```

[Federal Register Volume 77, Number 104 (Wednesday, May 30, 2012)]
[Rules and Regulations]
[Pages 31918-31963]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-12340]

[[Page 31917]]

Vol. 77

Wednesday,

No. 104

May 30, 2012

Part II

Department of Energy

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10 CFR Parts 429 and 430

Energy Conservation Program: Energy Conservation Standards for 
Residential Dishwashers; Final Rule and Proposed Rule

Federal Register / Vol. 77, No. 104 / Wednesday, May 30, 2012 / Rules 
and Regulations

[[Page 31918]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 430

[Docket Number EERE-2011-BT-STD-0060]
RIN 1904-AC64

Energy Conservation Program: Energy Conservation Standards for 
Residential Dishwashers

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

ACTION: Direct final rule.

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

SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
residential dishwashers. EPCA also requires the U.S. Department of 
Energy (DOE) to determine whether amended standards would be 
technologically feasible and economically justified, and would save a 
significant amount of energy. In this direct final rule, DOE is 
adopting amended energy conservation standards for residential 
dishwashers. DOE has determined that the amended energy conservation 
standards for these products would result in significant conservation 
of energy, and are technologically feasible and economically justified. 
A notice of proposed rulemaking that proposes identical energy 
efficiency standards is published elsewhere in today's Federal 
Register. If DOE receives adverse comment and determines that such 
comment may provide a reasonable basis for withdrawing the direct final 
rule, this final rule will be withdrawn and DOE will proceed with the 
proposed rule.

DATES: The effective date of this rule is September 27, 2012 unless 
adverse comment is received by September 17, 2012. If adverse comments 
are received that DOE determines may provide a reasonable basis for 
withdrawal of the final rule, a timely withdrawal of this rule will be 
published in the Federal Register. If no such adverse comments are 
received, compliance with the amended standards established for 
residential dishwashers in today's final rule will be required on May 
30, 2013.

ADDRESSES: The docket for this rulemaking is available for review at 
www.regulations.gov, including Federal Register notices, comments, and 
other supporting documents/materials. All documents in the docket are 
listed in the regulations.gov index. Not all documents listed in the 
index may be publicly available, however, such as information that is 
exempt from public disclosure.
    A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0060. The 
regulations.gov Web page contains instructions on how to access all 
documents, including public comments, in the docket.
    For further information on how to review the docket, contact Ms. 
Brenda Edwards at (202) 586-2945 or by email: 
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Witkowski, U.S. Department 
of Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: (202) 586-7463. Email: 
Stephen.Witkowski@ee.doe.gov.
    Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-7796. Email: Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Direct Final Rule and Its Benefits
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits
    D. Conclusion
II. Introduction
    A. Authority
    B. Background
    1. EISA 2007 Standards
    2. History of Standards Rulemaking for Residential Dishwashers
    3. Issues on Which DOE Seeks Comment
    4. Test Procedure History
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    D. Economic Justification
    1. Specific Criteria
    2. Rebuttable Presumption
IV. Methodology and Discussion
    A. Market and Technology Assessment
    1. General
    2. Products Included in This Rulemaking
    3. Product Classes
    4. Non-Regulatory Programs
    5. Technology Options
    B. Screening Analysis
    C. Engineering Analysis
    1. Baseline Efficiency Levels
    2. Higher Efficiency Levels
    3. Proprietary Designs
    4. Reverse Engineering
    D. Markups Analysis
    E. Energy and Water Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Energy Price Projections
    6. Water and Wastewater Prices
    7. Maintenance and Repair Costs
    8. Product Lifetime
    9. Discount Rates
    10. Compliance Date of Amended Standards
    11. Base-Case Efficiency Distribution
    12. Inputs to Payback Period Analysis
    13. Rebuttable-Presumption Payback Period
    G. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. Shipments
    2. Forecasted Efficiency in the Base Case and Standards Cases
    3. Total Installed Cost per Unit
    4. National Energy and Water Savings
    5. Net Present Value of Consumer Benefit
    H. Consumer Subgroup Analysis
    I. Manufacturer Impact Analysis
    1. Overview
    2. GRIM Analysis
    3. Manufacturer Interviews
    J. Employment Impact Analysis
    K. Utility Impact Analysis
    L. Emissions Analysis
    M. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    2. Valuation of Other Emissions Reductions
V. Analytical Results
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    2. Economic Impacts on Manufacturers
    3. National Impact Analysis
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Other Factors
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Residential 
Dishwashers
    2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866 and Executive Order 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    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

[[Page 31919]]

    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VII. Approval of the Office of the Secretary

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

I. Summary of the Direct Final Rule and Its Benefits

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as 
codified), established the Energy Conservation Program for Consumer 
Products Other Than Automobiles. Pursuant to EPCA, any new or amended 
energy conservation standard that DOE prescribes for certain products, 
such as residential dishwashers, shall 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)) 
Furthermore, the new or amended standard must result in significant 
conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In accordance with 
these and other statutory provisions discussed in this notice, DOE is 
adopting amended energy conservation standards for residential 
dishwashers. The amended standards, which are established in terms of 
maximum annual energy use and maximum per-cycle water consumption, are 
shown in Table I.1. These amended standards apply to all products 
listed in Table I.1 and manufactured in, or imported into, the United 
States on or after May 30, 2013.
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.

    Table I.1--Amended Energy Conservation Standards for Residential
                               Dishwashers
------------------------------------------------------------------------
                                      Compliance date: May 30, 2013
                                ----------------------------------------
         Product class              Maximum annual     Maximum per-cycle
                                     energy use *      water consumption
------------------------------------------------------------------------
1. Standard (>=8 place settings  307 kWh/year.......  5.0 gallons/cycle.
 plus 6 serving pieces).
2. Compact (year.......  3.5 gallons/cycle.
 plus 6 serving pieces).
------------------------------------------------------------------------
* Annual energy use, expressed in kilowatt-hours (kWh) per year, is
  calculated as: The sum of the annual standby electrical energy in kWh
  and the product of (1) the representative average dishwasher use
  cycles per year and (2) the sum of machine electrical energy
  consumption per cycle in kWh, the total water energy consumption per
  cycle in kWh, and, for dishwashers having a truncated normal cycle,
  the drying energy consumption divided by 2 in kWh. A truncated normal
  cycle is defined as the normal cycle interrupted to eliminate the
  power-dry feature after the termination of the last rinse option.

    These standard levels were submitted jointly to DOE by groups 
representing manufacturers, energy and environmental advocates, and 
consumer groups. This collective set of comments, titled ``Agreement on 
Minimum Federal Efficiency Standards, Smart Appliances, Federal 
Incentives and Related Matters for Specified Appliances'' (the ``Joint 
Petition'' \2\), recommends specific energy conservation standards for 
residential dishwashers that, in the commenters' view, would satisfy 
the EPCA requirements in 42 U.S.C. 6295(o).
---------------------------------------------------------------------------

    \2\ DOE Docket No. EERE-2011-BT-STD-0060, Comment 1.
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A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of 
today's standards on consumers of residential dishwashers, as measured 
by the average life-cycle cost (LCC) savings and the median payback 
period.

   Table I.2--Impacts of Today's Standards on Consumers of Residential
                               Dishwashers
------------------------------------------------------------------------
                                            Average LCC   Median payback
              Product class                   savings         period
                                              (2010$)         (years)
------------------------------------------------------------------------
Standard................................               3            11.8
Compact.................................              12             0.3
------------------------------------------------------------------------

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2012 through 2047). Using a real discount rate of 8.5 
percent, DOE estimates that the INPV for manufacturers of dishwashers 
is $637.5 million in 2010$. Under today's standards, DOE expects that 
manufacturers may lose up to 13.3 percent of their INPV, which is 
approximately $84.6 million. Additionally, based on DOE's interviews 
with the manufacturers of dishwashers, DOE does not expect any plant 
closings or significant loss of employment as a result of today's 
standards.

C. National Benefits

    DOE's analyses indicate that today's standards would save a 
significant amount of energy and water in 2013-2047--an estimated 0.07 
quads of cumulative energy, and 0.14 trillion gallons of water.
    The cumulative national net present value (NPV) of total consumer 
costs and savings of today's standards in 2010$ ranges from $0.08 
billion (at a 7-percent discount rate) to $0.46 billion (at a 3-percent 
discount rate). This NPV expresses the estimated total value of future 
operating-cost savings minus the estimated increased product costs for 
products purchased in 2013-2047, discounted to 2012.

[[Page 31920]]

    In addition, today's standards would have significant environmental 
benefits. The energy savings would result in cumulative greenhouse gas 
emission reductions of approximately 4.06 million metric tons (Mt) of 
carbon dioxide (CO2) from 2013 through 2047. During this 
period, the standards would also result in emissions reductions \3\ of 
approximately 3.54 thousand tons of nitrogen oxides (NOX) 
and zero tons of mercury (Hg).\4\
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    \3\ DOE calculates emissions reductions relative to the most 
recent version of the Annual Energy Outlook (AEO) Reference case 
forecast. As noted in TSD chapter 15, this forecast accounts for 
regulatory emissions reductions from in-place regulations at the 
time of preparation of the AEO, including the Clean Air Interstate 
Rule (CAIR, 70 FR 25162 (May 12, 2005)), but not the Clean Air 
Mercury Rule (CAMR, 70 FR 28606 (May 18, 2005)). Subsequent 
regulations, including the recently finalized CAIR replacement rule, 
the Cross-State Air Pollution rule issued on July 6, 2011, will 
appear in the forecast for future rulemakings.
    \4\ Results for NOX and Hg are presented in short 
tons. One short ton equals 2000 lbs.
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent interagency 
process. The derivation of the SCC values is discussed in section IV.M. 
DOE estimates that the present monetary value of the CO2 
emissions reductions is between $16 and $242 million, expressed in 
2010$ and discounted to 2012. DOE also estimates that the present 
monetary value of the NOX emissions reductions, expressed in 
2010$ and discounted to 2012, is $2.8 million at a 7-percent discount 
rate, and $5.2 million at a 3-percent discount rate.\5\
---------------------------------------------------------------------------

    \5\ DOE is aware of multiple agency efforts to determine the 
appropriate range of values to use in evaluating the potential 
economic benefits of reduced Hg emissions. DOE has decided to await 
further guidance regarding consistent valuation and reporting of Hg 
emissions before it monetizes Hg emissions reductions in its 
rulemakings.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic costs and benefits 
expected to result from today's standards for residential dishwashers.

      Table I.3--Summary of National Economic Benefits and Costs of
          Residential Dishwasher Energy Conservation Standards
------------------------------------------------------------------------
                                        Present value
              Category                  Million 2010$   Discount rate  %
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings..............               600                 7
                                     -----------------------------------
                                                  1341                 3
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at                16.09                 5
 $4.9/t) *..........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at                79.49                 3
 $22.3/t) *.........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at                133.5               2.5
 $36.5/t) *.........................
------------------------------------------------------------------------
CO2 Reduction Monetized Value (at                242.5                 3
 $67.6/t) *.........................
------------------------------------------------------------------------
NOX Reduction Monetized Value (at                 2.76                 7
 $2,537/ton) **.....................
                                     -----------------------------------
                                                  5.24                 3
                                     -----------------------------------
    Total Benefits [dagger].........               683                 7
                                     -----------------------------------
                                                  1426                 3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Incremental Installed Costs.........               522                 7
                                     -----------------------------------
                                                   881                 3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger].......               161                 7
                                     -----------------------------------
                                                   545                 3
------------------------------------------------------------------------
* The CO2 values represent global monetized values of the SCC in 2010
  under several scenarios. The values of $4.9, $22.3, and $36.5 per
  metric ton (t) are the averages of SCC distributions calculated using
  5%, 3%, and 2.5% discount rates, respectively. The value of $67.6/t
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate.
** The value represents the average of the low and high NOX values used
  in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the SCC value calculated at a 3% discount rate.

    The benefits and costs of today's standards, for products sold in 
2013-2047, can also be expressed in terms of annualized values. The 
annualized monetary values are the sum of (1) the annualized national 
economic value, expressed in 2010$, of the benefits from operating the 
product (consisting primarily of operating cost savings from using less 
energy, minus increases in equipment purchase and installation costs, 
which is another way of representing consumer NPV, plus (2) the 
annualized monetary value of the benefits of emission reductions, 
including CO2 emission reductions.\6\
---------------------------------------------------------------------------

    \6\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2012, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of 3 and 7 percent for all 
costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.3.From the present value, DOE then calculated the 
fixed annual payment over a 30-year period, starting in 2013, that 
yields the same present value. This payment includes benefits to 
consumers which accrue after 2047 from the dishwashers purchased 
from 2013 to 2047. Costs incurred by manufacturers, some of which 
may be incurred prior to 2013 in preparation for the rule, are 
indirectly included as part of incremental equipment costs. The 
extent of these costs and benefits depends on the projected price 
trends of dishwashers because consumer demand of dishwashers is a 
function of dishwasher prices. The fixed annual payment is the 
annualized value. Although DOE calculated annualized values, this 
does not imply that the time-series of cost and benefits from which 
the annualized values were determined is a steady stream of 
payments.

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[[Page 31921]]

    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. consumer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
CO2 savings are performed with different methods that use 
quite different time frames for analysis. The national operating cost 
savings is measured for the lifetime of residential dishwashers shipped 
in 2013-2047. The SCC values, on the other hand, reflect the present 
value of future climate-related impacts resulting from the emission of 
one metric ton of carbon dioxide in each year. These impacts continue 
well beyond 2100.
    Estimates of annualized benefits and costs of today's standards are 
shown in Table I.4. (All monetary values below are expressed in 2010$.) 
The results under the primary estimate are as follows. Using a 7-
percent discount rate for benefits and costs other than CO2 
reduction, for which DOE used a 3-percent discount rate along with the 
SCC series corresponding to a value of $22.3/ton in 2010, the cost of 
the standards for dishwashers in today's rule is $46 million per year 
in increased equipment costs, while the benefits are $53 million per 
year in reduced equipment operating costs, $3.9 million in 
CO2 reductions, and $0.24 million in reduced NOX 
emissions. In this case, the net benefit amounts to $11 million per 
year. Using a 3-percent discount rate for all benefits and costs and 
the SCC series corresponding to a value of $22.3/ton in 2010, the cost 
of the standards for dishwashers in today's rule is $44 million per 
year in increased equipment costs, while the benefits are $66 million 
per year in reduced operating costs, $3.9 million in CO2 
reductions, and $0.26 million in reduced NOX emissions. In 
this case, the net benefit amounts to $27 million per year.

                                          Table I.4--Annualized Benefits and Costs of Amended Standards for Residential Dishwashers Sold in 2013-2047 *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Monetized  (million 2010$/year)
                                                  Discount rate             --------------------------------------------------------------------------------------------------------------------
                                                                                       Primary estimate *                Low net benefits estimate *            High net benefits estimate *
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings..............  7%...................................  53...................................  48...................................  59.
                                      3%...................................  66...................................  59...................................  75.
CO2 Reduction at $4.9/t **..........  5%...................................  1.1..................................  1.0..................................  1.3.
CO2 Reduction at $22.3/t **.........  3%...................................  3.9..................................  3.5..................................  4.7.
CO2 Reduction at $36.5/t **.........  2.5%.................................  6.1..................................  5.4..................................  7.2.
CO2 Reduction at $67.6/t **.........  3%...................................  12.0.................................  10.8.................................  14.2.
NOX Reduction at $2,537/ton **......  7%...................................  0.24.................................  0.23.................................  0.27.
                                      3%...................................  0.26.................................  0.24.................................  0.30.
Total [dagger]......................  7% plus CO2 range....................  54 to 65.............................  49 to 59.............................  60 to 73.
                                      7%...................................  57...................................  52...................................  64.
                                      3% plus CO2 range....................  68 to 78.............................  60 to 70.............................  76 to 89.
                                      3%...................................  70...................................  63...................................  80.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Costs
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Product Costs...........  7%...................................  46...................................  44...................................  43.
                                      3%...................................  44...................................  41...................................  40.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Total Net Benefits
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger]......................  7% plus CO2 range....................  8 to 19..............................  6 to 16..............................  17 to 30.
                                      7%...................................  11...................................  8....................................  20.
                                      3% plus CO2 range....................  24 to 35.............................  19 to 29.............................  37 to 49.
                                      3%...................................  27...................................  22...................................  40.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 through 2047. Costs incurred by manufacturers, some of which may be incurred prior
  to 2013 in preparation for the rule, are indirectly included as part of incremental equipment costs. The extent of the costs and benefits will depend on the projected price trends of
  dishwashers, because the consumer demand for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and
  housing starts from the AEO2011 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline rate for projected product
  price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits Estimate, and a high decline rate for projected product price trends in the
  High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.G.3.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and $36.5 per ton are the averages of SCC
  distributions calculated using 5-percent, 3-percent, and 2.5-percent discount rates, respectively. The value of $67.6 per ton represents the 95th percentile of the SCC distribution
  calculated using a 3-percent discount rate. The value for NOX (in 2010$) is the average of the low and high values used in DOE's analysis.

[[Page 31922]]

 
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the SCC value calculated at a 3-percent discount rate, which is $22.3/t in 2010 (in 2010$). In the rows
  labeled as ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range
  of CO2 values.

D. Conclusion

    Based on the analyses culminating in this final rule, DOE found the 
benefits to the nation of the standards (energy savings, water savings, 
favorable consumer LCC savings and payback period, positive NPV of 
consumer benefit, and emission reductions) outweigh the burdens (profit 
margin impacts that could result in a reduction in INPV and increased 
operational risk for manufacturers). DOE has concluded that the 
standards in today's final rule represent the maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified, and would result in significant conservation of energy. DOE 
further notes that residential dishwashers achieving these standard 
levels are already commercially available.

II. Introduction

    The following section briefly discusses the statutory authority 
underlying today's final rule, as well as some of the relevant 
historical background related to the establishment of standards for 
residential dishwashers.

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles,\7\ a program covering most major household appliances 
(collectively referred to as ``covered products''), which includes the 
residential dishwashers that are the subject of this rulemaking. (42 
U.S.C. 6292(a)(6)) EPCA prescribed energy conservation standards for 
these products (42 U.S.C. 6295(g)(1)), and directed DOE to conduct two 
cycles of rulemakings to determine whether to amend these standards. 
(42 U.S.C. 6295(g)(4)) DOE also notes that under 42 U.S.C. 6295(m), DOE 
must periodically review its energy conservation standards for covered 
products.
---------------------------------------------------------------------------

    \7\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
---------------------------------------------------------------------------

    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(FTC) is primarily responsible for labeling, and DOE implements the 
remainder of the program. Subject to certain criteria and conditions, 
DOE is required to develop test procedures to measure the energy 
efficiency, energy use, or estimated annual operating cost of each 
covered product. (42 U.S.C. 6293) Manufacturers of covered products 
must use the prescribed DOE test procedure as the basis for certifying 
to DOE that their products comply with the applicable energy 
conservation standards adopted under EPCA and when making 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use 
these test procedures to determine whether the products comply with 
standards adopted pursuant to EPCA. Id. The DOE test procedure for 
residential dishwashers currently appear at title 10 of the Code of 
Federal Regulations (CFR) part 430, subpart B, appendix C.
    DOE must follow specific statutory criteria for prescribing amended 
standards for covered products. As indicated above, any amended 
standard for a covered product 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)) Furthermore, DOE may 
not adopt any standard that would not result in the significant 
conservation of energy. (42 U.S.C. 6295(o)(3)) In deciding whether an 
amended standard is economically justified, DOE must determine whether 
the benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i)) DOE must make this determination after receiving 
comments on the proposed standard and 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 products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
products likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy and water conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    EPCA allows DOE to issue a final rule (hereinafter referred to as a 
``direct final rule'') establishing an energy conservation standard on 
receipt of a statement submitted jointly by interested persons that are 
fairly representative of relevant points of view (including 
representatives of manufacturers of covered products, States, and 
efficiency advocates) as determined by the Secretary, that contains 
recommendations with respect to an energy conservation standard that 
are in accordance with the provisions of 42 U.S.C. 6295(o). A notice of 
proposed rulemaking (NOPR) that proposes an identical energy efficiency 
standard must be published simultaneously with the final rule, and DOE 
must provide a public comment period of at least 110 days. 42 U.S.C. 
6295(p)(4). Not later than 120 days after issuance of the direct final 
rule, if one or more adverse comments or an alternative joint 
recommendation are received relating to the direct final rule, the 
Secretary must determine whether the comments or alternative 
recommendation may provide a reasonable basis for withdrawal under 42 
U.S.C. 6295(o) or other applicable law. If the Secretary makes such a 
determination, DOE must withdraw the direct final rule and proceed with 
the simultaneously published notice of proposed rulemaking. DOE must 
publish in the Federal Register the reason why the direct final rule 
was withdrawn. Id.
    Furthermore, EPCA, contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that

[[Page 31923]]

the standard is likely to result in the unavailability in the United 
States of 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. (42 U.S.C. 6295(o)(4))
    EPCA also establishes a rebuttable presumption that a standard 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 savings during the first year that the consumer will receive 
as a result of the standard, as calculated under the applicable test 
procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).
    Additionally, 42 U.S.C. 6295(q)(1) specifies requirements when 
promulgating a standard for a type or class of covered product that has 
two or more subcategories. DOE must specify a different standard level 
than that which applies generally to such type or class of products for 
any group of covered products that 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 within that type or class. Id. In determining 
whether a performance-related feature justifies 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. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 42 
U.S.C. 6297(d)).
    Any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, must address standby mode and off mode 
energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a 
standard for a covered product after that date, it must, if justified 
by the criteria for adoption of standards under EPCA (42 U.S.C. 
6295(o)), incorporate standby mode and off mode energy use into the 
standard, or, if that is not feasible, adopt a separate standard for 
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) The 
standards established in today's direct final rule address standby and 
off mode energy use.
    DOE notes that it is also required to amend its test procedures to 
integrate measures of standby mode and off mode energy consumption into 
the overall energy efficiency, energy consumption, or other energy 
descriptor for each covered product unless the current test procedure 
already fully accounts for and incorporates standby and off mode energy 
consumption or such integration is technically infeasible. (42 U.S.C. 
6295(gg)(2)) DOE is currently considering amendments to the test 
procedure at appendix C to incorporate measures of off mode energy 
consumption in addition to the existing measures of standby mode energy 
use. 75 FR 75290 (Dec. 2, 2010); 76 FR 58346 Sept. 20, 2011)
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies are required by Executive Order 13563 to: (1) Propose or adopt 
a regulation only upon a reasoned determination that its benefits 
justify its costs (recognizing that some benefits and costs are 
difficult to quantify); (2) tailor regulations to impose the least 
burden on society, consistent with obtaining regulatory objectives, 
taking into account, among other things, and to the extent practicable, 
the costs of cumulative regulations; (3) select, in choosing among 
alternative regulatory approaches, those approaches that maximize net 
benefits (including potential economic, environmental, public health 
and safety, and other advantages; distributive impacts; and equity); 
(4) to the extent feasible, specify performance objectives, rather than 
specifying the behavior or manner of compliance that regulated entities 
must adopt; and (5) identify and assess available alternatives to 
direct regulation, including providing economic incentives to encourage 
the desired behavior, such as user fees or marketable permits, or 
providing information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that today's direct final rule is consistent with these 
principles, including that, to the extent permitted by law, agencies 
adopt a regulation only upon a reasoned determination that its benefits 
justify its costs and select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits.
    Consistent with EO 13563, and the range of impacts analyzed in this 
rulemaking, the energy conservation standards adopted herein by DOE 
achieve maximum net benefits.

B. Background

1. EISA 2007 Standards
    EPCA, as amended by EISA 2007, prescribed energy conservation 
standards for residential dishwashers manufactured on or after January 
1, 2010. 42 U.S.C. 6295(g)(10) These standards are set forth in Table 
II.1.

  Table II.1--Energy Conservation Standards for Residential Dishwashers
                        Established by EISA 2007
------------------------------------------------------------------------
                                                         Per-cycle water
            Product class               Annual energy      consumption
                                       use (kWh/year)    (gallons/cycle)
------------------------------------------------------------------------
Standard............................               355               6.5
Compact.............................               260               4.5
------------------------------------------------------------------------

[[Page 31924]]

    The EPCA amendments in EISA 2007 also require DOE to publish a 
final rule no later than January 1, 2015 determining whether to amend 
the standards in effect for dishwashers manufactured on or after 
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) Today's final rule 
fulfills this statutory requirement.
2. History of Standards Rulemaking for Residential Dishwashers
    The National Appliance Energy Conservation Act of 1987 (NAECA), 
Public Law 100-12 (March 17, 1989), amended EPCA and required that 
dishwashers be equipped with an option to dry without heat. NAECA 
further required that DOE conduct two cycles of rulemakings to 
determine if amended standards are justified. (42 U.S.C. 6295(g)(1) and 
(4))
    On May 14, 1991, DOE issued a final rule establishing performance 
standards for dishwashers to complete the first required rulemaking 
cycle (56 FR 22250). Compliance with the new standards, codified at 10 
CFR 430.32(f), was required on May 14, 1994.
    DOE then conducted a second standards rulemaking for dishwashers. 
DOE issued an advance notice of proposed rulemaking (ANOPR) on November 
14, 1994 to consider amending the energy conservation standards for 
clothes washers, dishwashers, and clothes dryers. 59 FR 56423. 
Subsequently, DOE published a Notice of Availability of the Rulemaking 
Framework for Commercial Clothes Washers and Residential Dishwashers, 
Dehumidifiers, and Cooking Products. 71 FR 15059 (Mar. 27, 2006). On 
November 15, 2007, DOE published a second ANOPR (hereafter, the 
November 2007 ANOPR) addressing energy conservation standards for these 
products. 72 FR 64432. On December 19, 2007, Congress enacted EISA 
2007, which, among other things, established maximum energy and water 
use levels for residential dishwashers manufactured on or after January 
1, 2010. (42 U.S.C. 6295(g)(10)) DOE codified the statutory standards 
for these products in a final rule published March 23, 2009. 74 FR 
12058.
    EPCA, as amended by EISA 2007, further requires that DOE publish a 
final rule no later than January 1, 2015, to determine whether to amend 
the standards in effect for dishwashers manufactured on or after 
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)(i)) This rulemaking fulfills 
this statutory requirement.
