```

[Federal Register Volume 80, Number 131 (Thursday, July 9, 2015)]
[Proposed Rules]
[Pages 39485-39539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-16336]

[[Page 39485]]

Vol. 80

Thursday,

No. 131

July 9, 2015

Part II

Department of Energy

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

10 CFR Parts 429 and 431

Energy Conservation Program: Energy Conservation Standards for 
Commercial Prerinse Spray Valves; Proposed Rule

Federal Register / Vol. 80 , No. 131 / Thursday, July 9, 2015 / 
Proposed Rules

[[Page 39486]]

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DEPARTMENT OF ENERGY

10 CFR Parts 429 and 431

[Docket Number EERE-2014-BT-STD-0027]
RIN 1904-AD31

Energy Conservation Program: Energy Conservation Standards for 
Commercial Prerinse Spray Valves

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

ACTION: Notice of proposed rulemaking (NOPR) and announcement of public 
meeting.

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

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 
commercial prerinse spray valves (CPSVs). EPCA also requires the U.S. 
Department of Energy (DOE) to determine whether more-stringent, amended 
standards would be technologically feasible and economically justified, 
and would save a significant amount of energy. In this notice, DOE 
proposes amended energy conservation standards for commercial prerinse 
spray valves. The notice also announces a public meeting to receive 
comment on these proposed standards and associated analyses and 
results.

DATES: 
    Meeting: DOE will hold a public meeting on Tuesday, July 28, 2015. 
The standards meeting will start immediately following the test 
procedure meeting. The meeting will also be broadcast as a webinar. See 
section VII ``Public Participation'' for webinar registration 
information, participant instructions, and information about the 
capabilities available to webinar participants.
    Comments: DOE will accept comments, data, and information regarding 
this NOPR before and after the public meeting, but no later than 
September 8, 2015. See section VII ``Public Participation'' for 
details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585.
    Instructions: Any comments submitted must identify the NOPR for 
Energy Conservation Standards for commercial prerinse spray valves, and 
provide docket number EERE-2014-BT-STD-0027 and/or regulatory 
information number (RIN) number 1904-AD31. Comments may be submitted 
using any of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: SprayValves2014STD0027@ee.doe.gov. Include the docket 
number and/or RIN in the subject line of the message. Submit electronic 
comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and 
avoid the use of special characters or any form of encryption.
    3. Postal Mail: Ms. Brenda Edwards, U.S. Department of Energy, 
Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue 
SW., Washington, DC 20585-0121. If possible, please submit all items on 
a CD, in which case it is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed previously and by email to 
Chad_S_Whiteman@omb.eop.gov.
    No faxes will be accepted. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see 
section VII of this document (``Public Participation'').
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at www.regulations.gov. 
All documents in the docket are listed in the www.regulations.gov 
index. However, some documents listed in the index, such as those 
containing information that is exempt from public disclosure, may not 
be publicly available.
    A link to the docket Web page can be found at: 
www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100. This Web page will contain a link to the 
docket for this notice on the www.regulations.gov site. The 
www.regulations.gov Web page will contain simple instructions on how to 
access all documents, including public comments, in the docket. See 
section VII, ``Public Participation'' for further information on how to 
submit comments through www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: 
    Mr. James Raba, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202) 586-8654. Email: jim.raba@ee.doe.gov.
    Mr. Peter Cochran, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 586-7935. Email: Peter.Cochran@hq.doe.gov.
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
Brenda.Edwards@ee.doe.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Synopsis of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits and Costs
II. Introduction
    A. Authority
    B. Background
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Test Procedure
    C. Technological Feasibility
    D. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    E. Economic Justification
    1. Economic Impact on Manufacturers and Consumers
    2. Savings in Operating Costs Compared to Increase in Price
    3. Energy Savings
    4. Lessening of Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need for National Energy Conservation
    7. Other Factors
    F. Rebuttable Presumption
IV. Methodology and Discussion of Related Comments
    A. Market and Technology Assessment
    1. Market Assessment
    2. Efficiency Metrics
    3. Product Classes
    4. Technology Assessment
    1. Backflow Preventers
    2. Specially Designed Spray Patterns
    B. Screening Analysis
    1. Addition of Flow Control Insert
    2. Smaller Spray Hole Area
    3. Aerators
    4. Additional Valves
    5. Changing Spray Hole Shape
    6. Venturi Meter to Orifice Plate Nozzle Geometries
    C. Engineering Analysis

[[Page 39487]]

    1. Engineering Approach
    2. Product Classes
    3. Baseline and Max-Tech Models
    4. Manufacturing Cost Analysis
    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 and Water Consumption
    4. Energy Prices
    5. Water and Wastewater Prices
    6. Maintenance and Repair Costs
    7. Product Lifetime
    8. Discount Rates
    9. No-New-Standards Case Efficiency Distribution
    10. Payback Period Analysis
    11. Rebuttable-Presumption Payback Period
    G. Shipments
    H. National Impact Analysis
    1. National Energy and Water Savings
    2. Forecasted Efficiency in the No-Standards Case and Standards 
Cases
    3. Net Present Value Analysis
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    3. Discussion of Comments
    4. Manufacturer Interviews
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    2. Valuation of Other Emissions Reductions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
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. Summary of National Economic Impacts
    8. Other Factors
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Commercial 
Prerinse Spray Valves
    2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description and Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    4. Significant Alternatives to the Rule
    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
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements For 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Synopsis of the Proposed Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified), 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles.\2\ These products include commercial prerinse spray 
valves (CPSV), the subject of this document.\3\
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
part B was redesignated part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the Energy Efficiency Improvement Act of 2015, 
Public Law 114-11 (Apr. 30, 2015).
    \3\ Because Congress included commercial prerinse spray valves 
in part A of Title III of EPCA, the consumer product provisions of 
part A (not the industrial equipment provisions of part A-1) apply 
to commercial prerinse spray valves. However, because commercial 
prerinse spray valves are commonly considered to be commercial 
equipment, as a matter of administrative convenience and to minimize 
confusion among interested parties, DOE placed the requirements for 
commercial prerinse spray valves into subpart O of 10 CFR part 431. 
Part 431 contains DOE regulations for commercial and industrial 
equipment.
---------------------------------------------------------------------------

    Pursuant to EPCA, any new or amended energy conservation standard 
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, the new or amended standard must 
result in a significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B)) EPCA also provides that not later than 6 years after 
issuance of any final rule establishing or amending a standard, DOE 
must publish either a notice of determination that standards for the 
product do not need to be amended, or a notice of proposed rulemaking 
(NOPR) including new proposed energy conservation standards. (42 U.S.C. 
6295(m)(1))
    In accordance with these and other statutory provisions discussed 
in this notice, DOE proposes amended energy conservation standards for 
commercial prerinse spray valves. The proposed standards, which are 
described in terms of the maximum water flow rate (in gallons per 
minute, gpm) for each product class (defined by spray force in ounce-
force, ozf), are shown in Table I.1. The proposed standards, if 
adopted, would apply to all products listed in Table I.1 and 
manufactured in, or imported into, the United States on or after the 
date 3 years after the publication of the final rule for this 
rulemaking. For purposes of the analyses conducted in support of this 
NOPR, DOE used 2015 as the expected year of publication of any final 
standards and 2018 as the expected compliance year.\4\
---------------------------------------------------------------------------

    \4\ Because the anticipated compliance date is late in the year 
2018, for analytical purposes, DOE conducted its analyses utilizing 
shipments associated with the 2019-2048 period. The analytical 
effect is equivalent to the use of a 2019 compliance year. In the 
MIA, 2019 is referred to as the ``analysis compliance year.''

    Table I.1--Proposed Energy Conservation Standards for Commercial
            Prerinse Spray Valves (Compliance Starting 2018)
------------------------------------------------------------------------
                                                           Maximum water
                      Product class                          flow rate
                                                               (gpm)
------------------------------------------------------------------------
1. Light duty (5 ozf and 8 ozf)..................................            1.24
------------------------------------------------------------------------

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed amended standards on consumers of commercial prerinse spray 
valves, as measured by the average life-cycle cost (LCC) savings and 
the simple payback period (PBP).\5\ The average LCC savings are 
positive for all product classes. The PBP for all product classes is 
also less than the projected average CPSV lifetime of approximately 5 
years.
