulemakings. 

The interim judgments resulting from 

the recent interagency review process 

can be summarized as follows: (a) DOE 

and other Federal agencies should 

consider the global benefits associated 

with the reductions of CO2 emissions 

resulting from efficiency standards and 

other similar rulemakings, rather 

continuing the previous focus on 

domestic benefits; (b) these global 

benefits should be based on SCC 

estimates (in 2007$) of $55, $33, $19, 

$10, and $5 per ton of CO2 equivalent 

emitted (or avoided) in 2007; (c) the 

SCC value of emissions that occur (or 

are avoided) in future years should be 

escalated using an annual growth rate of 

3 percent from the current values); and 

(d) domestic benefits are estimated to be 

approximately 6 percent of the global 

values. These interim judgments are 

based on the following: 

1. Global and domestic estimates of 

SCC. Because of the distinctive nature of 

the climate change problem, estimates 

of both global and domestic SCC values 

should be considered, but the global 

measure should be ‘‘primary.’’ This 

approach represents a departure from 

past practices, which relied, for the 

most part, on measures of only domestic 

impacts. As a matter of law, both global 

and domestic values are permissible; the 

relevant statutory provisions are 

ambiguous and allow the agency to 

choose either measure. (It is true that 

Federal statutes are presumed not to 

have extraterritorial effect, in part to 

ensure that the laws of the United States 

respect the interests of foreign 

sovereigns. But use of a global measure 

for the SCC does not give extraterritorial 

effect to Federal law and hence does not 

intrude on such interests.) 

It is true that under OMB guidance, 

analysis from the domestic perspective 

is required, while analysis from the 

international perspective is optional. 

The domestic decisions of one nation 

are not typically based on a judgment 

about the effects of those decisions on 

other nations. But the climate change 

problem is highly unusual in the sense 

that it involves (a) a global public good 

in which (b) the emissions of one nation 

may inflict significant damages on other 

nations and (c) the United States is 

actively engaged in promoting an 

international agreement to reduce 

worldwide emissions. 

In these circumstances, the global 

measure is preferred. Use of a global 

measure reflects the reality of the 

problem and is expected to contribute to 

the continuing efforts of the United 

States to ensure that emission 

reductions occur in many nations. 

Domestic SCC values are also 

presented. The development of a 

domestic SCC is greatly complicated by 

the relatively few region- or countryspecific estimates of the SCC in the 

literature. One potential estimate comes 

from the DICE (Dynamic Integrated 

Climate Economy, William Nordhaus) 

model. In an unpublished paper, 

Nordhaus (2007) produced 

disaggregated SCC estimates using a 

regional version of the DICE model. He 

reported a U.S. estimate of $1/tCO2 

(2007 value, 2007$), which is roughly 

11 percent of the global value. 

An alternative source of estimates 

comes from a recent EPA modeling 

effort using the FUND (Climate 

Framework for Uncertainty, Negotiation 

and Distribution, Center for Integrated 

Study of the Human Dimensions of 

Global Change) model. The resulting 

estimates suggest that the ratio of 

domestic to global benefits varies with 

key parameter assumptions. With a 3 

percent discount rate, for example, the 

U.S. benefit is about 6 percent of the 

global benefit for the ‘‘central’’ (mean) 

FUND results, while, for the 

corresponding ‘‘high’’ estimates 

associated with a higher climate 

sensitivity and lower global economic 

growth, the U.S. benefit is less than 4 

percent of the global benefit. With a 2 

percent discount rate, the U.S. share is 

about 2 to 5 percent of the global 

estimate. 

Based on this available evidence, a 

domestic SCC value equal to 6 percent 

of the global damages is used in this 

rulemaking. This figure is in the middle 

of the range of available estimates from 

the literature. It is recognized that the 6 

percent figure is approximate and 

highly speculative and alternative 

approaches will be explored before 

establishing final values for future 

rulemakings. 

2. Filtering existing analyses. There 

are numerous SCC estimates in the 

existing literature, and it is legitimate to 

make use of those estimates to produce 

a figure for current use. A reasonable 

starting point is provided by the metaanalysis in Richard Tol, ‘‘The Social 

Cost of Carbon: Trends, Outliers, and 

Catastrophes, Economics: The OpenAccess, Open-Assessment E-Journal,’’ 

Vol. 2, 2008–25. http://www.economicsejournal.org/economics/journalarticles/ 

2008–25 (2008). With that starting point, 

it is proposed to ‘‘filter’’ existing SCC 

estimates by using those that (1) are 

derived from peer-reviewed studies; (2) 

do not weight the monetized damages to 

one country more than those in other 

countries; (3) use a ‘‘business as usual’’ 

climate scenario; and (4) are based on 

the most recent published version of 

each of the three major integrated 

assessment models (IAMs): FUND, DICE 

and PAGE (Policy Analysis of the 

Greenhouse Effect) Policy. 

Proposal (1) is based on the view that 

those studies that have been subject to 

peer review are more likely to be 

reliable than those that have not been. 

Proposal (2) is based on a principle of 

neutrality and simplicity; it does not 

treat the citizens of one nation 

differently on the basis of speculative or 

controversial considerations. Proposal 

(3) stems from the judgment that as a 

general rule, the proper way to assess a 

policy decision is by comparing the 

implementation of the policy against a 

counterfactual state where the policy is 

not implemented. A departure from this 

approach would be to consider a more 

dynamic setting in which other 

countries might implement policies to 

reduce GHG emissions at an unknown 

future date, and the United States could 

choose to implement such a policy now 

or in the future. 

Proposal (4) is based on three 

complementary judgments. First, the 

FUND, PAGE, and DICE models now 

stand as the most comprehensive and 

reliable efforts to measure the damages 

from climate change. Second, the latest 

versions of the three IAMs are likely to 

reflect the most recent evidence and 

learning, and hence they are presumed 

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to be superior to those that preceded 

them. It is acknowledged that earlier 

versions may contain information that is 

missing from the latest versions. Third, 

any effort to choose among them, or to 

reject one in favor of the others, would 

be difficult to defend at this time. In the 

absence of a clear reason to choose 

among them, it is reasonable to base the 

SCC on all of them. 

The agency is keenly aware that the 

current IAMs fail to include all relevant 

information about the likely impacts 

from greenhouse gas emissions. For 

example, ecosystem impacts, including 

species loss, do not appear to be 

included in at least two of the models. 

Some human health impacts, including 

increases in food-borne illnesses and in 

the quantity and toxicity of airborne 

allergens, also appear to be excluded. In 

addition, there has been considerable 

recent discussion of the risk of 

catastrophe and of how best to account 

for worst-case scenarios. It is not clear 

whether the three IAMs take adequate 

account of these potential effects. 

3. Use a model-weighted average of 

the estimates at each discount rate. At 

this time, there appears to be no 

scientifically valid reason to prefer any 

of the three major IAMs (FUND, PAGE, 

and DICE). Consequently, the estimates 

are based on an equal weighting of 

estimates from each of the models. 

Among estimates that remain after 

applying the filter, the average of all 

estimates within a model is derived. 

The estimated SCC is then calculated as 

the average of the three model-specific 

averages. This approach ensures that the 

interim estimate is not biased towards 

specific models or more prolific authors. 

4. Apply a 3 percent annual growth 

rate to the chosen SCC values. SCC is 

assumed to increase over time, because 

future emissions are expected to 

produce larger incremental damages as 

physical and economic systems become 

more stressed as the magnitude of 

climate change increases. Indeed, an 

implied growth rate in the SCC is 

produced by most studies that estimate 

economic damages caused by increased 

GHG emissions in future years. But 

neither the rate itself nor the 

information necessary to derive its 

implied value is commonly reported. In 

light of the limited amount of debate 

thus far about the appropriate growth 

rate of the SCC, applying a rate of 3 

percent per year seems appropriate at 

this stage. This value is consistent with 

the range recommended by IPCC (2007) 

and close to the latest published 

estimate (Hope, 2008). 

For climate change, one of the most 

complex issues involves the appropriate 

discount rate. OMB’s current guidance 

offers a detailed discussion of the 

relevant issues and calls for discount 

rates of 3 percent and 7 percent. It also 

permits a sensitivity analysis with low 

rates for intergenerational problems. (‘‘If 

your rule will have important 

intergenerational benefits or costs you 

might consider a further sensitivity 

analysis using a lower but positive 

discount rate in addition to calculating 

net benefits using discount rates of 3 

and 7 percent.’’) The SCC is being 

developed within the general context of 

the current guidance. 

The choice of a discount rate, 

especially over long periods of time, 

raises highly contested and exceedingly 

difficult questions of science, 

economics, philosophy, and law. See, 

e.g., William Nordhaus, ‘‘The Challenge 

of Global Warming (2008); Nicholas 

Stern, ‘‘The Economics of Climate 

Change’’ (2007); ‘‘Discounting and 

Intergenerational Equity’’ (Paul Portney 

and John Weyant, eds., 1999). Under 

imaginable assumptions, decisions 

based on cost-benefit analysis with high 

discount rates might harm future 

generations—at least if investments are 

not made for the benefit of those 

generations. See Robert Lind, ‘‘Analysis 

for Intergenerational Discounting,’’ id. at 

173, 176–177. At the same time, use of 

low discount rates for particular projects 

might itself harm future generations, by 

ensuring that resources are not used in 

a way that would greatly benefit them. 

In the context of climate change, 

questions of intergenerational equity are 

especially important. 

Reasonable arguments support the use 

of a 3 percent discount rate. First, that 

rate is among the two figures suggested 

by OMB guidance, and hence it fits with 

existing National policy. Second, it is 

standard to base the discount rate on the 

compensation that people receive for 

delaying consumption, and the 3 

percent rate is close to the risk-free rate 

of return, proxied by the return on long 

term inflation-adjusted U.S. Treasury 

Bonds. (In the context of climate 

change, it is possible to object to this 

standard method for deriving the 

discount rate.) Although these rates are 

currently closer to 2.5 percent, the use 

of 3 percent provides an adjustment for 

the liquidity premium that is reflected 

in these bonds’ returns. 

At the same time, other arguments 

support use of a 5 percent discount rate. 

First, that rate can also be justified by 

reference to the level of compensation 

for delaying consumption, because it fits 

with market behavior with respect to 

individuals’ willingness to trade off 

consumption across periods as 

measured by the estimated post-tax 

average real returns to private 

investment (e.g., the S&P 500). In the 

climate setting, the 5 percent discount 

rate may be preferable to the riskless 

rate because it is based on risky 

investments and the return to projects to 

mitigate climate change is also risky. In 

contrast, the 3 percent riskless rate may 

be a more appropriate discount rate for 

projects where the return is known with 

a high degree of confidence (e.g., 

highway guardrails). 

Second, 5 percent, and not 3 percent, 

is roughly consistent with estimates 

implied by reasonable inputs to the 

theoretically derived Ramsey equation, 

which specifies the optimal time path 

for consumption. That equation 

specifies the optimal discount rate as 

the sum of two components. The first 

reflects the fact that consumption in the 

future is likely to be higher than 

consumption today (even accounting for 

climate impacts), so diminishing 

marginal utility implies that the same 

monetary damage will cause a smaller 

reduction of utility in the future. 

Standard estimates of this term from the 

economics literature are in the range of 

3 to 5 percent. The second component 

reflects the possibility that a lower 

weight should be placed on utility in 

the future, to account for social 

impatience or extinction risk, which is 

specified by a pure rate of time 

preference (PRTP). A conventional 

estimate of the PRTP is 2 percent. (Some 

observers believe that a principle of 

intergenerational equity suggests that 

the PRTP should be close to zero.) It 

follows that discount rate of 5 percent 

is within the range of values which are 

able to be derived from the Ramsey 

equation, albeit at the low end of the 

range of estimates usually associated 

with Ramsey discounting. 

It is recognized that the arguments 

above—for use of market behavior and 

the Ramsey equation—face objections in 

the context of climate change, and of 

course there are alternative approaches. 

In light of climate change, it is possible 

that consumption in the future will not 

be higher than consumption today, and 

if so, the Ramsey equation will suggest 

a lower figure. Some people have 

suggested that a very low discount rate, 

below 3 percent, is justified in light of 

the ethical considerations calling for a 

principle of intergenerational neutrality. 

See Nicholas Stern, ‘‘The Economics of 

Climate Change’’ (2007); for contrary 

views, see William Nordhaus, The A 

Question of Balance (2008); Martin 

Weitzman, ‘‘Review of the Stern Review 

on the Economics of Climate Change.’’ 

Journal of Economic Literature, 45(3): 

703–724 (2007). Additionally, some 

analyses attempt to deal with 

uncertainty with respect to interest rates 

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44950 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

over time; a possible approach enabling 

the consideration of such uncertainties 

is discussed below. Richard Newell and 

William Pizer, ‘‘Discounting the Distant 

Future: How Much do Uncertain Rates 

Increase Valuations?’’ J. Environ. Econ. 

Manage. 46 (2003) 52–71. 

The application of the methodology 

outlined above yields estimates of the 

SCC that are reported in Table VI.25. 