    On July 30, 2010, DOE received the Joint Petition, a comment 
submitted by groups representing manufacturers (the Association of Home 
Appliance Manufacturers (AHAM), Whirlpool Corporation (Whirlpool), 
General Electric Company (GE), Electrolux, LG Electronics, Inc. (LG), 
BSH Home Appliances (BSH), Alliance Laundry Systems (ALS), Viking 
Range, Sub-Zero Wolf, Friedrich A/C, U-Line, Samsung, Sharp 
Electronics, Miele, Heat Controller, AGA Marvel, Brown Stove, Haier, 
Fagor America, Airwell Group, Arcelik, Fisher & Paykel, Scotsman Ice, 
Indesit, Kuppersbusch, Kelon, and DeLonghi); energy and environmental 
advocates (American Council for an Energy Efficient Economy (ACEEE), 
Appliance Standards Awareness Project (ASAP), Natural Resources Defense 
Council (NRDC), Alliance to Save Energy (ASE), Alliance for Water 
Efficiency (AWE), Northwest Power and Conservation Council (NPCC), and 
Northeast Energy Efficiency Partnerships (NEEP)); and consumer groups 
(Consumer Federation of America (CFA) and the National Consumer Law 
Center (NCLC)) (collectively, the ``Joint Petitioners''). The Joint 
Petitioners recommended specific energy conservation standards for 
residential dishwashers that, in their view, would satisfy the EPCA 
requirements in 42 U.S.C. 6295(o). Earthjustice submitted a comment 
affirming its support for the Joint Petition. (Earthjustice, No. 2 at 
p. 1) \8\
---------------------------------------------------------------------------

    \8\ A notation in the form ``Earthjustice, No. 2 at p. 1'' 
identifies a written comment that DOE has received and has included 
in the docket of the standards rulemaking for residential 
dishwashers (Docket No. EERE-2011-BT-STD-0060). This particular 
notation refers to a comment (1) submitted by Earthjustice, (2) in 
document number 2 in the docket of that rulemaking, and (3) 
appearing on page 1 of document number 2.
---------------------------------------------------------------------------

    After careful consideration of the Joint Petition containing a 
consensus recommendation for amended energy conservation standards for 
residential dishwashers, the Secretary has determined that this 
``Consensus Agreement'' has been submitted by interested persons who 
are fairly representative of relevant points of view on this matter. 
Congress provided some guidance within the statute itself by specifying 
that representatives of manufacturers of covered products, States, and 
efficiency advocates are relevant parties to any consensus 
recommendation. (42 U.S.C. 6295(p)(4)(A)) As delineated above, the 
Consensus Agreement was signed and submitted by a broad cross-section 
of the manufacturers who produce the subject products, their trade 
associations, and environmental, energy efficiency and consumer 
advocacy organizations. Although States were not signatories to the 
Consensus Agreement, they did not express any opposition to it. 
Moreover, DOE does not read the statute as requiring absolute agreement 
among all interested parties before the Department may proceed with 
issuance of a direct final rule. By explicit language of the statute, 
the Secretary has discretion to determine when a joint recommendation 
for an energy or water conservation standard has met the requirement 
for representativeness (i.e., ``as determined by the Secretary''). 
Accordingly, DOE will consider each consensus recommendation on a case-
by-case basis to determine whether the submission has been made by 
interested persons fairly representative of relevant points of view.
    Pursuant to 42 U.S.C. 6295(p)(4), the Secretary must also determine 
whether a jointly-submitted recommendation for an energy or water 
conservation standard is in accordance with 42 U.S.C. 6295(o) or 42 
U.S.C. 6313(a)(6)(B), as applicable. This determination is exactly the 
type of analysis that DOE conducts whenever it considers potential 
energy conservation standards pursuant to EPCA. DOE applies the same 
principles to any consensus recommendations it may receive to satisfy 
its statutory obligation to ensure that any energy conservation 
standard that it adopts achieves the maximum improvement in energy 
efficiency that is technologically feasible and economically justified 
and will result in significant conservation of energy. Upon review, the 
Secretary determined that the Consensus Agreement submitted in the 
instant rulemaking comports with the standard-setting criteria set 
forth under 42 U.S.C. 6295(o). Accordingly, the consensus agreement 
levels were included as trial standard level (TSL) 2 in today's rule 
for residential dishwashers, the details of which are discussed at 
relevant places throughout this document. The definition of the TSLs 
considered in this direct final rule is discussed in section V.A.
    In sum, as the relevant criteria under 42 U.S.C. 6295(p)(4) have 
been satisfied, the Secretary has determined that it is appropriate to 
adopt amended energy conservation standards for residential dishwashers 
through this direct final rule.
    As required by the same statutory provision, DOE is also 
simultaneously publishing a NOPR which proposes the identical standard 
levels contained in this direct final rule and is providing for a 110-
day public comment period. DOE will consider whether any comment 
received during this comment period is sufficiently ``adverse'' as to 
provide a reasonable basis for withdrawal of the

[[Page 31925]]

direct final rule and continuation of this rulemaking under the NOPR. 
Typical of other rulemakings, it is the substance, rather than the 
quantity, of comments that will ultimately determine whether a direct 
final rule will be withdrawn. To this end, the substance of any adverse 
comment(s) received will be weighed against the anticipated benefits of 
the Consensus Agreement and the likelihood that further consideration 
of the comment(s) would change the results of the rulemaking. DOE notes 
that to the extent an adverse comment had been previously raised and 
addressed in the rulemaking proceeding, such a submission will not 
typically provide a basis for withdrawal of a direct final rule.
3. Issues on Which DOE Seeks Comment
    As stated previously, in promulgating today's direct final rule 
pursuant to 42 U.S.C. 6295(p)(4), DOE carefully considered the Joint 
Petition submitted to DOE, which contained a consensus recommendation 
for amended energy conservation standards for residential dishwashers. 
For the reasons stated in this direct final rule, the Secretary 
determined that the ``Consensus Agreement'' was submitted by interested 
persons who are fairly representative of relevant points of view on 
this matter. The Secretary also determined, for the reasons set forth 
in this direct final rule, that the standards contained in the 
Consensus Agreement comport with the standard-setting criteria set 
forth under 42 U.S.C. 6295(o). Therefore, the Secretary promulgates 
this direct final rule establishing the amended energy conservation 
standards for residential dishwashers.
    As required by EPCA, DOE is also simultaneously publishing a NOPR 
and providing for a 110-day public comment period. 42 U.S.C. 
4295(p)(4). Should DOE determine to proceed with the NOPR, or to gather 
additional data for future energy conservation standards activities for 
residential dishwashers, DOE will consider any comments and data 
received on the direct final standards. Although comments are welcome 
on all aspects of this rulemaking, DOE is particularly interested in 
comments on the following:
    (1) Impacts of the standards that may lessen or improve the utility 
or performance of the covered products. These impacts may include 
increased cycle times to wash dishware, ability to achieve good wash 
performance (e.g., cleaning, rinsing) and drying performance, increase 
in noise, and other potential impacts. As discussed in section IV.I.3, 
manufacturers noted in interviews that any potential utility impacts 
may be more significant at efficiency levels above those adopted in 
today's direct final rule. DOE also seeks information on utility 
impacts at higher efficiency levels and will consider such information 
in any future rulemaking for dishwashers.
    (2) The 2013 compliance date for the proposed standards and whether 
this compliance date adequately considers the typical dishwasher model 
design cycle for manufacturers.
    (3) Whether repair costs for residential dishwashers would increase 
at the efficiency levels indicated in today's rule due to any changes 
in the design and materials and components used in order to comply with 
the new efficiency standards.
    (4) Where there would be any anticipated changes in the consumption 
of complementary goods (e.g., dishwasher detergent, rinse aid) that may 
result from the proposed standards.
    (5) The 215 cycles per year estimate of consumer usage for 
residential dishwashers, as well as the estimated 1-hour cycle time, 
which includes all cycles available on the unit.
    (6) The product lifetime for dishwashers assumed in the analysis 
and the method used to derive the mean age of 15 years.
    DOE has prepared a technical support document (TSD) in support of 
this direct final rule. The TSD, which is available at the rulemaking 
Web site,\9\ provides an overview of the activities DOE undertook in 
developing standards for residential dishwashers. It presents and 
describes in detail each analysis DOE performed, including descriptions 
of inputs, sources, methodologies, and results. These analyses are as 
follows:
---------------------------------------------------------------------------

    \9\ The rulemaking Web site for residential dishwashers is 
located at www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.
---------------------------------------------------------------------------

    (1) A market and technology assessment addresses the scope of this 
rulemaking, identifies the dishwasher product classes, characterizes 
the markets for the products, and reviews techniques and approaches for 
improving their efficiency.
    (2) A screening analysis reviews technology options to improve the 
efficiency of residential dishwashers and weighs those options against 
DOE's four prescribed screening criteria.
    (3) An engineering analysis develops the relationship between 
increased manufacturer price and increased efficiency.
    (4) A markups analysis establishes markups for converting 
manufacturer prices to customer product costs.
    (5) An energy use analysis generates energy-use estimates for 
residential dishwashers as a function of efficiency levels.
    (6) A life-cycle cost analysis calculates the effects of standards 
on individual customers and compares the life-cycle costs (LCC) and 
payback period (PBP) of products with and without higher efficiency 
standards.
    (7) A shipments analysis forecasts shipments with and without 
higher efficiency standards.
    (8) A national impact analysis forecasts the national energy 
savings (NES), and the national net present value of total consumer 
costs and savings, expected to result from specific, potential energy 
conservation standards for residential dishwashers.
    (9) A consumer subgroup analysis discusses the effects of standards 
on different subgroups of consumers.
    (10) A manufacturer impact analysis discusses the effects of 
standards on the finances and profitability of product manufacturers.
    (11) An employment impact analysis discusses the indirect effects 
of standards on national employment.
    (12) A utility impact analysis discusses the effects of standards 
on electric and gas utilities.
    (13) An emissions analysis discusses the effects of standards on 
three pollutants--sulfur dioxide (SO2), nitrogen oxides 
(NOX), and mercury--as well as carbon dioxide emissions.
    (14) A regulatory impact analysis discusses the impact of non-
regulatory alternatives to efficiency standards.
4. Test Procedure History
    As discussed in section II. A, the DOE test procedure for 
residential dishwashers is found at Title 10 of the CFR, part 430, 
subpart B, appendix C. DOE originally established its test procedure 
for dishwashers in 1977. 42 FR 39964 (Aug. 8, 1977). In 1983, DOE 
amended the test procedure to revise the representative average-use 
cycles to more accurately reflect consumer use and to address 
dishwashers that use 120 degrees Fahrenheit ([deg]F) inlet water. 48 FR 
9202 (March 3, 1983). DOE amended the test procedure again in 1984 to 
redefine the term ``water heating dishwasher.'' 49 FR 46533 (Nov. 27, 
1984). In 1987, DOE amended the test procedure to address models that 
use 50 [deg]F inlet water. 52 FR 47549 (Dec. 15, 1987). In 2001, DOE 
revised the test procedure's testing specifications to improve testing 
repeatability, changed the definitions of ``compact dishwasher'' and 
``standard dishwasher,'' and reduced the average number of use cycles 
per year from 322

[[Page 31926]]

to 264. 66 FR 65091, 65095-97 (Dec. 18, 2001). In 2003, DOE again 
revised the test procedure to more accurately measure dishwasher 
efficiency, energy use, and water use. The 2003 dishwasher test 
procedure amendments included the following revisions: (1) The addition 
of a method to rate the efficiency of soil-sensing products; (2) the 
addition of a method to measure standby power; and (3) a reduction in 
the average-use cycles per year from 264 to 215. 68 FR 51887, 51899-903 
(August 29, 2003). The current version of the test procedure includes 
provisions for determining estimated annual energy use (EAEU), 
estimated annual operating cost (EAOC), energy factor (EF) expressed in 
cycles per kilowatt-hour (kWh), and water consumption expressed in 
gallons per cycle. 10 CFR 430.23(c). As discussed in section II. A, DOE 
is currently considering amendments the test procedure to incorporate 
measures of off mode energy consumption in addition to the existing 
measures of standby mode energy use.

III. General Discussion

A. Product Classes and Scope of Coverage

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that 
justifies a different standard. In making a determination whether a 
performance-related feature justifies a different standard, DOE must 
consider such factors as the utility to the consumer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
    Existing energy conservation standards divide residential 
dishwashers into two product classes based on the capacity, i.e., the 
number of place settings and serving pieces that can be loaded in the 
product.
     Standard (capacity equal to or greater than eight place 
settings plus six serving pieces)
     Compact (capacity less than eight place settings plus six 
serving pieces)
    The Joint Petition proposes energy conservation standard levels for 
standard and compact product classes based on the same capacity 
definitions. (Joint Petition, No. 1 at p. 11) In this final rule, DOE 
maintains the existing standard and compact product classes for 
residential dishwashers. Based on a survey of products available on the 
market, DOE determined that compact dishwasher provide unique utility 
in their countertop or drawer configurations.

B. Technological Feasibility

1. General
    In each standards rulemaking, DOE conducts a screening analysis 
based on information gathered on all current technology options and 
prototype designs that could improve the efficiency of the products or 
equipment that are the subject of the rulemaking. As the first step in 
such an analysis, DOE develops a list of technology options for 
consideration in consultation with manufacturers, design engineers, and 
other interested parties. DOE then determines which of those means for 
improving efficiency are technologically feasible. DOE considers 
technologies incorporated in commercially available products or in 
working prototypes to be technologically feasible. 10 CFR part 430, 
subpart C, appendix A, section 4(a)(4)(i).
    After DOE has determined that particular technology options are 
technologically feasible, it further evaluates each technology option 
in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, or service; (2) adverse impacts 
on product utility or availability; and (3) adverse impacts on health 
or safety. Section IV. B of this rule discusses the results of the 
screening analysis for residential dishwashers, particularly the 
designs DOE considered, those it screened out, and those that are the 
basis for the TSLs in this rulemaking. For further details on the 
screening analysis for this rulemaking, see chapter 4 of the direct 
final rule TSD.
2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt an amended standard for a type or class 
of covered product, it must determine the maximum improvement in energy 
efficiency or maximum reduction in energy use that is technologically 
feasible for such product. (42 U.S.C. 6295(p)(1)) Accordingly, in the 
engineering analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for 
residential dishwashers, using the design parameters for the most 
efficient products available on the market or in working prototypes. 
(See chapter 5 of the direct final rule TSD.) The max-tech levels that 
DOE determined for this rulemaking are described in section IV.C.2 of 
this final rule.

C. Energy Savings

1. Determination of Savings
    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from amended standards for the products that 
are the subject of this rulemaking.\10\ For each TSL, DOE forecasted 
energy savings beginning in the year that manufacturers would be 
required to comply with amended standards, and ending in 2047. DOE 
quantified the energy savings attributable to each TSL as the 
difference in energy consumption between the standards case and the 
base case. The base case represents the forecast of energy consumption 
in the absence of amended mandatory efficiency standards, and considers 
market demand for more efficient products.
---------------------------------------------------------------------------

    \10\ The NIA spreadsheet model is described in section IV.G of 
this notice.
---------------------------------------------------------------------------

    The NIA spreadsheet model calculates the electricity savings in 
site energy expressed in kilowatt-hours (kWh). Site energy is the 
energy directly consumed by appliances at the locations where they are 
used. DOE reports national energy savings on an annual basis in terms 
of the aggregated source (primary) energy savings, which is the savings 
in the energy that is used to generate and transmit the site energy. 
(See chapter 10 of the direct final rule TSD). To convert site energy 
to source energy, DOE derived annual conversion factors from the model 
used to prepare the Energy Information Administration's (EIA) Annual 
Energy Outlook 2011 (AEO2011).
2. Significance of Savings
    As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting 
a standard for a covered product unless such standard would result in 
``significant'' energy savings. Although the term ``significant'' is 
not defined in the Act, the U.S. Court of Appeals, in Natural Resources 
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), 
indicated that Congress intended ``significant'' energy savings in this 
context to be savings that were not ``genuinely trivial.'' The energy 
savings for all of the TSLs considered in this rulemaking (presented in 
section V.3.a) are nontrivial, and, therefore, DOE considers them 
``significant'' within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
    As noted in section II.A, EPCA provides seven factors to be 
evaluated in

[[Page 31927]]

determining whether a potential energy conservation standard is 
economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The following 
sections discuss how DOE has addressed each of those seven factors in 
this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of an amended standard on manufacturers, 
DOE first uses an annual cash-flow approach to determine the 
quantitative impacts. This step includes both a short-term assessment--
based on the cost and capital requirements during the period between 
when a regulation is issued and when entities must comply with the 
regulation--and a long-term assessment over a 30-year analysis period. 
The industry-wide impacts analyzed include industry net present value 
(INPV), which values the industry on the basis of expected future cash 
flows; cash flows by year; changes in revenue and income; and other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the impacts on different types of manufacturers, including impacts on 
small manufacturers. Third, DOE considers the impact of standards on 
domestic manufacturer employment and manufacturing capacity, as well as 
the potential for standards to result in plant closures and loss of 
capital investment. Finally, DOE takes into account cumulative impacts 
of various DOE regulations and other regulatory requirements on 
manufacturers.
    For individual consumers, measures of economic impact include the 
changes in life-cycle cost (LCC) and payback period (PBP) associated 
with new or amended standards. The LCC, which is specified separately 
in EPCA as one of the seven factors to be considered in determining the 
economic justification for a new or amended standard, 42 U.S.C. 
6295(o)(2)(B)(i)(II), is discussed in the following section. For 
consumers in the aggregate, DOE also calculates the national net 
present value of the economic impacts throughout the forecast period 
applicable to a particular rulemaking.
b. Life-Cycle Costs
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC savings for the considered efficiency levels are 
calculated relative to a base case that reflects likely market trends 
in the absence of amended standards. The LCC analysis requires a 
variety of inputs, such as product prices, product energy consumption, 
energy prices, maintenance and repair costs, product lifetime, and 
consumer discount rates. In its analysis, DOE assumed that consumers 
will purchase the considered products in the first year of compliance 
with amended standards.
    To account for uncertainty and variability in specific inputs, such 
as product lifetime and discount rate, DOE uses a distribution of 
values, with probabilities attached to each value. Using this approach, 
DOE identifies the percentage of consumers estimated to receive LCC 
savings or experience an LCC increase, in addition to the average LCC 
savings associated with a particular standard level. In addition to 
identifying ranges of impacts, DOE evaluates the LCC impacts of 
potential standards on identifiable subgroups of consumers that may be 
affected disproportionately by a national standard.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA 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)) DOE uses 
the NIA spreadsheet results in its consideration of total projected 
energy savings.
d. Lessening of Utility or Performance of Products
    In establishing classes of products, and in evaluating design 
options and the impact of potential standard levels, DOE developed 
standards for residential dishwashers that would not lessen the utility 
or performance of those products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) The 
TSL adopted in today's direct final rule will not reduce the utility or 
performance of the dishwashers under consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider any lessening of competition that is 
likely to result from standards. It also directs the Attorney General 
of the United States (Attorney General) to determine the impact, if 
any, of any lessening of competition likely to result from a proposed 
standard and to transmit such determination to the Secretary within 60 
days of the publication of a direct final rule and simultaneously 
published proposed rule, together with an analysis of the nature and 
extent of the impact. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii)) DOE 
published the proposed rule containing energy conservation standards 
identical to those set forth in today's direct final rule and 
transmitted a copy of today's direct final rule and the accompanying 
TSD to the Attorney General, requesting that the Department of Justice 
(DOJ) provide its determination on this issue. DOE will consider DOJ's 
comments on the rule in determining whether to proceed with the direct 
final rule. DOE will also publish and respond to DOJ's comments in the 
Federal Register in a separate notice.
f. Need for National Energy Conservation
    The energy savings from new or amended standards are likely to 
provide improvements to the security and reliability of the nation's 
energy system. Reductions in the demand for electricity also may result 
in reduced costs for maintaining the reliability of the nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the nation's needed power generation capacity.
    Energy savings from today's standards also are likely to result in 
environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production. DOE 
reports the environmental effects from today's standards, and from each 
TSL it considered, in the emissions analysis contained in chapter 15 in 
the direct final rule TSD and in section V.B.6 of this notice. DOE also 
reports estimates of the economic value of emissions reductions 
resulting from the considered TSLs.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
In developing this direct final rule, DOE has also considered the 
submission of the Joint Petition, which DOE believes sets forth a 
statement by interested persons that are fairly representative of 
relevant points of view (including representatives of manufacturers of 
covered products, and efficiency advocates) and contains 
recommendations with respect to an energy conservation standard that 
are in accordance with 42 U.S.C. 6295(o). (Although States were not 
signatories to the Consensus Agreement, they did not express any 
opposition to it.) DOE has encouraged the submission of consensus 
agreements as a way to bring diverse

[[Page 31928]]

interested parties together, to develop an independent and probative 
analysis useful in DOE standard setting, and to expedite the rulemaking 
process. DOE also believes that standard levels recommended in the 
Consensus Agreement may increase the likelihood for regulatory 
compliance, while decreasing the risk of litigation.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effect potential amended 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, DOE routinely conducts an economic analysis that considers 
the full range of impacts to consumers, manufacturers, the nation, and 
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The 
results of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section IV.F.11 of this direct final rule and chapter 8 
of the direct final rule TSD.

IV. Methodology and Discussion

    DOE used two spreadsheet tools to estimate the impact of today's 
direct final rule. The first spreadsheet calculates LCCs and PBPs of 
potential new energy conservation standards. The second provides 
shipments forecasts and then calculates impacts of potential energy 
conservation standards on national energy savings and net present 
value. The two spreadsheets are available online at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html. The Department also assessed manufacturer impacts, 
largely through use of the Government Regulatory Impact Model (GRIM).
    Additionally, DOE estimated the impacts on utilities and the 
environment of energy conservation standards for residential 
dishwashers. DOE used a version of EIA's National Energy Modeling 
System (NEMS) for the utility and environmental analyses. The NEMS 
model simulates the energy sector of the U.S. economy. EIA uses NEMS to 
prepare its Annual Energy Outlook, a widely known baseline energy 
forecast for the United States. For more information on NEMS, refer to 
The National Energy Modeling System: An Overview, DOE/EIA-0581 (98) 
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
    The version of NEMS used for appliance standards analysis, which 
makes minor modifications to the AEO version, is called NEMS-BT.\11\ 
NEMS-BT offers a sophisticated picture of the effect of standards, 
because it accounts for the interactions among the various energy 
supply and demand sectors and the economy as a whole.
---------------------------------------------------------------------------

    \11\ EIA approves the use of the name ``NEMS'' to describe only 
an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the 
model as used here. (BT stands for DOE's Building Technologies 
Program.)
---------------------------------------------------------------------------

A. Market and Technology Assessment

1. General
    When beginning an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the products concerned, including the purpose of the products, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments based primarily on 
publicly available information. The subjects addressed in the market 
and technology assessment for this rulemaking include products covered 
by the rulemaking, quantities and types of products sold and offered 
for sale, retail market trends, product classes and manufacturers, 
regulatory and non-regulatory programs, and technology options that 
could improve the energy efficiency of the product(s) under 
examination. See chapter 3 of the direct final rule TSD for further 
discussion of the market and technology assessment.
2. Products Included in This Rulemaking
    DOE defines ``dishwasher'' under EPCA as ``a cabinet-like appliance 
which with the aid of water and detergent, washes, rinses, and dries 
(when a drying process is included) dishware, glassware, eating 
utensils, and most cooking utensils by chemical, mechanical and/or 
electrical means and discharges to the plumbing drainage system.'' (10 
CFR 430.2) DOE considers this definition to encompass built-in, 
portable, and countertop dishwashers.
3. Product Classes
    Existing energy conservation standards divide residential 
dishwashers into two product classes based on capacity: (1) Standard; 
and (2) compact. As mentioned previously in section III.A, DOE is 
maintaining these product classes for this rulemaking.
4. Non-Regulatory Programs
    As part of the market and technology assessment, DOE reviews non-
regulatory programs promoting energy efficient residential appliances 
in the United States. Non-regulatory programs that DOE considers in its 
market and technology assessment include ENERGY STAR and the Consortium 
for Energy Efficiency (CEE) Super-Efficient Home Appliance Initiative 
(SEHA).
    ENERGY STAR is a voluntary labeling program administered jointly by 
the U.S. Environmental Protection Agency (EPA) and DOE. ENERGY STAR 
identifies energy efficient products through a qualification 
process.\12\ To qualify, a product must exceed Federal minimum 
standards by a specified amount, or if no Federal standard exists, a 
product must exhibit select energy-saving features. ENERGY STAR 
specifications currently exist for residential dishwashers.
---------------------------------------------------------------------------

    \12\ For more information, please visit www.energystar.gov.
---------------------------------------------------------------------------

    The CEE SEHA program develops initiatives for its North American 
members to promote the manufacture and purchase of energy efficient 
products and services.\13\ The program establishes efficiency tiers 
beyond the DOE energy conservation standards and the ENERGY STAR 
specifications. Currently, CEE has set two efficiency tiers above the 
ENERGY STAR specification for standard dishwashers, and one efficiency 
tier above the ENERGY STAR specification for compact dishwashers.
---------------------------------------------------------------------------

    \13\ For more information, please visit www.cee1.org.
---------------------------------------------------------------------------

5. Technology Options
    As part of the market and technology assessment, DOE developed a 
list of technologies to consider for improving the efficiency of 
residential dishwashers, as shown in Table IV.1. These technologies 
encompass all those DOE believes would improve energy efficiency and 
are technologically feasible, most of which were identified for the 
November 2007 ANOPR. 72 FR

[[Page 31929]]

64432, 64451 (Nov. 15, 2007). In addition to those technology options 
identified in the November 2007 ANOPR, DOE also considered the use of 
control strategies to decrease energy and water consumption. This 
technology option is a change in the product's operation. For instance, 
a manufacturer may lower the temperature of a wash or rinse cycle to 
decrease the amount of internal water heating required. Often, 
decreases in water temperatures or water use are combined with longer 
cycles to limit the impact on wash performance.

   Table IV.1--Initial Technology Options for Residential Dishwashers
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
1. Condenser drying.
2. Control Strategies.
3. Fan/jet drying.
4. Flow-through heating.
5. Improved fill control.
6. Improved food filter.
7. Improved motor efficiency.
8. Improved spray-arm geometry.
9. Increased insulation.
10. Low-standby-loss electronic controls.
11. Microprocessor controls and fuzzy logic, including adaptive or soil-
 sensing controls.