---------------------------------------------------------------------------

    \5\ The average LCC savings are measured relative to the no-new-
standards case efficiency distribution, which depicts the CPSV 
market in the compliance year (see section IV.F.9). The simple PBP, 
which is designed to compare specific efficiency levels, is measured 
relative to the baseline CPSV model (see section IV.C.1).

[[Page 39488]]

     Table I.2--Impacts of Proposed Energy Conservation Standards on
              Consumers of Commercial Prerinse Spray Valves
------------------------------------------------------------------------
                                            Average LCC
              Product class                   savings     Simple payback
                                              (2014$)     period (years)
------------------------------------------------------------------------
1. Light duty (5 ozf and 8 ozf)..................             667             0.0
------------------------------------------------------------------------

    DOE's analysis of the impacts of the proposed standards on 
consumers is described in section IV.F of this notice.

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 (2015 to 2048). Using a real discount rate of 6.9 
percent,\6\ DOE estimates that the INPV for manufacturers of commercial 
prerinse spray valves is $9.1 million in 2014$. Under the proposed 
standards, DOE expects that manufacturers may lose up to 21.6 percent 
of their INPV, which is approximately $2.0 million. Additionally, based 
on its analysis of available information, DOE does not expect any plant 
closings or significant loss of employment.
---------------------------------------------------------------------------

    \6\ The discount rate is an industry average discount rate, 
which was estimated using publically available industry financial 
data for companies that sell CPSVs in the U.S. Data sources are 
listed in section IV.J.1.
---------------------------------------------------------------------------

C. National Benefits and Costs 7
---------------------------------------------------------------------------

    \7\ All monetary values in this section are expressed in 2014 
dollars and are discounted to 2015, unless otherwise noted.
---------------------------------------------------------------------------

    DOE's analyses indicate that the proposed standards would save a 
significant amount of energy and water. The lifetime savings for 
commercial prerinse spray valves purchased in the 30-year period (2019 
to 2048) amount to 0.10 quadrillion Btu (quads) \8\ and 120.18 billion 
gallons of water. This represents a savings of 9 percent relative to 
the energy use of this product in the no-new-standards case.\9\ This 
also represents a savings of 9 percent relative to the water use of 
this product in the no-new-standards case.
---------------------------------------------------------------------------

    \8\ A quad is equal to 10\15\ British thermal units (Btu).
    \9\ The no-new-standards case assumptions are described in 
section IV.F.9. The no-new-standards case represents a projection of 
energy consumption in the absence of amended mandatory efficiency 
standards, and it considers market forces and policies that may 
affect future demand for more efficient products.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the proposed standards for commercial prerinse spray valves 
ranges from $0.71 billion (at a 7-percent discount rate) to $1.46 
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 commercial prerinse spray valves 
purchased in 2019-2048.
    In addition, the proposed standards would have significant 
environmental benefits.\10\ The described energy savings would result 
in cumulative emission reductions (over the same period as for energy 
savings) of 5.76 million metric tons (Mt) \11\ of carbon dioxide 
(CO2), 46.94 thousand tons of methane (CH4), 2.43 
thousand tons of sulfur dioxide (SO2), 13.22 thousand tons 
of nitrogen oxides (NOX), 0.04 thousand tons of nitrous 
oxide (N2O), and 0.01 tons of mercury (Hg).\12\ The 
cumulative reduction in CO2 emissions through 2030 amounts 
to 1.83 Mt, which is equivalent to the emissions resulting from the 
annual electricity use of about 251,719 homes.
---------------------------------------------------------------------------

    \10\ The emission reductions calculated here result from the 
energy savings only. The emission reductions from water savings are 
not calculated as part of this analysis.
    \11\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \12\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2014 (AEO2014) reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2013.
---------------------------------------------------------------------------

    The value of the CO2 reduction 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 Federal 
interagency process.\13\ The derivation of the SCC values is discussed 
in section IV.L of this notice. Using discount rates appropriate for 
each set of SCC values, DOE estimates the present monetary value of the 
CO2 emissions reduction is between $0.04 billion and $0.61 
billion. DOE also estimates the present monetary value of the 
NOX emissions reduction is between $1.80 and $18.48 million 
at a 7-percent discount rate and between $3.52 and $36.15 million at a 
3-percent discount rate.\14\
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    \13\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
    \14\ DOE is currently investigating valuation of avoided Hg and 
SO2 emissions.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic costs and benefits 
expected to result from the proposed standards for commercial prerinse 
spray valves.

 Table I.3--Summary of National Economic Benefits and Costs of Proposed
  Energy Conservation Standards for Commercial Prerinse Spray Valves *
------------------------------------------------------------------------
                                           Present value
                Category                     (million      Discount rate
                                              2014$)            (%)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings..................             708               7
                                                   1,459               3
CO2 Reduction Monetized Value ($12.2/                 44               5
 metric ton case) * *...................
CO2 Reduction Monetized Value ($41.1/                196               3
 metric ton case) * *...................
CO2 Reduction Monetized Value ($63.3/                309             2.5
 metric ton case) * *...................
CO2 Reduction Monetized Value ($121/                 606               3
 metric ton case) * *...................

[[Page 39489]]

 
NOX Reduction Monetized Value (at $2,723/             10               7
 ton)...................................
                                                      20               3
                                         -------------------------------
    Total Benefits [dagger].............             914               7
                                                   1,675               3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Manufacturer Conversion Costs [Dagger]..          2 to 3             N/A
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction Monetized              914               7
 Value [dagger].........................
                                                   1,675               3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with commercial
  prerinse spray valves shipped in 2019-2048. These results include
  benefits to consumers which accrue after 2048 from the products
  purchased in 2019-2048. The results account for the incremental
  variable and fixed costs incurred by manufacturers due to the proposed
  standard, some of which may be incurred in preparation for the rule.
* * The CO2 values represent global monetized values of the SCC, in
  2014$ per metric ton, in 2015 under several scenarios of the updated
  SCC values. The first three cases use the averages of SCC
  distributions calculated using 5 percent, 3 percent, and 2.5 percent
  discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3 percent
  discount rate.
[dagger] Total benefits for both the 3 percent and 7 percent cases are
  derived using the series corresponding to average SCC with 3 percent
  discount rate. Manufacturer Conversion Costs are not included in the
  Total Net Benefits calculations.
[Dagger] The lower value of the range represents costs associated with
  the Sourced Components conversion cost scenario. The upper value
  represents costs associated with the Fabricated Components conversion
  cost scenario. Manufacturer conversion cost estimates are based on the
  engineering analysis and product teardowns conducted in 2014, and,
  therefore, have not been discounted. In the GRIM, these values are
  spread over the 3-year conversion period leading up to the compliance
  year.

    The benefits and costs of these proposed standards, for commercial 
prerinse spray valves sold in 2019-2048, can also be expressed in terms 
of annualized values. The annualized monetary values are the sum of: 
(1) The annualized national economic value of the benefits from 
consumer operation of products that meet the proposed standards 
(consisting primarily of operating cost savings from using less energy 
and water, minus increases in product purchase and installation costs, 
which is another way of representing consumer NPV); and (2) the 
annualized monetary value of the benefits of emission reductions, 
including CO2 emission reductions.\15\
---------------------------------------------------------------------------

    \15\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2015, the year 
used for discounting the NPV of total customer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2015. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the first year of the analysis period, which yields the same 
present value.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 emission 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, whereas 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 different time frames for analysis. The national operating 
cost savings is measured for the lifetime of commercial prerinse spray 
valves shipped in 2019-2048. Because CO2 emissions have a 
very long residence time in the atmosphere,\16\ the SCC values in 
future years reflect future CO2-emissions impacts that 
continue beyond 2100.