These estimates are reported separately 

using 3 percent and 5 percent discount 

rates. The cells are empty in rows 10 

and 11, because these studies did not 

report estimates of the SCC at a 3 

percent discount rate. The modelweighted means are reported in the final 

or summary row; they are $33 per tCO2

at a 3% discount rate and $5 per tCO2

with a 5% discount rate. 

TABLE VI.25—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/TCO2 IN 2007 (2006$)), BASED ON 3% AND 5% 

DISCOUNT RATES * 

Model Study Climate scenario 3% 5% 

1 FUND ......................................... Anthoff et al. 2009 ..................... FUND default ............................. 6 ¥1 

2 FUND ......................................... Anthoff et al. 2009 ..................... SRES A1b .................................. 1 ¥1 

3 FUND ......................................... Anthoff et al. 2009 ..................... SRES A2 .................................... 9 ¥1 

4 FUND ......................................... Link and Tol 2004 ...................... No THC ...................................... 12 3 

5 FUND ......................................... Link and Tol 2004 ...................... THC continues ........................... 12 2 

6 FUND ......................................... Guo et al. 2006 .......................... Constant PRTP .......................... 5 ¥1 

7 FUND ......................................... Guo et al. 2006 .......................... Gollier discount 1 ....................... 14 0 

8 FUND ......................................... Guo et al. 2006 .......................... Gollier discount 2 ....................... 7 ¥1 

FUND Mean ............................... 8 .25 0 

9 PAGE ......................................... Wahba & Hope 2006 ................. A2-scen ...................................... 57 7 

10 PAGE ......................................... Hope 2006 ................................. .................................................... .......................... 7 

11 DICE ........................................... Nordhaus 2008 .......................... .................................................... .......................... 8 

Summary ................................................................................................ Model-weighted Mean ................ 33 5 

* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. 

Analyses have been conducted at $33 

and $5 as these represent the estimates 

associated with the 3 percent and 5 

percent discount rates, respectively. The 

3 percent and 5 percent estimates have 

independent appeal and at this time a 

clear preference for one over the other 

is not warranted. Thus, DOE has also 

included—and centered its current 

attention on—the average of the 

estimates associated with these discount 

rates, which is $19. (Based on the $19 

global value, the domestic value would 

be $1.14 per ton of CO2 equivalent.) 

It is true that there is uncertainty 

about interest rates over long time 

horizons. Recognizing that point, 

Newell and Pizer have made a careful 

effort to adjust for that uncertainty. See 

Newell and Pizer, supra. This is a 

relatively recent contribution to the 

literature. 

There are several concerns with using 

this approach in this context. First, it 

would be a departure from current OMB 

guidance. Second, an approach that 

would average what emerges from 

discount rates of 3 percent and 5 

percent reflects uncertainty about the 

discount rate, but based on a different 

model of uncertainty. The Newell-Pizer 

approach models discount rate 

uncertainty as something that evolves 

over time; in contrast, one alternative 

approach would assume that there is a 

single discount rate with equal 

probability of 3 percent and 5 percent. 

Table VI.26 reports on the application 

of the Newell-Pizer adjustments. The 

precise numbers depend on the 

assumptions about the data generating 

process that governs interest rates. 

Columns (1a) and (1b) assume that 

‘‘random walk’’ model best describes 

the data and uses 3 percent and 5 

percent discount rates, respectively. 

Columns (2a) and (2b) repeat this, 

except that it assumes a ‘‘meanreverting’’ process. As Newell and Pizer 

report, there is stronger empirical 

support for the random walk model. 

TABLE VI.26—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/TCO2 IN 2007 (2006$)),* USING NEWELL & PIZER

(2003) ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY ** 

Model Study Climate scenario 

Random-walk model Mean-reverting model 

3% 5% 3% 5% 

(1a) (1b) (2a) (2b) 

1 FUND ............................. Anthoff et al. 2009 ......... FUND default ................. 10 0 7 ¥1 

2 FUND ............................. Anthoff et al. 2009 ......... SRES A1b ...................... 2 0 1 ¥1 

3 FUND ............................. Anthoff et al. 2009 ......... SRES A2 ........................ 15 0 10 ¥1 

4 FUND ............................. Link and Tol 2004 .......... No THC .......................... 20 6 13 4 

5 FUND ............................. Link and Tol 2004 .......... THC continues ............... 20 4 13 2 

6 FUND ............................. Guo et al. 2006 .............. Constant PRTP .............. 9 0 6 ¥1 

7 FUND ............................. Guo et al. 2006 .............. Gollier discount 1 ........... 14 0 14 0 

8 FUND ............................. Guo et al. 2006 .............. Gollier discount 2 ........... 7 ¥1 7 ¥1 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44951 

TABLE VI.26—GLOBAL SOCIAL COST OF CARBON (SCC) ESTIMATES ($/TCO2 IN 2007 (2006$)),* USING NEWELL & PIZER

(2003) ADJUSTMENT FOR FUTURE DISCOUNT RATE UNCERTAINTY **—Continued 

Model Study Climate scenario 

Random-walk model Mean-reverting model 

3% 5% 3% 5% 

(1a) (1b) (2a) (2b) 

FUND Mean ................... 12 1 9 0 

9 PAGE ............................. Wahba & Hope 2006 ..... A2-scen .......................... 97 13 63 8 

10 PAGE ............................. Hope 2006 ..................... ........................................ .................... 13 .................... 8 

11 DICE .............................. Nordhaus 2008 .............. ........................................ .................... 15 .................... 9 

Summary ...................................................................... Model-weighted Mean ... 55 10 36 6 

* The sample includes all peer reviewed, non-equity-weighted estimates included in Tol (2008), Nordhaus (2008), Hope (2008), and Anthoff et 

al. (2009), that are based on the most recent published version of FUND, PAGE, or DICE and use business-as-usual climate scenarios. All values are based on the best available information from the underlying studies about the base year and year dollars, rather than the Tol (2008) assumption that all estimates included in his review are 1995 values in 1995$. All values were updated to 2007 using a 3 percent annual growth 

rate in the SCC, and adjusted for inflation using GDP deflator. 

** Assumes a starting discount rate of 3 percent. Newell and Pizer (2003) based adjustment factors are not applied to estimates from Guo et 

al. (2006) that use a different approach to account for discount rate uncertainty (rows 7–8). 

The resulting estimates of the social 

cost of carbon are necessarily greater. 

When the adjustments from the random 

walk model are applied, the estimates of 

the social cost of carbon are $10 and 

$55, with the 3 percent and 5 percent 

discount rates, respectively. The 

application of the mean-reverting 

adjustment yields estimates of $6 and 

$36. 

Since the random walk model has 

greater support from the data, analyses 

are also conducted with the value of the 

SCC set at $10 and $55. 

Based on this analysis, DOE has 

concluded that it is appropriate to 

consider the global benefits of reducing 

CO2 emissions, while also presenting 

the domestic benefits. Consequently, 

DOE considered in its decision process 

for this final rule the potential global 

benefits resulting from reduced CO2

emissions valued at $5, $10, $19, $30 

and $55 per metric ton, and has also 

presented the domestic benefits derived 

using a value of $1.14 per metric ton. 

All of these values represent emissions 

that are valued in 2007$. As indicated 

in the analysis summarized above, the 

value of future emissions is determined 

using a 3 percent escalation rate. The 

resulting range is based on current peerreviewed estimates of the value of SCC 

and, DOE believes, fairly represents the 

uncertainty surrounding the global 

benefits resulting from reduced CO2

emissions and, at the $1.14 level, also 

encompasses the likely domestic 

benefits, DOE also concluded, based on 

the most recent Tol analysis, that it was 

appropriate to escalate these values at 3 

percent per year to represent the 

expected increases, over time, of the 

benefits associated with reducing CO2

and other greenhouse gas emissions. 

Estimates of SCC are assumed to 

increase over time since future 

emissions are expected to produce 

larger incremental damages as physical 

and economic systems become more 

stressed as the magnitude of climate 

change increases. Although most studies 

that estimate economic damages caused 

by increased GHG emissions in future 

years produce an implied growth rate in 

the SCC, neither the rate itself nor the 

information necessary to derive its 

implied value is commonly reported. 

Given the limited amount of debate thus 

far about the appropriate growth rate of 

the SCC, applying a rate of 3 percent per 

year seems appropriate at this stage. 

This value is consistent with the range 

recommended by IPCC (2007). 

Table VI.27 and Table VI.28 present 

the resulting estimates of the potential 

range of NPV benefits associated with 

reducing CO2 emissions for both Class A 

and Class B equipment based on the 

range of values used by DOE for this 

final rule. 

TABLE VI.27—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AND CO2 PRICES AT A 7 

PERCENT DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated 

cumulative 

CO2 (MMt) 

emission 

reductions 

Value of estimated CO2 emission reductions (million 2007$)** 

CO2 Value of 

$1.14/metric 

ton CO2* 

$ 

CO2 Value of 

$5/metric 

ton CO2

$ 

CO2 Value of 

$10/metric 

ton CO2

$ 

CO2 Value of 

$19/metric 

ton CO2

$ 

CO2 Value of 

$33/metric 

ton CO2

$ 

CO2 Value of 

$55/metric 

ton CO2

$ 

1 ................................... 0.40 0.23 1.00 1.99 3.79 6.58 10.97 

2 ................................... 1.89 1.09 4.77 9.54 18.13 31.49 52.48 

3 ................................... 4.18 2.41 10.56 21.12 40.12 69.69 116.14 

4 ................................... 6.45 3.71 16.28 32.55 61.85 107.43 179.04 

5 ................................... 7.63 4.39 19.25 38.49 73.13 127.02 211.70 

6 ................................... 8.40 4.84 21.21 42.42 80.61 140.00 233.34 

7 ................................... 10.22 5.88 25.80 51.60 98.04 170.28 283.80 

* This value per ton represents the domestic negative externalities of CO2 only. 

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TABLE VI.28—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AND CO2 PRICES AT A 3 

PERCENT DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated 

cumulative 

CO2 (MMt) 

emission 

reductions 

Value of estimated CO2 emission reductions (million 2007$)** 

CO2 Value of 

$1.14/metric 

ton CO2* 

$ 

CO2 Value of 

$5/metric 

ton CO2

$ 

CO2 Value of 

$10/metric 

ton CO2

$ 

CO2 Value of 

$19/metric 

ton CO2

$ 

CO2 Value of 

$33/metric 

ton CO2

$ 

CO2 Value of 

$55/metric 

ton CO2

$ 

1 ................................... 0.40 0.46 2.04 4.07 7.73 13.43 22.39 

2 ................................... 1.89 2.22 9.74 19.47 36.99 64.25 107.09 

3 ................................... 4.18 4.91 21.55 43.09 81.87 142.20 237.00 

4 ................................... 6.45 7.57 33.21 66.43 126.21 219.21 365.35 

5 ................................... 7.63 8.95 39.27 78.54 149.23 259.20 432.00 

6 ................................... 8.40 9.87 43.29 86.57 164.48 285.68 476.14 

7 ................................... 10.22 12.00 52.65 105.29 200.06 347.46 579.11 

* This value per ton represents the domestic negative externalities of CO2 only. 

TABLE VI.29—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AND CO2 PRICES AT A 7 

PERCENT DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated 

cumulative 

CO2 (MMt) 

emission 

reductions 

Value of estimated CO2 emission reductions (million 2007$)** 

CO2 Value of 

$1.14/metric 

ton CO2* 

$ 

CO2 Value of 

$5/metric 

ton CO2

$ 

CO2 Value of 

$10/metric 

ton CO2

$ 

CO2 Value of 

$19/metric 

ton CO2

$ 

CO2 Value of 

$33/metric 

ton CO2

$ 

CO2 Value of 

$55/metric 

ton CO2

$ 

1 ................................... 0.16 0.09 0.40 0.81 1.53 2.66 4.43 

2 ................................... 0.24 0.14 0.60 1.20 2.27 3.95 6.58 

3 ................................... 1.19 0.68 3.00 6.00 11.40 19.81 33.01 

4 ................................... 1.36 0.78 3.43 6.86 13.04 22.65 37.75 

5 ................................... 3.66 2.11 9.24 18.48 35.11 60.98 101.64 

6 ................................... 4.08 2.35 10.29 20.58 39.10 67.91 113.18 

* This value per ton represents the domestic negative externalities of CO2 only. 

TABLE VI.30—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AND CO2 PRICES AT A 3 

PERCENT DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated 

cumulative 

CO2 (MMt) 

emission 

reductions 

Value of estimated CO2 emission reductions (million 2007$)** 

CO2 Value of 

$1.14/metric 

ton CO2* 

$ 

CO2 Value of 

$5/metric 

ton CO2

$ 

CO2 Value of 

$10/metric 

ton CO2

$ 

CO2 Value of 

$19/metric 

ton CO2

$ 

CO2 Value of 

$33/metric 

ton CO2

$ 

CO2 Value of 

$55/metric 

ton CO2

$ 

1 ................................... 0.16 0.19 0.82 1.64 3.12 5.42 9.04 

2 ................................... 0.24 0.28 1.22 2.44 4.64 8.05 13.42 

3 ................................... 1.19 1.40 6.12 12.25 23.27 40.42 67.36 

4 ................................... 1.36 1.60 7.00 14.01 26.61 46.22 77.04 

5 ................................... 3.66 4.30 18.85 37.71 71.65 124.44 207.40 

6 ................................... 4.08 4.79 21.00 41.99 79.78 138.57 230.95 

* This value per ton represents the domestic negative externalities of CO2 only. 