12. Modified sump geometry, with and without dual pumps.
13. Reduced inlet-water temperature.
14. Supercritical carbon dioxide washing.
15. Ultrasonic washing.
16. Variable washing pressures and flow rates.
------------------------------------------------------------------------

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration.
    (1) Technological feasibility. DOE will consider technologies 
incorporated in commercial products or in working prototypes to be 
technologically feasible. (The technological feasibility of options was 
discussed in the preceding section as part of the market and technology 
assessment.)
    (2) Practicability to manufacture, install, and service. If mass 
production and reliable installation and servicing of a technology in 
commercial products could be achieved on the scale necessary to serve 
the relevant market at the time the standard comes into effect, then 
DOE will consider that technology practicable to manufacture, install, 
and service.
    (3) Adverse impacts on product utility or product availability. If 
DOE determines a technology would have significant adverse impact on 
the utility of the product to significant subgroups of consumers, or 
would result in the unavailability of any covered product type with 
performance characteristics (including reliability), features, sizes, 
capacities, and volumes that are substantially the same as products 
generally available in the United States at the time, it will not 
consider this technology further.
    (4) Adverse impacts on health or safety. If DOE determines that a 
technology will have significant adverse impacts on health or safety, 
it will not consider this technology further.
    (10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b)).
    Technologies that pass through the screening analysis are referred 
to as ``design options'' in the engineering analysis. Details of the 
screening analysis are provided in chapter 4 of the direct final rule 
TSD.
    Based on the preliminary determinations made in the November 2007 
ANOPR (72 FR 64432, 64454-55 (Nov. 15, 2007)), and further analysis of 
the initial technology options, DOE retained the design options shown 
in Table IV.2 for its subsequent analyses. These remaining design 
options met all of the screening criteria listed above.

      Table IV.2--Design Options Retained for Engineering Analysis
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
1. Condenser drying.
2. Control Strategies.
3. Fan/jet drying.
4. Flow-through heating.
5. Improved fill control.
6. Improved food filter.
7. Improved motor efficiency.
8. Improved spray-arm geometry.
9. Increased insulation.
10. Low-standby-loss electronic controls.
11. Microprocessor controls and fuzzy logic, including adaptive or soil-
 sensing controls.
12. Modified sump geometry, with and without dual pumps.
13. Variable washing pressures and flow rates.
------------------------------------------------------------------------

C. Engineering Analysis

    In the engineering analysis, DOE evaluates a range of product 
efficiency levels and their associated manufacturing costs. The purpose 
of the analysis is to estimate the incremental manufacturer production 
costs (MPCs) associated with increasing efficiency levels above that of 
the baseline model in each product class. The engineering analysis 
considers technologies not eliminated in the screening analysis, 
designated as design options, in developing cost-efficiency curves, 
which subsequently are used for the LCC and PBP analyses.
    DOE has identified the following three methodologies for generating 
the manufacturing costs needed for the engineering analysis: (1) The 
design-option approach, which provides the incremental costs of adding 
to a baseline model design options that will improve its efficiency; 
(2) the efficiency-level approach, which provides the relative costs of 
achieving increases in energy efficiency levels, without regard to the 
particular design options used to achieve such increases; and (3) the 
cost-assessment (or reverse-engineering) approach, which provides 
``bottom-up'' manufacturing cost assessments for achieving various 
levels of increased efficiency, based on detailed data regarding costs 
for parts and material, labor, shipping/packaging, and investment for 
models that operate at particular efficiency levels.
    DOE conducted the engineering analyses for the standard product 
class in this rulemaking using the efficiency-level approach, combined 
with the cost-assessment approach, to develop a manufacturing cost for 
each efficiency level. DOE chose this approach because the efficiency 
levels considered in the engineering analysis are attainable using 
technologies currently available on the market for residential 
dishwashers. This approach involved physically disassembling 
commercially available products, consulting with outside experts, 
reviewing publicly available cost and performance information, and 
modeling equipment costs.
    Given the data available for the compact product class, DOE used 
the design-option approach to develop the cost-efficiency relationship. 
There are very few, disparate platforms (i.e., countertop units and 
dishdrawers) available on the market for this product class. Therefore, 
DOE developed the cost-efficiency relationship by estimating the 
incremental costs of adding specific design options to a baseline model 
that would provide sufficient improvement in efficiency to achieve the 
higher efficiency levels considered for the analysis. DOE weighted the 
costs at each efficiency level by market share of each platform.
    To provide interested parties with additional information about 
DOE's assumptions and results and the ability to perform independent 
analyses for verification, DOE associated each efficiency level with 
specific technologies that manufacturers might use. Chapter 5 of the 
direct final rule TSD describes the methodology and results of the 
efficiency level analysis used to derive the cost-efficiency 
relationships.
1. Baseline Efficiency Levels
    The baseline efficiency levels for both the standard and compact 
product classes are based on the current DOE

[[Page 31930]]

energy conservation standards for annual energy use and per-cycle water 
consumption. These standards took effect for residential dishwashers 
manufactured on or after January 1, 2010. (42 U.S.C. 6295 (g)(10)) 
Table IV.3 below shows the baseline efficiency level for each 
residential dishwasher product class.

    Table IV.3--Baseline Efficiency Levels for Residential Dishwasher
                                Analysis
------------------------------------------------------------------------
                                                         Per-cycle water
            Product class               Annual energy      consumption
                                       use  (kWh/year)   (gallons/cycle)
------------------------------------------------------------------------
Standard............................               355               6.5
Compact.............................               260               4.5
------------------------------------------------------------------------

2. Higher Efficiency Levels
    DOE considered efficiency levels higher than baseline levels based 
on specifications prescribed by ENERGY STAR and CEE's Super-Efficient 
Home-Appliances Initiative. The highest efficiency levels were defined 
by the maximum available technology that DOE could identify on the 
market. (DOE did not identify any working prototypes that were more 
efficient than the maximum available technology on the market.) Where 
the increments between adjacent efficiency levels were large, DOE 
proposed to add an intermediate ``gap-fill'' level. Efficiency Level 2 
for standard dishwashers and Efficiency Level 1 for compact dishwashers 
correspond to the efficiency levels proposed in the Consensus Agreement 
discussed in section II.B.2. Table IV.4 and Table IV.5 show the 
efficiency levels analyzed in today's direct final rule, based on 
annual energy use and per-cycle water consumption.

                   Table IV.4--Efficiency Levels for Standard Residential Dishwasher Analysis
----------------------------------------------------------------------------------------------------------------
                                                                                       Efficiency level
                                                                            ------------------------------------
                 Level                    Efficiency level reference source                     Per-cycle water
                                                                               Annual energy   consumption  (gal/
                                                                              use (kWh/year)         cycle)
----------------------------------------------------------------------------------------------------------------
Baseline...............................  DOE Standard......................               355               6.5
EL 1...................................  ENERGY STAR (effective August 11,                324               5.8
                                          2009).
EL 2...................................  CEE Tier 1/Consensus Agreement....               307               5.0
EL 3...................................  CEE Tier 2/Upcoming ENERGY STAR                  295               4.25
                                          (effective January 20, 2012).
EL 4...................................  Gap Fill *........................               234               3.8
EL 5...................................  Maximum Available *...............               180               1.6
----------------------------------------------------------------------------------------------------------------
* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

                    Table IV.5--Efficiency Levels for Compact Residential Dishwasher Analysis
----------------------------------------------------------------------------------------------------------------
                                                                                                 Per-cycle water
                  Level                      Efficiency level description       Annual energy      consumption
                                                                              use * (kWh/year)     (gal/cycle)
----------------------------------------------------------------------------------------------------------------
Baseline................................  DOE Standard......................               260               4.5
EL 1....................................  Consensus Agreement/Upcoming                     222               3.5
                                           ENERGY STAR (effective January
                                           20, 2012).
EL 2....................................  Maximum Available \*\.............               154               2.1
----------------------------------------------------------------------------------------------------------------
* Source: ENERGY STAR-qualified dishwashers as of January 30, 2011.

3. Proprietary Designs
    In its engineering and economic analyses DOE considers all design 
options that are commercially available or present in a working 
prototype, including proprietary designs and technologies. DOE will 
consider a proprietary design in the subsequent analyses only if the 
achieved efficiency level can also be reached using other 
nonproprietary design options. If the proprietary design is the only 
approach available to achieve a given efficiency level, then DOE will 
reject that efficiency level to avoid impacts on competition that would 
likely result. DOE solicited comment on any proprietary design options 
during its manufacturer interviews, and although manufacturers 
mentioned several technologies that are currently in development, these 
technologies are not required to meet the efficiency levels considered 
in this analysis. Therefore, DOE believes that all efficiency levels in 
today's direct final rule can be achieved without the use of 
proprietary designs.
4. Reverse Engineering
    Based on product teardowns and cost modeling, DOE developed overall 
cost-efficiency relationships for the standard and compact product 
classes. Table IV.6 and Table IV.7 show DOE's estimates of incremental 
manufacturing costs for improvement of dishwasher efficiency above the 
baseline. Chapter 5 of the direct final rule TSD provides details on 
DOE's engineering analysis and development of the cost-efficiency 
curves.

[[Page 31931]]

                                      Table IV.6--Cost-Efficiency Relationship for Standard Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Per-cycle water              Incremental manufacturing cost
                       Efficiency level                          Annual energy   consumption  (gal/-----------------------------------------------------
                                                                use  (kWh/year)        cycle)            (2010$)         ($/kWh/yr)       ($/gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.....................................................               355               6.5   ................  ................  ................
EL 1.........................................................               324               5.8              18.27              0.59             26.10
EL 2.........................................................               307               5.0              31.82              0.66             21.21
EL 3.........................................................               295               4.25             69.23              1.15             30.77
EL 4.........................................................               234               3.8              75.18              0.62             27.85
EL 5.........................................................               180               1.6              82.95              0.47             16.93
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                      Table IV.7--Cost-Efficiency Relationship for Compact Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Per-cycle water             Incremental manufacturing cost
                       Efficiency level                           Annual energy      consumption   -----------------------------------------------------
                                                                 use  (kWh/year)     (gal/cycle)         (2010$)         ($/kWh/yr)       ($/gal/cycle)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline......................................................               260               4.5  ................  ................  ................
EL 1..........................................................               222               3.5              1.00              0.03              1.00
EL 2..........................................................               154               2.1             12.11              0.11              5.05
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Markups Analysis

    The markups analysis develops appropriate markups in the 
distribution chain to convert the estimates of manufacturer cost 
derived in the engineering analysis to consumer prices. At each step in 
the distribution channel, companies mark up the price of the product to 
cover business costs and profit margin. For dishwashers, the main 
parties in the distribution chain are manufacturers and retailers.
    DOE developed an average manufacturer markup by examining the 
annual Securities and Exchange Commission (SEC) 10-K reports filed by 
publicly traded manufacturers primarily engaged in appliance 
manufacturing and whose combined product range includes residential 
dishwashers.
    For retailers, DOE developed separate markups for baseline products 
(baseline markups) and for the incremental cost of more efficient 
products (incremental markups). Incremental markups are coefficients 
that relate the change in the manufacturer sales price of higher-
efficiency models to the change in the retailer sales price. DOE relied 
on economic data from the U.S. Census Bureau to estimate average 
baseline and incremental markups.\14\
---------------------------------------------------------------------------

    \14\ U.S. Census, 2002 Business Expenditure Survey (BES), 
Electronics and Appliance Stores sectors.
---------------------------------------------------------------------------

    Chapter 6 of the direct final rule TSD provides details on DOE's 
development of markups for dishwashers.

E. Energy and Water Use Analysis

    DOE's energy and water use analysis estimated the range of energy 
and water use of dishwashers in the field, i.e., as they are actually 
used by consumers. The energy and water use analysis provided the basis 
for other analyses DOE performed, particularly assessments of the 
energy and water savings and the savings in consumer operating costs 
that could result from DOE's adoption of amended standards.
    DOE determined a range of annual energy and per-cycle water 
consumption of dishwashers by multiplying the per-cycle energy use and 
per-cycle water use of each considered design by the number of cycles 
per year in a representative sample of U.S. households.
    DOE estimated the per-cycle energy use by subtracting the annual 
energy use associated with standby power from the total annual energy 
use and dividing the result by the national average number of 
dishwasher cycles per year. DOE used data provided by AHAM on the total 
annual dishwasher energy use and the standby power use for each 
considered efficiency level.
    DOE analyzed per-cycle energy consumption based on two components: 
(1) Water-heating energy, and (2) machine (motor) and drying energy. 
The largest component of dishwasher energy consumption is water-heating 
energy use, which is the energy required to heat the inlet water to the 
temperature for dishwashing. The machine energy consists of the motor 
energy (for water pumping and food disposal) and drying energy consists 
of energy to dry cleaned dishes.
    DOE estimated the per-cycle water-heating energy consumption based 
on DOE's dishwasher test procedure (which refers to this quantity as 
``water energy consumption''). DOE estimated this energy consumption 
for dishwashers that operate with a nominal inlet water temperature of 
120 [deg]F, the most common situation in U.S. homes. For a dishwasher 
using electrically heated water, the water energy consumption, 
expressed in kWh per cycle, is equal to the water consumption per cycle 
times a nominal water heater temperature rise of 70 [deg]F times the 
specific heat of water (0.0024 kWh per gallon per [deg]F).\15\ For a 
dishwasher using gas-heated or oil-heated water, the calculation is the 
same, but also incorporates a nominal water heater recovery efficiency 
of 0.75.\16\
---------------------------------------------------------------------------

    \15\ The water heater temperature rise of 70 [deg]F assumes an 
average water heater inlet temperature of 50 [deg]F, as specified as 
the national average in the dishwasher test procedure.
    \16\ The recovery efficiency indicates how efficient a water 
heater is at heating water. The DOE test procedure for dishwashers 
specifies a recovery efficiency of 0.75 for gas-fired water heating, 
which is representative of gas water heaters currently in the 
housing stock.
---------------------------------------------------------------------------

    The per-cycle machine and drying energy was determined by 
subtracting the per-cycle water-heating energy consumption from the 
per-cycle total energy consumption.
    DOE determined the standby annual energy consumption by multiplying 
the energy use in standby mode per hour by the hours the dishwasher is 
in standby mode, which is the difference between the number of hours in 
a year and the active hours, which is equal to the number of dishwasher 
cycles per year multiplied by cycle time, which is estimated to be one 
hour.\17\
---------------------------------------------------------------------------

    \17\ The one-hour cycle time is an estimate of the typical cycle 
time for a dishwasher. Actual cycle times vary based on wash 
selection, load, and model of dishwasher.
---------------------------------------------------------------------------

    DOE estimated the per-cycle water use by efficiency level in its 
engineering analysis, as described in chapter 5 of the direct final 
rule TSD.

[[Page 31932]]

    To estimate the number of cycles per year in a representative 
sample of U.S. households, DOE analyzed data from the Energy 
Information Administration (EIA)'s 2005 Residential Energy Consumption 
Survey (RECS), which was the most recent such survey available at the 
time of DOE's analysis.\18\ RECS is a national sample survey of housing 
units that collects statistical information on the consumption of and 
expenditures for energy in housing units along with data on energy-
related characteristics of the housing units and occupants. Of the more 
than 4,800 households in RECS, almost 2,500 have dishwashers. For each 
household using a dishwasher, RECS provides data on the number of 
dishwasher cycles in the following bins: (1) Less than once per week, 
(2) once per week, (3) 2-3 times per week, (4) 4-6 times per week, (5) 
at least once per day. DOE converted the above to annual values and 
created a triangular or uniform distribution for each bin. DOE randomly 
assigned a specific numerical value from within the appropriate bin to 
each household in the dishwasher sample. The average number of cycles 
per year derived from the RECS 2005 data is 174.
---------------------------------------------------------------------------

    \18\ For information on RECS, see www.eia.doe.gov/emeu/recs/.
---------------------------------------------------------------------------

    DOE also analyzed a review of survey data \19\ to estimate the 
average number of dishwasher cycles per year. In the review, survey 
data on consumers' dishwasher usage habits were collected from a number 
of sources including several dishwasher manufacturers, detergent 
manufacturers, energy and consumer interest groups, independent 
researchers, and government agencies. These data were also used to 
develop the 2003 dishwasher test procedure amendments, which included a 
reduction in the average cycles per year from 264 to 215.\20\ Because 
the survey data are more comprehensive than the RECS data, for today's 
rule DOE chose an average usage of 215 cycles per year as the most 
representative value for average dishwasher use.
---------------------------------------------------------------------------

    \19\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/survey_data.pdf.
    \20\ 68 FR 51887 (August 29, 2003). The 215 value was based on 
the review's recommendation that the number of average-use cycles 
per year be reduced into the range of 200 to 233 cycles.
---------------------------------------------------------------------------

    To estimate the annual number of cycles for each RECS household in 
the dishwasher sample, DOE multiplied the specific value derived from 
RECS by the ratio of 215 cycles to 174 cycles (the RECS average). The 
resulting range of values used in the LCC analysis is consistent with 
the average use in the DOE dishwasher test procedure.
    Table IV.8 shows the estimated average annual energy and water use 
for each efficiency level analyzed for standard dishwashers.

                                Table IV.8--Standard Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Annual energy use                            Annual water use
                                                               -----------------------------------------------------------------------------------------
                       Efficiency level                          Water heating *  Machine + drying  Standby [dagger]        Total
                                                               ------------------------------------------------------------------------     gal/year
                                                                    kWh/year          kWh/year          kWh/year          kWh/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline......................................................             234.8             120.2               0.0               355             1,398
1.............................................................             209.5              94.8              19.7               324             1,247
2.............................................................             180.6             111.9              14.5               307             1,075
3.............................................................             153.5             127.0              14.5               295               914
4.............................................................             137.3              82.2              14.5               234               817
5.............................................................              57.8             107.7              14.5               180               344
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours - (215 cycles x 1 hour) = 8,545 hours.

                                Table IV.9--Compact Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                           Annual energy use                            Annual water use
                                                               -----------------------------------------------------------------------------------------
                       Efficiency level                          Water heating *  Machine + drying  Standby [dagger]        Total
                                                               ------------------------------------------------------------------------     gal/year
                                                                    kWh/year          kWh/year          kWh/year          kWh/year
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline......................................................             162.5              77.8              19.7               260               968
1.............................................................             126.4              75.9              19.7               222               753
2.............................................................              75.9              63.6              14.5               154               452
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of one hour.
Standby hours = 8,760 hours - (215 cycles x 1 hour) = 8,545 hours.

    Chapter 7 of the direct final rule TSD provides details on DOE's 
energy and water use analysis for dishwashers.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
dishwashers. The LCC is the total consumer expense over the life of a 
product, consisting of purchase and installation costs plus operating 
costs (expenses for energy use, maintenance, and repair). To compute 
the operating costs, DOE discounts future operating costs to the time 
of purchase and sums them over the lifetime of the product. The PBP is 
the estimated amount of time (in years) it takes consumers to recover 
the increased purchase cost (including installation) of a more 
efficient product through lower operating costs. DOE calculates the PBP 
by dividing the change in purchase cost (normally higher) due to a more 
stringent standard by the change in average annual operating cost 
(normally lower) that results from the standard.

[[Page 31933]]

    For any given efficiency level, DOE measures the PBP and the change 
in LCC relative to an estimate of the base-case appliance efficiency 
levels. The base-case estimate reflects the market in the absence of 
new or amended energy conservation standards, including the market for 
products that exceed the current energy conservation standards.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
housing units. For the analysis for today's rule, DOE developed 
household samples from the 2005 RECS. For each sample household, DOE 
determined the energy consumption for the dishwasher and the 
appropriate electricity price. By developing a representative sample of 
households, the analysis captured the variability in energy consumption 
and energy prices associated with the use of residential dishwashers.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes manufacturer costs, manufacturer 
markups, retailer and distributor markups, and sales taxes--and 
installation costs. Inputs to the calculation of operating expenses 
include annual energy consumption, energy and water prices and price 
projections, repair and maintenance costs, product lifetimes, discount 
rates, and the year that compliance with standards is required. DOE 
created distributions of values for product lifetime, discount rates, 
and sales taxes, with probabilities attached to each value, to account 
for their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP, which 
incorporates Crystal Ball (a commercially available software program), 
relies on a Monte Carlo simulation to incorporate uncertainty and 
variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and dishwasher 
user samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 housing units per simulation run.
    Table IV.10 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
and its appendices of the direct final rule TSD (see Table 8.1.1 for a 
summary of inputs).

 Table IV.10--Summary of Inputs and Methods for the LCC and PBP Analysis
                                    *
------------------------------------------------------------------------
            Inputs                           Source/method
------------------------------------------------------------------------
Product Cost.................  Derived by multiplying manufacturer cost
                                by manufacturer and retailer markups and
                                sales tax, as appropriate. Used
                                historical data to derive a price
                                scaling index to forecast product costs.
Installation Costs...........  Baseline installation cost determined
                                with data from RS Means. Assumed no
                                change with efficiency level.
Annual Energy and Water Use..  The sum of the total per-cycle annual
                                energy and water use multiplied by the
                                number of cycles per year and the
                                standby annual energy use. Average
                                number of cycles based on ADL field
                                data.
                               Variability: Based on the 2005 RECS
                                normalized to the average number of
                                cycles.
Energy and Water Prices......  Electricity: Based on EIA's Form 861 data
                                for 2010.
                               Variability: Regional energy prices
                                determined for 13 regions.
                               Water: Based on 2010 AWWA/Raftelis
                                Survey.
                               Variability: By census region.
Energy and Water Price Trends  Energy: Forecasted using Annual Energy
                                Outlook 2011 (AEO2011) price forecasts.
                               Water: Forecasted using BLS historic
                                water price index information.
Repair and Maintenance Costs.  Assumed no change with efficiency level.
Product Lifetime.............  Estimated using survey results from RECS
                                (1990, 1993, 1997, 2001, 2005) and the
                                U.S. Census American Housing Survey
                                (2005, 2007), along with historic data
                                on appliance shipments.
                               Variability: Characterized using Weibull
                                probability distributions.
Discount Rates...............  Approach involves identifying all
                                possible debt or asset classes that
                                might be used to purchase the considered
                                appliances, or might be affected
                                indirectly. Primary data source was the
                                Federal Reserve Board's SCF ** for 1989,
                                1992, 1995, 1998, 2001, 2004 and 2007.
Compliance Date..............  2018.[dagger]
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the direct
  final rule TSD.
** Survey of Consumer Finances.
[dagger] For TSL 2, DOE used 2013 as the compliance date.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the 
manufacturer selling prices developed in the engineering analysis by 
the supply-chain markups described above (along with sales taxes). DOE 
used different markups for baseline products and higher-efficiency 
products, because DOE applies an incremental markup to the increase in 
MSP associated with higher-efficiency products.
    Examination of historical price data for a number of appliances 
that have been subject to energy conservation standards indicates that 
an assumption of constant real prices and costs may overestimate long-
term trends in appliance prices. Economic literature and historical 
data suggest that the real costs of these products may in fact trend 
downward over time according to ``learning'' or ``experience'' curves. 
Experience curve analysis focuses on entire industries (often operating 
globally) and aggregates over many causal factors that may not be well 
characterized. Experience curve analysis implicitly includes factors 
such as efficiencies in labor, capital investment, automation, 
materials prices, distribution, and economies of scale at an industry-
wide level.\21\ Since market competition is very effective, learning in 
one plant or firm rapidly diffuses to other firms as well, leading to 
industry-wide effects.
---------------------------------------------------------------------------

    \21\ Newell, R.G., 2000. Incorporation of Technological Learning 
into NEMS Buildings Modules. U.S. Department of Energy, Energy 
Information Administration, Washington, DC.

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

[[Page 31934]]

    On February 22, 2011, DOE published a Notice of Data Availability 
(NODA, 76 FR 9696) stating that DOE may consider improving regulatory 
analysis by addressing equipment price trends. In the NODA, DOE 
proposed that when sufficiently long-term data are available on the 
cost or price trends for a given product, it would analyze the 
available data to forecast future trends.
    Many commenters were supportive of DOE moving from an assumption-
based equipment price trend forecasting method to a data-driven 
methodology for forecasting price trends. Other commenters were 
skeptical that DOE could accurately forecast price trends given the 
many variables and factors that can complicate both the estimation and 
the interpretation of the numerical price trend results and the 
relationship between price and cost. DOE evaluated the concerns 
expressed about its proposed approach for incorporating experience in 
its forecasts of product prices and determined that retaining an 
assumption-based approach of a constant real price trend was not 
consistent with the historical data for residential dishwashers. 
Therefore, DOE developed a range of potential price trends that was 
consistent with the available data.
    For the default price trend for this final rule, DOE estimated an 
experience rate for residential dishwashers based on an analysis of 
long-term historical data. DOE derived a dishwasher price index from 
1988 to 2010 using Producer Price Index (PPI) data for miscellaneous 
household appliances from the Bureau of Labor Statistics' (BLS). (PPI 
data specific to residential dishwashers were not available.) An 
inflation-adjusted price index was calculated using the GDP price 
deflator for the same years. This proxy for historic price data was 
then regressed on the quantity of dishwashers produced, based on a 
corresponding series for total shipments of dishwashers.
    To calculate an experience rate, a least-squares power-law fit was 
performed on the dishwasher price index versus cumulative shipments 
(including imports). DOE then derived a price factor index, with the 
price in 2010 equal to 1, to forecast prices in the year of compliance 
for amended energy conservation standards in the LCC and PBP analysis, 
and for the NIA, for each subsequent year through 2047. The index value 
in each year is a function of the experience rate and the cumulative 
production through that year. To derive the latter, DOE used projected 
shipments from the base case projections made for the NIA (see section 
IV.G.1 of this notice). The average annual rate of price decline in the 
default case is 1.27 percent. By 2047, which is the end date of the 
forecast period, the price is forecasted to drop 38 percent relative to 
2010. For the baseline model, the average price decreases from $630 in 
2010 to $392 in 2047 (values given in 2010$). DOE's forecast of product 
prices for dishwashers is described in further detail in appendix 8-E 
of the direct final rule TSD.
    For the NIA, DOE also considered several alternative price trends 
as sensitivity cases (see section IV.G.3 for a description). In 
recognition of the uncertainty regarding estimation of future product 
price trends, DOE will continue to review the relevant literature and 
seek to continually improve and refine its methodology through 
research, enhancements to its models and by seeking public input. DOE 
will also work to ensure the robustness of its data sets as a means to 
ensure the reliability of its projections.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE used data from 
the 2010 RS Means Plumbing Cost data book to estimate the baseline 
installation cost. DOE found no evidence that installation costs would 
be impacted with increased efficiency levels.