---------------------------------------------------------------------------

    \16\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of 
fossil-fuel particulate black carbon and organic matter, possibly 
the most effective method of slowing global warming,' '' J. Geophys. 
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------

    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.4. 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 average SCC series that has a 
value of $41.1 per metric ton in 2015), there are no increased product 
costs associated with the standards proposed in this rule, while the 
benefits are $69.90 million per year in reduced product operating 
costs, $10.94 million per year in CO2 reductions, and $1.00 
million per year in reduced NOX emissions. In this case, the 
net benefit amounts to $81.85 million per year. Using a 3-percent 
discount rate for all benefits and costs as well as the average SCC 
series that has a value of $41.1 per metric ton in 2015, there are no 
increased product costs associated with the standards proposed in this 
rule, while the benefits are $81.32 million per year in reduced 
operating costs, $10.94 million in CO2 reductions, and $1.11 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $93.37 million per year.

[[Page 39490]]

Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Prerinse Spray
                                                     Valves
----------------------------------------------------------------------------------------------------------------
                                                                          Million 2014$/year
                                                     -----------------------------------------------------------
                                   Discount rate (%)                       Low net benefits    High net benefits
                                                      Primary estimate *      estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.  7.................  69.90.............  65.90.............  72.70
                                  3.................  81.32.............  75.92.............  85.10
CO2 Reduction at $12.0/t * *....  5.................  3.33..............  3.33..............  3.33
CO2 Reduction at $40.5/t * *....  3.................  10.94.............  10.94.............  10.94
CO2 Reduction at $62.4/t * *....  2.5...............  15.91.............  15.91.............  15.91
CO2 Reduction at $119/t * *.....  3.................  33.81.............  33.81.............  33.81
NOX Reduction at $2,723/ton.....  7.................  1.00..............  1.00..............  1.00
                                  3.................  1.11..............  1.11..............  1.11
----------------------------------------------------------------------------------------------------------------
    Total[dagger]...............  7 plus CO2 range..  74 to 105.........  70 to 101.........  77 to 108
                                  7.................  81.85.............  77.84.............  84.64
                                  3 plus CO2 range..  86 to 116.........  80 to 111.........  90 to 120
                                  3.................  93.37.............  87.96.............  97.15
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs     7.................  0.16 to 0.24......  0.16 to 0.24......  0.16 to 0.24
 [dagger].
                                  3.................  0.10 to 0.15......  0.10 to 0.15......  0.10 to 0.15
----------------------------------------------------------------------------------------------------------------
                                               Total Net Benefits
----------------------------------------------------------------------------------------------------------------
    Total [Dagger]..............  7 plus CO2 range..  74 to 105.........  70 to 101.........  77 to 108
                                  7.................  81.85.............  77.84.............  84.64
                                  3 plus CO2 range..  86 to 116.........  80 to 111.........  90 to 120
                                  3.................  93.37.............  87.96.............  97.15
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with commercial prerinse spray valves shipped
  in 2019-2048. These results include benefits to consumers which accrue after 2048 from the products purchased
  in 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due
  to the proposed standard, some of which may be incurred in preparation for the rule. The primary, low
  benefits, and high benefits estimates utilize projections of energy prices from the AEO2014 reference case,
  low estimate, and high estimate, respectively.
* * The CO2 values represent global monetized values of the SCC, in 2014$, in 2015 under several scenarios of
  the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5
  percent, 3 percent, and 2.5 percent discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3 percent discount rate.
[dagger] The lower value of the range represents costs associated with the Sourced Components conversion cost
  scenario. The upper value represents costs for the Fabricated Components scenario.
[Dagger] Total benefits for both the 3 percent and 7 percent cases are derived using the series corresponding to
  the average SCC with 3 percent discount rate. In the rows labeled ``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. Manufacturer Conversion Costs are not included in the Net Benefits
  calculations.

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that products 
achieving these standard levels are already commercially available for 
the product classes covered by this proposal. See chapter 8 of the NOPR 
technical support document (TSD) for more discussion of the no-new-
standards case efficiency distribution. Based on DOE's analyses, DOE 
has tentatively concluded that the benefits of the proposed standards 
to the nation (energy savings, water savings, positive NPV of consumer 
benefits, consumer LCC savings, and emission reductions) would outweigh 
the burdens (loss of INPV for manufacturers).
    DOE also considered both more and less stringent energy efficiency 
levels (EL) as trial standard levels (TSL), and will continue to 
consider them in this rulemaking. However, DOE has tentatively 
concluded that the potential burdens of the more stringent energy 
efficiency levels would outweigh the projected benefits. Based on 
consideration of the public comments DOE receives in response to this 
notice and related information collected and analyzed during the course 
of this rulemaking effort, DOE may adopt energy efficiency levels 
presented in this notice that are either higher or lower than the 
proposed standards, or some combination of levels that incorporate the 
proposed standards in part.

II. Introduction

    The following section discusses the statutory authority underlying 
this proposal, as well as some of the relevant historical background 
related to the establishment of standards for commercial prerinse spray 
valves.

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA), Public Law 94-163 (42 U.S.C. 6291-6309, as codified) 
established the Energy Conservation Program for Consumer Products Other 
Than Automobiles. As part of this program, EPCA prescribed energy 
conservation standards for commercial prerinse spray valves. (42 U.S.C. 
6295(dd)) Under 42 U.S.C. 6295(m), DOE must periodically review its 
already established energy conservation standards for a covered

[[Page 39491]]

product. DOE is undertaking this rulemaking to meet this EPCA 
requirement.
    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 Secretary or the Federal 
Trade Commission, as appropriate, may prescribe labeling requirements 
for commercial prerinse spray valves. (42 U.S.C. 6294(a)(5)(A)) 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(b)(3)) 
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. (42 U.S.C. 
6295(s)) The DOE test procedure for commercial prerinse spray valves 
currently appears at title 10 of the Code of Federal Regulations (CFR) 
part 431, subpart O. DOE recently proposed updates to its CPSV test 
procedure in a proposed rule issued for prepublication on June 05, 2015 
(80 FR 35874).
    DOE must follow specific statutory criteria for prescribing amended 
standards for covered products. As indicated previously, 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)(B)) Moreover, DOE may not 
prescribe a standard for certain products, including commercial 
prerinse spray valves, if no test procedure has been established for 
the product. (42 U.S.C. 6295(o)(3)(A))
    In deciding whether a proposed 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 by considering, 
to the greatest extent practicable, the following seven factors:
    (1) The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    (2) The savings in operating costs throughout the estimated average 
life of the covered 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) through (VII))
    EPCA, as codified, also 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 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 at the time of 
the Secretary's finding. (42 U.S.C. 6295(o)(4))
    Further, EPCA, as codified, 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 water savings the consumer will 
receive during the first year that the standard applies, as calculated 
under the applicable test procedure. (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 products 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 DOE determines that products within such group: (1) 
Consume a different kind of energy from that consumed by other covered 
products within such type (or class); or (2) 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. (42 U.S.C. 6294(q)(1)) In determining whether a performance-
related feature justifies a different standard for a group of products, 
DOE shall consider such factors as the utility to the consumer of the 
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) though (c)) California, however, has 
a statutory exemption to preemption for commercial prerinse spray valve 
standards adopted by the California Energy Commission before January 1, 
2005. (42 U.S.C. 6297(c)(7)) As a result, while federal commercial 
prerinse spray valve standards, including any amended standards that 
may result from this rulemaking, apply in California, California's 
commercial prerinse spray valve standards also apply as they are exempt 
from preemption. DOE may also grant waivers of Federal preemption for 
particular State laws or regulations, in accordance with the procedures 
and other provisions set forth under EPCA. (42 U.S.C. 6297(d))
    Finally, pursuant to the amendments contained in the Energy 
Independence and Security Act of 2007 (EISA 2007), Public Law 110-140, 
any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010, is required to 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

[[Page 39492]]

separate standard for such energy use for that product. (42 U.S.C. 