DOE recognizes that scientific and 

economic knowledge about the 

contribution of CO2 and other GHG to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed in this 

rulemaking on reducing CO2 emissions 

is subject to change. 

DOE, together with other Federal 

agencies, will continue to review 

various methodologies for estimating 

the monetary value of reductions in CO2

and other greenhouse gas emissions. 

This ongoing review will consider the 

comments on this subject that are part 

of the public record for this and other 

rulemakings, as well as other 

methodological assumptions and issues. 

However, consistent with DOE’s legal 

obligations, and taking into account the 

uncertainty involved with this 

particular issue, DOE has included in 

this final rule the most recent values 

and analyses resulting from the ongoing 

interagency review process. 

DOE also investigated the potential 

monetary benefit of reduced SO2, NOX, 

and Hg emissions from the TSLs it 

considered. As previously stated, DOE’s 

initial analysis assumed the presence of 

nationwide emission caps on SO2 and 

Hg, and caps on NOX emissions in the 

28 States covered by the CAIR. In the 

presence of these caps, DOE concluded 

that no physical reductions in power 

sector emissions would occur, but that 

the standards could put downward 

pressure on the prices of emissions 

allowances in cap-and-trade markets. 

Estimating this effect is very difficult 

because such factors as credit banking 

can change the trajectory of prices. DOE 

has concluded that the effect from 

energy conservation standards on SO2

allowance prices is likely to be 

negligible based on runs of the NEMS– 

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BT model. See chapter 16 of the TSD for 

further details. 

Because the courts have decided to 

allow the CAIR rule to remain in effect, 

projected annual NOX allowances from 

NEMS–BT are relevant. The update to 

the AEO2009-based version of NEMS– 

BT includes the representation of CAIR. 

As noted above, standards would not 

produce an economic impact in the 

form of lower prices for emissions 

allowance credits in the 28 eastern 

States and D.C. covered by the CAIR 

cap. New or amended energy 

conservation standards would reduce 

NOX emissions in those 22 States that 

are not affected by the CAIR. For the 

area of the United States not covered by 

the CAIR, DOE estimated the monetized 

value of NOX emissions reductions 

resulting from each of the TSLs 

considered for today’s final rule based 

on environmental damage estimates 

from the literature. Available estimates 

suggest a very wide range of monetary 

values for NOX emissions, ranging from 

$370 per ton to $3,800 per ton of NOX

from stationary sources, measured in 

2001$ (equivalent to a range of $432 to 

$4,441 per ton in 2007$). Refer to the 

OMB, Office of Information and 

Regulatory Affairs, ‘‘2006 Report to 

Congress on the Costs and Benefits of 

Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal 

Entities,’’ Washington, DC, for 

additional information. 

For Hg emissions reductions, DOE 

estimated the national monetized values 

resulting from the TSLs considered for 

today’s rule based on environmental 

damage estimates from the literature. 

DOE conducted research for today’s 

final rule and determined that the 

impact of mercury emissions from 

power plants on humans is considered 

highly uncertain. However, DOE 

identified two estimates of the 

environmental damage of mercury based 

on two estimates of the adverse impact 

of childhood exposure to methyl 

mercury on intelligence quotient (IQ) for 

American children, and subsequent loss 

of lifetime economic productivity 

resulting from these IQ losses. The highend estimate is based on an estimate of 

the current aggregate cost of the loss of 

IQ in American children that results 

from exposure to mercury of U.S. power 

plant origin ($1.3 billion per year in 

year 2000$), which works out to $32.6 

million per ton emitted per year 

(2007$). Refer to L. Trasande et al., 

‘‘Applying Cost Analyses to Drive 

Policy that Protects Children,’’ 1076 

Ann. N.Y. Acad. Sci. 911 (2006) for 

additional information. The low-end 

estimate is $0.66 million per ton emitted 

(in 2004$) or $0.729 million per ton in 

2007$. DOE derived this estimate from 

a published evaluation of mercury 

control using different methods and 

assumptions from the first study but 

also based on the present value of the 

lifetime earnings of children exposed. 

See Ted Gayer and Robert Hahn, 

‘‘Designing Environmental Policy: 

Lessons from the Regulation of Mercury 

Emissions,’’ Regulatory Analysis 05–01, 

AEI–Brookings Joint Center for 

Regulatory Studies, Washington, DC 

(2004). A version of this paper was 

published in the Journal of Regulatory 

Economics in 2006. The estimate was 

derived by back-calculating the annual 

benefits per ton from the net present 

value of benefits reported in the study. 

Table VI.31 through Table VI.34 present 

the resulting estimates of the potential 

range of present value benefits 

associated with reducing national NOX

and Hg emissions for Class A and B 

equipment. 

TABLE VI.31—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TRIAL STANDARD LEVELS AT A

7 PERCENT DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated 

cumulative 

NOX emission 

reductions 

Value of 

estimated NOX

emission 

reductions 

Estimated 

cumulative Hg 

emission 

reductions 

Value of 

estimated Hg 

emission 

reductions 

kt thousand 

2007$ 

tons thousand 

2007$ 

1 ....................................................................................................................... 0.13 15–150 0.008 0–61 

2 ....................................................................................................................... 0.65 70–716 0.037 0–293 

3 ....................................................................................................................... 1.43 154–1,584 0.082 0–649 

4 ....................................................................................................................... 2.20 238–2,442 0.127 0–1,001 

5 ....................................................................................................................... 2.60 281–2,888 0.150 0–1,183 

6 ....................................................................................................................... 2.87 310–3,183 0.165 0–1,304 

7 ....................................................................................................................... 3.49 377–3,871 0.201 0–1,586 

TABLE VI.32—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TRIAL STANDARD LEVELS AT A

7 PERCENT DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated 

cumulative 

NOX emission 

reductions 

Value of 

estimated 

NOX emission 

reductions 

Estimated 

cumulative 

Hg emission 

reductions 

Value of 

estimated Hg 

emission 

reductions 

kt thousand 

2007$ 

tons thousand 

2007$ 

.

1 ....................................................................................................................... 0.05 6–60 0.003 0–25 

2 ....................................................................................................................... 0.08 9–90 0.005 0–37 

3 ....................................................................................................................... 0.41 44–450 0.023 0–185 

4 ....................................................................................................................... 0.46 50–515 0.027 0–211 

5 ....................................................................................................................... 1.25 135–1,386 0.072 0–568 

6 ....................................................................................................................... 1.39 150–1,544 0.080 0–633 

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44954 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

TABLE VI.33—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TRIAL STANDARD LEVELS AT A

3 PERCENT DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated 

cumulative 

NOX emission 

reductions 

Value of 

estimated NOX

emission 

reductions 

Estimated 

cumulative Hg 

emission 

reductions 

Value of 

estimated Hg 

emission 

reductions 

kt thousand 

2007$ 

tons thousand 

2007$ 

1 ....................................................................................................................... 0.13 31–317 0.008 0–132 

2 ....................................................................................................................... 0.65 148–1,516 0.037 0–633 

3 ....................................................................................................................... 1.43 326–3,356 0.082 0–1,401 

4 ....................................................................................................................... 2.20 503–5,174 0.127 0–2,160 

5 ....................................................................................................................... 2.60 595–6,117 0.150 0–2,554 

6 ....................................................................................................................... 2.87 656–6,742 0.165 0–2,815 

7 ....................................................................................................................... 3.49 798–8,200 0.201 0–3,424 

TABLE VI.34—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TRIAL STANDARD LEVELS AT A

3 PERCENT DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated 

cumulative 

NOX emission 

reductions 

Value of 

estimated NOX

emission 

reductions 

Estimated 

cumulative Hg 

emission 

reductions 

Value of 

estimated Hg 

emission 

reductions 

kt thousand 

2007$ 

tons thousand 

2007$ 

1 ....................................................................................................................... 0.05 12–128 0.003 0–53 

2 ....................................................................................................................... 0.08 18–190 0.005 0–79 

3 ....................................................................................................................... 0.41 93–954 0.023 0–398 

4 ....................................................................................................................... 0.46 106–1,091 0.027 0–455 

5 ....................................................................................................................... 1.25 286–2,937 0.072 0–1,226 

6 ....................................................................................................................... 1.39 318–3,270 0.080 0–1,365 

7. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 6295(o)(2)(B)(i) 

and (v)) Under this provision, DOE 

considered LCC impacts on identifiable 

groups of customers, 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. DOE identified no factors other 

than those already considered above for 

analysis. 

D. Conclusion 

EPCA specifies that any new or 

amended energy conservation standard 

for any type (or class) of covered 

equipment shall 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 6316(e)(1)) In 

determining whether a standard is 

economically justified, the Secretary 

must determine whether the benefits of 

the standard exceed its burdens. (42 

U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1)) 

The new or amended standard must 

‘‘result in significant conservation of 

energy.’’ (42 U.S.C. 6295(o)(3)(B) and 

6316(e)(1)) 

DOE established a separate set of 

TSLs for Class A and B beverage 

vending machines. DOE considered 

seven TSLs for Class A and six TSLs for 

Class B beverage vending machines. The 

following discussion briefly explains 

the development of the TSLs, 

consideration of the TSLs (starting with 

the most stringent) under the statutory 

factors, and DOE’s conclusions. 

Table VI.35 and Table VI.36 present 

summaries of quantitative analysis 

results for each TSL for Class A and B 

equipment, respectively, based on the 

assumptions and methodology 

discussed above. These tables present 

the results or, in some cases, ranges of 

results, for each TSL. The ranges 

reported for industry impacts represent 

the results of the different markup 

scenarios DOE used to estimate impacts. 

TABLE VI.35—SUMMARY OF RESULTS FOR CLASS A EQUIPMENT BASED UPON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST * 

Results 

Trial standard level 

1 2 3 4 5 6 7 

Primary Energy Saved 

(quads).

0.007 ............ 0.031 ............ 0.069 ............ 0.107 ............ 0.127 ............ 0.139 ............ 0.170. 

7% Discount Rate ................... 0.002 ............ 0.010 ............ 0.021 ............ 0.032 ............ 0.038 ............ 0.042 ............ 0.051. 

3% Discount Rate ................... 0.004 ............ 0.018 ............ 0.040 ............ 0.061 ............ 0.073 ............ 0.080 ............ 0.097. 

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TABLE VI.35—SUMMARY OF RESULTS FOR CLASS A EQUIPMENT BASED UPON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST *—Continued 

Results 

Trial standard level 

1 2 3 4 5 6 7 

Generation Capacity Reduction (GW) **.0.005 ............ 0.023 ............ 0.051 ............ 0.079 ............ 0.094 ............ 0.103 ............ 0.126. 

NPV 2008$ billion: 

7% Discount Rate ........... 0.015 ............ 0.068 ............ 0.112 ............ 0.175 ............ 0.192 ............ 0.185 ............ (1.449). 

3% Discount Rate ........... 0.034 ............ 0.153 ............ 0.268 ............ 0.415 ............ 0.464 ............ 0.465 ............ (2.466). 

Industry Impacts: 

Industry NPV (2008$ million).0.0–(0.0) ....... 0.2–(0.3) ....... 0.3–(1.1) ....... (1.3)–(3.5) .... (1.3)–(4.1) .... (7.9)–(11.1) .. (3.2)–(28.3). 

Industry NPV (% change) 0.1–(0.1) ....... 0.5–(0.6) ....... 0.7–(2.5) ....... (2.9)–(7.9) .... (3.0)–(9.3) .... (18.0)–(25.1) (7.2)–(64.2). 

Cumulative Emissions Impacts†: 

CO2 Reductions (Mt) ....... 0.4 ................ 1.9 ................ 4.2 ................ 6.4 ................ 7.6 ................ 8.4 ................ 10.2.

Value of CO2 Reductions 

at 7% Discount Rate 

(million 2007$).

0.2 to 11 ....... 1.1 to 52.5 .... 2.4 to 116.1 .. 3.7 to 179 ..... 4.4 to 211.7 .. 4.8 to 233.3 .. 5.9 to 283.8. 

Value of CO2 Reductions 

at 3% Discount Rate 

(million 2007$).

0.5 to 22.4 .... 2.2 to 107.1 .. 4.9 to 237 ..... 7.6 to 365.4 .. 9 to 432 ........ 9.9 to 476.1 .. 12 to 579.1. 

NOX Reductions (kt) ............... 0.1 ................ 0.6 ................ 1.4 ................ 2.2 ................ 2.6 ................ 2.9 ................ 3.5. 