3. Annual Energy Consumption
    For each sampled household, DOE determined the energy consumption 
for a dishwasher at different efficiency levels using the approach 
described above in section IV.E.
4. Energy Prices
    DOE derived average annual energy prices for 13 geographic areas 
consisting of the nine U.S. Census divisions, with four large states 
(New York, Florida, Texas, and California) treated separately. For 
Census divisions containing one of those large states, DOE calculated 
the regional average excluding the data for the large state.
    DOE calculated average residential electricity prices for each of 
the 13 geographic areas using data from EIA's Form EIA-861 database 
(based on ``Annual Electric Power Industry Report'').\22\ DOE 
calculated an average annual regional residential price by: (1) 
Estimating an average residential price for each utility (by dividing 
the residential revenues by residential sales); and (2) weighting each 
utility by the number of residential consumers it served in that 
region. The final rule analysis used the data for 2009, the most recent 
data available.
---------------------------------------------------------------------------

    \22\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    DOE calculated average residential natural gas prices for each of 
the 13 geographic areas using data from EIA's ``Natural Gas Monthly.'' 
\23\ DOE calculated average annual regional residential prices by: (1) 
Estimating an average residential price for each State; and (2) 
weighting each State by the number of residential consumers. The direct 
final rule analysis used the data for 2010.
---------------------------------------------------------------------------

    \23\ Available at: http://www.eia.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html.
---------------------------------------------------------------------------

5. Energy Price Projections
    To estimate energy prices in future years, DOE multiplied the 
average regional energy prices discussed in the preceding section by 
the forecast of annual average residential energy price changes in the 
Reference case from AEO2011, which has an end year of 2035.\24\ To 
estimate price trends after 2035, DOE used the average annual rate of 
change in prices from 2020 to 2035.
---------------------------------------------------------------------------

    \24\ U.S. Energy Information Administration. Annual Energy 
Outlook 2011. Washington, DC. April 2011.
---------------------------------------------------------------------------

6. Water and Wastewater Prices
    For today's direct final rule, DOE obtained data on water and 
wastewater prices for 2010 from the Water and Wastewater Rate Survey 
conducted by Raftelis Financial Consultants and the water utility 
association, AWWA. The survey, which analyzes each industry separately, 
covers approximately 308 water utilities and 228 wastewater utilities. 
The water survey includes, for each utility, the cost to consumers of 
purchasing a given volume of water or treating a given volume of 
wastewater. The data provide a division of the total consumer cost into 
fixed and volumetric charges. DOE's calculations use only the 
volumetric charge to calculate water and wastewater prices, because 
only this charge is affected by a change in water use. Average water 
and wastewater prices were estimated for each of four census regions. 
Each RECS household was assigned a water and wastewater price depending 
on its census region location.
    DOE also used price information for households that use well water 
and a septic tank from the National Ground Water Association, as well 
as national cost data on residential septic systems from the National 
Onsite Wastewater Recycling Association (NOWRA).
    Chapter 8 of the direct final rule TSD provides more detail about 
DOE's

[[Page 31935]]

approach to developing water and wastewater prices.
7. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing components 
that have failed in an appliance; maintenance costs are associated with 
maintaining the operation of the product. Typically, small incremental 
increases in product efficiency produce no, or only minor, changes in 
repair and maintenance costs compared to baseline efficiency products.
    DOE requested information from manufacturers during interviews as 
to whether maintenance and repair costs are a function of efficiency 
level and product class. Manufacturers responded that these costs would 
not increase with efficiency. Therefore, DOE did not assume that more 
efficient dishwashers would have greater repair or maintenance costs.
8. Product Lifetime
    Because the lifetime of appliances varies depending on utilization 
and other factors, DOE develops a distribution of lifetimes from which 
specific values are assigned to the appliances in the samples. DOE 
conducted an analysis of residential dishwasher lifetimes in the field 
based on a combination of shipments data and RECS 2005 data on the ages 
of the dishwashers reported in the household stock. As described in 
chapter 8 of the direct final rue TSD, the analysis yielded an estimate 
of mean age for residential dishwashers of approximately 15 years. It 
also yielded a survival function that DOE incorporated as a probability 
distribution in its LCC analysis. See chapter 8 of the direct final 
rule TSD for further details on the method and sources DOE used to 
develop product lifetimes.
9. Discount Rates
    In the calculation of LCC, DOE applies discount rates appropriate 
to households to estimate the present value of future operating costs. 
DOE estimated a distribution of residential discount rates for 
dishwashers based on consumer financing costs and opportunity cost of 
any uses of their funds, including investments in more-efficient 
appliances.
    To establish residential discount rates for the LCC analysis, DOE 
identified all debt or asset classes that might be used to purchase 
dishwashers, including household assets that might be affected 
indirectly. It estimated the average percentage shares of the various 
debt or asset classes for the average U.S. household using data from 
the Federal Reserve Board's Survey of Consumer Finances (SCF) for 1989, 
1992, 1995, 1998, 2001, 2004, and 2007. Using the SCF and other 
sources, DOE then developed a distribution of rates for each type of 
debt and asset to represent the rates that may apply in the year in 
which amended standards would take effect. DOE assigned each sample 
household a specific discount rate drawn from one of the distributions. 
The average rate across all types of household debt and equity, 
weighted by the shares of each class, is 5.1 percent. DOE used the same 
approach for today's direct final rule. See chapter 8 in the direct 
final rule TSD for further details on the development of consumer 
discount rates.
10. Compliance Date of Amended Standards
    In the context of EPCA, the compliance date is the future date when 
parties subject to the requirements of a new or amended standard must 
comply. EPCA, as amended by EISA 2007, requires that DOE publish a 
final rule no later than January 1, 2015, to determine whether to amend 
the standards in effect for dishwashers manufactured on or after 
January 1, 2018. (42 U.S.C. 6295(g)(10)(B)) Where appropriate, DOE 
calculated the LCC and PBP for dishwashers as if consumers would 
purchase new products in 2018. As discussed in section II.B.2, TSL 2, 
which corresponds to the Consensus Agreement level for standard 
dishwashers, has a compliance date of 2013. Thus, for TSL 2, DOE used 
2013 as the compliance year.
11. Base-Case Efficiency Distribution
    To accurately estimate the share of consumers that would be 
affected by a standard at a particular efficiency level, DOE's LCC 
analysis considered the projected distribution of product efficiencies 
that consumers purchase under the base case (i.e., the case without new 
energy efficiency standards). DOE refers to this distribution of 
product of efficiencies as a base-case efficiency distribution.
    To estimate the base-case efficiency distribution of standard-sized 
dishwashers for 2013 and 2018, DOE relied on data submitted by AHAM for 
the current rulemaking. These data provide shares of shipments by 
efficiency level for 2002-2005 and 2008-2010. These data show 
significant increase in the share of ENERGY STAR products in both 
periods. To predict the market shares for each efficiency level in 2013 
and 2018, DOE considered the shares and market trends present in the 
AHAM data and assumed these trends would continue in a manner 
consistent with the decline in average energy use.
    For compact dishwashers, AHAM data for efficiency distributions 
were not available. Thus, DOE first considered 2010 market data from 
the NPD Group, Inc.\25\ These data show that nearly all shipments for 
both standard and compact dishwashers are at the baseline efficiency 
level. For the compact class base-case distribution, however, there 
were only two types of compact dishwashers in the NPD data set: 
``countertop'' and ``portable.'' DOE is not aware of any portable 
dishwashers currently on the market in the United States that would be 
classified as compact size based on the number of place settings. 
Further, there are no compact dishdrawer platforms included in the NPD 
dataset, which DOE believes represent a sizeable fraction of compact 
dishwasher shipments. As a result, DOE estimated compact base-case 
efficiencies from its research on the number of models available at 
each efficiency level. Of the eight compact dishwashers listed in the 
FTC database for manufacturer certifications in 2010, four are 
dishdrawer models with similar performance. Therefore, DOE allocated 
half of shipments to the dishdrawer platform that meets candidate 
standard level (CSL) 2. DOE further estimated, based on the number of 
countertop models and underlying platforms contained within the CEC and 
FTC databases, that half of remaining shipments (25 percent of total 
compact dishwasher shipments) would meet CSL 1, while the remaining 25 
percent of compact shipments are at the baseline.
---------------------------------------------------------------------------

    \25\ NPD Group, Inc. offers marketing research services, 
industry tracking, data collection, and analysis. For more 
information, please visit: www.npdgroup.com.
---------------------------------------------------------------------------

    The estimated shares for the base-case efficiency distribution for 
dishwashers are shown in Table IV.11. See chapter 8 of the direct final 
rule TSD for further information on the derivation of the base-case 
efficiency distributions. For standard-sized dishwashers, DOE also 
considered an alternative base-case efficiency distribution that uses a 
different set of historical data. This distribution is described in 
appendix 8-F of the direct final rule TSD.

[[Page 31936]]

               Table IV.11--Dishwasher Base-Case Efficiency Distribution by Product Class in 2013
----------------------------------------------------------------------------------------------------------------
                                                          Efficiency level    Standard (% of     Compact (% of
                          CSL                                  (kWh)            shipments)         shipments)
----------------------------------------------------------------------------------------------------------------
Baseline...............................................                355                3.8               25.0
1......................................................                324               32.3               25.0
2......................................................                307               28.0               50.0
3......................................................                295               16.4  .................
4......................................................                234               13.8  .................
5......................................................                180                5.6  .................
----------------------------------------------------------------------------------------------------------------

12. Inputs to Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation are the total installed cost of 
the product to the customer for each efficiency level and the average 
annual operating expenditures for each efficiency level. The PBP 
calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
13. Rebuttable-Presumption Payback Period
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard 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. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency 
level, DOE determined the value of the first year's energy and water 
savings by calculating the quantity of those savings in accordance with 
the applicable DOE test procedure, and multiplying that amount by the 
average energy and water price forecast for the year in which 
compliance with the amended standard would be required. The results of 
the rebuttable payback period analysis are summarized in section 
V.B.1.c of this notice.

G. National Impact Analysis-National Energy Savings and Net Present 
Value Analysis

    The national impact analysis (NIA) assesses the national energy 
savings (NES) and the national net present value (NPV) of total 
consumer costs and savings that would be expected to result from new or 
amended standards at specific efficiency levels. (``Consumer'' in this 
context refers to consumers of the product being regulated.) DOE 
calculates the NES and NPV based on projections of annual appliance 
shipments, along with the annual energy consumption and total installed 
cost data from the energy use and LCC analyses.\26\ For the present 
analysis, DOE forecasted the energy savings, operating cost savings, 
product costs, and NPV of consumer benefits for products sold from 2018 
through 2047.\27\
---------------------------------------------------------------------------

    \26\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
    \27\ For TSL 2, which assumes a compliance date in 2013, DOE 
forecasted the impacts for products sold from 2013 through 2047.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new and amended standards by comparing 
base-case projections with standards-case projections. The base-case 
projections characterize energy use and consumer costs for each product 
class in the absence of new or amended energy conservation standards. 
DOE compares these projections with projections characterizing the 
market for each product class if DOE adopted new or amended standards 
at specific energy efficiency levels (i.e., the TSLs or standards 
cases) for that class. For the base-case forecast, DOE considers 
historical trends in efficiency and various forces that are likely to 
affect the mix of efficiencies over time. For the standards cases, DOE 
also considers how a given standard would likely affect the market 
shares of efficiencies greater than the standard.
    DOE uses an MS Excel spreadsheet model to calculate the energy 
savings and the national consumer costs and savings from each TSL. The 
TSD and other documentation that DOE provides during the rulemaking 
help explain the models and how to use them, and interested parties can 
review DOE's analyses by changing various input quantities within the 
spreadsheet. The NIA spreadsheet model uses typical values (as opposed 
to probability distributions) as inputs.
    For the results presented in today's notice, DOE used projections 
of energy prices and housing starts from the AEO2011 Reference case. As 
part of the NIA, DOE analyzed scenarios that used inputs from the 
AEO2011 Low Economic Growth and High Economic Growth cases. Those cases 
have higher and lower energy price trends compared to the Reference 
case, as well as higher and lower housing starts, which result in 
higher and lower appliance shipments to new homes. NIA results based on 
these cases are presented in appendix 10-C of the direct final rule 
TSD.
    Table IV.12 summarizes the inputs and methods DOE used for the NIA 
analysis for the direct final rule. Discussion of these inputs and 
methods follows the table. See chapter 10 of the direct final rule TSD 
for further details.

   Table IV.12--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
            Inputs                               Method
------------------------------------------------------------------------
Shipments....................  Annual shipments from shipments model.
Compliance Date of Standard..  2018.*
Base-Case Forecasted           Efficiency distributions are forecasted
 Efficiencies.                  based on historical efficiency data.
Standards-Case Forecasted      Used a ``roll-up'' scenario.
 Efficiencies.
Annual Energy Consumption per  Annual weighted-average values are a
 Unit.                          function of energy use at each CSL.

[[Page 31937]]

 
Total Installed Cost per Unit  Annual weighted-average values are a
                                function of cost at each CSL.
                                Incorporates forecast of future product
                                prices based on historical data.
Annual Energy Cost per Unit..  Annual weighted-average values as a
                                function of the annual energy
                                consumption per unit and energy prices.
Repair and Maintenance Cost    Annual values do not change with
 per Unit.                      efficiency level.
Energy Prices................  AEO2011 forecasts (to 2035) and
                                extrapolation through 2047.
Energy Site-to-Source          Varies yearly and is generated by NEMS-
 Conversion Factor.             BT.
Discount Rate................  Three and seven percent real.
Present Year.................  Future expenses discounted to 2012, when
                                the final rule will be published.
------------------------------------------------------------------------
* For TSL 2, the compliance date is 2013.

1. Shipments
    Forecasts of product shipments are needed to calculate the national 
impacts of standards on energy and water use, NPV, and future 
manufacturer cash flows. DOE develops shipment forecasts based on an 
analysis of key market drivers for residential dishwashers. In DOE's 
shipments model, shipments of products are driven by new construction 
and stock replacements. The shipments model takes an accounting 
approach, tracking market shares of each product class and the vintage 
of units in the existing stock. Stock accounting uses product shipments 
as inputs to estimate the age distribution of in-service product stocks 
for all years. The age distribution of in-service product stocks is a 
key input to calculations of both the NES and NPV, because operating 
costs for any year depend on the age distribution of the stock. DOE 
also considers the impacts on shipments from changes in product 
purchase price and operating cost associated with higher energy 
efficiency levels.
    New housing forecasts and market saturation data comprised the two 
primary inputs for DOE's estimates of new construction shipments. ``New 
housing'' includes newly-constructed single-family and multi-family 
units (referred to as ``new housing completions'') and mobile home 
placements. For new housing completions and mobile home placements, DOE 
used actual data through 2008, and adopted the projections from AEO2011 
for later years.
    DOE calibrated the shipments model against historical dishwasher 
shipments. In general, DOE estimated replacements using a product 
retirement function developed from product lifetime. DOE based the 
retirement function on a probability distribution for the product 
lifetime that was developed in the LCC analysis. The shipments model 
assumes that no units are retired below a minimum product lifetime and 
that all units are retired before exceeding a maximum product lifetime.
    DOE applied a price elasticity parameter to estimate the effect of 
standards on dishwasher shipments. DOE estimated the price elasticity 
parameter from a regression analysis that used purchase price and 
efficiency data specific to residential clothes washers, refrigerators 
and dishwashers during 1980-2002. The estimated ``relative price 
elasticity'' incorporates the impacts from purchase price, operating 
cost, and household income. Based on evidence that the price elasticity 
of demand is significantly different over the short run and long run 
for other consumer goods (i.e., automobiles),\28\ DOE assumed that the 
relative price elasticity declines over time. DOE estimated shipments 
in each standards case using the relative price elasticity along with 
the change in the relative price between a standards case and the base 
case.
---------------------------------------------------------------------------

    \28\ S. Hymans. Consumer Durable Spending: Explanation and 
Prediction, Brookings Papers on Economic Activity, 1971. Vol. 1971, 
No. 1, pp. 234-239.
---------------------------------------------------------------------------

    For details on the shipments analysis, see chapter 9 of the direct 
final rule TSD.
2. Forecasted Efficiency in the Base Case and Standards Cases
    A key component of the NIA is the trend in energy efficiency 
forecasted for the base case (without new or amended standards) and 
each of the standards cases. Section IV.F.11 describes how DOE 
developed a base-case energy efficiency distribution (which yields a 
shipment-weighted average efficiency) for each of the considered 
product classes for the first year of the forecast period. To project 
the trend in efficiency for standard-sized dishwashers over the entire 
forecast period, DOE utilized the historical trend in shipment-weighted 
average efficiency from 2002 to 2010 as provided by AHAM and considered 
the potential effect of programs such as ENERGY STAR. The historical 
trend demonstrates that the shipment-weighted average annual energy use 
decreased by almost 90 kWh from 2002 to 2010, reaching 309 kWh. DOE fit 
an exponential function to the 2002 to 2010 data that indicated that 
the base-case shipment-weighted average annual energy use will 
asymptotically approach a value of 290 kWh by 2025 and remain at that 
level. For standard-sized dishwashers, DOE also considered an 
alternative base-case efficiency trend that was estimated using a 
different set of historical data. This trend is described in appendix 
10-D of the direct final rule TSD.
    The historical record suggests that the likely market response to 
new or amended standards is that lower efficiency baseline models will 
roll up to the standard efficiency level, and some products will exceed 
the minimum requirements. To estimate efficiency trends in the 
standards cases, DOE has used ``roll-up'' and/or ``shift'' scenarios in 
its standards rulemakings. Under the ``roll-up'' scenario, DOE assumes: 
(1) Product efficiencies in the base case that do not meet the standard 
level under consideration would ``roll-up'' to meet the new standard 
level; and (2) product efficiencies above the standard level under 
consideration would not be affected. Under the ``shift'' scenario, DOE 
re-orients the distribution above the new minimum energy conservation 
standard.
    DOE determined that a roll-up scenario is most appropriate to 
establish the distribution of efficiencies for the year that compliance 
with revised dishwasher standards would be required. For subsequent 
years, DOE assumed that efficiency would continue to improve in each 
standards case at the same rate as estimated for the base case, until 
the max-tech efficiency level is reached. The details of DOE's approach 
to forecast efficiency trends are described in chapter 10 of the direct 
final rule TSD.

[[Page 31938]]

3. Total Installed Cost per Unit
    As discussed in section IV. F. 1, DOE developed a dishwasher price 
trend based on an experience rate for miscellaneous household 
appliances. It used this trend to forecast the prices of dishwashers 
sold in each year in the forecast period. DOE applied the same values 
to forecast prices for each product class at each considered efficiency 
level.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
forecasts on the consumer net present value for the considered TSLs for 
residential dishwashers. In addition to the default price trend, DOE 
considered two product price sensitivity cases: (1) A high price 
decline case based on an exponential fit using PPI data for 1991 to 
2010; (2) a low price decline case based on an experience rate derived 
using PPI and shipments data for 1991 to 2000. The derivation of these 
price trends and the results of these sensitivity cases are described 
in appendix 10-B of the direct final rule TSD. In the high price 
decline case, the NPV is significantly higher than in the default case. 
In the low price decline case, the NPV is slightly lower than in the 
default case. The rank order of the TSLs is the same in all of the 
cases.
4. National Energy and Water Savings
    For each year in the forecast period, DOE calculates the national 
energy and water savings for each standard level by multiplying the 
stock of products affected by the energy conservation standards by the 
per-unit annual energy savings. Cumulative energy and water savings are 
the sum of the NES for each year.
    To estimate the national energy savings expected from appliance 
standards, DOE uses a multiplicative factor to convert site energy 
consumption (at the home) into primary or source energy consumption 
(the energy required to convert and deliver the site energy). These 
conversion factors account for the energy used at power plants to 
generate electricity and losses in transmission and distribution. The 
conversion factors vary over time because of projected changes in 
generation sources (i.e., the power plant types projected to provide 
electricity to the country). The factors that DOE developed are 
marginal values, which represent the response of the system to an 
incremental decrease in consumption associated with appliance 
standards. For today's rule, DOE used annual site-to-source conversion 
factors based on the version of NEMS that corresponds to AEO2011, which 
provides energy forecasts through 2035. For 2036-2047, DOE used 
conversion factors that remain constant at the 2035 values.
    Section 1802 of the Energy Policy Act of 2005 (EPACT 2005) directed 
DOE to contract a study with the National Academy of Science (NAS) to 
examine whether the goals of energy efficiency standards are best 
served by measuring energy consumed, and efficiency improvements, at 
the actual point of use or through the use of the full-fuel-cycle, 
beginning at the source of energy production. (Pub. L. No. 109-58 
(August 8, 2005)). NAS appointed a committee on ``Point-of-Use and 
Full-Fuel-Cycle Measurement Approaches to Energy Efficiency Standards'' 
to conduct the study, which was completed in May 2009. The NAS 
committee defined full-fuel-cycle energy consumption as including, in 
addition to site energy use: Energy consumed in the extraction, 
processing, and transport of primary fuels such as coal, oil, and 
natural gas; energy losses in thermal combustion in power generation 
plants; and energy losses in transmission and distribution to homes and 
commercial buildings.
    In evaluating the merits of using point-of-use and full-fuel-cycle 
(FFC) measures, the NAS committee noted that DOE uses what the 
committee referred to as ``extended site'' energy consumption to assess 
the impact of energy use on the economy, energy security, and 
environmental quality. The extended site measure of energy consumption 
includes the energy consumed during the generation, transmission, and 
distribution of electricity but, unlike the full-fuel-cycle measure, 
does not include the energy consumed in extracting, processing, and 
transporting primary fuels. A majority of the NAS committee concluded 
that extended site energy consumption understates the total energy 
consumed to make an appliance operational at the site. As a result, the 
NAS committee recommended that DOE consider shifting its analytical 
approach over time to use a full-fuel-cycle measure of energy 
consumption when assessing national and environmental impacts, 
especially with respect to the calculation of greenhouse gas (GHG) 
emissions. The NAS committee also recommended that DOE provide more 
comprehensive information to the public through labels and other means, 
such as an enhanced Web site. For those appliances that use multiple 
fuels (e.g., water heaters), the NAS committee indicated that measuring 
full-fuel-cycle energy consumption would provide a more complete 
picture of energy consumed and permit comparisons across many different 
appliances, as well as an improved assessment of impacts.
    In response to the NAS committee recommendations, DOE issued a 
notice of proposed policy for incorporating a full-fuel cycle analysis 
into the methods it uses to estimate the likely impacts of energy 
conservation standards on energy use and emissions. 75 FR 51423 (Aug. 
20, 2010). In its final Statement of Policy, DOE stated that it intends 
to calculate FFC energy and emission impacts by applying conversion 
factors generated by the GREET model to the NEMS-based results 
currently used by DOE. 76 FR 51282 (Aug. 18, 2011). Additionally, DOE 
will review alternative approaches to estimating these factors and may 
decide to use a model other than GREET to estimate the FFC energy and 
emission impacts in any particular future appliance efficiency 
standards rulemaking.
5. Net Present Value of Consumer Benefit
    The inputs for determining the net present value (NPV) of the total 
costs and benefits experienced by consumers of considered appliances 
are: (1) Total annual installed cost, (2) total annual savings in 
operating costs, and (3) a discount factor. DOE calculates net savings 
each year as the difference between the base case and each standards 
case in total savings in operating costs and total increases in 
installed costs. DOE calculates operating cost savings over the life of 
each product shipped during the forecast period.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For 
today's direct final rule, DOE estimated the NPV of appliance consumer 
benefits using both a 3-percent and a 7-percent real discount rate. DOE 
uses these discount rates in accordance with guidance provided by the 
Office of Management and Budget (OMB) to Federal agencies on the 
development of regulatory analysis.\29\ The discount rates for the 
determination of NPV are in contrast to the discount rates used in the 
LCC analysis, which are designed to reflect a consumer's perspective. 
The 7-percent real value is an estimate of the average before-tax rate 
of return to private capital in the U.S. economy. The 3-percent real 
value represents the ``social rate of time preference,'' which

[[Page 31939]]

is the rate at which society discounts future consumption flows to 
their present value.
---------------------------------------------------------------------------

    \29\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs. Available at: www.whitehouse.gov/omb/memoranda/m03-21.html.
---------------------------------------------------------------------------

H. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers (e.g., low-income households) that may be disproportionately 
affected by a national standard. DOE evaluates impacts on particular 
subgroups of consumers primarily by analyzing the LCC impacts and PBP 
for those particular consumers from alternative standard levels. 
Chapter 11 in the direct final rule TSD describes the consumer subgroup 
analysis. For this rule, DOE analyzed the impacts of the considered 
standard levels on low-income households and senior-only households.

I. Manufacturer Impact Analysis

    The following sections address the various steps taken to analyze 
the impacts of the amended standards on manufacturers. These steps 
include conducting a series of analyses, interviewing manufacturers, 
and evaluating the information received from interested parties during 
this rulemaking.
1. Overview
    In determining whether an amended energy conservation standard for 
residential dishwashers subject to this rulemaking is economically 
justified, DOE is required to consider ``the economic impact of the 
standard on the manufacturers and on the consumers of the products 
subject to such standard.'' (42 U.S.C. 6295(o)(2)(B)(i)(I)) The statute 
also calls for an assessment of the impact of any lessening of 
competition as determined by the Attorney General that is likely to 
result from the adoption of a standard. (42 U.S.C. 6295(o)(2)(B)(i)(V)) 
DOE conducted the MIA to estimate the financial impact of amended 
energy conservation standards on manufacturers, and to assess the 
impacts of such standards on employment and manufacturing capacity.
    The MIA is both a quantitative and qualitative analysis. The 
quantitative part of the MIA relies on the Government Regulatory Impact 
Model (GRIM), an industry cash-flow model customized for the 
residential dishwashers covered in this rulemaking. See section IV.I.2 
below, for details on the GRIM analysis. The qualitative part of the 
MIA addresses factors such as product characteristics, characteristics 
of particular firms, and market trends. The complete MIA is discussed 
in chapter 12 of the direct final rule TSD. DOE conducted the MIA in 
the three phases described below.
a. Phase 1, Industry Profile
    In Phase 1 of the MIA, DOE prepared a profile of the residential 
dishwasher industry based on the market and technology assessment 
prepared for this rulemaking. Before initiating the detailed impact 
studies, DOE collected information on the present and past market 
structure and characteristics of the industry, tracking trends in 
market share data, product attributes, product shipments, manufacturer 
markups, and the cost structure for various manufacturers.