6295(gg)(3)(A) and (B)) DOE's current test procedures and standards for 
commercial prerinse spray valves do not address standby mode and off 
mode energy use, which are not applicable for this product. Similarly, 
in this rulemaking, DOE only addresses active mode energy consumption 
because commercial prerinse spray valves only consume energy and water 
in active mode.

B. Background

    In a final rule published on October 18, 2005 (``2005 CPSV final 
rule''), DOE codified the current energy conservation standards for 
commercial prerinse spray valves that were prescribed by the Energy 
Policy Act of 2005, Public Law 109-58 (August 8, 2005). 70 FR 60407, 
60410. The 2005 CPSV final rule established that all commercial 
prerinse spray valves manufactured on or after January 1, 2006, must 
have a flow rate of not more than 1.6 gpm.
    DOE is conducting the current energy conservation standards 
rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 
years of issuing any final rule establishing or amending a standard, 
DOE shall publish either a notice of determination that amended 
standards are not needed or a NOPR proposing amended standards.
    DOE initiated the current rulemaking on September 11, 2014, by 
issuing an analytical Framework document, ``Rulemaking Framework for 
Commercial Prerinse Spray Valves'' (``2014 Framework document''), which 
described the procedural and analytical approaches DOE anticipated 
using to evaluate energy conservation standards for commercial prerinse 
spray valves. 79 FR 54213. DOE also announced a public meeting to 
discuss the proposed analytical framework for the rulemaking and 
invited written comments from the public. 79 FR 54213. The 2014 
Framework document is available at: www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0027-0001.
    The 2014 Framework document explained the issues, analyses, and 
process that DOE anticipated using to develop energy conservation 
standards for commercial prerinse spray valves. DOE held a public 
meeting on September 30, 2014, to solicit comments from interested 
parties regarding DOE's analytical approach. Comments received in 
response to DOE's proposed analytical approach have helped DOE identify 
and resolve issues relevant to energy conservation standards for 
commercial prerinse spray valves, and have informed the analyses 
presented in this notice. DOE discusses and responds to the comments 
received in response to the 2014 Framework document in section IV.

III. General Discussion

A. Product Classes and Scope of Coverage

    EPCA defines the term ``commercial prerinse spray valve'' as a 
``handheld device designed and marketed for use with commercial 
dishwashing and ware washing equipment that sprays water on dishes, 
flatware, and other food service items for the purpose of removing food 
residue before cleaning the items.'' (42 U.S.C. 6291(33)(A) In the 2015 
CPSV test procedure NOPR, DOE is proposing to modify the CPSV 
definition to redefine the scope of coverage, as authorized under 42 
U.S.C. 6291(33)(B). For specific details on the proposed modifications 
to the CPSV definition, including how to submit comments see the test 
procedure NOPR (80 FR 35874).
    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 justify 
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE considers such 
factors as the utility of the feature to the consumer and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q)) Different energy 
conservation standards may apply to different product classes.
    Currently, all covered commercial prerinse spray valves are 
included in a single product class that is subject to a 1.6-gpm 
standard for maximum flow rate. 10 CFR 431.266. In the 2014 Framework 
document, DOE considered whether to retain a single product class for 
all commercial prerinse spray valves, or to establish separate product 
classes based on the statutory criteria in 42 U.S.C. 6295(q) and 
comments from interested parties. See sections IV.A.2 and IV.C.2 for 
more discussion on the product classes addressed in this NOPR.

B. Test Procedure

    EPCA established the current maximum flow rate for commercial 
prerinse spray valves and prescribed an industry test procedure, 
American Society for Testing and Materials (ASTM) Standard F2324-03, to 
measure the flow rate. (42 U.S.C. 6295(dd), 42 U.S.C. 6293(b)(14)) In a 
final rule published December 8, 2006, DOE incorporated by reference 
ASTM Standard F2324-03 under 10 CFR 431.263, and prescribed it as the 
uniform test method to measure the flow rate of commercial prerinse 
spray valves under 10 CFR 431.264. 71 FR 71340, 71374. In a final rule 
published October 23, 2013, DOE incorporated by reference ASTM Standard 
F2324-03 (2009) for testing commercial prerinse spray valves, which 
updated the 2003 version. 78 FR 62970, 62980.
    In 2013, ASTM amended Standard F2324-03 (2009) to replace the 
cleanability test with a spray force test, based on research conducted 
by the U.S. Environmental Protection Agency's (EPA) WaterSense[supreg] 
program.\17\
---------------------------------------------------------------------------

    \17\ EPA WaterSense program, WaterSense Specification for 
Commercial Prerinse Spray Valves Supporting Statement, Version 1.0 
(Sept. 19, 2013) (Available at: http://www.epa.gov/watersense/partners/prsv_final.html).
---------------------------------------------------------------------------

    In the 2015 CPSV test procedure NOPR, DOE proposed to incorporate 
by reference the amended ASTM Standard F2324-13. Additionally, DOE 
proposed requiring spray force to be measured based on the procedure in 
ASTM Standard F2324-13. For commercial prerinse spray valves with 
multiple spray patterns, DOE proposed that both flow rate and spray 
force be measured for each possible spray pattern.

C. Technological Feasibility

    In each energy conservation standards rulemaking, DOE conducts a 
screening analysis based on information gathered on all current 
technology options and working prototype designs that could improve the 
efficiency of the products 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 options 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, and service; (2) adverse 
impacts on product utility or availability; and (3) adverse impacts on 
health or safety. 10 CFR part 430, subpart C, appendix A, section 
4(a)(4)(ii) through (iv). Section IV.B of this notice discusses the 
results of the screening analysis for commercial prerinse spray valves, 
particularly the

[[Page 39493]]

technology options 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 
NOPR Technical Support Document (TSD).
    When DOE proposes to adopt an amended standard for a type or class 
of covered products, it must determine the maximum improvement in 
energy efficiency or maximum reduction in energy use that is 
technologically feasible for such products. (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 commercial prerinse spray valves, using the design 
parameters for the most efficient products available on the market or 
in working prototypes. The max-tech levels that DOE determined for this 
rulemaking are described in chapter 5 of the NOPR TSD.

D. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the commercial 
prerinse spray valves purchased in the 30-year period that begins in 
the expected year of compliance with any amended standards (2019-2048). 
The savings are measured over the entire lifetime of commercial 
prerinse spray valves purchased in the 30-year analysis period. DOE 
quantified the energy savings attributable to each TSL as the 
difference in energy consumption between each standards case and the 
no-new-standards case. The no-new-standards case represents a 
projection of energy consumption in the absence of amended mandatory 
efficiency standards, and it considers market forces and policies that 
may affect future demand for more efficient products.
    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from amended standards. The NIA spreadsheet 
model (described in section IV.H of this notice) calculates energy 
savings in site energy, which is the energy consumed by a product at 
the location where it is used. For electricity, DOE calculates national 
energy savings in terms of primary energy savings, which is the savings 
in the energy that is used to generate and transmit the site 
electricity. To calculate primary energy savings, DOE derived annual 
conversion factors from the model used to prepare the Energy 
Information Administration's (EIA) Annual Energy Outlook 2014 
(AEO2014).\18\
---------------------------------------------------------------------------

    \18\ U.S. Department of Energy--Energy Information 
Administration, Annual Energy Outlook 2014 with Projections to 2040 
(Available at: www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

    For electricity and natural gas and oil, DOE also calculates full-
fuel-cycle (FFC) energy savings. As discussed in DOE's statement of 
policy and notice of policy amendment, the FFC metric includes the 
energy consumed in extracting, processing, and transporting primary 
fuels (i.e., coal, natural gas, petroleum fuels), and thus presents a 
more complete picture of the impacts of energy efficiency standards. 76 
FR 51281 (August 18, 2011), as amended at 77 FR 49701 (August 17, 
2012). For FFC energy savings, DOE's approach is based on the 
calculation of an FFC multiplier for each of the energy types used by 
covered products. For more information, see section IV.H.1 of this 
notice.