Value of NOX Reductions at 

7% Discount Rate 

(thousand 2007$).

15–150 ......... 70–716 ......... 154–1,584 .... 238–2,442 .... 281–2,888 .... 310–3,183 .... 377–3,871. 

Value of NOX Reductions at 

3% Discount Rate 

(thousand 2007$).

31–317 ......... 148–1,516 .... 326–3,356 .... 503–5,174 .... 595–6,117 .... 656–6,742 .... 798–8,200. 

Hg Reductions (tons) .............. 0.008 ............ 0.037 ............ 0.082 ............ 0.127 ............ 0.150 ............ 0.165 ............ 0.201. 

Value of Hg Reductions at 7% 

Discount Rate (thousand 

2007$).

0–61 ............. 0–293 ........... 0–649 ........... 0–1,001 ........ 0–1,183 ........ 0–1,304 ........ 0–1,586. 

Value of Hg reductions at 3% 

Discount Rate (thousand 

2007$).

0–132 ........... 0–633 ........... 0–1,401 ........ 0–2,160 ........ 0–2,554 ........ 0–2,815 ........ 0–3,424. 

Life-Cycle Cost: 

Net Savings (%) .............. 10 ................. 100 ............... 98 ................. 98 ................. 97 ................. 95 ................. 0. 

Net Increase (%) ............. 0 ................... 0 ................... 2 ................... 2 ................... 3 ................... 5 ................... 100. 

No Change (%) ............... 90 ................. 0 ................... 0 ................... 0 ................... 0 ................... 0 ................... 0. 

Mean LCC Savings 

(2008$).

136 ............... 182 ............... 218 ............... 272 ............... 285 ............... 277 ............... (1,281). 

Mean PBP (years) ........... 2.2 ................ 2.4 ................ 3.2 ................ 3.4 ................ 3.7 ................ 4.1 ................ 75.2. 

Direct Domestic Employment 

Impacts (2012) (jobs).

1 ................... 5 ................... 15 ................. 23 ................. 30 ................. 36 ................. 259. 

Indirect Domestic Employment 

Impacts (2042) (jobs).

13 ................. 82 ................. 172 ............... 265 ............... 313 ............... 344 ............... 475. 

* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC. 

** Change in installed generation capacity by 2042 based on April 2009 update to the AEO2009 Reference Case. † CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as 

well as production of emissions allowance credits where NOX emissions are subject to emissions caps. 

TABLE VI.36—SUMMARY OF RESULTS FOR CLASS B EQUIPMENT BASED ON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST * 

Results 

Trial standard level 

1 2 3 4 5 6 

Primary Energy Saved (quads) ........................ 0.003 ............ 0.004 ............ 0.020 ............ 0.023 ............ 0.061 ............ 0.068. 

7% Discount Rate ............................................. 0.001 ............ 0.001 ............ 0.006 ............ 0.007 ............ 0.018 ............ 0.020. 

3% Discount Rate ............................................. 0.002 ............ 0.002 ............ 0.012 ............ 0.013 ............ 0.035 ............ 0.039. 

Generation Capacity Reduction (GW) ** ........... 0.002 ............ 0.003 ............ 0.015 ............ 0.017 ............ 0.045 ............ 0.050. 

NPV (2008$ billion): 

7% Discount Rate ...................................... 0.005 ............ 0.006 ............ (0.003) .......... (0.014) .......... (0.621) .......... (2.452). 

3% Discount Rate ...................................... 0.011 ............ 0.014 ............ 0.011 ............ (0.006) .......... (1.083. .......... (4.427) 

Industry Impacts: 

Industry NPV (2008$ million) ..................... 0 ................... 0 ................... (0.6)–(1.2) .... (1.0)–(1.7) .... (7.4)–(16.5) .. (3.2)–(33.5). 

Industry NPV (% Change) ......................... 0.1–(0.1) ....... 0.1–(0.2) ....... (1.8)–(3.5) .... (3.0)–(5.0) .... (21.9)–(48.9) (9.5)–(99.4). 

Cumulative Emissions Impacts†: 

CO2 Reductions (Mt) ................................. 0.2 ................ 0.2 ................ 1.2 ................ 1.4 ................ 3.7 ................ 4.1. 

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TABLE VI.36—SUMMARY OF RESULTS FOR CLASS B EQUIPMENT BASED ON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST *—Continued 

Results 

Trial standard level 

1 2 3 4 5 6 

Value of CO2 reductions at 7% discount 

rate (million 2007$).

0.1 to 4.4 ...... 0.1 to 6.6 ...... 0.7 to 33 ....... 0.8 to 37.8 .... 2.1 to 101.6 .. 2.3 to 113.2. 

Value of CO2 reductions at 3% discount 

rate (million 2007$).

0.2 to 9 ......... 0.3 to 13.4 .... 1.4 to 67.4 .... 1.6 to 77 ....... 4.3 to 207.4 .. 4.8 to 230.9. 

NOX Reductions (kt) ......................................... 0.1 ................ 0.1 ................ 0.4 ................ 0.5 ................ 1.3 ................ 1.4. 

Value of NOX reductions at 7% discount rate 

(thousand 2007$).

6–60 ............. 9–90 ............. 44–450 ......... 50–515 ......... 135–1,386 .... 150–1,544. 

Value of NOX reductions at 3% discount rate 

(thousand 2007$).

12–128 ......... 18–190 ......... 93–954 ......... 106–1,091 .... 286–2,937 .... 318–3,270. 

Hg Reductions (t) .............................................. 0.003 ............ 0.005 ............ 0.023 ............ 0.027 ............ 0.072 ............ 0.080. 

Value of Hg reductions at 7% discount rate 

(thousand 2007$).

0–25 ............. 0–37 ............. 0–185 ........... 0–211 ........... 0–568 ........... 0–633. 

Value of Hg reductions at 3% discount rate 

(thousand 2007$).

0–53 ............. 0–79 ............. 0–398 ........... 0–455 ........... 0–1,226 ........ 0–1,365. 

Life-Cycle Cost: 

Net Savings (%) ......................................... 10 ................. 91 ................. 72 ................. 62 ................. 0 ................... 0. 

Net Increase (%) ........................................ 0 ................... 9 ................... 28 ................. 38 ................. 100 ............... 100. 

No Change (%) .......................................... 90 ................. 0 ................... 0 ................... 0 ................... 0 ................... 0. 

Mean LCC Savings (2008$) ...................... 42 ................. 48 ................. 37 ................. 27 ................. (554) ............. (2,291). 

Mean PBP (years) ..................................... 3.4 ................ 4.5 ................ 6.8 ................ 7.8 ................ 84.9 .............. 99.9. 

Direct Domestic Employment Impacts (2012) 

(jobs).

0 ................... 1 ................... 8 ................... 11 ................. 97 ................. 316. 

Indirect Employment Impacts (2042) (jobs) ...... 6 ................... 10 ................. 49 ................. 55 ................. 162 ............... 216. 

* Parentheses indicate negative values. For LCCs, a negative value means an increase in LCC. 

** Change in installed generation capacity by 2042 based on the April 2009 update to the AEO2009 reference case. † CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as 

well as production of emissions allowance credits where NOX emissions are subject to emissions caps. 

1. Class A Equipment 

First, DOE considered TSL 7, the most 

efficient level for Class A beverage 

vending machines that was determined 

to be technologically feasible. TSL 7 

would save a cumulative 0.170 quads of 

energy through 2042, an amount DOE 

considers significant. For the Nation as 

a whole, DOE projects that TSL 7 would 

result in a net decrease of $1.449 billion 

in NPV using a discount rate of 7 

percent and $2.47 billion discounted at 

3 percent. The emissions reductions at 

TSL 7 are 10.22 Mt of CO2, up to 3.49 

kt of NOX, and up to 0.201 ton of Hg. 

These reductions have a value in 2007$ 

of up to $283.8 million for CO2, up to 

$3.9 million for NOX, and up to $1.6 

million for Hg at a discount rate of 7 

percent. These reductions have a value 

in 2007$ of up to $579.1 million for 

CO2, up to $8.2 million for NOX, and up 

to $3.4 million for Hg at a discount rate 

of 3 percent. DOE also estimates that at 

TSL 7, total electric generating capacity 

in 2042 will decrease compared to the 

base case by 0.126 GW. 

At TSL 7, DOE projects that the 

average Class A beverage vending 

machine customer will experience an 

increase in LCC of $1,281 compared to 

the baseline. At TSL 7, DOE estimates 

the fraction of customers experiencing 

LCC increases will be 100 percent. The 

mean PBP for the average Class A 

beverage vending machine customer at 

TSL 7 compared to the baseline level is 

projected to be 75.2 years. 

At higher TSLs, manufacturers have a 

more difficult time maintaining current 

operating profit levels, as higher 

standards increase recurring operating 

costs such as capital expenditures, 

purchased materials, and carrying 

inventory. Therefore, TSL 7 is more 

likely to cause impacts in the higher end 

of the ranges (i.e., a drop of 64.2 percent 

in INPV). Manufacturers expressed great 

concern about high capital and 

equipment conversion costs necessary 

to convert production to standardscompliant equipment. At TSL 7, all 

manufacturers would have to 

completely redesign their production 

lines, and the risk of very large negative 

impacts on the industry from reduction 

in manufacturers’ operating profits 

levels is high. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 7, DOE finds that the 

benefits to the Nation of TSL 7 (i.e., 

energy savings and emissions 

reductions, including environmental 

and monetary benefits) do not outweigh 

the burdens (i.e., a decrease of $1,738 

million in NPV and a decrease of 64.2 

percent in INPV). Because the burdens 

of TSL 7 outweigh the benefits, TSL 7 

is not economically justified. Therefore, 

DOE rejects TSL 7 for Class A 

equipment. 

DOE then considered TSL 6, which 

provides for Class A equipment the 

maximum efficiency level that the 

analysis showed to have positive NPV to 

the Nation. TSL 6 would likely save a 

cumulative 0.139 quads of energy 

through 2042, an amount DOE considers 

significant. For the Nation as a whole, 

DOE projects that TSL 6 would result in 

a net increase of $185 million in NPV 

using a discount rate of 7 percent and 

$465 million using a discount rate of 3 

percent. The estimated emissions 

reductions at TSL 6 are up to 8.4 Mt of 

CO2, up to 2.87 kt of NOX, and up to 

0.165 tons of Hg. These reductions have 

a value in 2007$ of up to $233.3 million 

for CO2, up to $3.2 million for NOx, and 

up to $1.3 million for Hg, at a discount 

rate of 7 percent, and a value in 2007$ 

of up to $476.1 million for CO2, up to 

$6.7 million for NOX, and up to $2.8 

million for Hg, at a discount rate of 3 

percent. Total electric generating 

capacity in 2042 is estimated to 

decrease compared to the base case by 

0.103 GW under TSL 6. 

At TSL 6, DOE projects that the 

average beverage vending machine 

customer will experience a reduction in 

LCC of $277 compared to the baseline. 

The mean PBP for the average beverage 

vending machine customer at TSL 6 is 

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projected to be 4.1 years compared to 

the purchase of baseline equipment. 

At TSL 6, DOE believes the majority 

of manufacturers would need to 

completely redesign all Class A 

equipment offered for sale. Therefore, 

DOE expects beverage vending machine 

manufacturers would have some 

difficulty maintaining current operating 

profit levels with higher production 

costs. Similar to TSL 7, it is more likely 

that the higher end of the range of 

impacts would be reached at TSL 6 (i.e., 

a decrease of 25.1 percent in INPV). 

However, the higher end of the range of 

impacts at TSL 6 is lower than the 

higher end of the range of impacts for 

TSL 7. In addition, Class A equipment 

showed significant positive LCC savings 

on a national average basis and 

customers did not experience an 

increase in LCC with a standard at TSL 

6 compared to the baseline. The PBP 

calculated for Class A equipment was 

less than the life of the equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 6, DOE finds that for 

Class A equipment, TSL 6 represents the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. TSL 

6 is technologically feasible because the 

technologies required to achieve these 

levels are already in existence. TSL 6 is 

economically justified because the 

benefits to the Nation [i.e., increased 

energy savings of 0.139 quads, 

emissions reductions including 

environmental and monetary benefits of, 

for example, up to 8.4 Mt of carbon 

dioxide emissions reduction with an 

associated value in 2007$ of up to 

$233.3 million at a discount rate of 7 

percent ($476.1 million at 3 percent), 

and an increase in NPV of $185 million 

at 7 percent discount rate to $465 

million at 3 percent discount rate] 

outweigh the costs (i.e., a decrease of 

25.1 percent in INPV). In addition, the 

carbon dioxide reductions at the central 

value of $19 would further increase 

NPV by $80.6 million (2007$) at 7% 

discount rate and by $164 million at a 

3 percent discount rate. The combined 

NPV, including the value of CO2

emissions reductions, would be $265.6 

million at 7 percent discount rate and 

$629.0 million at a 3 percent discount 

rate. There is also the added benefit of 

a reduction in total electrical generating 

capacity in 2042 compared to the base 

case of 0.103 GW under the TSL 6 

scenario. Therefore, DOE establishes 

TSL 6 as the energy conservation 

standard for Class A beverage vending 

machines in this final rule. 