    The profile also included an analysis of manufacturers in the 
industry using Security and Exchange Commission 10-K filings,\30\ 
Standard & Poor's stock reports,\31\ and corporate annual reports 
released by both public and privately held companies. DOE used this and 
other publicly available information to derive preliminary financial 
inputs for the GRIM including industry revenues, cost of goods sold, 
and depreciation, as well as selling, general, and administrative 
(SG&A), and research and development (R&D) expenses.
---------------------------------------------------------------------------

    \30\ Available online at www.sec.gov.
    \31\ Available online at www2.standardandpoors.com.
---------------------------------------------------------------------------

b. Phase 2, Industry Cash Flow Analysis
    Phase 2 focused on the financial impacts of potential amended 
energy conservation standards on the industry as a whole. Amended 
energy conservation standards can affect manufacturer cash flows in 
three distinct ways: (1) By creating a need for increased investment, 
(2) by raising production costs per unit, and (3) by altering revenue 
due to higher per-unit prices and/or possible changes in sales volumes. 
DOE used the GRIM to model these effects in a cash-flow analysis of the 
residential dishwasher industry. In performing this analysis, DOE used 
the financial values derived during Phase 1 and the shipment 
assumptions from the NIA.
c. Phase 3, Sub-Group Impact Analysis
    Using average cost assumptions to develop an industry-cash-flow 
estimate may not adequately assess differential impacts of amended 
energy conservation standards among manufacturer subgroups. For 
example, small businesses, manufacturers of niche products, or 
companies exhibiting a cost structure that differs significantly from 
the industry average could be more negatively affected. During the 
manufacturer interviews, DOE discussed financial topics specific to 
each manufacturer and obtained each manufacturer's view of the industry 
as a whole. DOE reports the MIA impacts of amended energy conservation 
standards by grouping together the impacts on manufacturers of certain 
product classes. While DOE did not identify any other subgroup of 
manufacturers of residential dishwashers that would warrant a separate 
analysis, DOE specifically investigated impacts on small business 
manufacturers. See section VI.B for more information.
    The MIA also addresses the direct employment impacts in 
manufacturing of dishwashers. DOE uses census data and information 
gained through manufacturer interviews in conjunction with the GRIM to 
estimate the domestic labor expenditures and number of domestic 
production workers in the base case and at each TSL from 2012 to 2047.
2. GRIM Analysis
    DOE uses the GRIM to quantify the changes in cash flow that result 
in a higher or lower industry value. The GRIM analysis is a standard, 
annual cash-flow analysis that incorporates manufacturer costs, 
markups, shipments, and industry financial information as inputs, and 
models changes in costs, distribution of shipments, investments, and 
manufacturer margins that could result from amended energy conservation 
standards. The GRIM spreadsheet uses the inputs to arrive at a series 
of annual cash flows, beginning with the base year of the analysis, 
2012 (which accounts for the investments needed to bring products into 
compliance), and continuing to 2047. DOE uses the industry average 
weighted average cost of capital (WACC) of 8.5 percent, as this 
represents the minimum rate of return necessary to cover the debt and 
equity obligations manufacturers use to finance operations.
    DOE used the GRIM to compare INPV in the base case with INPV at 
various TSLs (the standards cases). The difference in INPV between the 
base and standards cases represents the financial impact of the amended 
standard on manufacturers. DOE collected this information from a number 
of sources, including publicly available data and interviews with a 
number of manufacturers. Additional details about the GRIM can be found 
in chapter 12 of the direct final rule TSD.

[[Page 31940]]

a. GRIM Key Inputs
Manufacturer Production Costs
    Changes in the manufacturer production costs (MPCs) of residential 
dishwashers can affect revenues, gross margins, and cash flow of the 
industry, making these product cost data key GRIM inputs for DOE's 
analysis. DOE created separate cost curves for standard and compact 
product classes using data from tear-downs to develop both the baseline 
MPCs and the incremental costs that correspond to the proposed design 
options. The cost model also disaggregated the MPCs into material, 
labor, overhead, and depreciation. Later, in Phase 3 of the MIA, 
manufacturers validated these estimates and assumptions during 
interviews. DOE used the resulting MPCs and cost breakdowns as 
described in section IV.C above, and further detailed in chapter 5 of 
the direct final rule TSD, for each efficiency level analyzed in the 
GRIM analysis.
Base-Case Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of these values by efficiency 
level and product class. Changes in the efficiency mix at each standard 
level affect manufacturer finances. For this analysis, the GRIM uses 
the NIA shipments forecasts from 2012 to 2047, the end of the analysis 
period.
    To calculate shipments, DOE developed a single shipment model for 
all dishwashers based on an analysis of key market drivers for 
residential dishwashers. For greater detail on the shipments analysis, 
see section IV.G.1 above or chapter 9 of the direct final rule TSD.
Product and Capital Conversion Costs
    Amended energy conservation standards will cause manufacturers to 
incur conversion costs to bring their production facilities and product 
designs into compliance. For the MIA, DOE classified these costs into 
two major groups: (1) Product conversion costs and (2) capital 
conversion costs. Product conversion costs are investments in research, 
development, testing, marketing, and other non-capitalized costs 
focused on making product designs comply with the amended energy 
conservation standard. Capital conversion costs are investments in 
property, plant, and equipment to adapt or change existing production 
facilities so that new product designs can be fabricated and assembled.
    DOE based its estimates of both the product and capital conversion 
costs that would be required to meet each TSL on information obtained 
from manufacturer interviews, the design pathways considered in the 
engineering analysis, and market information about the number of 
platform and product families for each manufacturer. DOE's estimates of 
the product and capital conversion costs for the dishwashers addressed 
in this rulemaking can be found in section V.B.2 of today's final rule 
and in chapter 12 of the final rule TSD.
b. GRIM Scenarios
Standards-Case Shipment Forecasts
    The MIA results presented in section V.B.2 all use shipments from 
the reference NIA scenario in the GRIM. To determine efficiency 
distributions in the standards case for the reference NIA scenario, DOE 
analyzed the roll-up scenario. In this scenario, DOE assumed that base 
case shipments of products that did not meet the new standard would 
roll up to meet the standard in the compliance year. See section IV.G.2 
for a description of the standards case efficiency distribution. DOE 
also used a relative price elasticity that considers the possibility of 
higher first costs lowering total shipments in the standards case.
    The reference NIA scenario used historical data to derive a price 
scaling index to forecast product costs. The MPCs and MSPs in the GRIM 
use the default price forecast for all scenarios. See section IV.G.4 
for a discussion of DOE's price forecasting methodology.
Markup Scenarios
    MSP is equal to MPC times a manufacturer markup. The MSP includes 
direct manufacturing production costs (i.e., labor, material, and 
overhead estimated in DOE's MPCs) and all non-production costs (i.e., 
SG&A, R&D, and interest), along with profit.
    To calculate the baseline manufacturer markup, DOE evaluated 
publicly available financial information for manufacturers of major 
household appliances whose product offerings include residential 
dishwashers. During manufacturer interviews, DOE received feedback 
supporting the calculated 1.24 baseline manufacturer markup. DOE used 
the baseline manufacturer markup for all products when modeling the 
base case in the GRIM.
    For the standards case in the GRIM, DOE modeled two markup 
scenarios to represent the uncertainty regarding the potential impacts 
on prices and profitability for manufacturers following the 
implementation of amended energy conservation standards. For both GRIM 
markup scenarios, DOE placed no premium on higher efficiency products. 
This assumption is informed by a market structure in which over 96 
percent of products currently adhere to ENERGY STAR standards, leaving 
little to no room for differentiation by efficiency level alone, and 
was further supported by manufacturer interviews. The two standards 
case markup scenarios are (1) a flat markup scenario, and (2) a 
preservation of operating profit markup scenario. Modifying these 
markups from the base case to the standards cases yields different sets 
of impacts on manufacturers' changing industry revenue and cash flow.
    The flat markup scenario assumes that the baseline markup of 1.24 
is maintained for all products in the standards case. This scenario 
represents the upper bound of industry profitability as manufacturers 
are able to fully pass through additional costs due to standards to 
their customers under this scenario.
    The preservation of operating profit markup scenario is similar to 
the flat markup scenario with the exception that in the standards case, 
minimally compliant products lose a fraction of the baseline markup. 
This scenario is the lower bound profitability scenario and represents 
a more substantial impact to the dishwasher industry as manufacturers 
attempt to maintain the lowest possible prices for entry level products 
while securing the same level of operating profit they saw prior to 
amended standards.
3. Manufacturer Interviews
    DOE interviewed manufacturers representing more than 80 percent of 
residential dishwasher sales. These interviews were in addition to 
those DOE conducted as part of the engineering analysis. DOE used these 
interviews to tailor the GRIM to incorporate unique financial 
characteristics of the industry. All interviews provided information 
that DOE used to evaluate the impacts of potential amended energy 
conservation standards on manufacturer cash flows, manufacturing 
capacities, and employment levels. See appendix 12-A of the direct 
final rule TSD for additional information on the MIA interviews. The 
following sections describe the most significant issues identified by 
manufacturers.
a. Dishwasher Performance
    All manufacturers interviewed expressed concerns about the 
potential impacts of amended standards on product performance, citing 
several

[[Page 31941]]

adverse and possibly severe consequences of standards above those 
agreed upon in the Joint Petition. For higher efficiency standards, the 
performance metrics manufacturers expect to be most severely impacted 
include wash performance, drying performance, cycle time, and the noise 
levels reached in operation. In considering these metrics, 
manufacturers anticipate negative reactions ranging from small but 
meaningful changes in consumer behavior to higher rates of service 
calls and returns. For efficiency standards well above those proposed 
in the Joint Petition, manufacturers foresee blanket rejection of 
poorly performing products in the market. In considering impacts to 
wash performance, manufacturers cited an increase in unnecessary 
rinsing or washing of dishes prior to loading the dishwasher, switching 
to a more aggressive cycle, and running multiple cycles when dishes are 
not adequately cleaned in a single cycle as the most likely changes in 
consumer behavior. Manufacturers went on to suggest that any of these 
changes would result in an increase in both energy and water 
consumption over that used by a dishwasher of satisfactory performance. 
To mitigate the impact of future standards on product performance, 
several manufacturers recommended the adoption of a performance metric 
into the test procedure and standard.
    While all manufacturers suggested that the efficiency level 
specified in the Joint Petition would not likely have a substantial 
negative impact on wash performance, some manufacturers noted that 
standards above this level would result in a decrease in performance 
unless substantially higher-cost technology changes were implemented. 
The comments did not indicate the specific technology changes that 
would be required. Even without such technology changes, however, 
several manufacturers already sell products at efficiency levels above 
those specified by the Joint Petition, including the max-tech 
efficiency level. Accordingly, DOE evaluated these efficiency levels as 
part of this rulemaking.
b. Test Procedures
    Manufacturers raised concerns over the current DOE dishwasher test 
procedure and the multitude of additional dishwasher test procedures in 
the field today. Several manufacturers suggested that the current DOE 
test procedure does not accurately capture the energy used by 
dishwashers in the field. These manufacturers cite the single cycle 
specification and lack of performance metrics in the test procedure as 
providing an easy avenue for circumvention of the standards. In the 
scenario described, manufacturers may optimize a particular cycle to 
perform well on the DOE test procedure with the implicit understanding 
that this cycle will not meet customer expectations and thus will not 
be used in the field as customers opt for a different, more energy-
intensive cycle.
    In contrast, other manufacturers raised concerns over expanding the 
test procedure to cover multiple cycles citing the additional testing 
burden this would generate. Similarly, some manufacturers raised 
concerns over how DOE would implement a performance test, noting that 
there already exist numerous performance tests in the industry 
including those developed by AHAM, IEC, and Consumer Reports and that 
each performance test procedure favors a different machine cycle 
algorithm.
    As discussed in sections II.A and II.B.4, the DOE test procedure 
for residential dishwashers is found at Title 10 of the CFR part 430, 
subpart B, appendix C. DOE is considering amendments to the test 
procedure to incorporate measures of standby mode and off mode energy 
consumption in accordance with statutory requirements. DOE will 
consider concerns regarding active mode testing provisions, including 
those discussed above, in the test procedure rulemaking.
c. Increased Competition
    Manufacturers of both baseline and high efficiency products 
anticipate an increase in competition in industry stemming from amended 
standards. Manufacturers whose market share is largely attributed to 
products currently below amended standards expect to see either the 
removal of features from higher efficiency units as a means to cut 
costs to maintain a low-cost minimally-compliant product, or the 
disappearance of entry level models as they are forced to add other 
features and cost in line with current higher efficiency products. If 
the latter approach prevails, manufacturers of higher efficiency 
products expect to see increased competition as manufacturers which 
previously focused on low efficiency products move into their target 
segment of the market. As noted in section III.D.1.d, the Attorney 
General provides DOE with a determination and analysis of the impact of 
any lessening of competition that is likely to result from the 
imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
d. Cumulative Regulatory Burden
    Several manufacturers noted that dishwashers are but one of a suite 
of appliances they produce and that the cumulative burden of research 
and development to meet standards, capital expenditure and retraining 
of staff to produce products at the new standards, and product testing 
to certify compliance of new products represent a significant burden 
when taken in combination across their various product lines. 
Manufacturers suggest that the ability to establish standards in a 
coordinated fashion by such vehicles as a joint petition and receiving 
adequate notice of DOE's plans for amended standards are both necessary 
elements in mitigating the cumulative burden and aligning changes in 
efficiency regulations with the product development cycle. Cumulative 
regulatory burden is discussed further in section V.B.2.e of today's 
direct final rule and chapter 12 of the direct final rule TSD.

J. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
direct and indirect impacts. Direct employment impacts are any changes 
in the number of employees of manufacturers of the products subject to 
standards, their suppliers, and related service firms. The MIA 
addresses those impacts. Indirect employment impacts from standards 
consist of the net jobs created or eliminated in the national economy, 
other than in the manufacturing sector being regulated, caused by:
    (1) Reduced spending by end users on energy;
    (2) Reduced spending on new energy supply by the utility industry;
    (3) Increased spending on new products to which the new standards 
apply; and
    (4) The effects of those three factors throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\32\ The BLS regularly publishes its estimates 
of the number of jobs per million dollars of economic activity in 
different sectors of

[[Page 31942]]

the economy, as well as the jobs created elsewhere in the economy by 
this same economic activity. Data from BLS indicate that expenditures 
in the utility sector generally create fewer jobs (both directly and 
indirectly) than expenditures in other sectors of the economy.\33\ 
There are many reasons for these differences, including wage 
differences and the fact that the utility sector is more capital-
intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment will 
increase due to shifts in economic activity resulting from amended 
standards for dishwashers.
---------------------------------------------------------------------------

    \32\ Data on industry employment, hours, labor compensation, 
value of production, and the implicit price deflator for output for 
these industries are available upon request by calling the Division 
of Industry Productivity Studies (202-691-5618) or by sending a 
request by email to dipsweb@bls.gov. Available at: www.bls.gov/news.release/prin1.nr0.htm.
    \33\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

    For the standard levels considered in today's direct final rule, 
DOE estimated indirect national employment impacts using an input/
output model of the U.S. economy called Impact of Sector Energy 
Technologies version 3.1.1 (ImSET).\34\ ImSET is a special-purpose 
version of the ``U.S. Benchmark National Input-Output'' (I-O) model, 
which was designed to estimate the national employment and income 
effects of energy-saving technologies. The ImSET software includes a 
computer-based I-O model having structural coefficients that 
characterize economic flows among 187 sectors most relevant to 
industrial, commercial, and residential building energy use.
---------------------------------------------------------------------------

    \34\ J. M. Roop, M. J. Scott, and R. W. Schultz, ImSET 3.1: 
Impact of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory, 2009. Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run for this rule. Because ImSET predicts small 
job impacts resulting from this rule, regardless of these 
uncertainties, the actual job impacts are likely to be negligible in 
the overall economy. DOE may consider the use of other modeling 
approaches for examining long run employment impacts. DOE also notes 
that the employment impacts estimated with ImSET for the entire economy 
differ from the employment impacts in the dishwasher manufacturing 
sector estimated using the GRIM in the MIA. The methodologies used and 
the sectors analyzed in the ImSET and GRIM models are different. For 
more details on the employment impact analysis, see chapter 13 of the 
direct final rule TSD.

K. Utility Impact Analysis

    The utility impact analysis estimates several important effects on 
the utility industry of the adoption of new or amended standards. For 
this analysis, DOE used the NEMS-BT model to generate forecasts of 
electricity consumption, electricity generation by plant type, and 
electric generating capacity by plant type, that would result from each 
TSL. DOE obtained the energy savings inputs associated with efficiency 
improvements to considered products from the NIA. DOE conducts the 
utility impact analysis as a scenario that departs from the latest AEO 
Reference case. In the analysis for today's rule, the estimated impacts 
of standards are the differences between values forecasted by NEMS-BT 
and the values in the AEO2011 Reference case. For more details on the 
utility impact analysis, see chapter 14 of the direct final rule TSD.

L. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of CO2, NOX, and Hg from amended 
energy conservation standards for distribution transformers. DOE used 
the NEMS-BT computer model, which is run similarly to the AEO NEMS, 
except that distribution transformer energy use is reduced by the 
amount of energy saved (by fuel type) due to each TSL. The inputs of 
national energy savings come from the NIA spreadsheet model, while the 
output is the forecasted physical emissions. The net benefit of each 
TSL is the difference between the forecasted emissions estimated by 
NEMS-BT at each TSL and the AEO Reference Case. NEMS-BT tracks 
CO2 emissions using a detailed module that provides results 
with broad coverage of all sectors and inclusion of interactive 
effects. For today's rule, DOE used the version of NEMS-BT based on 
AEO2011, which incorporated projected effects of all emissions 
regulations promulgated as of January 31, 2011.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap and trading 
programs, and DOE has determined that these programs create uncertainty 
about the standards' impact on SO2 emissions. Title IV of 
the Clean Air Act sets an annual emissions cap on SO2 for 
affected EGUs in the 48 contiguous States and the District of Columbia 
(DC). SO2 emissions from 28 eastern States and DC are also 
limited under the Clean Air Interstate Rule (CAIR, 70 Fed. Reg. 25162 
(May 12, 2005)), which created an allowance-based trading program that 
would gradually replaced the Title IV program in those States and DC. 
Although CAIR has been remanded to EPA by the U.S. Court of Appeals for 
the District of Columbia Circuit (D.C. Circuit), see North Carolina v. 
EPA, 550 F.3d 1176 (D.C. Cir. 2008), it remained in effect temporarily, 
consistent with the D.C. Circuit's earlier opinion in North Carolina v. 
EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2010, EPA issued the 
Transport Rule proposal, a replacement for CAIR. 75 FR 45210 (Aug. 2, 
2010). On July 6, 2011, EPA issued the final Transport Rule, titled the 
Cross-State Air Pollution Rule. 76 FR 48208 (August 8, 2011). (See 
http://www.epa.gov/crossstaterule/). On December 30, 2011, however, the 
D.C. Circuit stayed the new rules while a panel of judges reviews them, 
and told EPA to continue enforcing CAIR (see EME Homer City Generation 
v. EPA, No. 11-1302, Order at *2 (D.C. Cir. Dec. 30, 2011)). The AEO 
2011 NEMS-BT used for today's direct final rule assumes the 
implementation of CAIR.
    The attainment of emissions caps typically is flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the imposition of an efficiency standard could be used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
However, if the standard resulted in a permanent increase in the 
quantity of unused emissions allowances, there would be an overall 
reduction in SO2 emissions from the standards. While there 
remains some uncertainty about the ultimate effects of efficiency 
standards on SO2 emissions covered by the existing cap-and-
trade system, the NEMS-BT modeling system that DOE uses to forecast 
emissions reductions currently indicates that no physical reductions in 
power sector emissions would occur for SO2. DOE

[[Page 31943]]

acknowledges, however, that even though there is a cap on 
SO2 emissions and uncertainty whether efficiency standards 
would reduce SO2 emissions, it is possible that standards 
could reduce the compliance cost by reducing demand for SO2 
allowances.
    As discussed above, the AEO 2011 NEMS used for today's direct final 
rule assumes the implementation of CAIR, which established a cap on 
NOX emissions in 28 eastern States and the District of 
Columbia. With CAIR in effect, energy conservation standards are 
expected to have little or no physical effect on NOX 
emissions in the States covered by CAIR, for the same reasons that they 
may have little effect on SO2 emissions. However, the 
standards would be expected to reduce NOX emissions in the 
22 States not affected by the CAIR. For these 22 states, DOE used NEMS-
BT to forecast NOX emission reductions from the standards 
that are considered in today's direct final rule.
    On February 16, 2012, EPA issued national emissions standards for 
hazardous air pollutants (NESHAPs) for mercury and certain other 
pollutants emitted from coal and oil-fired EGUs. 77 FR 9304. The 
NESHAPs do not include emissions caps and, as such, DOE's energy 
conservation standards would likely reduce Hg emissions. For the 
emissions analysis for this rulemaking, DOE estimated mercury emissions 
reductions using NEMS-BT based on AEO2011, which does not incorporate 
the NESHAPs. DOE expects that future versions of the NEMS-BT model will 
reflect the implementation of the NESHAPs.

M. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this direct final rule, DOE 
considered the estimated monetary benefits likely to result from the 
reduced emissions of CO2 and NOX that are 
expected to result from each of the considered TSLs. In order to make 
this calculation similar to the calculation of the NPV of consumer 
benefit, DOE considered the reduced emissions expected to result over 
the lifetime of products shipped in the forecast period for each TSL. 
This section summarizes the basis for the monetary values used for each 
of these emissions and presents the benefits estimates considered.
    For today's direct final rule, DOE is relying on a set of values 
for the social cost of carbon (SCC) that was developed by an 
interagency process. A summary of the basis for these values is 
provided below, and a more detailed description of the methodologies 
used is provided in appendix 15-A of the direct final rule TSD.
1. Social Cost of Carbon
    Under Executive Order 12866, agencies must, to the extent permitted 
by law, ``assess both the costs and the benefits of the intended 
regulation and, recognizing that some costs and benefits are difficult 
to quantify, propose or adopt a regulation only upon a reasoned 
determination that the benefits of the intended regulation justify its 
costs.'' The purpose of the SCC estimates presented here is to allow 
agencies to incorporate the monetized social benefits of reducing 
CO2 emissions into cost-benefit analyses of regulatory 
actions that have small, or ``marginal,'' impacts on cumulative global 
emissions. The estimates are presented with an acknowledgement of the 
many uncertainties involved and with a clear understanding that they 
should be updated over time to reflect increasing knowledge of the 
science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide.
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of serious 
challenges. A recent report from the National Research Council \35\ 
points out that any assessment will suffer from uncertainty, 
speculation, and lack of information about (1) future emissions of 
greenhouse gases, (2) the effects of past and future emissions on the 
climate system, (3) the impact of changes in climate on the physical 
and biological environment, and (4) the translation of these 
environmental impacts into economic damages. As a result, any effort to 
quantify and monetize the harms associated with climate change will 
raise serious questions of science, economics, and ethics and should be 
viewed as provisional.
---------------------------------------------------------------------------

    \35\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. National Academies Press: 
Washington, DC. 2009.
---------------------------------------------------------------------------

    Despite the serious limits of both quantification and monetization, 
SCC estimates can be useful in estimating the social benefits of 
reducing carbon dioxide emissions. Consistent with the directive quoted 
above, the purpose of the SCC estimates presented here is to make it 
possible for agencies to incorporate the social benefits from reducing 
carbon dioxide emissions into cost-benefit analyses of regulatory 
actions that have small, or ``marginal,'' impacts on cumulative global 
emissions. Most Federal regulatory actions can be expected to have 
marginal impacts on global emissions.
    For such policies, the agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC value 
appropriate for that year. The net present value of the benefits can 
then be calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years. This 
approach assumes that the marginal damages from increased emissions are 
constant for small departures from the baseline emissions path, an 
approximation that is reasonable for policies that have effects on 
emissions that are small relative to cumulative global carbon dioxide 
emissions. For policies that have a large (non-marginal) impact on 
global cumulative emissions, there is a separate question of whether 
the SCC is an appropriate tool for calculating the benefits of reduced 
emissions. This concern is not applicable to this notice, and DOE does 
not attempt to answer that question here.
    At the time of the preparation of this notice, the most recent 
interagency estimates of the potential global benefits resulting from 
reduced CO2 emissions in 2010, expressed in 2010$, were 
$4.9, $22.3, $36.5, and $67.6 per metric ton avoided. For emission 
reductions that occur in later years, these values grow in real terms 
over time. Additionally, the interagency group determined that a range 
of values from 7 percent to 23 percent should be used to adjust the 
global SCC to calculate domestic

[[Page 31944]]

effects,\36\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions.
---------------------------------------------------------------------------

    \36\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
---------------------------------------------------------------------------

    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. Specifically, the interagency group has set a preliminary 
goal of revisiting the SCC values within 2 years or at such time as 
substantially updated models become available, and to continue to 
support research in this area. In the meantime, the interagency group 
will continue to explore the issues raised by this analysis and 
consider public comments as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    To date, economic analyses for Federal regulations have used a wide 
range of values to estimate the benefits associated with reducing 
carbon dioxide emissions. In the final model year 2011 CAFE rule, the 
U.S. Department of Transportation (DOT) used both a ``domestic'' SCC 
value of $2 per ton of CO2 and a ``global'' SCC value of $33 
per ton of CO2 for 2007 emission reductions (in 2007$), 
increasing both values at 2.4 percent per year.\37\ DOT also included a 
sensitivity analysis at $80 per ton of CO2. See Average Fuel 
Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74 
FR 14196 (March 30, 2009) (Final Rule); Final Environmental Impact 
Statement Corporate Average Fuel Economy Standards, Passenger Cars and 
Light Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at: 
www.nhtsa.gov/fuel-economy). A domestic SCC value is meant to reflect 
the value of damages in the United States resulting from a unit change 
in carbon dioxide emissions, while a global SCC value is meant to 
reflect the value of damages worldwide.
---------------------------------------------------------------------------

    \37\ Throughout this section, references to tons of 
CO2 refer to metric tons.