2. Significance of Savings
    To adopt more stringent standards for a covered product, DOE must 
determine that such action would result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is 
not defined in EPCA, the U.S. Court of Appeals for DC Circuit, in 
Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), indicated that Congress intended ``significant'' 
energy savings in the context of EPCA to be savings that were not 
``genuinely trivial.'' The energy savings for the proposed standards 
(presented in section V.B.3.a of this notice) are nontrivial, and, 
therefore, DOE considers them ``significant'' within the meaning of 
section 325 of EPCA.

E. Economic Justification

    EPCA provides seven factors to be evaluated in 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.
1. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J. 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 
period. The industry-wide impacts analyzed include: (1) INPV, which 
values the industry on the basis of expected future cash flows, (2) 
cash flows by year, (3) changes in revenue and income, and (4) 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 LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national net present value of 
the economic impacts applicable to a particular rulemaking. DOE also 
evaluates the LCC impacts of potential standards on identifiable 
subgroups of consumers that may be affected disproportionately by a 
national standard.
2. Savings in Operating Costs Compared to Increase in Price
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product compared 
to any increases in the price of the covered products that are likely 
to result from the imposition of the standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including water, energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. The LCC and PBP analysis requires a variety of inputs, 
such as product prices, product water and energy consumption, water and 
sewer prices, energy prices, maintenance and repair costs, product 
lifetime, and consumer discount rates. 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. For its analysis, DOE assumes that consumers will purchase 
the covered

[[Page 39494]]

product in the first year of compliance with amended standards.\19\
---------------------------------------------------------------------------

    \19\ Because the anticipated compliance date is late in the 
expected compliance year, 2018, for analytical purposes, DOE assumes 
that customers will purchase the CPSV equipment that meets the 
potential amended standards in 2019. In other words, the first year 
of the analysis period is 2019.
---------------------------------------------------------------------------

    The LCC savings for the considered efficiency levels are calculated 
relative to a no-new-standards case that reflects projected market 
trends in the absence of amended standards. DOE identifies the 
percentage of consumers estimated to receive LCC savings or experience 
a LCC increase, in addition to the average LCC savings associated with 
a particular standard level. DOE's LCC and PBP analysis is discussed in 
further detail in section IV.F of this notice.
3. Energy Savings
    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)) As discussed in section IV.H.1, DOE uses 
spreadsheet models to project national energy savings.
4. Lessening of Utility or Performance of Products
    In determining whether a proposed standard is economically 
justified, DOE evaluates any lessening of the utility or performance of 
the considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
available to DOE, the standards proposed in this notice would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
5. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V)) DOE will transmit a copy of this proposed rule to 
the Attorney General with a request that the Department of Justice 
(DOJ) provide its determination to the Secretary within 60 days of the 
publication of a proposed rule, together with an analysis of the nature 
and extent of the impact. (42 U.S.C. 6295(o)(2)(B)(ii)). DOE will 
publish and respond to the Attorney General's determination in the 
final rule.
6. Need for National Energy Conservation
    DOE also considers the need for national energy conservation in 
determining whether a new or amended standard is economically 
justified. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) The energy savings from the 
proposed standards are likely to provide improvements to the security 
and reliability of the nation's energy system. Reductions in the demand 
for electricity may also 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, as discussed in section IV.M.
    The proposed 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 and use. DOE 
conducts an emissions analysis to estimate how standards may affect 
these emissions and reports the emissions impacts from each TSL it 
considered in section V.B.6. DOE also reports estimates of the economic 
value of emissions reductions resulting from the considered TSLs in 
section IV.L.
7. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
To the extent that interested parties submit any relevant information 
regarding economic justification that does not fit into the other 
categories described in the previous sections, DOE could consider such 
information under ``other factors.''

F. 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 effects that proposed 
energy conservation standards would have on the PBP for consumers. 
These analyses include, but are not limited to, the 3-year PBP 
contemplated under the rebuttable-presumption test. The rebuttable 
presumption payback calculation is discussed in section IV.F.11 of this 
proposed rule.

IV. Methodology and Discussion of Related Comments

    DOE used several spreadsheet tools to estimate the impact of the 
proposed standards. One of these spreadsheet tools calculates LCCs and 
PBPs of potential amended energy conservation standards. Another 
provides shipments forecasts and then calculates impacts of potential 
standards on national energy savings and net present value. The 
Department also assessed manufacturer impacts, largely through the use 
of the Government Regulatory Impact Model (GRIM) spreadsheet tool. The 
spreadsheets are available online at: www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=100.
    Additionally, DOE estimated the impacts of amended standards for 
commercial prerinse spray valves on utilities and the environment. DOE 
used a version of EIA's National Energy Modeling System (NEMS) for the 
utility and environmental analyses.\20\ 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. The version of NEMS used for appliance standards analysis, 
which makes minor modifications to the AEO version, is called NEMS-
BT.\21\ NEMS-BT accounts for the interactions among the various energy 
supply and demand sectors and the economy as a whole.
---------------------------------------------------------------------------

    \20\ For more information on NEMS, refer to the U.S. Department 
of Energy, Energy Information Administration documentation. A useful 
summary is National Energy Modeling System: An Overview 2009, DOE/
EIA-0581(2009) (October 2009) (Available at: http://www.eia.doe.gov/oiaf/aeo/overview/index.html).
    \21\ 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 
Office.)
---------------------------------------------------------------------------

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the product 
concerned, including the purpose of the product, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the product. 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 commercial prerinse spray valves

[[Page 39495]]

rulemaking include: (1) Market assessment, (2) efficiency metrics, (3) 
product classes, and (4) technology assessment. The key findings of 
DOE's market assessment are summarized in the following sections. See 
chapter 3 of the NOPR TSD for further discussion of the market and 
technology assessment.
1. Market Assessment
    As part of the market assessment, DOE examined manufacturers, trade 
associations, and the quantities and types of products sold and offered 
for sale. DOE reviewed relevant literature to develop an understanding 
of the CPSV industry in the United States, including market research 
data, government databases, retail listings, and industry publications 
(e.g., manufacturer catalogs). Using this information, DOE assessed the 
overall state of the industry, CPSV manufacturing and market shares, 
shipments, general technical information on commercial prerinse spray 
valves, and industry trends.
    In the Framework document, DOE sought comments regarding the market 
for commercial prerinse spray valves, and in particular on product 
features, market shares, and trends. Additionally, DOE also sought 
comments on which organizations had a vested interest in commercial 
prerinse spray valves. DOE recognized Plumbing Manufacturers 
International (PMI) and North American Association of Food Equipment 
Manufacturers (NAFEM) in the Framework document as organizations that 
have an interest in commercial prerinse spray valves. In addition to 
these trade organizations, T&S Brass suggested including the National 
Restaurant Association (NRA) as an organization that has an interest in 
commercial prerinse spray valves. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 30) \22\ Additionally, the International 
Association of Plumbing and Mechanical Officials (IAMPO) commented that 
it tests and certifies commercial prerinse spray valves to make sure 
they meet mandated levels. Hence, IAMPO is also a body that has an 
interest in commercial prerinse spray valves. (IAPMO, Public Meeting 
Transcript, No. 6 at p. 30) Alliance for Water Efficiency (AWE) 
recommended that DOE consider service companies, such as Ecolab, as a 
subtype in its list of retailers. It stated that such companies provide 
on-demand, on-site maintenance and other services to food service 
operators, and have the most influence over the selection of commercial 
prerinse spray valves at the restaurant site. (AWE, No. 8 at p. 2) DOE 
acknowledges and appreciates the information provided by these 
interested parties.
---------------------------------------------------------------------------

    \22\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to amend 
energy conservation standards for commercial prerinse spray valves. 
(Docket No. EERE-2014-BT-STD-0027, which is maintained at 
www.regulations.gov) This particular notation refers to a comment: 
(1) submitted by T&S Brass; (2) appearing in the Public Meeting 
Transcript, which is document number 6 of the docket; and (3) 
appearing on page 30 of that document.