2. Class B Equipment 

First, DOE considered TSL 6, the most 

efficient level for Class B beverage 

vending machines. TSL 6 would likely 

save a cumulative 0.068 quads of energy 

through 2042, an amount DOE considers 

significant. For the Nation as a whole, 

DOE projects that TSL 6 would result in 

a net decrease of $2.452 billion in NPV 

using a discount rate of 7 percent, and 

$4.427 billion in NPV using a discount 

rate of 3 percent. The emissions 

reductions at TSL 6 are up to 4.08 Mt 

of CO2, up to 1.39 kt of NOX, and up to 

0.080 ton of Hg. These reductions have 

a value in 2007$ of up to $113.2 million 

for CO2, up to $1.5 million for NOX, and 

up to $633,000 for Hg at a discount rate 

of 7 percent and a value of up to $230.9 

million for CO2, up to $3.3 million for 

NOX, and up to $1.4 million for Hg at 

a discount rate of 3 percent. DOE also 

estimates that at TSL 6, total electric 

generating capacity in 2042 will 

decrease compared to the base case by 

0.050 GW. 

At TSL 6, DOE projects that for the 

average customer, the LCC of Class B 

beverage vending machines will 

increase by $2,291 compared to the 

baseline. At TSL 6, DOE estimates the 

fraction of customers experiencing LCC 

increases will be 100 percent. The mean 

PBP for the average Class B beverage 

vending machine customer at TSL 6 

compared to the baseline is projected to 

be almost 100 years. 

At higher TSLs, manufacturers have 

large increases in production costs, 

resulting in difficulty maintaining 

operating profit. Therefore, it is more 

likely that the higher end of the range 

of impacts would be reached at TSL 6 

(i.e., a decrease of 99.4 percent in INPV). 

At TSL 6, all manufacturers would have 

to completely redesign their production 

lines, and there is the risk of very large 

negative impacts on the industry if 

manufacturers’ operating profit levels 

are reduced. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 6, DOE finds that the 

benefits to the Nation of TSL 6 (i.e., 

energy savings and emissions 

reductions including environmental and 

monetary benefits) do not outweigh the 

burdens (i.e., a decrease of $2.45 to 

$4.43 billion in NPV, a decrease of 99.4 

percent in INPV, and an economic 

burden on customers). DOE finds that 

the burdens of TSL 6 outweigh the 

benefits and TSL 6 is not economically 

justified. Therefore, DOE rejects TSL 6 

for Class B equipment. 

TSL 5, the next most efficient level, 

would likely save a cumulative 0.061 

quads of energy through 2042, an 

amount DOE considers significant. For 

the Nation as a whole, DOE projects that 

TSL 5 would result in a net decrease of 

$621 million in NPV, using a discount 

rate of 7 percent and $1.083 billion in 

NPV, using a discount rate of 3 percent. 

The estimated emissions reductions at 

TSL 5 are up to 3.66 Mt of CO2, up to 

1.25 kt of NOX, and up to 0.072 ton of 

Hg. These reductions have a value in 

2007$ of up to $101.6 million for CO2, 

up to $1.4 million for NOX, and up to 

$568,000 for Hg at a discount rate of 7 

percent, and a value in 2007$ of up to 

$207.4 million for CO2, up to $2.9 

million for NOX, and up to $1.2 million 

for Hg at a discount rate of 3 percent. 

Total electric generating capacity in 

2042 is estimated to decrease compared 

to the base case by 0.045 GW at TSL 5. 

At TSL 5, DOE projects that the 

average Class B beverage vending 

machine customer will experience an 

increase in LCC of $554 compared to the 

baseline. The mean PBP for the average 

Class B beverage vending machine 

customer at TSL 5 is projected to be 84.9 

years compared to the purchase of 

baseline equipment. 

At TSL 5, DOE believes the majority 

of manufacturers would need to 

completely redesign all Class B 

equipment offered for sale at TSL 5. 

Therefore, DOE expects that 

manufacturers will have difficulty 

maintaining operating profit with larger 

cost increases. Though the higher end of 

the range of expected impacts is lower 

for TSL 5 than for TSL 6, TSL 5 would 

likely cause impacts at the higher end 

of the range (i.e., a decrease of 48.9 

percent in INPV). 

After carefully considering the 

analysis and evaluating the benefits and 

burdens of TSL 5, DOE finds that the 

benefits to the Nation of TSL 5 (i.e., 

energy savings and emissions 

reductions, including environmental 

and monetary benefits) do not outweigh 

the burdens (i.e., a decrease of $621 to 

1.08 billion in NPV and a decrease of 

48.9 percent in INPV as well as the 

economic burden on customers). DOE 

finds that the burdens of TSL 5 

outweigh the benefits and TSL 5 is not 

economically justified. Therefore, DOE 

rejects TSL 5 for Class B equipment. 

TSL 4 would save a cumulative 0.023 

quads of energy through 2042, an 

amount DOE considers significant. For 

the Nation as a whole, DOE projects that 

TSL 4 would result in a net decrease of 

$14 million in NPV using a discount 

rate of 7 percent and a net decrease of 

$6 million in NPV using a discount rate 

of 3 percent. The estimated emissions 

reductions at TSL 4 are up to 1.36 Mt 

of CO2, up to 0.46 kt of NOX, and up to 

0.027 ton of Hg. Based on previously 

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developed estimates, these reductions 

could have a value in 2007$ of up to 

$37.8 million for CO2, up to $515,000 

for NOX, and up to $211,000 for Hg at 

a discount rate of 7 percent and a value 

in 2007$ of up to $77.0 million for CO2, 

up to $1.1 million for NOX, and up to 

$455,000 for Hg at a discount rate of 3 

percent. Total electric generating 

capacity in 2042 is estimated to 

decrease compared to the base case by 

0.017 GW at TSL 4. 

At TSL 4, DOE projects that the 

average Class B beverage vending 

machine customer will experience a 

reduction in LCC of $27 compared to 

the baseline. The mean PBP for the 

average Class B beverage vending 

machine customer at TSL 4 is projected 

to be 7.8 years compared to the 

purchase of baseline equipment. 

At TSL 4, DOE believes that while a 

complete redesign would not be 

required, manufacturers would need to 

redesign most existing Class B 

equipment offered for sale. Therefore, 

while perhaps to a somewhat lesser 

extent than for TSL 5 and TSL 6, DOE 

expects that manufacturers will have 

difficulty maintaining operating profit 

with high increases in production costs. 

In addition, while the higher end of the 

range of impacts expected from TSL 4 

is less than those for TSL 5 and TSL 6, 

it is still likely that the higher end of the 

range of impacts would be reached at 

TSL 4 (i.e., a decrease of 5.0 percent in 

INPV). However, compared to the 

baseline, Class B equipment showed 

positive LCC savings on a national 

average and most customers did not 

experience an increase in LCC at TSL 4. 

The PBP calculated for Class B 

equipment was less than the lifetime of 

the equipment. 

After carefully considering the 

analysis and evaluating the benefits and 

burdens of TSL 4, DOE finds that the 

benefits to the Nation of TSL 4 (i.e., 

energy savings and emissions 

reductions, including estimates of the 

monetary value of the environmental 

benefits) do not outweigh the burdens 

(i.e., a decrease of $6 million to $14 

million in NPV and a decrease of up to 

5.0 percent in INPV, primarily from 

equipment redesigns). DOE finds that 

the burdens, especially the likelihood of 

net economic losses indicated by 

negative NPV values at both discount 

rates, of TSL 4 outweigh the benefits 

and TSL 4 is not economically justified. 

Therefore, DOE rejects TSL 4 for Class 

B equipment. 

TSL 3 would save a cumulative 0.020 

quads of energy through 2042, an 

amount DOE considers significant. For 

the Nation as a whole, DOE projects that 

TSL 3 would result in a decrease in NPV 

of $3 million, using a discount rate of 

7 percent. However, using a 3 percent 

discount rate, DOE projects that TSL 3 

would result in a net increase of $11 

million in NPV. The estimated 

emissions reductions at TSL 3 are up to 

1.2 Mt of CO2, up to 0.41 kt of NOX, and 

up to 0.023 ton of Hg. Based on 

previously developed estimates, these 

reductions could have a value in 2007$ 

of up to $33.0 million for CO2, up to 

$450,000 for NOX, and up to $185,000 

for Hg at a discount rate of 7 percent. 

At a 3 percent discount rate, these 

reductions could have a value in 2007$ 

of up to $67.4 million for CO2, up to 

$954,000 for NOX, and up to $398,000 

for Hg. Total electric generating capacity 

in 2042 is estimated to decrease 

compared to the base case by 0.015 GW 

at TSL 3. 

At TSL 3, DOE projects that the 

average Class B beverage vending 

machine customer will experience a 

reduction in LCC of $37 compared to 

the baseline. The mean PBP for the 

average Class B beverage vending 

machine customer at TSL 3 is projected 

to be 6.8 years compared to the 

purchase of baseline equipment. 

At TSL 3, DOE believes manufacturers 

would have to make some component 

switches to comply with the standard, 

but most manufacturers will not have to 

significantly alter their production 

process. These minor design changes 

would not raise the production costs 

beyond the cost of most equipment sold 

today, resulting in minimal impacts on 

industry value. Compared to the 

baseline, Class B equipment showed 

significant positive LCC savings on a 

national average and customers did not 

experience an increase in LCC at TSL 3. 

The PBP calculated for Class B 

equipment was less than the lifetime of 

the equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 3, DOE finds that for 

Class B equipment, TSL 3 represents the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. TSL 

3 is technologically feasible because the 

technologies required to achieve these 

levels are already in existence. TSL 3 is 

economically justified because DOE 

finds that the benefits to the Nation [i.e., 

an increase of $11 million in NPV using 

a 3 percent discount rate, energy 

savings, and emissions reductions, 

including environmental and monetary 

benefits of, for example, up to 1.2 Mt of 

carbon dioxide emissions reduction 

with an associated value in 2007$ of up 

to $33 million at a discount rate of 7 

percent and $67.4 million at a discount 

rate of 3 percent, and an increase in 

NPV of $11 million at 3 percent 

discount rate] outweigh the costs (i.e., a 

$3 million loss in NPV at a 7 percent 

discount rate and a decrease of 3.5 

percent in INPV, primarily from 

upgraded components). In addition, the 

carbon dioxide reductions at the central 

value of $19 would further increase 

NPV by $11.4 million (2007$) at 7% 

discount rate and by $23.3 million at a 

3 percent discount rate. The combined 

NPV, including the value of CO2

emissions reductions, would be $8.4 

million at a 7 percent discount rate and 

$34.3 million at a 3 percent discount 

rate. DOE finds that, while there is a 

greater likelihood of net economic 

losses at TSL 4 (indicated by negative 

NPV values at 3 percent and 7 percent 

discount rates), TSL 3 is more favorable 

since it shows a greater possibility of a 

net economic benefit (indicated by a 

positive NPV value at a 3 percent 

discount rate). There is also the added 

benefit of a reduction in total electrical 

generating capacity in 2042 compared to 

the base case of 0.015 GW under the 

TSL 3 scenario. Therefore, DOE 

establishes TSL 3 as the energy 

conservation standard for Class B 

beverage vending machines in this final 

rule. 

DOE also calculated the annualized 

values for certain benefits and costs at 

the various TSLs. Table VI.37 shows the 

annualized values for Class A 

equipment and Table VI.38 shows the 

annualized values for Class B 

equipment. 