---------------------------------------------------------------------------

    A 2008 regulation proposed by DOT assumed a domestic SCC value of 
$7 per ton of CO2 (in 2006$) for 2011 emission reductions 
(with a range of $0-$14 for sensitivity analysis), also increasing at 
2.4 percent per year. See Average Fuel Economy Standards, Passenger 
Cars and Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008) 
(Proposed Rule); Draft Environmental Impact Statement Corporate Average 
Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 
2011-2015 at 3-58 (June 2008) (Available at: www.nhtsa.gov/fuel-economy). A regulation for packaged terminal air conditioners and 
packaged terminal heat pumps finalized by DOE in October of 2008 used a 
domestic SCC range of $0 to $20 per ton CO2 for 2007 
emission reductions (in 2007$). 73 FR 58772, 58814 (Oct. 7, 2008) In 
addition, EPA's 2008 Advance Notice of Proposed Rulemaking for 
Greenhouse Gases identified what it described as ``very preliminary'' 
SCC estimates subject to revision. See Regulating Greenhouse Gas 
Emissions Under the Clean Air Act, 73 FR 44354 (July 30, 2008). EPA's 
global mean values were $68 and $40 per ton CO2 for discount 
rates of approximately 2 percent and 3 percent, respectively (in 2006$ 
for 2007 emissions).
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across agencies, the Administration sought to 
develop a transparent and defensible method, specifically designed for 
the rulemaking process, to quantify avoided climate change damages from 
reduced CO2 emissions. The interagency group did not 
undertake any original analysis. Instead, it combined SCC estimates 
from the existing literature to use as interim values until a more 
comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: Global SCC estimates for 2007 (in 2006 dollars) of $55, 
$33, $19, $10, and $5 per ton of CO2. These interim values 
represent the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules and were offered for public comment in connection with 
proposed rules, including the joint EPA-DOT fuel economy and 
CO2 tailpipe emission proposed rules.
c. Current Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates, which 
were used in this direct final rule. Specifically, the group considered 
public comments and further explored the technical literature in 
relevant fields. The interagency group relied on three integrated 
assessment models (IAMs) commonly used to estimate the SCC: The FUND, 
DICE, and PAGE models.\38\ These models are frequently cited in the 
peer-reviewed literature and were used in the last assessment of the 
Intergovernmental Panel on Climate Change. Each model was given equal 
weight in the SCC values that were developed.
---------------------------------------------------------------------------

    \38\ The models are described in appendix 15-A of the direct 
final rule TSD.
---------------------------------------------------------------------------

    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four SCC values for use in 
regulatory analyses. Three values are based on the average SCC from 
three integrated assessment models, at discount rates of 2.5, 3, and 5 
percent. The fourth value, which represents the 95th percentile SCC 
estimate across all three models at a 3-percent discount rate, is 
included to represent higher-than-expected impacts from temperature 
change further out in the tails of the SCC distribution.

[[Page 31945]]

                                   Table IV.13--Social Cost of CO2, 2010-2050
                                        [In 2007 dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
                                                                                 Discount rate
                                                             ---------------------------------------------------
                                                                5%  Avg      3%  Avg     2.5%  Avg     3%  95th
----------------------------------------------------------------------------------------------------------------
2010........................................................          4.7         21.4         35.1         64.9
2015........................................................          5.7         23.8         38.4         72.8
2020........................................................          6.8         26.3         41.7         80.7
2025........................................................          8.2         29.6         45.9         90.4
2030........................................................          9.7         32.8         50.0        100.0
2035........................................................         11.2         36.0         54.2        109.7
2040........................................................         12.7         39.2         58.4        119.3
2045........................................................         14.2         42.1         61.7        127.8
2050........................................................         15.7         44.9         65.0        136.2
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable since they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned above points out that there is tension between 
the goal of producing quantified estimates of the economic damages from 
an incremental ton of carbon and the limits of existing efforts to 
model these effects. There are a number of concerns and problems that 
should be addressed by the research community, including research 
programs housed in many of the agencies participating in the 
interagency process to estimate the SCC.
    DOE recognizes the uncertainties embedded in the estimates of the 
SCC used for cost-benefit analyses. As such, DOE and others in the U.S. 
Government intend to periodically review and reconsider those estimates 
to reflect increasing knowledge of the science and economics of climate 
impacts, as well as improvements in modeling. In this context, 
statements recognizing the limitations of the analysis and calling for 
further research take on exceptional significance.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the most recent values 
identified by the interagency process, adjusted to 2010$ using the GDP 
price deflator. For each of the four cases specified, the values used 
for emissions in 2010 were $4.9, $22.3, $36.5, and $67.6 per metric ton 
avoided (values expressed in 2010$).\39\ To monetize the CO2 
emissions reductions expected to result from amended standards for 
dishwashers, DOE used the values identified in Table A1 of the ``Social 
Cost of Carbon for Regulatory Impact Analysis Under Executive Order 
12866,'' which is reprinted in appendix 16-A of the direct final rule 
TSD, appropriately adjusted to 2010$. To calculate a present value of 
the stream of monetary values, DOE discounted the values in each of the 
four cases using the specific discount rate that had been used to 
obtain the SCC values in each case.
---------------------------------------------------------------------------

    \39\ Table A1 presents SCC values through 2050. For DOE's 
calculation, it derived values after 2050 using the 3-percent per 
year escalation rate used by the interagency group.
---------------------------------------------------------------------------

2. Valuation of Other Emissions Reductions
    DOE investigated the potential monetary benefit of reduced 
NOX emissions from the TSLs it considered. As noted above, 
amended energy conservation standards would reduce NOX 
emissions in those 22 States that are not affected by the CAIR, in 
addition to the reduction in site NOX emissions nationwide. 
DOE estimated the monetized value of NOX emissions 
reductions resulting from each of the TSLs considered for today's 
direct final rule based on environmental damage estimates from the 
literature. Available estimates suggest a very wide range of monetary 
values, ranging from $370 per ton to $3,800 per ton of NOX 
from stationary sources, measured in 2001$ (equivalent to a range of 
$450 to $4,623 per ton in 2010$).\40\ In accordance with OMB guidance, 
DOE conducted two calculations of the monetary benefits derived using 
each of the economic values used for NOX, one using a real 
discount rate of 3 percent and another using a real discount rate of 7 
percent.\41\
---------------------------------------------------------------------------

    \40\ For additional information, refer to U.S. Office of 
Management and Budget, Office of Information and Regulatory Affairs. 
2006 Report to Congress on the Costs and Benefits of Federal 
Regulations and Unfunded Mandates on State, Local, and Tribal 
Entities. 2006. Washington, DC.
    \41\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

    DOE is aware of multiple agency efforts to determine the 
appropriate range of values used in evaluating the potential economic 
benefits of reduced Hg emissions. DOE has decided to await further 
guidance regarding consistent valuation and reporting of Hg emissions 
before it monetizes Hg in its rulemakings.

V. Analytical Results

    The following section addresses the results from DOE's analyses 
with respect to potential energy conservation standards for residential 
dishwashers. It addresses the TSLs examined by DOE, the projected 
impacts of each of these levels if adopted as energy conservation 
standards for dishwashers, and the standards levels that DOE sets forth 
in today's direct final rule. Additional details regarding DOE's 
analyses are contained in the publicly available direct final rule TSD 
supporting this notice.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of four TSLs for residential 
dishwashers. These TSLs were developed using combinations of efficiency 
levels for the standard and compact product classes analyzed by DOE. 
DOE presents the results for those TSLs in today's final rule. DOE 
presents the results for all efficiency levels that it analyzed in the 
direct final rule TSD. Table V.1 presents the TSLs and the 
corresponding efficiency levels for dishwashers. TSL 4 represents the 
maximum technologically feasible (``max-tech'') improvements in energy 
efficiency for residential dishwashers. TSL 3 consists of the next 
efficiency level below the max-tech level for standard dishwashers, and 
the max-tech level for compacts. The efficiency levels in TSL 2 
correspond to the recommended levels in the Joint Petition. TSL 1 
consists of the first

[[Page 31946]]

efficiency levels considered above the baseline.

                          Table V.1--Trial Standard Levels for Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                    Standard                               Compact
                                     ---------------------------------------------------------------------------
                 TSL                                   Annual energy use
                                           CSL              (KwH)               CSL      Annual energy use (kWh)
----------------------------------------------------------------------------------------------------------------
1...................................            1                      324            1                      222
2...................................            2                      307            1                      222
3...................................            4                      234            2                      154
4...................................            5                      180            2                      154
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
    Consumers affected by new or amended standards usually experience 
higher purchase prices and lower operating costs. Generally, the 
impacts on individual consumers are best captured by changes in LCC and 
by the PBP. Therefore, DOE calculated the LCC and PBP analyses for the 
potential standard levels considered in this rulemaking. DOE's LCC and 
PBP analyses provided key outputs for each TSL, which are reported by 
dishwasher product class in Table V.2 and Table V.3. The LCC and its 
components refer to the average values at each efficiency level. The 
average LCC savings (averaged over all sample consumers), as well as 
the fraction of product consumers for which the LCC will decrease (net 
benefit), increase (net cost), or exhibit no change (no impact), are 
relative to the base-case efficiency distribution. The last column in 
the tables is the median PBP for the consumer purchasing a design that 
complies with the TSL. DOE presents the median PBP because it is the 
most statistically robust measure of the PBP. The results for each 
potential standard level are relative to the efficiency distribution in 
the base case (no amended standards). DOE based the LCC and PBP 
analyses on the range of energy consumption under conditions of actual 
product use.

                                                                     Table V.2--LCC and PBP Results for Standard Dishwashers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost (2010$)                             LCC savings                       Payback
                                                                              -------------------------------------------------------------------------------------------    period
   TSL                         Efficiency level  (kWh/yr)                                    Discounted                 Average    Percent of households that experience    (years)
                                                                                Installed    operating       LCC        savings   ---------------------------------------------------
                                                                                   cost         cost                    (2010$)      Net cost    No impact   Net benefit     Median
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
        1  324...............................................................         $656         $445       $1,101           $1            2           96            2          5.9
        2  307...............................................................          674          411        1,086            3           19           64           17         11.8
        3  234...............................................................          734          318        1,052           41           30           20           50          6.6
        4  180...............................................................          745          232          977          108           23            9           68          4.5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                     Table V.3--LCC and PBP Results for Compact Dishwashers
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost (2010$)                             LCC savings                       Payback
                                                                              -------------------------------------------------------------------------------------------    period
   TSL                         Efficiency level  (kWh/yr)                                    Discounted                 Average    Percent of households that experience    (years)
                                                                                Installed    operating       LCC        savings   ---------------------------------------------------
                                                                                   cost         cost                    (2010$)      Net cost    No impact   Net benefit     Median
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
     1, 2  222...............................................................         $623         $297         $920          $12            7           76           18          0.3
     3, 4  154...............................................................          638          206          844           52            5           50           44          2.1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    For standard-sized dishwashers, DOE also considered an alternative 
base-case efficiency distribution that uses a different set of 
historical data. LCC and PBP results using this distribution are 
described in appendix 8-F of the direct final rule TSD.
b. Consumer Subgroup Analysis
    As described in section IV.H, DOE determined the impact of the 
considered TSLs on low-income households and senior-only 
households.\42\ Table V.4 compares the average LCC savings at each 
efficiency level for the two consumer subgroups, along with the average 
LCC savings for the entire sample for each product class for 
dishwashers. For today's standards, the average LCC savings for low-
income households and senior-only households at the considered 
efficiency levels are not substantially different from the average for 
all households. At higher efficiency levels the average LCC savings for 
these subgroups are somewhat lower than the average for all households. 
Chapter 11 of the direct final rule TSD presents the complete LCC and 
PBP results for the two subgroups.
---------------------------------------------------------------------------

    \42\ DOE did not analyze subgroup impacts for compact 
dishwashers because the saturation of these products is extremely 
small.

[[Page 31947]]

  Table V.4--Standard Dishwashers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
                                                               Low-income        Senior-only
                            TSL                                households        households      All households
----------------------------------------------------------------------------------------------------------------
                                                                                    2010$
                                                           -----------------------------------------------------
1.........................................................                $0                $0                $1
2.........................................................                 3                 2                 3
3.........................................................                26                24                41
4.........................................................                84                78               108
----------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed above, EPCA provides a rebuttable presumption that an 
energy conservation standard is economically justified if the increased 
purchase cost for a product that meets the standard is less than three 
times the value of the first-year energy savings resulting from the 
standard. In calculating a rebuttable presumption payback period for 
the considered standard levels, DOE used discrete values rather than 
distributions for input values, and, as required by EPCA, based the 
energy use calculation on the DOE test procedures for residential 
dishwashers. As a result, DOE calculated a single rebuttable 
presumption payback value, and not a distribution of payback periods, 
for each efficiency level.
    Table V.5 presents the average rebuttable presumption payback 
periods for the considered TSLs. While DOE examined the rebuttable-
presumption criterion, it considered whether the standard levels 
considered for today's rule are economically justified through a more 
detailed analysis of the economic impacts of those levels pursuant to 
42 U.S.C. 6295(o)(2)(B)(i). The results of that analysis serve as the 
basis for DOE to evaluate the economic justification for a potential 
standard level (thereby supporting or rebutting the results of any 
preliminary determination of economic justification).

                                     Table V.5--Dishwashers: Rebuttable PBPs
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                                             ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
Standard (years)............................................         5.40         5.51         5.57         4.00
Compact (years).............................................         0.23         0.23         1.02         1.02
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of residential dishwashers. The 
section below describes the expected impacts on manufacturers at each 
TSL. Chapter 12 of the direct final rule TSD explains the analysis in 
further detail.
a. Industry Cash Flow Analysis Results
    DOE modeled two scenarios using different markup assumptions. Each 
scenario results in a unique set of cash flows and corresponding 
industry value at each TSL. These assumptions correspond to the bounds 
of a range of market responses that DOE anticipates could occur in the 
standards case. The tables below depict the financial impacts on 
manufacturers (represented by changes in INPV) and the conversion costs 
DOE estimates manufacturers would incur at each TSL. The first table 
corresponds to the flat markup scenario and reflects the lower (less 
severe) bound of impacts whereas the second table corresponds to the 
preservation of operating profit scenario and reflects the upper bound 
of impacts.
    The INPV results refer to the difference in industry value between 
the base case and the standards case, which DOE calculated by summing 
the discounted industry cash flows from the base year (2012) through 
the end of the analysis period. The discussion also notes the 
difference in cash flow between the base case and the standards case in 
the year before the compliance date of potential amended energy 
conservation standards. This figure provides an estimate of the 
required conversion costs relative to the cash flow generated by the 
industry in the base case.

            Table V.6--Manufacturer Impact Analysis for Residential Dishwashers--Flat Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                     Units        Base case  ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
INPV.........................  (2010$ millions)        637.5        593.2        563.6        508.6        491.9
Change in INPV...............  (2010$ millions)  ...........       (44.3)       (73.9)      (128.9)      (145.6)
                               (%).............  ...........        -7.0%       -11.6%       -20.2%       -22.8%
Product Conversion Costs.....  (2010$ millions)  ...........         27.8         34.9         66.5         76.7
Capital Conversion Costs.....  (2010$ millions)  ...........         45.5         59.1        195.4        226.3
                                                ----------------------------------------------------------------
    Total Conversion Costs...  (2010$ millions)  ...........         73.2         94.0        261.9        303.0
----------------------------------------------------------------------------------------------------------------

[[Page 31948]]

           Table V.7--Manufacturer Impact Analysis for Residential Dishwashers--Tiered Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                     Units        Base case  ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
INPV.........................  (2010$ millions)        637.5        592.2        552.9        463.1        434.8
Change in INPV...............  (2010$ millions)  ...........       (45.3)       (84.6)      (174.4)      (202.7)
                               (%).............  ...........        -7.1%       -13.3%       -27.4%       -31.8%
Product Conversion Costs.....  (2010$ millions)  ...........         27.8         34.9         66.5         76.7
Capital Conversion Costs.....  (2010$ millions)  ...........         45.5         59.1        195.4        226.3
                                                ----------------------------------------------------------------
    Total Conversion Costs...  (2010$ millions)  ...........         73.2         94.0        261.9        303.0
----------------------------------------------------------------------------------------------------------------

    Because standard dishwashers represent over 99 percent of shipments 
in the year leading up to amended standards, changes to this product 
class contribute the majority of impacts to INPV across all TSLs 
analyzed in this rulemaking.
    At TSL 1, DOE estimates impacts on INPV to range from -$44.3 
million to -$45.3 million, or a change in INPV of -7.0 percent to -7.1 
percent. At this level, industry free cash flow is estimated to 
decrease by approximately 56.5 percent to $21.9 million, compared to 
the base-case value of $50.5 million in the year leading up to the 
amended energy conservation standards. As TSL 1 corresponds to current 
ENERGY STAR standards, and these products represent over 96 percent of 
shipments in the year leading up to amended standards, only a very 
small fraction of the market is affected at this efficiency level. In 
either markup scenario, the impact to INPV at TSL 1 stems from the 
conversion costs required to switch production lines from manufacturing 
baseline units to those meeting the standards set at EL 1 for both 
product classes.
    As a large fraction of the energy used in dishwashing is associated 
with heating the wash water, the design options proposed to meet this 
efficiency level relate primarily to minimizing the amount of wash 
water through spray-arm optimization and enabling greater control over 
the wash water temperature. Both of these practices are in common use 
in higher efficiency platforms across the industry and contribute to an 
MPC of $209.25 for standard dishwashers. Because the industry already 
produces a substantial number of products at this efficiency level, 
product and capital conversion costs are limited to 73.2 million, which 
accounts for switching production lines from baseline products to 
existing higher efficiency platforms.
    TSL 2 represents the efficiency level set forth in the Joint 
Petition, and establishes a compliance date of 2013 as compared the 
2018 compliance date for the other TSLs. At TSL 2, DOE estimates 
impacts on INPV to range from -$73.9 million to -$84.6 million, or a 
change in INPV of -11.6 percent to -13.3 percent. At this level, 
industry free cash flow is estimated to decrease by approximately 192.2 
percent to -$39.2 million, compared to the base-case value of $42.5 
million in the year leading up to the amended energy conservation 
standards. As with TSL 1, the impact to INPV at TSL 2 stems from the 
conversion costs required to switch production lines from manufacturing 
baseline units to those meeting the standards set at EL 2 for both 
product classes. At TSL 2, these impacts grow as the number of products 
requiring changes grows from 3.8 percent of shipments in the year 
leading up to amended standards to 36.1 percent.
    As a large fraction of the energy used in dishwashing is associated 
with heating wash water, the design options proposed to meet this 
efficiency level relate primarily to minimizing the amount of wash 
water through additional optimization of the water lines as well as 
upgrades to higher efficiency pumps and electronic controls. 
Incorporating these design options leads to an estimated MPC of $222.80 
for standard products. While a significant fraction of dishwashers 
currently employ these energy and water saving measures, the product 
and capital conversion costs rise to $94.0 million (as compared to 
$73.2 million for TSL 1), to account for the additional switching of 
production lines to higher efficiency platforms.
    At TSL 3, DOE estimates impacts on INPV to range from -$128.9 
million to -$174.4 million, or a change in INPV of -20.2 percent to -
27.4 percent. At this level, industry free cash flow is estimated to 
decrease by approximately 212.6 percent to -$56.8 million, compared to 
the base-case value of $50.5 million in the year leading up to the 
amended energy conservation standards. While TSL 3 returns the 
compliance date to 2018 (5 years after the compliance date for TSL 2) 
the impact to INPV is more severe as less than 20 percent of shipments 
in the year leading up to amended standards meet or exceed this 
efficiency level. As such, the capital and product conversion costs 
required to bring these products into compliance rise significantly to 
a total of $261.9 million, $167.9 million more than at TSL 2. These 
conversion costs stem from both the research programs needed to develop 
such optimized products and the capital investment required to change 
over the majority of production lines to produce these high efficiency 
products.
    The design options proposed to meet efficiency standards at TSL 3 
include exchanging a heated drying system for a condensation drying 
system, further optimizing the hydraulic system (extending to a 
redesign of both the sump and water lines), and incorporating a flow 
meter, temperature control, and a humidity sensor to finely tune water 
consumption, temperature, and the drying cycle. Beyond component 
exchanges alone, the design options proposed at TSL 3 extend to include 
control strategies that would reduce the wash and rinse water 
temperatures. The component changes required to enable these 
improvements contribute to an MPC of $266.16 for standard dishwashers, 
$43.37 above that at TSL 2.
    At TSL 4, DOE estimates impacts on INPV to range from -$145.6 
million to -$202.7 million, or a change in INPV of -22.8 percent to -
31.8 percent. At this level, industry free cash flow is estimated to 
decrease by approximately -246.0 percent to -$73.7 million, compared to 
the base-case value of $50.5 million in the year leading up to the 
amended energy conservation standards. TSL 4 represents the max-tech 
efficiency level for all dishwashers. The effects on INPV result from 
similar sources as TSL 3, but the fraction of products in the market 
that currently meet this standard is reduced to less than 9 percent in 
the year leading up to amended standards. As such, standards at TSL 4 
would affect nearly all platforms and will result in substantial

[[Page 31949]]

capital conversion costs associated with improvements to nearly all 
production facilities. Because so few products exist at this level 
today, nearly all manufacturers would face complete redesigns for 
products to meet this standard. Accordingly, the product conversion 
costs increase to reflect this substantial research effort. The total 
conversion cost required to meet standards at TSL 5 is approximately 
$303.0 million--a $41.1 million increase from TSL 4.
    The design options proposed to meet the efficiency levels specified 
at TSL 4 start with those at TSL 3, but replace the in-line flow-
through water heater with one that is integrated with the pump and 
eliminate the fan used to circulate air during drying. Where these 
design options have little impact on the product MPC, contributing to 
only a $7.77 increase over that at TSL 3, they significantly impact 
INPV because of the large conversion costs associated with developing 
and producing these highly optimized products.
b. Impacts on Employment
    DOE used the GRIM to estimate the domestic labor expenditures and 
number of domestic production workers in the base case and at each TSL 
from 2012 to 2047. DOE used the labor content of each product and the 
manufacturing production costs from the engineering analysis to 
estimate the total annual labor expenditures associated with 
residential dishwashers sold in the United States. Using statistical 
data from the most recent U.S. Census Bureau's 2009 ``Annual Survey of 
Manufactures'' and interviews with manufacturers, DOE estimates that 95 
percent of residential dishwashers sold in the United States are 
manufactured domestically and hence that portion of total labor 
expenditures is attributable to domestic labor. Labor expenditures for 
the manufacture of a product are a function of the labor intensity of 
the product, the sales volume, and an assumption that wages in real 
terms remain constant.
    Using the GRIM, DOE forecasts the domestic labor expenditure for 
residential dishwasher production labor in 2018 will be approximately 
$248.7 million. Using the $27.03 hourly wage rate including fringe 
benefits and 2,003 production hours per year per employee found in the 
2009 ASM, DOE estimates there will be approximately 4,593 domestic 
production workers involved in manufacturing residential dishwashers in 
2018, the year in which amended standards would go into effect for TSL 
1, TSL 3, and TSL 4. In addition, DOE estimates that 1,120 non-
production employees in the United States will support residential 
dishwasher production.\43\ The employment spreadsheet of the 
residential dishwasher GRIM shows the annual domestic employment 
impacts in further detail.
    The production worker estimates in this section cover workers only 
up to the line-supervisor level who are directly involved in 
fabricating and assembling dishwashers within an Original Equipment 
Manufacturer (OEM) facility. Workers performing services that are 
closely associated with production operations, such as material 
handling with a forklift, are also included as production labor. 
Additionally, the employment impacts shown are independent of the 
employment impacts from the broader U.S. economy, which are documented 
in chapter 13 of the direct final rule TSD.
    Table V.8 depicts the potential levels of production employment 
that could result following amended energy conservation standards as 
calculated by the GRIM. The employment levels shown reflect the 
scenario in which manufacturers continue to produce the same scope of 
covered products in domestic facilities and domestic production is not 
shifted to lower-labor-cost countries. If all existing production were 
moved outside of the United States, the expected impact to domestic 
manufacturing employment would be a loss of 4,593 jobs, the equivalent 
of the total base case employment. Because there is a risk of 
manufacturers evaluating sourcing decisions in response to amended 
energy conservation standards, the expected impact to domestic 
production employment falls between the potential increases as shown in 
Table V.8, and the levels of job loss associated with all domestic 
dishwasher manufacturing moving outside of the United States. The 
discussion below includes a qualitative evaluation of the likelihood of 
negative domestic production employment impacts at the various TSLs.

             Table V.8--Total Number of Domestic Residential Dishwasher Production Workers in 2018 *
----------------------------------------------------------------------------------------------------------------
                                                                           Trial standard level
                                              Base case  -------------------------------------------------------
                                                                1             2             3             4
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production               4,593         4,601         4,679         4,658         4,799
 Workers in 2018 (without changes in
 production locations)....................
----------------------------------------------------------------------------------------------------------------
* The compliance date for residential dishwashers at TSL 1, TSL 3, and TSL 4 is 2018. At TSL 2, the compliance
  date is 2013 as specified by the Joint Petition.

    All examined TSLs show relatively minor impacts on domestic 
employment levels relative to total industry employment. At all TSLs, 
most of the design options analyzed by DOE do not greatly alter the 
labor content of the final product. For example, longer or more complex 
wash cycles or improved sump designs involve one-time changes to the 
final product but do not significantly change the number of steps 
required for the final assembly of the dishwasher (which would add 
labor). Because many manufacturers have recently introduced high 
efficiency products in the United States that meet or exceed the 
standards in today's final rule, it is unlikely today's direct final 
rule would greatly impact the sourcing decisions of these 
manufacturers. However, at higher TSLs, some of the design options 
analyzed greatly impact the ability of manufacturers to make product 
changes within existing platforms. The very large upfront capital costs 
at these levels could influence the decision of some manufacturers to 
relocate some or all of their domestic production of dishwashers to 
lower labor cost countries.
c. Impacts on Manufacturing Capacity
    Nearly 64 percent of shipments of residential dishwashers already 
comply with the amended energy conservation standards as agreed upon in 
the Joint Petition and established in this rulemaking. Every 
manufacturer that ships standard dishwashers offers products that meet 
these amended energy conservation standards. Because manufacturers 
would need to make only minor platform changes and/or increase

[[Page 31950]]

the production of existing products by the 2013 compliance date, the 
experience of multiple manufacturers that already produce standards-
compliant dishwashers would allow the industry to meet the amended 
energy conservation standards proposed in the Joint Petition without 
any significant impact to manufacturing capacity in the interim.
d. Impacts on Sub-Groups of Manufacturers
    Using average cost assumptions to develop an industry cash-flow 
estimate may not be adequate for assessing differential impacts among 
manufacturer subgroups. Small manufacturers, niche equipment 
manufacturers, and manufacturers exhibiting a cost structure 
substantially different from the industry average could be affected 
disproportionately. DOE analyzed the impacts to small business, as 
discussed in section VI.B. DOE did not identify any other subgroups for 
residential dishwashers for this rulemaking.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several impending 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. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and can lead 
companies to abandon product lines or markets with lower expected 
future returns than competing products. For these reasons, DOE conducts 
an analysis of cumulative regulatory burden as part of its rulemakings 
pertaining to appliance efficiency.