---------------------------------------------------------------------------

    Commenting on the commercial prerinse spray valve industry in 
general, T&S Brass stated that a small number of manufacturers control 
the majority of the market because commercial prerinse spray valves are 
a niche product. Two or three manufacturers have the majority of the 
market share. Most of the manufacturers in the industry are family-
owned businesses. (T&S, Public Meeting Transcript, No. 6 at p. 58)
    DOE also held phone conversations with representatives from the EPA 
WaterSense[supreg] program regarding the market assessment.\23\ The 
representatives commented that the industry comprises a small number of 
CPSV manufacturers, most of which are private companies which do not 
readily provide market information.
---------------------------------------------------------------------------

    \23\ Information on the WaterSense program for commercial 
prerinse spray valves is available at www.epa.gov/WaterSense/products/prsv.html.
---------------------------------------------------------------------------

    DOE researched government databases for CPSV product listings, 
including DOE's Compliance Certification Management System (CCMS), the 
California Energy Commission (CEC) Appliance Database, and the 
WaterSense database. Based on this research, DOE concluded that the 
CPSV market includes 54 basic models from 13 different brands and 11 
manufacturers. Chapter 3 provides more details on the CPSV market.
2. Efficiency Metrics
    Currently, all covered commercial prerinse spray valves are 
included in a single product class that is subject to a 1.6 gpm 
standard for maximum flow rate. 10 CFR 431.266. As part of the 2014 
Framework document, DOE considered adopting an alternative metric to 
replace the existing flow rate (gpm) metric. DOE examined alternative 
metrics that could achieve energy and water savings while also 
preserving product functionality. In the 2014 Framework document, DOE 
presented two alternate metrics. One alternative metric under 
consideration was a performance metric that takes into account both 
flow rate and spray force (measured in gpm divided by ozf). Another 
metric considered was gallons per plate washed, which was calculated 
using the flow rate and the cleanability time, which is defined in ASTM 
Standard F2324-2003, as the ``effectiveness of the prerinse spray valve 
to remove soil from the plate before it is placed in a dishwashing 
machine.'' DOE requested comments from interested parties on these 
suggested alternate metrics.
    A joint comment submitted by the Alliance to Save Energy, the 
Appliance Standards Awareness Project, and the Natural Resources 
Defense Council (``Advocates'') supported the consideration of a metric 
that incorporates both flow rate and spray force because this may allow 
DOE to adopt an amended standard that ensures functionality, while 
improving water and energy efficiency of commercial prerinse spray 
valves. In addition, the Advocates pointed out that a widely used 
industry standard, ASTM Standard F2324-13, already incorporates spray 
force measurement, and so a metric accounting for both flow rate and 
spray force would not cause additional burden to manufacturers listing 
products to the industry standard. (Advocates, No. 11 at p. 1) However, 
the Advocates also commented that product classes must be considered to 
distinguish between commercial prerinse spray valves and DOE could 
consider using spray force as one way to delineate separate product 
classes. (Advocates, No. 11 at p. 2)
    A joint comment submitted by Pacific Gas and Electric Company 
(PG&E), Southern California Gas Company, San Diego Gas and Electric, 
and Southern California Edison (CA IOUs) urged DOE to consider a metric 
or a product classification structure that addresses product 
performance in addition to water consumption. The CA IOUs stated that 
if a single metric does not capture both performance and water 
consumption, the standard should be structured to preserve the primary 
function of the product while addressing water efficiency. (CA IOUs, 
No. 14 at p. 1)
    The CA IOUs also urged DOE to consider user satisfaction when 
considering the metric, as some field surveys have shown that users 
that are dissatisfied with efficient commercial prerinse spray valves 
will substitute them with those that likely increase overall water 
consumption. Therefore, CA IOUs suggested either incorporating spray 
force into the metric, or alternatively, using spray force to establish 
product classes as a way to account for differentiating products. (CA 
IOUs, No. 14 at p. 1)
    In terms of considering cleanability in the metric, the Advocates 
commented that they opposed using gallons per

[[Page 39496]]

plate washed as a metric because of concerns about efficacy and 
replicability of cleanability testing. (Advocates, No. 11 at p. 1) CA 
IOUs also suggested that DOE consider not using the cleanability test 
given the problems with repeatability and little correlation to user 
satisfaction. (CA IOUs, No. 14 at p. 2) Additionally, AWE commented 
that the cleanability test was an unreliable indicator of top-
performing products and was not easily repeatable in laboratories 
across North America. (AWE, No. 8 at p. 1)
    Although the purpose of the rulemaking is to achieve water savings, 
DOE recognizes that the utility of commercial prerinse spray valves 
must also be ensured. DOE agrees with interested parties that there are 
specific applications for different commercial prerinse spray valves, 
and to preserve utility, another measure besides flow rate must be 
considered in the analysis. There was a consensus among interested 
parties not to include cleanability in the test method metric because 
of the issues regarding repeatability of test results. Additionally, 
interested parties stated that cleanability had little correlation to 
performance and user satisfaction. Therefore, DOE did not use 
cleanability in the analysis.
    However, a majority of the interested parties supported including 
spray force in the analysis. Whereas some stakeholders suggested 
incorporating spray force as part of the water consumption metric, 
others commented that spray force can also be used as a characteristic 
to distinguish product classes. Based on the comments received, DOE 
proposes to retain flow rate (in gpm) as the efficiency metric, and to 
incorporate spray force as a characteristic to distinguish product 
classes. Because the industry currently uses flow rate as the 
efficiency metric, DOE will continue using this industry-accepted 
metric. However, to ensure that utility of the commercial prerinse 
spray valves is maintained, DOE proposes to use spray force as a 
characteristic to establish product classes. The following section 
provides further discussion on incorporating spray force as a 
characteristic to differentiate product classes.
3. Product Classes
    As stated previously, all commercial prerinse spray valves are 
included in a single product class. In the 2014 Framework document, DOE 
also considered whether to establish separate product classes based on 
the statutory criteria in 42 U.S.C. 6295(q), and requested comments 
from interested parties.
    The Advocates stated that separate product classes should be 
established to distinguish among commercial prerinse spray valves that 
fit different applications. The Advocates also stated that DOE should 
consider establishing product classes for commercial prerinse spray 
valves that would distinguish between valves designed and marketed for 
light duty, standard duty, and heavy-duty applications. (Advocates, No. 
11 at p. 2) The CA IOUs also suggested that DOE should examine what 
applications do not require a higher flow rate for establishing product 
classes. (CA IOUs, No. 14 at p. 2)
    NAFEM suggested evaluating the impacts of the rule on other 
applications where commercial prerinse spray valves are currently used. 
(NAFEM, No. 9 at p. 2) Similarly, T&S Brass commented that the 
applications of commercial prerinse spray valves could vary from 
rinsing to cleaning baked-on food, and that the different applications 
might require different spray forces. T&S Brass stated that it offers a 
variety of prerinse spray valves that have different design features 
based on end users' applications. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 40) T&S Brass also commented that nozzle design 
and spray pattern provide specific CPSV applications and performance 
and that consumers choose a commercial prerinse spray valve based on 
application by trying various designs and determining which commercial 
prerinse spray valve works best for their specified application. (T&S, 
No. 12 at p. 4) Additionally, T&S Brass commented that CPSV efficiency 
depends on water pressure, water temperature, duration, flow rate, 
spray patterns, and other factors, and that the end-user application 
will dictate several of these variables. (T&S, No. 12 at p. 6)
    DOE agrees with interested parties that there are different 
applications of commercial prerinse spray valves, such as cleaning 
baked-on food and light rinsing. Therefore, commercial prerinse spray 
valves designed for heavy duty cleaning require a higher flow rate in 
order to achieve satisfactory cleaning performance compared to products 
designed for light rinsing. Therefore, to preserve consumer utility for 
all CPSV applications, DOE proposes to establish separate product 
classes for commercial prerinse spray valves.
    To determine what criteria to use to establish the product classes, 
DOE presented several different CPSV characteristics in the 2014 
Framework document and requested input from interested parties. DOE 
received input on whether cleanability, flow rate, and spray force are 
criteria that should be used to establish product classes.
a. Cleanability
    T&S Brass stated that because cleanability depends on subjective 
features such as spray pattern, end-user's application, and duration, 
this characteristic should not be used to establish product classes. 