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TABLE VI.37—ANNUALIZED BENEFITS AND COSTS FOR CLASS A MACHINES

TSL Category Unit 

Primary estimate 

(AEO reference case) 

Low estimate 

(low growth case) 

High estimate 

(high growth case) 

7% 3% 7% 3% 7% 3% 

1 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 1.96 2.29 1.79 2.09 2.07 2.41 

Annualized Emission Reductions.CO2 (Mt) 0.01 0.01 0.01 0.01 0.01 0.01 

NOX (kT) 0.003 0.004 0.003 0.004 0.003 0.004 

Hg (T) .... 0.000 0.000 0.000 0.000 0.000 0.000 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 0.45 0.43 0.45 0.43 0.45 0.43 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 1.50 1.86 1.34 1.65 1.62 1.98 

2 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 9.23 10.81 8.46 9.83 9.76 11.38 

Annualized Emission Reductions.CO2 (Mt) 0.06 0.06 0.06 0.06 0.06 0.06 

NOX (kT) 0.016 0.019 0.016 0.019 0.016 0.019 

Hg (T) .... 0.001 0.001 0.001 0.001 0.001 0.001 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 2.56 2.46 2.56 2.46 2.56 2.46 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 6.67 8.34 5.90 7.37 7.20 8.92 

3 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 19.32 22.66 17.61 20.51 20.50 23.93 

Annualized Emission Reductions.CO2 (Mt) 0.12 0.13 0.12 0.13 0.12 0.13 

NOX (kT) 0.035 0.041 0.035 0.041 0.035 0.041 

Hg (T) .... 0.002 0.002 0.002 0.002 0.002 0.002 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 8.33 8.02 8.33 8.02 8.33 8.02 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 10.99 14.64 9.29 12.50 12.17 15.92 

4 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 29.80 34.96 27.18 31.65 31.62 36.92 

Annualized Emission Reductions.CO2 (Mt) 0.19 0.20 0.19 0.20 0.19 0.20 

NOX (kT) 0.054 0.064 0.054 0.064 0.054 0.064 

Hg (T) .... 0.003 0.004 0.003 0.004 0.003 0.004 

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TABLE VI.37—ANNUALIZED BENEFITS AND COSTS FOR CLASS A MACHINES—Continued 

TSL Category Unit 

Primary estimate 

(AEO reference case) 

Low estimate 

(low growth case) 

High estimate 

(high growth case) 

7% 3% 7% 3% 7% 3% 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 12.74 12.26 12.74 12.26 12.74 12.26 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 17.06 22.70 14.44 19.39 18.89 24.66 

5 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 34.83 40.87 31.72 36.95 36.98 43.19 

Annualized Emission Reductions.CO2 (Mt) 0.22 0.24 0.22 0.24 0.22 0.24 

NOX (kT) 0.064 0.036 0.064 0.036 0.064 0.036 

Hg (T) .... 0.004 0.004 0.004 0.004 0.004 0.004 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 16.10 15.50 16.10 15.50 16.10 15.50 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 18.73 25.37 15.63 21.46 20.88 27.69 

6 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... 37.67 44.22 34.24 39.91 40.04 46.78 

Annualized Emission Reductions.CO2 (Mt) 0.25 0.26 0.25 0.26 0.25 0.26 

NOX (kT) 0.070 0.039 0.070 0.039 0.070 0.039 

Hg (T) .... 0.004 0.005 0.004 0.005 0.004 0.005 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 19.56 18.83 19.56 18.83 19.56 18.83 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... 18.11 25.40 14.68 21.08 20.48 27.95 

7 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ..... (0.59 ) 1.02 (4.76 ) (4.22 ) 2.30 4.13 

Annualized Emission Reductions.CO2 (Mt) 0.30 0.32 0.30 0.32 0.30 0.32 

NOX (kT) 0.085 0.048 0.085 0.048 0.085 0.048 

Hg (T) .... 0.005 0.006 0.005 0.006 0.005 0.006 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ..... 141.02 135.74 141.02 135.74 141.02 135.74 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ..... (141.61 ) (134.72 ) (145.77 ) (139.97 ) (138.72 ) (131.61 ) 

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TABLE VI.38—ANNUALIZED BENEFITS AND COSTS FOR CLASS B MACHINES

TSL Category Unit 

Primary estimate 

(AEO reference case) 

Low estimate 

(low growth case) 

High estimate 

(high growth case) 

7% 3% 7% 3% 7% 3% 

1 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... 0.73 0.86 0.66 0.77 0.77 0.90 

Annualized Emission Reductions.CO2 (Mt) .. 0.00 0.00 0.00 0.00 0.00 0.00 

NOX (kT) .. 0.001 0.002 0.001 0.002 0.001 0.002 

Hg (T) ...... 0.000 0.000 0.000 0.000 0.000 0.000 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 0.26 0.25 0.26 0.25 0.26 0.25 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... 0.47 0.61 0.41 0.53 0.52 0.66 

2 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... 1.03 1.21 0.94 1.09 1.10 1.28 

Annualized Emission Reductions.CO2 (Mt) .. 0.01 0.01 0.01 0.01 0.01 0.01 

NOX (kT) .. 0.002 0.002 0.002 0.002 0.002 0.002 

Hg (T) ...... 0.000 0.000 0.000 0.000 0.000 0.000 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 0.48 0.46 0.48 0.46 0.48 0.46 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... 0.56 0.76 0.46 0.63 0.62 0.83 

3 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... 4.11 4.87 3.62 4.26 4.44 5.23 

Annualized Emission Reductions.CO2 (Mt) .. 0.03 0.04 0.03 0.04 0.03 0.04 

NOX (kT) .. 0.010 0.012 0.010 0.012 0.010 0.012 

Hg (T) ...... 0.001 0.001 0.001 0.001 0.001 0.001 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 4.44 4.28 4.44 4.28 4.44 4.28 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... (0.34 ) 0.59 (0.82 ) (0.02 ) (0.00 ) 0.95 

4 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... 4.36 5.19 3.81 4.49 4.75 5.60 

Annualized Emission Reductions.CO2 (Mt) .. 0.04 0.04 0.04 0.04 0.04 0.04 

NOX (kT) .. 0.011 0.013 0.011 0.013 0.011 0.013 

Hg (T) ...... 0.001 0.001 0.001 0.001 0.001 0.001 

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44962 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

TABLE VI.38—ANNUALIZED BENEFITS AND COSTS FOR CLASS B MACHINES—Continued 

TSL Category Unit 

Primary estimate 

(AEO reference case) 

Low estimate 

(low growth case) 

High estimate 

(high growth case) 

7% 3% 7% 3% 7% 3% 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 5.72 5.51 5.72 5.51 5.72 5.51 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... (1.36 ) (0.32 ) (1.91 ) (1.02 ) (0.97 ) 0.09 

5 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... (7.83 ) (8.30 ) (9.32 ) (10.18 ) (6.80 ) (7.18 ) 

Annualized Emission Reductions.CO2 (Mt) .. 0.11 0.11 0.11 0.11 0.11 0.11 

NOX (kT) .. 0.031 0.036 0.031 0.036 0.031 0.036 

Hg (T) ...... 0.002 0.002 0.002 0.002 0.002 0.002 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 52.84 50.86 52.84 50.86 52.84 50.86 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... (60.67 ) (59.16 ) (62.16 ) (61.04 ) (59.63 ) (58.05 ) 

6 ............... Benefits 

Annualized Consumer Benefits ($millions/year).2008$ ...... (67.78 ) (76.40 ) (69.44 ) (78.49 ) (66.63 ) (75.16 ) 

Annualized Emission Reductions.CO2 (Mt) .. 0.12 0.13 0.12 0.13 0.12 0.13 

NOX (kT) .. 0.034 0.040 0.034 0.040 0.034 0.040 

Hg (T) ...... 0.002 0.002 0.002 0.002 0.002 0.002 

Costs 

Annualized Consumer Costs 

($millions/year).

2008$ ...... 171.92 165.49 171.92 165.49 171.92 165.49 

Net Consumer Benefits/Costs 

Net Consumer Benefits (excluding emission benefits) 

($millions/year).

2008$ ...... (239.70 ) (241.89 ) (241.36 ) (243.98 ) (238.55 ) (240.65 ) 

VII. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

Executive Order 12866 requires that 

each agency identify in writing the 

problem the agency intends to address 

that warrants new agency action 

(including, where applicable, the 

failures of private markets or public 

institutions), as well as assess the 

significance of that problem to 

determine whether any new regulation 

is necessary. Executive Order 12866, 

section 1(b)(1). 

Because today’s regulatory action is a 

significant 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 benefits of 

today’s rule. Accordingly, DOE 

presented to OIRA for review the draft 

final rule and other documents prepared 

for this rulemaking, including a 

regulatory impact analysis (RIA). These 

documents are included in the 

rulemaking record and are available for 

public review in the Resource Room of 

the Building Technologies Program, 950 

L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024, (202) 586–2945, 

between 9 a.m. and 4 p.m. Monday 

through Friday, except Federal holidays. 

The May 2009 NOPR contained a 

summary of the RIA, which evaluated 

the extent to which major alternatives to 

standards for beverage vending 

machines could achieve significant 

energy savings at reasonable cost, as 

compared to the effectiveness of the 

proposed rule. 74 FR 26067–69. The 

complete RIA (Regulatory Impact 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44963 

Analysis for Proposed Energy 

Conservation Standards for Beverage 

Vending Machines) is contained in the 

TSD prepared for today’s rule. The RIA 

consists of: (1) A statement of the 

problem addressed by this regulation 

and the mandate for government action, 

(2) a description and analysis of the 

feasible policy alternatives to this 

regulation, (3) a quantitative comparison 

of the impacts of the alternatives, and 

(4) the national economic impacts of 

today’s standards. 

The major alternatives DOE analyzed 

were: (1) No new regulatory action; (2) 

financial incentives, including tax 

credits and rebates; (3) revisions to 

voluntary energy efficiency targets; (4) 

early replacement; (5) bulk government 

purchases; and (6) prescriptive 

standards that would mandate design 

requirements. As explained in detail in 

Section VI. of the May 2009 NOPR, none 

of the alternatives DOE examined would 

save as much energy or have an NPV as 

high as the proposed standards. The 

same conclusion applies to the 

standards in today’s rule. Also, several 

of the alternatives would require new 

enabling legislation, because DOE does 

not have authority to implement those 

alternatives. Additional detail on the 

regulatory alternatives is found in the 

RIA chapter in the TSD. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that 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 negative impacts. 

Also, as required by Executive Order 

13272, ‘‘Proper Consideration of Small 

Entities in Agency Rulemaking,’’ 67 FR 

53461 (August 16, 2002), DOE 

published procedures and policies on 

February 19, 2003 to ensure that the 

potential impacts of its rules on small 

entities are properly considered during 

the rulemaking process. 68 FR 7990. 

DOE has made its procedures and 

policies available on the Office of 

General Counsel’s Web site: http:// 

www.gc.doe.gov. 

For the beverage vending machine 

manufacturing industry, the SBA 

defines small businesses as 

manufacturing enterprises with 500 or 

fewer employees. See http:// 

www.sba.gov/idc/groups/public/ 

documents/sba_homepage/ 

serv_sstd_tablepdf. DOE used this small 

business definition to determine 

whether any small entities would be 

required to comply with the rule. (65 FR 

30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 

(September 5, 2000) and codified at 13 

CFR part 121.) The size standards are 

listed by North American Industry 

Classification System (NAICS) code and 

industry description. Beverage vending 

machine manufacturing is classified 

under NAICS 333311, ‘‘Automatic 

Vending Machine Manufacturing.’’ 

As explained in the May 2009 NOPR, 

the beverage vending machine industry 

is characterized by both large and small 

manufacturers that service a wide range 

of customers, including large bottlers 

and direct end-users. Almost all 

beverage vending machines sold in the 

United States are manufactured 

domestically. Three major companies 

supply roughly 90 percent of all 

equipment sold. Most of the sales for 

these companies are made to a few 

major bottlers. One of the major 

manufacturers with significant market 

share is considered a small business. 

The remaining 10 percent of industry 

shipments is believed to be supplied by 

five manufacturers. All of these 

companies not supplying the major 

bottlers are considered small businesses. 

Before issuing this notice of proposed 

rulemaking, DOE contacted all 

identified small business manufacturers 

and provided a questionnaire seeking 

information to better understand the 

impacts of the proposed standards on 

small businesses and how these impacts 

differ between large and small 

manufacturers. The small business 

interview questionnaire is a condensed 

version of the manufacturer interview 

guide described in the manufacturer 

impact analysis, chapter 13 of the TSD. 

In accordance with the Regulatory 

Flexibility Act, during the NOPR stage 

of this rulemaking, DOE prepared an 

IRFA which describes potential impacts 

on small businesses associated with 

beverage vending machine design and 

manufacture, and incorporates 

information received in response to the 

questionnaire. The IRFA addresses the 

following: (1) The reasons the regulatory 

action is being considered, (2) the 

objectives of and legal basis for the 

proposed rule, (3) a description and 

estimate of the number of small entities 

that would be affected by the rule, (4) 

an estimate of the reporting, 

recordkeeping, and other compliance 

costs for the proposed rule, (5) an 

analysis of significant alternatives to the 

proposed rule that could lessen any 

disproportionate burdens on small 

entities, and (6) a discussion of any 

duplicative, overlapping, and 

conflicting rules. (‘‘A Guide for 

Government Agencies: How to Comply 

with the Regulatory Flexibility Act, 

Chapter 2, Office of Advocacy, U.S. 

Small Business Administration, 2003,’’ 

available at http://www.sba.gov/advo/ 

laws/rfaguide.pdf) DOE divided the 

estimate of the compliance costs for 

small businesses into two categories 

representing potential impacts to small 

business manufacturers with major 

market shares, and potential impacts to 

small business manufacturers with 

small market shares. DOE also analyzed 

alternatives that could reduce the 

disproportionate impact of the proposed 

standards on small vending machine 

manufacturers. DOE provided the 

complete IRFA in the May 2009 NOPR, 

74 FR 26069–72, for review by the Chief 

Counsel for Advocacy of the SBA and 

the public. Chapter 13 of the TSD 

contains more information about the 

impact of this rulemaking on 

manufacturers. 