    Manufacturers provided comment on some of these regulations during 
interviews. DOE summarizes and addresses these comments in section 
IV.I.3. For the cumulative regulatory burden, DOE attempts to quantify 
or describe the impacts of other Federal regulations that have a 
compliance date within approximately 3 years of the compliance date of 
this rulemaking. Most of the major regulations identified by DOE that 
meet this criterion are other energy conservation standards for 
products and equipment made by manufacturers of residential 
dishwashers. See chapter 12 of the direct final rule TSD for the 
results of DOE's analysis of the cumulative regulatory burden.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for dishwashers, DOE compared the energy consumption of those products 
under the base case to their anticipated energy consumption under each 
TSL. Table V.9 presents DOE's projections of the national energy 
savings and national water savings for each TSL considered for 
dishwashers.\44\ The savings were calculated using the approach 
described in section IV.G.\45\ For standard-sized dishwashers, DOE also 
considered an alternative base-case efficiency trend that was estimated 
using a different set of historical data. Results calculated using this 
trend are described in appendix 10-D of the direct final rule TSD.
---------------------------------------------------------------------------

    \44\ National energy and water savings are cumulative over a 30-
year period. Any savings for products entering the housing stock in 
this 30-year period which occur beyond the 30-year time limit are 
not reported in the national totals.
    \45\ Chapter 10 of the direct final rule TSD presents tables 
that also show the magnitude of the energy savings if the savings 
are discounted at rates of 7 percent and 3 percent. Discounted 
energy savings represent a policy perspective in which energy 
savings realized farther in the future are less significant than 
energy savings realized in the nearer term.

               Table V.9--Dishwashers: Cumulative National Energy and Water Savings (2018-2047) *
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                                             ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
Energy (quads)..............................................         0.02         0.07         0.94         1.59
Water (trillion gallons)....................................         0.01         0.14         0.56         1.71
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2047.

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV to the nation of the total costs 
and savings for consumers that would result from particular standard 
levels for dishwashers. In accordance with the OMB's guidelines on 
regulatory analysis (OMB Circular A-4, section E, September 17, 2003), 
DOE calculated NPV using both a 7-percent and a 3-percent real discount 
rate. The 7-percent rate is an estimate of the average before-tax rate 
of return to private capital in the U.S. economy, and reflects the 
returns to real estate and small business capital as well as corporate 
capital. DOE used this discount rate to approximate the opportunity 
cost of capital in the private sector, since recent OMB analysis has 
found the average rate of return to capital to be near this rate. In 
addition, DOE used the 3-percent rate to capture the potential effects 
of standards on private consumption (e.g., through higher prices for 
products and the purchase of reduced amounts of energy). This rate 
represents the rate at which society discounts future consumption flows 
to their present value. This rate can be approximated by the real rate 
of return on long-term government debt (i.e., yield on Treasury notes 
minus annual rate of change in the Consumer Price Index), which has 
averaged about 3 percent on a pre-tax basis for the last 30 years.
    Table V.10 shows the consumer NPV results for each TSL DOE 
considered for dishwashers, using a 3-percent and a 7-percent discount 
rate. The impacts are counted over the lifetime of products purchased 
in 2018-2047 for TSLs 1, 3 and 4, and in 2013-2047 for TSL 2.

[[Page 31951]]

 Table V.10--Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2018-2047 *
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                        Discount rate                        ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
                                                                                 Billion 2010$
                                                             ---------------------------------------------------
3 percent...................................................         0.12         0.46         6.51        17.45
7 percent...................................................         0.03         0.08         1.96         5.88
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted over the lifetime of products shipped in 2013-2047.

    The NPV results presented in Table V.10 are based on the default 
product price trend. As discussed in section IV.G.3, DOE developed 
several sensitivity cases with alternative forecasts of future prices 
of dishwashers. The impact of these alternative forecasts on the NPV 
results is presented in appendix 10-C of the direct final rule TSD.
    For standard-sized dishwashers, DOE also considered an alternative 
base-case efficiency trend that was estimated using a different set of 
historical data. NPV results calculated using this trend are described 
in appendix 10-D of the direct final rule TSD.
    Circular A-4 requires agencies to present analytical results, 
including separate schedules of the monetized benefits and costs that 
show the type and timing of benefits and costs. Circular A-4 also 
directs agencies to consider the variability of key elements underlying 
the estimates of benefits and costs. DOE believes its standard 30-year 
analysis is fully compliant with Circular A-4. For this rulemaking, DOE 
undertook an additional sensitivity analysis of its standard 30-year 
analysis, in compliance with Circular A-4, using a 9-year analytical 
period. The choice of a 9-year period is a proxy for the timeline in 
EPCA for the review of the energy conservation standard established in 
this direct final rule and potential revision of and compliance with a 
new standard for dishwashers.\46\ The timeframe established in EPCA may 
not be statistically relevant with regard to the product lifetime, 
product manufacturing cycles or other factors specific to dishwashers. 
DOE notes that the review timeframe established in EPCA generally does 
not overlap with the product lifetime, product manufacturing cycles or 
other factors specific to dishwashers. Thus, this information is 
presented for informational purposes only and is not indicative of any 
change in DOE's analytical methodology.
---------------------------------------------------------------------------

    \46\ EPCA requires DOE to review its standards at least once 
every 6 years, and requires, for certain products including 
dishwashers, a 3 year period after any new standard is promulgated 
before compliance is required, except that in no case may any new 
standards be required within 6 years of the compliance date of the 
standards established in this direct final rule. While adding a 6-
year review to the 3-year compliance period adds up to 9 years, DOE 
notes that it may undertake reviews at any time within the 6 year 
period and that the 3-year compliance date may yield to the 6-year 
backstop. A 9-year analysis period does not reflect the variability 
that may occur in the timing of standards reviews and the fact that 
for some consumer products, the compliance period is 5 years rather 
than 3 years.
---------------------------------------------------------------------------

    The sensitivity analysis results based on a 9-year analytical 
period are presented below. Table IV.11 presents DOE's forecasts of the 
national energy savings and national water savings for each TSL for 
dishwashers.\47\ Table IV.12 shows the consumer NPV results for each 
TSL DOE considered for dishwashers, using a 3-percent and a 7-percent 
discount rate. For determination of the NPV, the impacts are counted 
over the lifetime of products purchased in 2018-2026 for TSLs 1, 3 and 
4, and in 2013-2021 for TSL 2 (note that the NPV estimate incorporates 
all of the operating cost savings of dishwashers purchased in the 9 
year analytical period).
---------------------------------------------------------------------------

    \47\ National energy and water savings are cumulative over the 
9-year period. Any savings for products entering the housing stock 
in this 9-year period which occur beyond the 9-year time limit are 
not reported in the national totals. In contrast, the social benefit 
and cost estimates include the benefits and costs that are incurred 
over the lifetime of the dishwashers irrespective of when they are 
purchased.

 Table V.11--Dishwashers: Cumulative National Energy and Water Savings, Nine-Year Analysis Period (2018-2026) *
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                                             ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
Energy (quads)..............................................         0.00         0.01         0.13         0.22
Water (trillion gallons)....................................         0.00         0.02         0.08         0.24
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2021.

  Table V.12--Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in 2018-2026,
                                           Nine-Year Analysis Period *
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                        Discount rate                        ---------------------------------------------------
                                                                   1            2            3            4
----------------------------------------------------------------------------------------------------------------
                                                                                 Billion 2010$
                                                             ---------------------------------------------------
3 percent...................................................         0.04         0.07         2.15         6.01
7 percent...................................................         0.02         0.00         0.93         2.89
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted over the lifetime of products shipped in 2013-2021.

[[Page 31952]]

c. Impacts on Employment
    DOE develops estimates of the indirect employment impacts of 
potential standards on the economy in general. As discussed above, DOE 
expects energy conservation standards for dishwashers to reduce energy 
bills for consumers of those products, and the resulting net savings to 
be redirected to other forms of economic activity. These expected 
shifts in spending and economic activity could affect the demand for 
labor. As described in section IV.J, DOE used an input/output model of 
the U.S. economy to estimate indirect employment impacts of the TSLs 
that DOE considered in this rulemaking. DOE understands that there are 
uncertainties involved in projecting employment impacts, especially 
changes in the later years of the analysis. Therefore, DOE generated 
results for near-term timeframes, where these uncertainties are 
reduced.
    The results suggest that today's standards are likely to have 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 13 of the direct final rule TSD presents detailed 
results.
4. Impact on Utility or Performance of Products
    As presented in section III.D.1.d of this notice, DOE concluded 
that the TSL adopted in this direct final rule would not reduce the 
utility or performance of the dishwashers under consideration in this 
rulemaking. Manufacturers of these products currently offer units that 
meet or exceed today's standards. (42 U.S.C. 6295(o)(2)(B)(i)(IV))
5. Impact of Any Lessening of Competition
    DOE has also considered any lessening of competition that is likely 
to result from amended standards. The Attorney General determines the 
impact, if any, of any lessening of competition likely to result from a 
proposed standard, and transmits such determination to DOE, 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))
    DOE published a NOPR containing energy conservation standards 
identical to those set forth in today's direct final rule and 
transmitted a copy of today's direct final rule and the accompanying 
TSD to the Attorney General, requesting that the DOJ provide its 
determination on this issue. DOE will consider DOJ's comments on the 
rule in determining whether to proceed with the direct final rule. DOE 
will also publish and respond to DOJ's comments in the Federal Register 
in a separate notice.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the products subject to 
today's rule is likely to improve the security of the nation's energy 
system by reducing overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system.
    Energy savings from amended standards for residential dishwashers 
are expected to produce environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases associated with 
electricity production. Table V.13 provides DOE's estimate of 
cumulative CO2, NOX, and Hg emissions reductions 
that would be expected to result from the TSLs considered in this 
rulemaking. In the environmental assessment (chapter 15 of the direct 
final rule TSD), DOE reports annual CO2, NOX, and 
Hg emissions reductions for each TSL.
    As discussed in section IV.L, DOE has not reported SO2 
emissions reductions from power plants because the NEMS-BT modeling 
system that DOE uses to forecast emissions reductions currently 
indicates that no physical reductions in power sector emissions would 
occur for SO2. DOE also did not include NOX 
emissions reduction from power plants in States subject to emissions 
caps because in such a case an energy conservation standard would 
likely not affect the overall level of NOX emissions in 
those States.\48\
---------------------------------------------------------------------------

    \48\ EPA issued the final Cross-State Air Pollution Rule on July 
6, 2011 (www.epa.gov/crossstaterule/ rule/). The Cross-State Air 
Pollution Rule will replace CAIR. In the emissions analysis for 
today's amended energy conservation standards, DOE's discussion and 
conclusions about NOX emissions assume the implementation 
of CAIR. In future rulemakings, DOE will adjust its relevant models 
to assume the implementation of the Cross-State Air Pollution Rule.

                 Table V.13--Emissions Reduction Estimated for Dishwasher Trial Standard Levels
                                           [Cumulative in 2018-2047] *
----------------------------------------------------------------------------------------------------------------
                                                TSL 1             TSL 2             TSL 3             TSL 4
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...............              1.15              4.06             65.02             98.62
NOX (thousand tons).....................              0.96              3.54             54.27             83.31
Hg (tons)...............................             0.004             0.000             0.274             0.304
----------------------------------------------------------------------------------------------------------------
* For TSL 2, the impacts are counted for 2013-2047.

    DOE also estimated monetary benefits likely to result from the 
reduced emissions of CO2 and NOX that DOE 
estimated for each of the TSLs considered for dishwashers. As discussed 
in section IV.M, DOE used values for the SCC developed by an 
interagency process. The four values for CO2 emissions 
reductions in 2010 resulting from that process (expressed in 2010$) are 
$4.9/ton (the average value from a distribution that uses a 5-percent 
discount rate), $22.3/ton (the average value from a distribution that 
uses a 3-percent discount rate), $36.5/ton (the average value from a 
distribution that uses a 2.5-percent discount rate), and $67.6/ton (the 
95th-percentile value from a distribution that uses a 3-percent 
discount rate). The values for later years are higher due to increasing 
damages as the magnitude of climate change increases. For each of the 
four cases, DOE calculated a present value of the stream of annual 
values using the same discount rate as used in the studies upon which 
the dollar-per-ton values are based. Table V.14 presents the global 
values of CO2 emissions reductions at each TSL. DOE 
calculated domestic values as a range from 7 percent to 23 percent of 
the global values. Those results are presented in Table V.15.

[[Page 31953]]

Table V.14--Estimates of Global Present Value of CO2 Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                       Million 2010$
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% Discount
                                             5% Discount       3% Discount      2.5% Discount      rate, 95th
                                           rate, average *   rate, average *   rate, average *    percentile *
----------------------------------------------------------------------------------------------------------------
1.......................................              4.88              25.9              44.2              78.9
2.......................................              16.1              79.5               133               242
3.......................................               278              1484              2534              4515
4.......................................               427              2284              3904              6951
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution.

   Table V.15--Estimates of Domestic Present Value of CO2 Emissions Reductions Under Dishwasher Trial Standard
                                                     Levels
----------------------------------------------------------------------------------------------------------------
                                                               Million 2010$
                          --------------------------------------------------------------------------------------
           TSL               5% Discount rate,     3% Discount rate,    2.5% Discount rate,   3% Discount rate,
                                 average *             average *             average *        95th percentile *
----------------------------------------------------------------------------------------------------------------
1........................  0 to 1..............  2 to 6..............  3 to 10.............  6 to 18.
2........................  1 to 4..............  6 to 18.............  9 to 31.............  17 to 56.
3........................  19 to 64............  104 to 341..........  177 to 583..........  316 to 1039.
4........................  30 to 98............  160 to 525..........  273 to 898..........  487 to 1599.
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution.

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions 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 social value of 
reductions in CO2 and other GHG 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 estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emissions reductions 
anticipated to result from amended standards for residential 
dishwashers. The dollar-per-ton values that DOE used are discussed in 
section IV.M. Table V.16 presents the cumulative present values for 
each TSL calculated using 3-percent and 7-percent discount rates.

Table V.16--Estimates of Present Value of NOX Emissions Reductions Under
                    Dishwasher Trial Standard Levels
------------------------------------------------------------------------
                          3% Discount rate          7% Discount rate
         TSL               (million 2010$)           (million 2010$)
------------------------------------------------------------------------
1...................  0 to 3..................  0 to 1.
2...................  1 to 10.................  0 to 5.
3...................  14 to 148...............  6 to 59.
4...................  22 to 230...............  9 to 91.
------------------------------------------------------------------------

    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the consumer 
savings calculated for each TSL considered in this rulemaking. Table 
V.17 and Table V.18 present the NPV values that result from adding the 
estimates of the potential economic benefits resulting from reduced 
CO2 and NOX emissions in each of four valuation 
scenarios to the NPV of consumer savings calculated for each TSL 
considered in this rulemaking, at both a 7-percent and a 3-percent 
discount rate. The CO2 values used in the columns of each 
table correspond to the four scenarios for the valuation of 
CO2 emission reductions presented in section IV.M.

 Table V.17--Results of Adding Net Present Value of Consumer Savings (at 7-Percent Discount Rate) to Net Present
    Value of Monetized Benefits From CO2 and NOX Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                     Consumer NPV at 7% discount rate added with:
                                     ---------------------------------------------------------------------------
                                      SCC Value of $4.9/    SCC Value of       SCC Value of       SCC Value of
                 TSL                   metric ton CO2 *   $22.3/metric ton   $36.5/metric ton   $67.6/metric ton
                                      and low value for   CO2 * and medium   CO2 * and medium    CO2 * and high
                                       NOX **  (billion   value for NOX **   value for NOX **   value for NOX **
                                            2010$)        (billion 2010$)    (billion 2010$)    (billion 2010$)
----------------------------------------------------------------------------------------------------------------
1...................................               0.04               0.06               0.08               0.11

[[Page 31954]]

 
2...................................               0.10               0.16               0.21               0.33
3...................................               2.24               3.48               4.53               6.53
4...................................               6.31               8.21               9.83              12.92
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2010$. Their present values have been
  calculated with scenario-consistent discount rates.
** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX
  emissions. High Value corresponds to $4,623 per ton of NOX emissions.

 Table V.18--Results of Adding Net Present Value of Consumer Savings (at 3-Percent Discount Rate) to Net Present
    Value of Monetized Benefits From CO2 and NOX Emissions Reductions Under Dishwasher Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                     Consumer NPV at 3% discount rate added with:
                                     ---------------------------------------------------------------------------
                                      SCC Value of $4.9/    SCC Value of       SCC Value of       SCC Value of
                 TSL                   metric ton CO2 *   $22.3/metric ton   $36.5/metric ton   $67.6/metric ton
                                      and low value for   CO2 * and medium   CO2* and medium     CO2 * and high
                                       NOX **  (billion   value for NOX **   value for NOX **   value for NOX **
                                            2010$)        (billion 2010$)    (billion 2010$)    (billion 2010$)
----------------------------------------------------------------------------------------------------------------
1...................................               0.13               0.15               0.17               0.20
2...................................               0.48               0.54               0.60               0.71
3...................................               6.80               8.07               9.12              11.17
4...................................              17.90              19.86              21.48              24.63
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2010$. Their present values have been
  calculated with scenario-consistent discount rates.
** Low Value corresponds to $450 per ton of NOX emissions. Medium Value corresponds to $2,537 per ton of NOX
  emissions. High Value corresponds to $4,623 per ton of NOX emissions.

    Although adding the value of consumer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. consumer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
CO2 savings are performed with different methods that use 
quite different time frames for analysis. The national operating cost 
savings is measured for the lifetime of products shipped in 2013-2047. 
The SCC values, on the other hand, reflect the present value of all 
future climate-related impacts resulting from the emission of one ton 
of carbon dioxide in each year. These impacts continue well beyond 
2100.
7. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI))) In 
developing the direct final rule, DOE has also considered the Joint 
Petition submitted to DOE. DOE recognizes the value of consensus 
agreements submitted by parties in accordance with 42 U.S.C. 6295(p)(4) 
and has weighed the value of such consensus in establishing the 
standards set forth in today's final rule. DOE has encouraged the 
submission of consensus agreements as a way to get diverse interested 
parties together, to develop an independent and probative analysis 
useful in DOE standard setting, and to expedite the rulemaking process. 
DOE also believes that standard levels recommended in the consensus 
agreement may increase the likelihood for regulatory compliance, while 
decreasing the risk of litigation.

C. Conclusion

    When considering proposed standards, the new or amended energy 
conservation standard that DOE adopts for any type (or class) of 
covered product 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)) In 
determining whether a standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens, 
considering to the greatest extent practicable the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also ``result in significant conservation of 
energy.'' (42 U.S.C. 6295(o)(3)(B))
    The Department considered the impacts of standards at each TSL, 
beginning with maximum technologically feasible level, to determine 
whether that level was economically justified. Where the max-tech level 
was not justified, DOE then considered the next most efficient level 
and undertook the same evaluation until it reached the highest 
efficiency level that is both technologically feasible and economically 
justified and saves a significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each trial standard level, tables present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results

[[Page 31955]]

presented in the tables, DOE also considers other burdens and benefits 
that affect economic justification. Those include the impacts on 
identifiable subgroups of consumers, such as low-income households and 
seniors, who may be disproportionately affected by a national standard. 
Section V.B.1 presents the estimated impacts of each TSL for these 
subgroups.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. This undervaluation suggests that 
regulation that promotes energy efficiency can produce significant net 
private gains (as well as producing social gains by, for example, 
reducing pollution). There is evidence that consumers undervalue future 
energy savings as a result of (1) a lack of information; (2) a lack of 
sufficient salience of the long-term or aggregate benefits; (3) a lack 
of sufficient savings to warrant delaying or altering purchases (for 
example, an inefficient ventilation fan in a new building or the 
delayed replacement of a water pump); (4) excessive focus on the short 
term, in the form of inconsistent weighting of future energy cost 
savings relative to available returns on other investments; (5) 
computational or other difficulties associated with the evaluation of 
relevant tradeoffs; and (6) a divergence in incentives (that is, renter 
versus owner; builder versus purchaser). Other literature indicates 
that with less than perfect foresight and a high degree of uncertainty 
about the future, consumers may trade off these types of investments at 
a higher than expected rate between current consumption and uncertain 
future energy cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways: First, if consumers forego a 
purchase of a product in the standards case, this decreases sales for 
product manufacturers and the cost to manufacturers is included in the 
MIA. Second, DOE accounts for energy savings attributable only to 
products actually used by consumers in the standards case; if a 
regulatory option decreases the number of products used by consumers, 
this decreases the potential energy savings from an energy conservation 
standard. DOE provides detailed estimates of shipments and changes in 
the volume of product purchases in chapter 9 of the direct final rule 
TSD. However, DOE's current analysis does not explicitly control for 
heterogeneity in consumer preferences, preferences across subcategories 
of products or specific features, or consumer price sensitivity 
variation according to household income (Reiss and White, 2005).\49\
---------------------------------------------------------------------------

    \49\ P.C. Reiss and M.W. White. Household Electricity Demand, 
Revisited. Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. DOE has posted a paper that discusses 
the issue of consumer welfare impacts of appliance energy efficiency 
standards, and potential enhancements to the methodology by which these 
impacts are defined and estimated in the regulatory process.\50\ DOE 
welcomes comments on how to more fully assess the potential impact of 
energy conservation standards on consumer choice and how to quantify 
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

    \50\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory. 2010. Available online at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Residential Dishwashers
    Table V.19 and Table V.20 summarize the quantitative impacts 
estimated for each TSL for residential dishwashers. The efficiency 
levels contained in each TSL are described in section V.A.

                            Table V.19--Summary of Results for Residential Dishwasher Trial Standard Levels: National Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                           TSL 1                        TSL 2                        TSL 3                        TSL 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings (quads).....  0.02.......................  0.07.......................  0.94.......................  1.59.
National Water Savings (trillion      0.01.......................  0.14.......................  0.56.......................  1.71.
 gal.).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Net Present Value (2010$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate....................  0.12.......................  0.46.......................  0.51.......................  17.45.
--------------------------------------------------------------------------------------------------------------------------------------------------------
7% discount rate....................  0.03.......................  0.08.......................  1.96.......................  5.88.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...........  1.15.......................  4.06.......................  65.02......................  98.62.
NOX (thousand tons).................  0.96.......................  3.54.......................  54.27......................  83.31.
Hg (tons)...........................  0.004......................  0.000......................  0.274......................  0.304.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Value of Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2010$ million) *...............  5 to 79....................  16 to 242..................  278 to 4515................  427 to 6951.
NOX--3% discount rate (2010$          0 to 3.....................  1 to 10....................  14 to 148..................  22 to 230.
 million).
NOX--7% discount rate (2010$          0 to 1.....................  0 to 5.....................  6 to 59....................  9 to 91.
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** Values are for 2047.

[[Page 31956]]

   Table V.20--Summary of Results for Residential Dishwasher Trial Standard Levels: Consumer and Manufacturer
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
              Category                      TSL 1              TSL 2              TSL 3              TSL 4
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Impact to Industry NPV (2010$             (44.3)-(45.3)      (73.9)-(84.6)    (128.9)-(174.4)    (145.6)-(202.7)
 million, 8.5% discount rate).......
Industry NPV (% change).............        (7.0)-(7.1)      (11.6)-(13.3)      (20.2)-(27.4)      (22.8)-(31.8)
----------------------------------------------------------------------------------------------------------------
                                        Consumer Mean LCC Savings (2010$)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher.................                  1                  3                 41                108
Compact Dishwasher..................                 13                 12                 52                 52
----------------------------------------------------------------------------------------------------------------
                                           Consumer Median PBP (Years)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher.................                5.9               11.8                6.6                4.5
Compact Dishwasher..................                0.3                0.3                2.1                2.1
----------------------------------------------------------------------------------------------------------------
                                      Distribution of Consumer LCC Impacts
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher:
    Net Cost (%)....................                1.9               18.7               29.7               22.9
    No Impact (%)...................               96.3               64.1               20.0                9.0
    Net Benefit (%).................                1.7               17.2               50.4               68.1
----------------------------------------------------------------------------------------------------------------
Compact Dishwasher:
    Net Cost (%)....................                6.4                6.5                5.4                5.4
    No Impact (%)...................               75.6               75.6               50.2               50.2
    Net Benefit (%).................               18.0               17.9               44.4               44.4
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 1.59 quads of energy and 1.71 
trillion gallons of water, amounts DOE considers significant. Under TSL 
4, the NPV of consumer benefit would be $5.88 billion, using a discount 
rate of 7 percent, and $17.45 billion, using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 4 are 99 Mt of 
CO2, 83 thousand tons of NOX, and 0.304 tons of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 4 ranges from $427 million to $6,951 million.
    At TSL 4, the average LCC impact is a savings of $108 for standard 
dishwashers and a savings of $52 for compact dishwashers. The median 
payback period is 4.5 years for standard dishwashers and 2.1 years for 
compact dishwashers. The fraction of consumers experiencing an LCC 
benefit is 68.1 percent for standard dishwashers and 44.4 percent for 
compact dishwashers. However, 22.9 percent of standard dishwasher 
consumers and 5.4 percent of compact dishwasher consumers experience an 
LCC net cost. In addition, DOE is concerned that reducing energy and 
water use at TSL 4 without implementing significantly higher-cost 
technologies could result in the loss of certain consumer utility. 