(T&S Brass, No. 12 at p. 4) AWE suggested that DOE develop a more 
viable cleanability test method than that in ASTM F2324-2003 if 
cleanability is to be used as the defining characteristic. (AWE, No. 8 
at p. 2) CA IOUs suggested that DOE consider not using the cleanability 
test given the problems with repeatability and little correlation to 
user satisfaction. (CA IOUs, No. 14 at p. 2) T&S Brass commented that 
ultra-low-flow commercial prerinse spray valves are designed for 
applications that allow for minimum water consumption, and that 
cleanability using an ultra-low-flow commercial prerinse spray valve is 
not applicable to every CPSV application in the foodservice 
environment. (T&S Brass, No. 12 at p. 4)
    Based on these comments, as well as ASTM's update of the F2324 
standard (ASTM Standard F2324-13), which replaces the cleanability test 
with a spray force test, DOE is not considering using cleanability as a 
characteristic to define product classes.
b. Flow Rate
    T&S Brass stated that flow rate is a useful characteristic to 
define product classes and that spray force is a related parameter that 
can be altered with the nozzle design. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 39) T&S Brass commented that the data for flow 
rates for commercial prerinse spray valves are available and verifiable 
because they are based upon consistent test methods of a national test 
standard. (T&S Brass, No. 12 at p. 3) T&S Brass suggested using three 
product classes: (1) An ultra low-flow commercial prerinse spray valve 
with a maximum flow rate of 0.8 gpm; (2) a low-flow commercial prerinse 
spray valve with flow rates of 0.8 to 1.28 gpm; and (3) a standard 
commercial prerinse spray valve with flow rates of 1.28 to 1.6 gpm. 
(T&S Brass, No. 12 at p. 3) T&S Brass stated that the 1.6 gpm class is 
currently called the EPAct 2005 class. The 1.28 gpm class is based on 
the WaterSense voluntary standard. The 0.80 gpm class represents a 50 
percent reduction of the current DOE standard. (T&S Brass, Public 
Meeting Transcript, No. 6 at p. 54) However, the Advocates commented 
that if the metric is not changed from the current gpm, then including 
flow

[[Page 39497]]

rate as a differentiator for product class would be inconsistent. 
(Advocates, Public Meeting Transcript, No. 6 at p. 38)
    Additionally, T&S Brass commented that the performance of the 
maximum technologically feasible model (max-tech model) should not be 
evaluated solely based on flow rate. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 52) Also, as described in section IV.A.1, 
interested parties commented that for DOE to maintain the utility of 
the commercial prerinse spray valves, another measure besides flow rate 
must be considered in the analysis.
    In the 2014 Framework document, DOE noted that it would be 
difficult to establish product classes based on flow rate if the flow 
rate efficiency metric was retained. For this rulemaking, DOE proposes 
to retain flow rate as the efficiency metric for commercial prerinse 
spray valves. Therefore, DOE is not considering flow rate as a 
characteristic to establish product classes.
c. Spray Force
    As described in section IV.A.1, interested parties recommended that 
DOE incorporate spray force in the analysis. Additionally, the 
Northwest Energy Efficiency Alliance (NEEA) recommended that DOE 
investigate whether spray force and flow rate are directly 
proportional, and to investigate whether spray force is a good 
characteristic to predict the performance of a commercial prerinse 
spray valve. (NEEA, No. 13 at p. 2)
    DOE investigated whether any relationship exists between spray 
force and flow rate. DOE tested multiple spray valves for both flow 
rate and spray force using the ASTM Standard F2324-13 test procedure. 
The test results showed a direct linear relationship between flow rate 
and spray force, such that higher flow rate corresponds to higher spray 
force. Additionally, DOE found literature online that supported the 
linear relationship between spray force and flow rate.\24\ Chapter 3 of 
the NOPR TSD provides further discussion on this relationship.
---------------------------------------------------------------------------

    \24\ Spraying Systems Co., ``Optimizing Your Spray System'' 
(2009) (Available at: www.spray.com/Literature_PDFs/TM410A_Optimizing_Your_Spray_System.pdf); PNR America, ``Some Uses 
of Spray Nozzles'' (Available at: http://www.pnramerica.com/pdfs/p2_6.pdf).
---------------------------------------------------------------------------

    Multiple interested parties also recommended the use of spray force 
to establish product classes. The Advocates suggested that spray force 
might be a suitable criterion to create product classes. (Advocates, 
No. 11 at p. 2) T&S Brass commented that there are several applications 
of commercial prerinse spray valves, and all might require different 
spray forces. (T&S Brass, Public Meeting Transcript, No. 6 at p. 39) 
AWE stated that spray force is a useful characteristic that could be 
used to define product classes. (AWE, No. 8 at p. 2) CA IOUs suggested 
using spray force to establish product classes as a way to account for 
differentiating products.
    However, NEEA stated that establishing product classes based on 
spray force could overlook cleaning effectiveness. It stated that a 
solid water jet and pattern jet could have the same flow rate and spray 
force, but that the pattern jet would clean better than a solid jet, 
despite both having the same spray force. (NEEA, No. 13 at p. 2)
    A WaterSense field study found that low water pressure, or spray 
force, is a source of user dissatisfaction. WaterSense evaluated 14 
commercial prerinse spray valve models and collected 56 consumer 
satisfaction reviews, of which 9 were unsatisfactory. Seven of the nine 
unsatisfactory scores were attributed, among other factors, to the 
water pressure, or the user-perceived force of the spray.\25\
---------------------------------------------------------------------------

    \25\ EPA WaterSense, Prerinse Spray Valves Field Study Report, 
at 24-25 (Mar. 31, 2011) (Available at: www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf).
---------------------------------------------------------------------------

    Based on all comments from interested parties, DOE recognizes that 
spray force is an important criterion for characterizing consumer 
utility and is directly correlated with flow rate. Therefore, DOE is 
proposing to use spray force as the criterion to establish product 
classes. The 2015 CPSV test procedure NOPR proposes to incorporate by 
reference ASTM Standard F2324-13, which includes a test method for 
measuring spray force.
    DOE is proposing three product classes based on ranges of spray 
force: (1) light-duty (less than or equal to 5 ozf), (2) standard-duty 
(greater than 5 ozf but less than or equal to 8 ozf), and (3) heavy-
duty (greater than than 8 ozf). The light-duty equipment class would be 
suitable for light rinsing purposes, the standard-duty product class 
would be suitable to clean wet foods, and the heavy-duty product class 
would be suitable to clean baked-on foods. DOE testing of commercial 
prerinse spray valves provided clear indication of three clusters of 
commercial prerinse spray valves within these spray force ranges. 
Chapter 3 of the NOPR TSD provides a detailed description of the 
product classes that DOE is proposing in this rulemaking.
d. Impact of Product Classes on Compliance, Certification and 
Enforcement
    The procedures required for certification, determination, and 
enforcement of compliance of covered products with the applicable 
conservation standards are set forth in 10 CFR 429. The sampling plan 
and certification requirements for commercial prerinse spray valves are 
dictated in 10 CFR 429.51. DOE received comments from interested 
parties regarding the impact of product classes on product compliance, 
certification, and enforcement.
    T&S Brass commented that the impact of assigning product classes 
should be considered with regard to the regulation and certification 
process. T&S Brass seeks clarification on how commercial prerinse spray 
valves will be certified (e.g., through accredited third parties) in 
the future, if product classes will create more burden on 
manufacturers, and if it will be an additional requirement besides 
WaterSense certification. (T&S Brass, No. 12 at p. 8) T&S Brass also 
commented that there is a general lack of enforcement for manufacturers 
to file with DOE and that many imported products do not follow the 
federal regulations. (T&S, No. 12 at p. 8)
    As described in this NOPR, DOE proposes to designate product 
classes based on ranges of spray force. In the concurrent 2015 CPSV 
test procedure NOPR, DOE is proposing that spray force be tested for 
each spray pattern. Therefore, DOE proposes to revise the certification 
reporting requirements under 10 CFR 429.51(b)(2) to include reporting 
the average spray force in ozf, in addition to reporting the average 
flow rate. The reported spray force will determine which product class 
applies to each certified basic model. As DOE understands that spray 
force is already a widely accepted and measured characteristic of 
commercial prerinse spray valves, DOE believes that adding the 
reporting requirement for spray force will not create significant 
additional burden for CPSV manufacturers.