For today’s final rule, DOE has 

prepared a FRFA, which is presented in 

the following discussion. DOE 

developed this FRFA for review by the 

Chief Counsel for Advocacy of the SBA 

and the public. The FRFA below is 

written in accordance with the 

requirements of the Regulatory 

Flexibility Act. 

1. Need for and Objectives of the Final 

Rule 

Part A of subchapter III (42 U.S.C. 

6291–6309) provides for the Energy 

Conservation Program for Consumer 

Products Other Than Automobiles (this 

part was originally titled Part B, but was 

redesignated Part A after Part B of Title 

III was repealed by Pub. L. 109–58; 

similarly, Part C, Certain Industrial 

Equipment, was redesignated Part A–1). 

The amendments to EPCA contained in 

the EPACT 2005, Public Law 109–58, 

include new or amended energy 

conservation standards and test 

procedures for some of these products, 

and direct DOE to undertake 

rulemakings to promulgate such 

requirements. In particular, section 

135(c)(4) of EPACT 2005 amends EPCA 

to direct DOE to prescribe energy 

conservation standards for beverage 

vending machines. (42 U.S.C. 6295(v)) 

Hence, DOE is publishing today’s final 

rule on energy conservation standards 

for refrigerated bottle or canned 

beverage vending machines pursuant to 

Part A of EPCA. Because of its 

placement in Part A of Title III of EPCA, 

the rulemaking for beverage vending 

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44964 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

machine energy conservation standards 

is bound by the requirements of 42 

U.S.C. 6295. However, since beverage 

vending machines are commercial 

equipment, DOE intends to place the 

new requirements for beverage vending 

machines in Title 10 of the CFR, Part 

431 (Energy Efficiency Program for 

Certain Commercial and Industrial 

Equipment), which is consistent with 

DOE’s previous action to incorporate the 

EPACT 2005 requirements for 

commercial equipment. The location of 

the provisions within the CFR does not 

affect either their substance or 

applicable procedure, so DOE is placing 

them in the appropriate CFR part based 

on their nature or type. 

EPCA provides that any new or 

amended standard for beverage vending 

machines must be designed to achieve 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A) and (v)) EPCA 

precludes DOE from adopting any 

standard that would not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3)(B) and (v)) Moreover, 

DOE may not prescribe a standard for 

certain equipment if no test procedure 

has been established for that equipment, 

or if DOE determines by rule that the 

standard is not technologically feasible 

or economically justified and will not 

result in significant conservation of 

energy. (42 U.S.C. 6295(o)(3)(A)(B) and 

(v)) To determine whether economic 

justification exists, DOE reviews 

comments received and conducts 

analysis to determine whether the 

economic benefits of the proposed 

standard exceed the burdens to the 

greatest extent practicable, taking into 

consideration seven factors set forth in 

42 U.S.C. 6295(o)(2)(B) and (v). (See 

section II.A of this preamble.) 

EPCA also states that the Secretary 

may not prescribe an amended or new 

standard if interested parties have 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any equipment type (or class) 

with performance characteristics 

(including reliability), features, sizes, 

capacities, and volumes that are 

substantially the same as those generally 

available in the United States. (42 U.S.C. 

6295(o)(4) and (v)) 

As set forth above, DOE has 

determined that the standards adopted 

in today’s rule are designed to achieve 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. DOE 

has also determined that the standards 

will result in a significant conservation 

of energy and will not result in the 

unavailability in the United States of 

any equipment type or class with 

performance characteristics that are 

substantially the same as those generally 

available in the United States. Chapter 

1 of the TSD provides further 

background information on this 

rulemaking. 

2. Significant Issues Raised by Public 

Comments 

DOE summarized comments from 

interested parties, including beverage 

vending machine manufacturers, in 

sections IV and V of this preamble. DOE 

did not receive any comments regarding 

impacts specific to small business 

manufacturers for the adoption of TSL 

6 for Class A machines and TSL 3 for 

Class B machines in today’s final rule or 

the alternatives identified in section 6 of 

the IRFA, ‘‘Significant Alternatives to 

the Rule.’’ No changes were made to the 

IRFA as a result of public comment. 

3. Description and Estimated Number of 

Small Entities Regulated 

To establish a list of small beverage 

vending machine manufacturers, DOE 

examined publicly available data and 

contacted manufacturers to determine if 

they meet the SBA’s definition of a 

small manufacturing facility and if their 

manufacturing facilities are located 

within the United States. Based on this 

analysis, DOE confirmed that there are 

six small manufacturers of beverage 

vending machines. 

One of these six small manufacturers 

is one of the top three major 

manufacturers, who supply roughly 90 

percent of all equipment sales. The full 

line of products offered by this small 

manufacturer and the remaining two 

major manufacturers, which are 

considered large businesses, are covered 

under this rulemaking (i.e., equipment 

that dispenses refrigerated bottled or 

canned beverages). The remaining five 

small manufacturers comprise 

approximately 10 percent of industry 

shipments for covered equipment. See 

chapter 3 of the TSD for further details 

on the beverage vending machine 

market. In its examination of the 

beverage vending machine industry, 

DOE has determined that these small 

business manufacturers with small 

market shares differ significantly from 

the major manufacturers. The primary 

difference between these small business 

manufacturers and the major 

manufacturers is that these five small 

business manufacturers produce a wide 

variety of specialty and niche 

equipment that are not covered under 

this rulemaking, such as machines that 

dispense a wide range of items 

including snacks, heated drinks, 

electronic goods, DVDs, bowling 

supplies, and medical products. 

Furthermore, unlike the major 

manufacturers, these small business 

manufacturers do not sell equipment to 

the major bottlers because they do not 

produce covered equipment in the 

necessary volumes. Instead, these 

manufacturers rely on providing 

customized equipment in much smaller 

volumes. 

Before issuing the NOPR, requests for 

interviews were delivered electronically 

to the six manufacturers that met the 

small business criteria. DOE received 

responses from fewer than half and 

conducted an on-site interview with the 

single manufacturer who agreed to be 

interviewed. In the questionnaire and 

during the interview, DOE requested 

information that would determine if 

there are differential impacts on small 

manufacturers that may result from new 

energy conservation standards. See 

chapter 13 of the TSD for further 

discussion about the methodology DOE 

used in its analysis of manufacturer 

impacts, including small manufacturers. 

4. Description and Estimate of 

Reporting, Recordkeeping, and Other 

Compliance Requirements 

Potential impacts on manufacturers 

include impacts associated with 

beverage vending machine design and 

manufacturing. The level of research 

and development needed to meet energy 

conservation standards increases with 

more stringent standards. As mentioned 

previously, DOE examined the level of 

impacts that small manufacturers would 

incur by identifying small business 

manufacturers and sending them a short 

questionnaire seeking information to 

better understand the impacts of the 

proposed standard that are unique to 

small manufacturers. Because not all of 

the small business manufacturers 

responded to the questionnaire, it is 

difficult to specifically quantify how the 

impacts of the proposed standards differ 

between large and small manufacturers. 

However, as explained below, DOE 

found that the impacts of the proposed 

standard on the small business 

manufacturer with a major market share 

would not differ greatly from those of its 

larger competitors; the impacts would 

not be significant for the remaining 

small business manufacturers. 

a. Small Business Manufacturer With a 

Major Market Share 

The small business manufacturer that 

has a major market share in covered 

equipment will not be 

disproportionately disadvantaged by the 

proposed standard. It has a large 

shipment volume as a major supplier to 

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the large bottlers and its access to 

capital is nearly identical to its larger 

competitors. Its large shipment volume 

allows it to distribute the added cost of 

compliance across its products, similar 

to the large manufacturers. 

Correspondingly, it echoed the large 

manufacturers’ concerns about new 

energy conservation standards, 

including conversion costs needed to 

meet standards, meeting customer 

needs, and current market conditions. 

DOE found no significant differences in 

the R&D emphasis or marketing 

strategies between this small business 

manufacturer with a major market share 

and large manufacturers. As a result, 

DOE does not believe the impacts of the 

proposed standard will be significantly 

different for the small business 

manufacturer with a large market share 

when compared to those expected for 

the large business manufacturers. 

b. Small Business Manufacturers With 

Small Market Shares 

DOE does not expect the small 

businesses with small market shares to 

be compromised by the energy 

conservation standard finalized in 

today’s rule. DOE estimates that only 

approximately 40 percent of their 

offered vending equipment is covered 

by the standard. The majority of 

equipment offered is specialty or niche 

equipment. As a result, the primary 

source of revenue for these small 

manufacturers comes from supplying a 

market underserved by the major 

manufacturers of covered equipment. 

These small manufacturers may balance 

the cost disadvantage experienced in 

making their covered equipment 

compliant with today’s standard by 

charging premium prices for their noncovered niche equipment. As a result, 

DOE believes the standard will not 

affect the competitive position of the 

small business manufacturers with 

small market shares in covered 

equipment. 

DOE was able to estimate a portion of 

the differential impacts of the standard 

on the small manufacturers with small 

market shares by evaluating costs 

associated with equipment testing and 

certification. Manufacturers must test 

the energy performance of each basic 

model it manufactures to determine 

compliance with energy conservation 

standards and testing requirements. 

Therefore, DOE examined the number of 

basic models available from each 

manufacturer to determine an estimate 

for the differential in overall compliance 

costs. The number of basic models 

attributed to each manufacturer is based 

on an examination of the different 

models advertised by each. DOE 

estimates the cost of testing a piece of 

covered equipment to be approximately 

$2,000. A typical major manufacturer 

has approximately 23 basic models, 

approximately 85 percent of which are 

covered and would require separate 

standards compliance certifications. 

Therefore, DOE estimates that a typical 

major manufacturer will incur 

approximately $44,013 in annual costs 

for standards compliance certifications. 

DOE estimates that a typical small 

manufacturer with small market share 

has approximately 27 basic models, 44 

percent of which are covered and would 

require separate standards compliance 

certifications. DOE estimates that a 

typical small manufacturer will incur 

approximately $14,380 in annual costs 

for standards compliance certifications. 

According to this comparison, the cost 

of certification for a small manufacturer 

with small market share is significantly 

lower than that of a major manufacturer. 

As stated above, DOE estimated that 

there would be some differential 

impacts associated with beverage 

vending machine design and 

manufacturing on small manufacturers. 

DOE requested comments on how small 

business manufacturers would be 

affected due to new energy conversation 

standards. Specifically, DOE requested 

comments on the compliance costs and 

other impacts to small manufacturers 

that do not supply the high-volume 

customers of beverage vending 

machines. However, DOE did not 

receive any comments regarding 

impacts specific to small business 

manufacturers. 

5. Steps DOE Has Taken To Minimize 

the Economic Impact on Small 

Manufacturers 

In consideration of the benefits and 

burdens of standards, including the 

burdens posed on small manufacturers, 

DOE concluded that TSL 6 for Class A 

machines and TSL 3 for Class B 

machines are the highest levels that can 

be justified for beverage vending 

machines. Therefore, while the lower 

TSLs analyzed may lessen the impacts 

on small entities, DOE is precluded 

from adopting them based on the 

requirements of EPCA. 

Section VI.C.2 discusses how business 

impacts, including small business 

impacts, entered into DOE’s selection of 

today’s standards for beverage vending 

machines. DOE made its decision 

regarding standards by beginning with 

the highest level considered (TSL 7 for 

Class A machines and TSL 6 for Class 

B machines) and successively 

eliminating TSLs until it found a TSL 

that is both technically feasible and 

economically justified, taking into 

account other EPCA criteria. DOE 

expects today’s standard to have little or 

no differential impact on small 

manufacturers of beverage vending 

machines. 

As explained in part 6 of the IRFA, 

Significant Alternatives to the Rule, 

DOE expects that the differential impact 

on small beverage vending machine 

manufacturers would be less severe in 

moving from TSL 5 to TSL 6 for Class 

A than it would be in moving from TSL 

6 to TSL 7. For Class B machines, DOE 

expects that the differential impact on 

small beverage vending machine 

manufacturers would be less significant 

in moving from TSL 2 to TSL 3 than it 

would be in moving from TSL 4 to TSL 

5. Higher TSLs would place excessive 

burdens on manufacturers, including 

small manufacturers of beverage 

vending machines. Such burdens 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 

at TSL 6 for Class A machines and TSL 

3 for Class B machines 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. 

The TSD includes a regulatory impact 

analysis (RIA) (chapter 17), which 

discusses the following policy 

alternatives to the standards announced 

today that may lessen impacts on small 

entities: (1) No new regulatory action, 

(2) financial incentives including 

rebates or tax credits, (3) revisions to 

voluntary energy efficiency targets such 

as ENERGY STAR program criteria, (4) 

bulk government purchases, (5) early 

replacement incentive programs, and (6) 

prescriptive standards that would 

mandate design requirements (e.g., 

lighting and refrigeration controls). DOE 

did not consider these alternatives 

further because they are either not 

feasible to implement, or not expected 

to result in energy savings as large as 

those that would be achieved by the 

standard levels under consideration. 