Specifically, a substantially longer cycle time could be required to 
maintain cleaning performance. Therefore, DOE is concerned that TSL 4 
may result in a loss of consumer utility.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$145.6 million to a decrease of $202.7 million, equivalent to 22.8 
percent and 31.8 percent, respectively. Products that meet the 
efficiency standards specified by this TSL are forecast to represent 
less than 9 percent of shipments in the year leading up to amended 
standards. As such, manufacturers would have to redesign nearly all 
products by the 2018 compliance date to meet demand. Redesigning all 
units to meet the current max-tech efficiency levels would require 
considerable capital and product conversion expenditures. At TSL 4, the 
capital conversion costs total $226.3 million, 2.2 times the industry 
annual capital expenditure in the year leading up to amended standards. 
DOE estimates that complete platform redesigns would cost the industry 
$76.7 million in product conversion costs. These conversion costs 
largely relate to the research programs required to develop new 
products that meet the efficiency standards set forth by TSL 4. These 
costs are equivalent to 1.6 times the industry annual budget for 
research and development. As such, the conversion costs associated with 
the changes in products and manufacturing facilities required at TSL 4 
would require significant use of manufacturers' financial reserves 
(manufacturer capital pools), impacting other areas of business that 
compete for these resources and significantly reducing INPV. In 
addition, manufacturers could face a substantial impact on 
profitability at TSL 4. Because manufacturers are more likely to reduce 
their margins to maintain a price-competitive product at higher TSLs, 
DOE expects that TSL 4 would yield impacts closer to the high end of 
the range of INPV impacts. If the high end of the range of impacts is 
reached, as DOE expects, TSL 4 could result in a net loss of 31.8 
percent in INPV to dishwasher manufacturers.
    The Secretary concludes that at TSL 4 for residential dishwashers, 
the benefits of energy savings, water savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
CO2 emissions reductions would be outweighed by the economic 
burden on some consumers, the potential burden on all consumers from 
loss of product utility, and the impacts on manufacturers, including 
the conversion costs and profit margin impacts that could result in a 
large reduction in INPV. Consequently, the Secretary has concluded that 
TSL 4 is not economically justified.
    DOE then considered TSL 3. TSL 3 would save 0.94 quads of energy 
and 0.56 trillion gallons of water, amounts DOE considers significant. 
Under TSL 3,

[[Page 31957]]

the NPV of consumer benefit would be $1.96 billion, using a discount 
rate of 7 percent, and $6.51 billion, using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 3 are 65 Mt of 
CO2, 54 thousand tons of NOX, and 0.274 ton of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 3 ranges from $278 million to $4,515 million.
    At TSL 3, the average LCC impact is a savings of $41 for standard 
dishwashers and a savings of $52 for compact dishwashers. The median 
payback period is 6.6 years for standard dishwashers and 2.1 years for 
compact dishwashers. The fraction of consumers experiencing an LCC 
benefit is 50.4 percent for standard dishwashers and 44.4 percent for 
compact dishwashers. However, 29.7 percent of standard dishwasher 
consumers and 5.4 percent of compact dishwasher consumers experience an 
LCC net cost. In addition, DOE is concerned that reducing energy and 
water use at TSL 3 without implementing significantly higher-cost 
technologies could result in the loss of certain consumer utility. 
Specifically, a substantially longer cycle time could be required to 
maintain cleaning performance. Therefore, DOE is concerned that TSL 3 
may result in significant loss of consumer utility.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$128.9 million to a decrease of $174.4 million, decreases of 20.2 
percent and 27.4 percent, respectively. Products that meet the 
efficiency standards specified by this TSL represent less than 20 
percent of shipments in the year leading up to amended standards. As 
such, manufacturers would have to overhaul a significant fraction of 
products by the 2018 compliance date to meet demand. Redesigning 
significant component systems or developing entirely new platforms to 
meet the efficiency levels specified by this TSL would require 
considerable capital and product conversion expenditures. At TSL 3, the 
estimated capital conversion costs total $195.4 million, which is 1.9 
times the industry annual capital expenditure in the year leading up to 
amended standards. DOE estimates that the redesigns necessary to meet 
these standards would cost the industry $66.5 million in product 
conversion costs. These conversion costs largely relate to the research 
programs required to develop products that meet the efficiency 
standards set forth by TSL 3, and are 1.4 times the industry annual 
budget for research and development in the year leading up to amended 
standards. As such, the conversion costs associated with the changes in 
products and manufacturing facilities required at TSL 3 would require 
significant use of manufacturers' financial reserves (manufacturer 
capital pools), impacting other areas of business that compete for 
these resources and significantly reducing INPV. Because manufacturers 
are more likely to reduce their margins to maintain a price-competitive 
product at higher TSLs, DOE expects that TSL 3 would yield impacts 
closer to the high end of the range of INPV impacts as indicated by the 
preservation of operating profit markup scenario. If the high end of 
the range of impacts is reached, as DOE expects, TSL 3 could result in 
a net loss of 27.4 percent in INPV to dishwasher manufacturers.
    The Secretary concludes that at TSL 3 for residential dishwashers, 
the benefits of energy savings, water savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
CO2 emissions reductions would be outweighed by the economic 
burden on some consumers, the potential burden on all consumers from 
loss of product utility, and the impacts on manufacturers, including 
the conversion costs and profit margin impacts that could result in a 
large reduction in INPV. Consequently, the Secretary has concluded that 
TSL 3 is not economically justified.
    DOE then considered TSL 2. TSL 2 would save 0.07 quads of energy 
and 0.14 trillion gallons of water, amounts DOE considers significant. 
Under TSL 2, the NPV of consumer benefit would be $0.08 billion, using 
a discount rate of 7 percent, and $0.46 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 2 are 4.06 Mt of 
CO2, 3.54 thousand tons of NOX, and 0.000 ton of 
Hg. The estimated monetary value of the CO2 emissions 
reductions at TSL 2 ranges from $16 million to $242 million.
    At TSL 2, the average LCC impact is a savings of $3 for standard 
dishwashers and a savings of $12 for compact dishwashers. The median 
payback period is 11.8 years for standard dishwashers and 0.3 years for 
compact dishwashers. While some consumers experience an LCC increase, 
this increase is very small in most cases.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$73.9 million to a decrease of $84.6 million, decreases of 11.6 percent 
and 13.3 percent, respectively. All dishwasher manufacturers currently 
produce products that meet the efficiency levels specified at TSL 2. As 
such, this level corresponds more to incremental product conversions 
rather than the platform redesigns expected for TSL 3 and TSL 4. 
Products at or above the efficiency levels of TSL 2 represent nearly 64 
percent of shipments in the year leading up to amended standards. As 
such, DOE believes that the scope of the redesigns necessary to meet 
TSL 2 by the 2013 compliance date greatly mitigates concerns over 
manufacturers' ability to redesign products and switch over the bulk of 
production in time to meet the amended standards by the compliance date 
(operational risk). DOE estimates that the improvements to 
manufacturing facilities necessary to meet these standards would cost 
the industry $59.1 million in capital conversion costs, over $130 
million less than those incurred at TSL 3, and only 56 percent of the 
industry budget for capital expenditure in the year leading up to 
amended standards. TSL 2 will require an estimated 34.9 million in 
product conversion costs primarily relating to the research and 
development programs needed to improve upon existing platforms to meet 
the specified efficiency levels. This represents 72 percent of the 
industry budget for research and development in the year leading up to 
amended standards. The substantial reduction in conversion costs over 
those incurred at higher TSLs, coupled with the fact that many products 
currently meet the efficiency standards set forth by TSL 2, greatly 
mitigate the operational risk and impact on INPV.
    The Secretary concludes that at TSL 2 for residential dishwashers, 
the benefits of energy savings, water savings, positive NPV of consumer 
benefits, emission reductions, and the estimated monetary value of the 
CO2 emissions reductions would outweigh the impacts on 
manufacturers, including the conversion costs that could result in a 
reduction in INPV for manufacturers.
    In addition, the efficiency levels in TSL 2 correspond to the 
recommended levels in the Joint Petition, which DOE believes sets forth 
a statement by interested persons that are fairly representative of 
relevant points of view (including representatives of manufacturers of 
covered products, States, and efficiency advocates) and contains 
recommendations with respect to an energy conservation standard that 
are in accordance with 42 U.S.C. 6295(o). Moreover, DOE has encouraged 
the submission of consensus agreements as a way for diverse interested 
parties to develop an independent and probative analysis useful in DOE 
standard setting and to expedite the rulemaking process. DOE also 
believes that the standard levels recommended in the consensus 
agreement may increase the likelihood

[[Page 31958]]

for regulatory compliance, while decreasing the risk of litigation.
    After considering the analysis and the benefits and burdens of TSL 
2, the Secretary concludes that this TSL will offer the maximum 
improvement in efficiency that is technologically feasible and 
economically justified, and will result in the significant conservation 
of energy. Therefore, DOE today adopts TSL 2 for residential 
dishwashers. The amended energy conservation standards for residential 
dishwashers, which are a maximum allowable annual energy use and 
maximum allowable per-cycle water consumption, are shown in Table V.21.

                  Table V.21--Amended Energy Conservation Standards for Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                           Compliance date: May 30, 2013
          Product class           ------------------------------------------------------------------------------
                                        Maximum annual  energy use *        Maximum per-cycle  water consumption
----------------------------------------------------------------------------------------------------------------
1. Standard (>=8 place settings    307 kWh/year..........................  5.0 gallons/cycle.
 plus 6 serving pieces).
2. Compact (year..........................  3.5 gallons/cycle.
 plus 6 serving pieces).
----------------------------------------------------------------------------------------------------------------
*Annual energy use, expressed in kilowatt-hours (kWh) per year, is calculated as: the sum of the annual standby
  electrical energy in kWh and the product of (1) the representative average dishwasher use cycles per year and
  (2) the sum of machine electrical energy consumption per cycle in kWh, the total water energy consumption per
  cycle in kWh, and, for dishwashers having a truncated normal cycle, the drying energy consumption divided by 2
  in kWh. A truncated normal cycle is defined as the normal cycle interrupted to eliminate the power-dry feature
  after the termination of the last rinse option.

2. Summary of Benefits and Costs (Annualized) of the Standards
    The benefits and costs of today's standards can also be expressed 
in terms of annualized values. The annualized monetary values are the 
sum of (1) the annualized national economic value, expressed in 2010$, 
of the benefits from operating products that meet the proposed 
standards (consisting primarily of operating cost savings from using 
less energy and water, minus increases in product purchase costs, which 
is another way of representing consumer NPV), and (2) the monetary 
value of the benefits of emission reductions, including CO2 
emission reductions.\51\ The value of the CO2 reductions, 
otherwise known as the Social Cost of Carbon (SCC), is calculated using 
a range of values per metric ton of CO2 developed by a 
recent interagency process.
---------------------------------------------------------------------------

    \51\ DOE used a two-step calculation process to convert the 
time-series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2012, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of 3 and 7 percent for all 
costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table V.22. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period, starting in 2013, that 
yields the same present value. This payment includes benefits to 
consumers which accrue after 2047 from the dishwashers purchased 
from 2013 to 2047. Costs incurred by manufacturers, some of which 
may be incurred prior to 2013 in preparation for the rule, are 
indirectly included as part of incremental equipment costs. The 
extent of these costs and benefits depends on the projected price 
trends of dishwashers because consumer demand of dishwashers is a 
function of dishwasher prices. The fixed annual payment is the 
annualized value. Although DOE calculated annualized values, this 
does not imply that the time-series of cost and benefits from which 
the annualized values were determined is a steady stream of 
payments.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use quite 
different time frames for analysis. The national operating cost savings 
is measured for the lifetime of products shipped in 2013-2047. The SCC 
values, on the other hand, reflect the present value of all future 
climate-related impacts resulting from the emission of one ton of 
carbon dioxide in each year. These impacts continue well beyond 2100.
    Table V.22 shows the annualized values for residential dishwashers 
under TSL 2, expressed in 2010$. The results under the primary estimate 
are as follows. Using a 7-percent discount rate for benefits and costs 
other than CO2 reductions, for which DOE used a 3-percent 
discount rate along with the SCC series corresponding to a value of 
$22.3/ton in 2010 (in 2010$), the cost of the standards for dishwashers 
in today's rule is $46 million per year in increased equipment costs, 
while the annualized benefits are $53 million per year in reduced 
equipment operating costs, $3.9 million in CO2 reductions, 
and $0.24 million in reduced NOX emissions. In this case, 
the net benefit amounts to $11 million per year. Using a 3-percent 
discount rate for all benefits and costs and the SCC series 
corresponding to a value of $22.3/ton in 2010 (in 2010$), the cost of 
the standards for dishwashers in today's rule is $44 million per year 
in increased equipment costs, while the benefits are $66 million per 
year in reduced operating costs, $3.9 million in CO2 
reductions, and $0.26 million in reduced NOX emissions. In 
this case, the net benefit amounts to $27 million per year.

                  Table V.22--Annualized Benefits and Costs of Amended Standards (TSL 2) for Residential Dishwashers Sold in 2013-2047
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Monetized (million 2010$/year)
                                                                        --------------------------------------------------------------------------------
                                              Discount rate %                                       Low net benefits estimate      High net benefits
                                                                             Primary estimate *                 *                      estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings............  7..................................  53.......................  48.......................  59.
                                    3..................................  66.......................  59.......................  75.

[[Page 31959]]

 
CO2 Reduction at $4.9/t **........  5..................................  1.1......................  1.0......................  1.3.
CO2 Reduction at $22.3/t **.......  3..................................  3.9......................  3.5......................  4.7.
CO2 Reduction at $36.5/t **.......  2.5................................  6.1......................  5.4......................  7.2.
CO2 Reduction at $67.6/t **.......  3..................................  12.0.....................  10.8.....................  14.2.
NOX Reduction at $2,537/t **......  7..................................  0.24.....................  0.23.....................  0.27.
                                    3..................................  0.26.....................  0.24.....................  0.30.
Total[dagger]7....................  7% plus CO2 range..................  54 to 65.................  49 to 59.................  60 to 73.
                                    7%.................................  57.......................  52.......................  64.
                                    3% plus CO2 range..................  68 to 78.................  60 to 70.................  76 to 89.
                                    3..................................  70.......................  63.......................  80.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Incremental Product Costs.........  7..................................  46.......................  44.......................  43.
                                    3..................................  44.......................  41.......................  40.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Total Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total [dagger]....................  7% plus CO2 range..................  8 to 19..................  6 to 16..................  17 to 30.
                                    7..................................  11.......................  8........................  20.
                                    3% plus CO2 range..................  24 to 35.................  19 to 29.................  37 to 49.
                                    3..................................  27.......................  22.......................  40.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2047 from the dishwashers purchased from 2013 through 2047. Costs incurred by
  manufacturers, some of which may be incurred prior to 2013 in preparation for the rule, are not directly included, but are indirectly included as part
  of incremental equipment costs. The extent of the costs and benefits will depend on the projected price trends of dishwashers, as the consumer demand
  for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and
  housing starts from the AEO2011 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium
  decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends in the Low Benefits
  Estimate, and a high decline rate for projected product price trends in the High Benefits Estimate. The methods used to derive projected price trends
  are explained in section IV.G.3.
** The CO2 values represent global values (in 2010$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.3, and
  $36.5 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.6 per ton
  represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2010$) is the average of the low and
  high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.3/ton in 2010 (in
  2010$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2 range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and Executive Order 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that today's standards address are as follows:
    (1) There is a lack of consumer information and/or information 
processing capability about energy efficiency opportunities in the home 
appliance market.
    (2) There is asymmetric information (one party to a transaction has 
more and better information than the other) and/or high transactions 
costs (costs of gathering information and effecting exchanges of goods 
and services).
    (3) There are external benefits resulting from improved energy 
efficiency of residential dishwashers that are not captured by the 
users of such equipment. These benefits include externalities related 
to environmental protection and energy security that are not reflected 
in energy prices, such as reduced emissions of greenhouse gases.
    In addition, DOE has determined that today's regulatory action is 
an ``economically significant regulatory action'' under section 3(f)(1) 
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive 
Order requires that DOE prepare a regulatory impact analysis (RIA) on 
today's rule and that the Office of Information and Regulatory Affairs 
(OIRA) in the Office of Management and Budget (OMB) review this rule. 
DOE presented to OIRA for review the draft rule and other documents 
prepared for this rulemaking, including the RIA, and included these 
documents in the rulemaking record. The assessments prepared pursuant 
to Executive Order 12866 can be found in the technical support document 
for this rulemaking at http://www1.eere.energy.gov/buildings/appliance_standards/residential/dishwashers.html.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563 
is supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a 
reasoned determination that its benefits justify its costs (recognizing 
that some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into

[[Page 31960]]

account, among other things, and to the extent practicable, the costs 
of cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that today's direct final rule is consistent with these 
principles, including the requirement that, to the extent permitted by 
law, benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA, 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, unless the 
agency certifies that the rule, if promulgated, will not have a 
significant economic impact on a substantial number of small entities. 
As required by Executive Order 13272, ``Proper Consideration of Small 
Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 2002), DOE 
published procedures and policies on February 19, 2003, to ensure that 
the potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (www.gc.doe.gov).
    DOE reviewed today's direct final rule and corresponding NOPR 
pursuant to the RFA and the policies and procedures discussed above. 
DOE certifies that the standards established in today's direct final 
rule and proposed in the NOPR, published elsewhere in today's Federal 
Register, will not have a significant impact on a substantial number of 
small entities. The factual basis for this certification is set forth 
below. DOE will consider any comments on the certification or economic 
impacts of the rule in determining whether to proceed with the direct 
final rule.
    For manufacturers of residential dishwashers, the Small Business 
Administration (SBA) has set a size threshold, which defines those 
entities classified as ``small businesses'' for the purposes of the 
statute. DOE used the SBA's small business size standards to determine 
whether any small entities would be subject to the requirements of the 
rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 
53544 (Sept. 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 and are available at: 
www.sba.gov/sites/default/files/Size_Standards_Table.pdf. Residential 
dishwasher manufacturing is classified under NAICS 335228, ``Other 
Major Household Appliance Manufacturing.'' The SBA sets a threshold of 
500 employees or less for an entity to be considered as a small 
business for this category.
    To estimate the number of small businesses which could be impacted 
by the amended energy conservation standards, DOE conducted a market 
survey using all available public information to identify potential 
small manufacturers. DOE's research included the AHAM membership 
directory, product databases (CEE, CEC, and ENERGY STAR databases) and 
individual company Web sites to find potential small business 
manufacturers. DOE also asked interested parties and industry 
representatives if they were aware of any other small business 
manufacturers during manufacturer interviews and at previous DOE public 
meetings. DOE reviewed all publicly available data and contacted 
various companies, as necessary, to determine whether they met the 
SBA's definition of a small business manufacturer of covered 
residential dishwashers. DOE screened out companies that did not offer 
products covered by this rulemaking, did not meet the definition of a 
``small business,'' or are foreign owned and operated.
    Almost half of residential dishwashers are currently manufactured 
in the United States by one corporation that accounts for approximately 
49 percent of the total market. Together, this manufacturer and 3 other 
manufacturers that do not meet the definition of a small business 
manufacturer comprise 99 percent of the residential dishwasher market. 
The small portion of the remaining residential dishwasher market 
(approximately 57,000 shipments) is supplied by a combination of 
approximately 15 international and domestic companies, all of which 
have small market shares. These companies are either foreign owned and 
operated or exceed the SBA's employment threshold for consideration as 
a small business under the appropriate NAICS code. Therefore, DOE did 
not identify any small business manufacturers of dishwashers.
    Based on the discussion above, DOE certifies that the standards for 
residential dishwashers set forth in today's rule would not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, DOE has not prepared a regulatory flexibility analysis for 
this rulemaking. DOE will transmit this certification to the SBA as 
required by 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

    Manufacturers of residential dishwashers must certify to DOE that 
their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for dishwashers, 
including any amendments adopted for those test procedures. DOE has 
established regulations for the certification and recordkeeping 
requirements for all covered consumer products and commercial 
equipment, including residential dishwashers. (76 FR 12422 (March 7, 
2011)). The collection-of-information requirement for the certification 
and recordkeeping is subject to review and approval by OMB under the 
Paperwork Reduction Act (PRA). This requirement has been approved by 
OMB under OMB control number 1910-1400. Public reporting burden for the 
certification is estimated to average 20 hours per response, including 
the time for reviewing instructions, searching existing data sources, 
gathering and maintaining the data needed, and completing and reviewing 
the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless

[[Page 31961]]

that collection of information displays a currently valid OMB Control 
Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that today's rule fits within the category of 
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets 
the requirements for application of a CX. See 10 CFR Part 1021, App. B, 
B5.1(b); 1021.410(b) and Appendix B, B(1)-(5). The rule fits within the 
category of actions because it is a rulemaking that establishes energy 
conservation standards for consumer products or industrial equipment, 
and for which none of the exceptions identified in CX B5.1(b) apply. 
Therefore, DOE has made a CX determination for this rulemaking, and DOE 
does not need to prepare an Environmental Assessment or Environmental 
Impact Statement for this rule. DOE's CX determination for this direct 
final rule is available at http://cxnepa.energy.gov.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism.'' 64 FR 43255 (Aug. 10, 1999) 
imposes certain requirements on Federal agencies formulating and 
implementing policies or regulations that preempt State law or that 
have Federalism implications. The Executive Order requires agencies to 
examine the constitutional and statutory authority supporting any 
action that would limit the policymaking discretion of the States and 
to carefully assess the necessity for such actions. The Executive Order 
also requires agencies to have an accountable process to ensure 
meaningful and timely input by State and local officials in the 
development of regulatory policies that have Federalism implications. 
On March 14, 2000, DOE published a statement of policy describing the 
intergovernmental consultation process it will follow in the 
development of such regulations. 65 FR 13735. EPCA governs and 
prescribes Federal preemption of State regulations as to energy 
conservation for the products that are the subject of today's direct 
final rule. States can petition DOE for exemption from such preemption 
to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 
6297) No further action is required by 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,'' 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. 61 FR 
4729 (Feb. 7, 1996). 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, this direct final rule 
meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For an amended regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy 
statement is also available at www.gc.doe.gov.
    DOE has concluded that this direct final rule would likely require 
expenditures of $100 million or more on the private sector. Such 
expenditures may include: (1) Investment in research and development 
and in capital expenditures by dishwasher manufacturers in the years 
between the direct final rule and the compliance date for the new 
standards, and (2) incremental additional expenditures by consumers to 
purchase higher-efficiency residential dishwashers, starting at the 
compliance date for the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the final rule. 2 U.S.C. 1532(c). The content requirements 
of section 202(b) of UMRA relevant to a private sector mandate 
substantially overlap the economic analysis requirements that apply 
under section 325(o) of EPCA and Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of the notice of direct final 
rulemaking and the ``Regulatory Impact Analysis'' section of the TSD 
for this direct final rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 
6295(g)(1) and (10), and (o), today's direct final rule would establish 
energy conservation standards for residential dishwashers that are 
designed to achieve the maximum improvement in energy efficiency that 
DOE has determined to be both technologically feasible and economically 
justified. A full discussion of the alternatives considered by DOE is 
presented in the ``Regulatory Impact Analysis'' section of the TSD for 
today's direct final rule.

[[Page 31962]]

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

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family 
Policymaking Assessment for any rule that may affect family well-being. 
This rule would not have any impact on the autonomy or integrity of the 
family as an institution. Accordingly, DOE has concluded that it is not 
necessary to prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, ``Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights'' 53 FR 8859 (March 18, 1988), that this regulation would not 
result in any takings that might require compensation under the Fifth 
Amendment to the U.S. Constitution.

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 Federal agencies to 
review most disseminations of information to the public under 
guidelines established by each agency pursuant to general guidelines 
issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 
2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 
2002). DOE has reviewed today's direct 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 
at OMB, a Statement of Energy Effects for any significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that: (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any significant energy action, the 
agency must give a detailed statement of any adverse effects on energy 
supply, distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use.
    DOE has concluded that today's regulatory action, which sets forth 
energy conservation standards for residential dishwashers, is not a 
significant energy action because the amended standards are not likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy, nor has it been designated as such by the Administrator 
at OIRA. Accordingly, DOE has not prepared a Statement of Energy 
Effects on the direct 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 Policy (OSTP), issued its Final Information 
Quality Bulletin for Peer Review (the Bulletin). 70 FR 2664 (Jan. 14, 
2005). The Bulletin establishes that certain scientific information 
shall be peer reviewed by qualified specialists before it is 
disseminated by the Federal Government, including influential 
scientific information related to agency regulatory actions. The 
purpose of the bulletin is to enhance the quality and credibility of 
the Government's scientific information. Under the Bulletin, the energy 
conservation standards rulemaking analyses are ``influential scientific 
information,'' which the Bulletin defines as scientific information the 
agency reasonably can determine will have, or does have, a clear and 
substantial impact on important public policies or private sector 
decisions. 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: 
www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the 
promulgation of this rule prior to its effective date. The report will 
state that it has been determined that the rule is not a ``major rule'' 
as defined by 5 U.S.C. 804(2).

VII. Approval of the Office of the Secretary

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

List of Subjects

10 CFR Part 429

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, and Reporting 
and recordkeeping requirements.

10 CFR Part 430

    Administrative practice and procedure, Confidential business 
information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, and Small businesses.

    Issued in Washington, DC, on May 11, 2012.
David Danielson,
Assistant Secretary of Energy, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE amends parts 429 and 
430, of title 10 of the Code of Federal Regulations, to read as set 
forth below:

PART 429--CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER 
PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT

0
1. The authority citation for part 429 continues to read as follows:

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

0
2. In Sec.  429.19 revise paragraph (b)(2) to read as follows:

Sec.  429.19  Dishwashers.

* * * * *
    (b) * * *
    (2) Pursuant to Sec.  429.12(b)(13), a certification report shall 
include the following public product-specific information: The 
estimated annual energy use in kilowatt hours per year (kWh/yr) and the 
water consumption in gallons per cycle.
* * * * *

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
3. The authority citation for part 430 continues to read as follows:

[[Page 31963]]

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

0
4. In Sec.  430.32 add paragraph (f)(3) to read as follows:

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

* * * * *
    (f) * * *
    (3) All dishwashers manufactured on or after May 30, 2013, shall 
meet the following standard--
    (i) Standard size dishwashers shall not exceed 307 kwh/year and 5.0 
gallons per cycle.
    (ii) Compact size dishwashers shall not exceed 222 kwh/year and 3.5 
gallons per cycle.
* * * * *
[FR Doc. 2012-12340 Filed 5-29-12; 8:45 am]
BILLING CODE 6450-01-P
```