DOE considered the following 

alternatives in its IRFA in accordance 

with Section 603(c) of the RFA: (1) 

Establishment of different compliance 

or reporting requirements for small 

entities or timetables that take into 

account the resources available to small 

entities, (2) clarification, consolidation, 

or simplification of compliance and 

reporting requirements for small 

entities, (3) use of performance rather 

than design standards, and (4) 

exemption for certain small entities 

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44966 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

from coverage of the rule, in whole or 

in part. For reasons described in the 

May 2009 NOPR, DOE did not choose 

any of these alternatives to the proposed 

rule. 73 FR 26071–26072. 

C. Review Under the Paperwork 

Reduction Act 

DOE stated in the May 2009 NOPR 

that this rulemaking would impose no 

new information and recordkeeping 

requirements, and that OMB clearance 

is not required under the Paperwork 

Reduction Act (44 U.S.C. 3501 et seq.). 

74 FR 26072. DOE received no 

comments on this in response to the 

May 2009 NOPR, and, as with the 

proposed rule, today’s final rule 

imposes no information and 

recordkeeping requirements. Therefore, 

DOE has taken no further action in this 

rulemaking with respect to the 

Paperwork Reduction Act. 

D. Review Under the National 

Environmental Policy Act 

DOE prepared an environmental 

assessment of the impacts of today’s 

standards which it published as chapter 

16 within the TSD for the final rule. 

DOE found the environmental effects 

associated with today’s various standard 

levels for beverage vending machines to 

be insignificant. Therefore, DOE is 

issuing a FONSI pursuant to NEPA (42 

U.S.C. 4321 et seq.), the regulations of 

the Council on Environmental Quality 

(40 CFR parts 1500–1508), and DOE’s 

regulations for compliance with NEPA 

(10 CFR part 1021). The FONSI is 

available in the docket for this 

rulemaking. 

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 requirements on 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have federalism 

implications. In accordance with DOE’s 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

regulations that have federalism 

implications, 65 FR 13735 (March 14, 

2000), DOE examined the May 2009 

proposed rule and determined that the 

rule would not have a substantial direct 

effect on the States, on the relationship 

between the National Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of Government. 74 FR 

26072. DOE received no comments on 

this issue in response to the May 2009 

NOPR, and its conclusions on this issue 

are the same for the final rule as they 

were for the proposed rule. Therefore, 

DOE has taken 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 and ambiguity, (2) write 

regulations to minimize litigation, and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. Section 3(b) of 

Executive Order 12988 specifically 

requires that executive agencies make 

every reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, the final 

regulations meet the relevant standards 

of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

As indicated in the May 2009 NOPR, 

DOE reviewed the proposed rule under 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

(UMRA), which imposes requirements 

on Federal agencies when their 

regulatory actions will have certain 

types of impacts on State, local, and 

Tribal governments and the private 

sector. 74 FR 26073. DOE concluded 

that this rule would not contain an 

intergovernmental mandate, nor result 

in expenditures of $100 million or more 

in one year by the private sector. Id. In 

the May 2009 NOPR, DOE addressed the 

UMRA requirements to prepare a 

statement as to the basis, costs, benefits, 

and economic impacts of the proposed 

rule, and that it identify and consider 

regulatory alternatives to the proposed 

rule. Id. DOE received no comments 

concerning the UMRA in response to 

the May 2009 NOPR, and its 

conclusions on this issue are the same 

for the final rule as they were for the 

proposed rule. Therefore, DOE has taken 

no further action in today’s final rule 

with respect to the UMRA. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

DOE determined that, for this 

rulemaking, it need not prepare a 

Family Policymaking Assessment under 

Section 654 of the Treasury and General 

Government Appropriations Act, 1999 

(Pub. L. 105–277). Id. DOE received no 

comments concerning Section 654 in 

response to the May 2009 NOPR, and, 

therefore, has taken 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 Constitutionally 

Protected Property Rights,’’ 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. 74 FR 26073. DOE 

received no comments concerning 

Executive Order 12630 in response to 

the May 2009 NOPR, and, therefore, has 

taken no further action in today’s final 

rule with respect to this Executive 

Order. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516 note) provides 

for agencies to review most 

disseminations of information to the 

public under guidelines established by 

each agency pursuant to general 

guidelines issued by OMB. OMB’s 

guidelines were published at 67 FR 

8452 (February 22, 2002), and DOE’s 

guidelines were published at 67 FR 

62446 (October 7, 2002). DOE has 

reviewed today’s final rule under the 

OMB and DOE guidelines and has 

concluded that it is consistent with 

applicable policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use,’’ 66 FR 28355 (May 

22, 2001) requires Federal agencies to 

prepare and submit to OIRA a Statement 

of Energy Effects for any significant 

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Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 44967 

energy action. DOE determined that 

today’s rule, which sets energy 

conservation standards for beverage 

vending machines, is not a ‘‘significant 

energy action’’ within the meaning of 

Executive Order 13211. 74 FR 26073. 

Accordingly, DOE did not prepare a 

Statement of Energy Effects on the 

proposed rule. DOE received no 

comments on this issue in response to 

the May 2009 NOPR. As with the 

proposed rule, DOE has concluded that 

today’s final rule is not a significant 

energy action within the meaning of 

Executive Order 13211, and has not 

prepared a Statement of Energy Effects 

on the final rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology, issued its ‘‘Final 

Information Quality Bulletin for Peer 

Review’’ (the Bulletin). 70 FR 2664 

(January 14, 2005). The purpose of the 

Bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government. As indicated in the May 

2009 NOPR, this includes influential 

scientific information related to agency 

regulatory actions, such as the analyses 

in this rulemaking. 74 FR 26073–74. 

As set forth in the May 2009 NOPR, 

DOE held 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. The report is 

available at http://www.eere.energy.gov/ 

buildings/appliance_standards/ 

peer_review.html. Id. 

M. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

submit to Congress a report regarding 

the issuance of today’s final rule prior 

to the effective date set forth at the 

outset of this notice. The report will 

state that it has been determined that 

the rule is a ‘‘major rule’’ as defined by 

5 U.S.C. 804(2). DOE also will submit 

the supporting analyses to the 

Comptroller General in the U.S. 

Government Accountability Office 

(GAO) and make them available to each 

House of Congress. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of today’s final rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Incorporation by reference. 

Issued in Washington, DC, on August 5, 

2009. 

Cathy Zoi, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

■ 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 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

■ 2. In § 431.292 add, in alphabetical 

order, new definitions for ‘‘bottled or 

canned beverage,’’ ‘‘Class A,’’ ‘‘Class B,’’ 

‘‘combination vending machine,’’ and 

‘‘V’’ to read as follows: 

§ 431.292 Definitions concerning 

refrigerated bottled or canned beverage 

vending machines. 

* * * * * 

Bottled or canned beverage means a 

beverage in a sealed container. 

Class A means a refrigerated bottled 

or canned beverage vending machine 

that is fully cooled, and is not a 

combination vending machine. 

Class B means any refrigerated bottled 

or canned beverage vending machine 

not considered to be Class A, and is not 

a combination vending machine. 

Combination vending machine means 

a refrigerated bottled or canned beverage 

vending machine that also has nonrefrigerated volumes for the purpose of 

vending other, non-‘‘sealed beverage’’ 

merchandise. 

* * * * * 

V means the refrigerated volume (ft3) 

of the refrigerated bottled or canned 

beverage vending machine, as measured 

by ANSI/AHAM HRF–1–2004 

(incorporated by reference, see 

§ 431.293). 

■ 3. Section 431.293 is revised to read 

as follows: 

§ 431.293 Materials incorporated by 

reference. 

(a) General. DOE incorporates by 

reference the following standards into 

Subpart Q of Part 431. The material 

listed has been approved for 

incorporation by reference by the 

Director of the Federal Register in 

accordance with 5 U.S.C. 552(a) and 1 

CFR part 51. Any subsequent 

amendment to a standard by the 

standard-setting organization will not 

affect the DOE regulations unless and 

until amended by DOE. Material is 

incorporated as it exists on the date of 

the approval and a notice of any change 

in the material will be published in the 

Federal Register. All approved material 

is available for inspection at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call (202) 741–6030 

or visit http://www.archives.gov/

federal_register/code_of_federal_

regulations/ibr_locations.html. This 

material is also available for inspection 

at U.S. Department of Energy, Office of 

Energy Efficiency and Renewable 

Energy, Building Technologies Program, 

6th Floor, 950 L’Enfant Plaza, SW., 

Washington, DC 20024, 202–586–2945, 

or visit http://www1.eere.energy.gov/ 

buildings/appliance_standards. 

Standards can be obtained from the 

sources listed below. 

(b) ANSI. American National 

Standards Institute, 25 W. 43rd Street, 

4th Floor, New York, NY 10036, 212– 

642–4900, or visit http://www.ansi.org. 

(1) ANSI/AHAM HRF–1–2004, 

Energy, Performance and Capacity of 

Household Refrigerators, RefrigeratorFreezers and Freezers, approved July 7, 

2004, IBR approved for §§ 431.292 and 

431.294. 

(2) ANSI/ASHRAE Standard 32.1– 

2004, Methods of Testing for Rating 

Vending Machines for Bottled, Canned, 

and Other Sealed Beverages, approved 

December 2, 2004, IBR approved for 

§ 431.294. 

■ 4. In Subpart Q, add an undesignated 

center heading and § 431.296 to read as 

follows: 

Energy Conservation Standards 

§ 431.296 Energy conservation standards 

and their effective dates. 

Each refrigerated bottled or canned 

beverage vending machine 

manufactured on or after [Insert date 3 

years from the date of publication of this 

final rule] shall have a maximum daily 

energy consumption (in kilowatt hours 

per day), when measured at the 75 °F 

± 2 °F and 45 ± 5% RH condition, that 

does not exceed the following: 

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44968 Federal Register / Vol. 74, No. 167 / Monday, August 31, 2009 / Rules and Regulations 

Equipment class Maximum daily energy consumption 

(kilowatt hours per day) 

Class A ................................................................................................................................................ MDEC = 0.055 × V + 2.56. 

Class B ................................................................................................................................................ MDEC = 0.073 × V + 3.16. 

Combination Vending Machines .......................................................................................................... [RESERVED]. 

[The following letter from the 

Department of Justice will not appear in 

the Code of Federal Regulations.] 

Appendix 

Department of Justice 

Antitrust Division. 

Christine A. Varney 

Assistant Attorney General. 

Main Justice Building, 950 Pennsylvania 

Avenue, NW., Washington, DC 20530– 

0001, (202) 514–2401/(202) 616–2645 (f), 

E-mail: antitrust@justice.usdoj.gov, Web 

site: http://www.usdoj.gov. 

July 23, 2009. 

Eric J. Fygi, Deputy General Counsel, 

Department of Energy, Washington, DC 

20585. 

Dear Deputy General Counsel Fygi: I am 

responding to your May 22, 2009 letter 

seeking the views of the Attorney General 

about the potential impact on competition of 

proposed energy conservation standards for 

Class A and Class B refrigerated beverage 

vending machines (‘‘BVMs’’). Your request 

was submitted pursuant to Section 

325(o)(2)(B)(i)(V), which requires the 

Attorney General to make a determination of 

the impact of any lessening of competition 

that is likely to result from the imposition of 

proposed energy conservation standards. The 

Attorney General’s responsibility for 

responding to requests from other 

departments about the effect of a program on 

competition has been delegated to the 

Assistant Attorney General for the Antitrust 

Division in 28 CFR 0.40(g). 

In conducting its analysis the Antitrust 

Division examines whether a proposed 

standard may lessen competition, for 

example, by substantially limiting consumer 

choice, leaving consumers with fewer 

competitive alternatives, placing certain 

manufacturers of a product at an unjustified 

competitive disadvantage compared to other 

manufacturers, or by inducing avoidable 

inefficiencies in production or distribution of 

particular products. 

We have reviewed the proposed standard 

contained in the Notice of Proposed 

Rulemaking (‘‘NOPR’’) (74 FR 26020) and 

attended the June 17, 2009 public hearing on 

the proposed standard. In addition, we have 

conducted interviews with members of the 

industry. 

Based on our review of the record and 

information we have gathered, we do not 

believe the proposed standard for Class B 

BVMs would likely lead to a lessening of 

competition. We are concerned, however, 

that the proposed Trial Standard Level 6 for 

Class A BVMs could potentially lessen 

competition. BVM manufacture is a highly 

concentrated industry in the United States, 

and compliance with the proposed Class A 

standard could require a disproportionate 

investment by some manufacturers, 

potentially placing them at a disadvantage 

vis-a`-vis others and leading to greater 

concentration. Compliance with a lesser 

standard does not appear to raise similar 

concerns. 

We ask the Department of Energy to take 

this possible competitive impact into 

account. We further ask the Department of 

Energy to ensure that the standard it adopts 

for Class A BVMs will not require access to 

intellectual property owned by an industry 

participant, which would place other 

industry participants at a comparative 

disadvantage. 

Sincerely, 

Christine A. Varney, 

Assistant Attorney General. 

[FR Doc. E9–19392 Filed 8–28–09; 8:45 am] 

BILLING CODE 6450–01–P 

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