    DOE further notes that the WaterSense prerinse spray valve program 
is a voluntary program administered by EPA, and DOE's reporting and 
certification requirements for commercial prerinse spray valves would 
be separate from the requirements of the WaterSense program.
    The Advocates noted that ASTM Standard F2324-13, which is being 
incorporated by reference in the concurrent 2015 CPSV test procedure

[[Page 39498]]

NOPR (80 FR 35874), already incorporates spray force measurement, and 
so accounting for both flow rate and spray force would not cause 
additional burden to manufacturers listing products to the industry 
standard. (Advocates, No. 11 at p. 1) However, the Advocates also noted 
that it would be challenging to administer the separate product classes 
when commercial prerinse spray valves in a commercial kitchen are 
interchangeable, as many users have both heavy-duty and light-duty 
cleaning to perform. (Advocates, No. 11 at p. 2) The Advocates 
cautioned that enforcement issues should also be considered when 
considering spray force. (Advocates, No. 11 at p. 2)
    While DOE administers the certification, determination, and 
enforcement of compliance of covered products, DOE does not administer 
the end-use of the covered products by the consumers. Under DOE 
enforcement activities, conservation standards cases deal with 
manufacturers that have distributed products in the U.S. that DOE has 
found do not meet the required energy standards. Compliance 
certification cases deal with manufacturers that either have not 
certified that the products that they manufacture and distribute in the 
U.S. have been tested and meet the applicable energy conservation 
standards or have submitted invalid compliance certifications. With 
respect to products certified to EPA's ENERGY STAR program, DOE refers 
to the EPA any products that DOE tests that do not meet the ENERGY STAR 
specification. Any complaints regarding non-compliant products can be 
sent to: energyefficiencyenforcement@hq.doe.gov.
4. Technology Assessment
    In the technology assessment, DOE identifies technology options 
that may decrease CPSV water consumption. This assessment provides the 
technical background and structure on which DOE bases its screening and 
engineering analyses. In the 2014 Framework Document, DOE suggested an 
initial list of technology options that it would consider, which 
included the following:
     Addition of a flow control insert;
     Smaller nozzle tip openings to increase pressure;
     Incorporation of additional components including, but not 
limited to backflow preventers, additional valves, or hoses; and
     Specially designed spray patterns, such as the following: 
fan spray pattern (single nozzle with a hollow cone stream); solid 
stream pattern (single nozzle with single solid jet stream); triple-
action spray pattern (three nozzles with solid jet streams); knife-like 
spray pattern (single nozzle with a flat stream); and rose spray 
pattern (multiple nozzles resembling a common showerhead).
    DOE received several comments regarding the feasibility and impact 
of the technology options identified in the 2014 Framework document, 
which are discussed in the screening and engineering analyses in 
section IV.B and section IV.C, respectively. T&S Brass commented that 
there should not be too many design restrictions, as commercial 
prerinse spray valves are used in different applications, and, based on 
the application, the incorporation of certain design options might be 
required. (T&S Brass, Public Meeting Transcript, No. 6 at p. 44) T&S 
Brass also commented that the rulemaking should not stifle innovation. 
Id. AWE recommended that DOE not be design-restrictive, but focus on 
cleaning performance, water consumption, and durability of commercial 
prerinse spray valves for the rulemaking. (AWE, No. 8 at p. 2)
    DOE notes that the proposed standard is a performance-based 
standard, not a design-based standard.
    After further research regarding the potential technology options 
identified in the 2014 Framework document, DOE determined that several 
of them do not affect CPSV efficiency and thus are not considered to be 
technology options. The following subsections provide background on 
these product features that DOE determined had no impact on CPSV 
efficiency. The technology options that do affect CPSV efficiency are 
discussed further in section IV.B.
1. Backflow Preventers
    Backflow preventers prevent reverse flow of water. They are mainly 
used in plumbing devices to protect water supplies from contamination 
or pollution. DOE did not identify any means by which incorporating a 
backflow preventers into a commercial prerinse spray valve could 
improve its efficiency by limiting the water flow rate.
2. Specially Designed Spray Patterns
    In the 2014 Framework document, DOE identified five different spray 
patterns that are incorporated in commercial prerinse spray valves. DOE 
performed several tests on various CPSV units with different spray 
patterns using the ASTM Standard F2324-13 test procedure. While the 
units provided different flow rate and spray force results, DOE 
research showed no direct correlation between the type of spray pattern 
and flow rate. Hence, DOE found no indication that a different spray 
pattern can be used to reduce water consumption. Additionally, T&S 
Brass commented that different nozzle designs and spray patterns have 
been developed to meet the requirements for specific CPSV applications. 
(T&S Brass, No. 12 at p. 4) Hence, the type of spray pattern is more 
relevant to a specific CPSV application, rather than being a potential 
design option to reduce water consumption in commercial prerinse spray 
valves.
    DOE did, however, identify additional CPSV technology options 
beyond those in the 2014 Framework document which could improve CPSV 
efficiency. The additional technology options analyzed include spray 
hole eccentricity and orifice plate nozzle geometry, and are discussed 
further in the section IV.B.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    (1) Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    (2) Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
projected compliance date of the standard, then that technology will 
not be considered further.
    (3) Impacts on product utility or product availability. If it is 
determined that 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 be 
considered further.
    (4) Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further. 10 CFR part 430, subpart C, appendix 
A, 4(a)(4) and 5(b)
    In response to the technology options presented in the 2014 
Framework document, T&S Brass stated that design and technology aspects 
to improve

[[Page 39499]]

CPSV performance are considered proprietary information by 
manufacturers. (T&S Brass, No. 12 at p. 5) The Natural Resources 
Defense Council (NRDC) asked whether the spray patterns and associated 
nozzles used in the engineering analysis would be non-proprietary 
options. (NRDC, Public Meeting Transcript, No. 6 at p. 46).
    In the engineering and economic analyses, DOE considered all design 
options that are commercially available or present in a working 
prototype, including proprietary designs that meet the screening 
criteria. DOE will consider a proprietary design, however, only if it 
does not represent a unique path to a given efficiency level. If the 
proprietary design is the only approach available to achieve a given 
efficiency level, then DOE will eliminate that efficiency level from 
further analysis. However, if a given energy efficiency level can be 
achieved by a number of design approaches, including a proprietary 
design, DOE will examine the given efficiency level, despite the 
proprietary nature of that one design.
    Additionally, NAFEM stated that DOE's suggested design options in 
the 2014 Framework document fail to satisfy the criteria as specified 
in 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii) through 
(iv). (NAFEM, No. 9 at p. 2) Sections 4(a)4(ii) through (iv) define 
three of the four screening criteria described previously, which are: 
Practicability to manufacture, install and service; adverse impacts on 
product or equipment utility or availability; and adverse impacts on 
health or safety. The technology options presented in the 2014 
Framework document had not been screened using the four factors 
discussed above. For the analysis in this notice, DOE evaluated the 
technology options being considered in the engineering analysis based 
on the four screening criteria. While a majority of the technology 
options were not considered in the analysis because they failed to 
satisfy the screening criteria, there are several technology options 
that DOE believes satisfy the screening criteria, which are discussed 
in the following sections. Those technology options not screened out by 
the four criteria are called ``design options'' and are considered in 
the engineering analysis as possible methods of improving efficiency. 
The following sections describe which technology options were screened 
out, and which were included as design options.
1. Addition of Flow Control Insert
    A flow control insert is a component that can be installed within 
certain plumbing products to limit the amount of water that flows out 
of the product. Several faucets and showerheads on the market use flow 
control inserts to reduce water consumption. Therefore, a flow control 
insert could also be used in other water products, like commercial 
prerinse spray valves, to control flow. However, T&S Brass commented 
that the addition of a flow control insert should not be considered as 
a design option. T&S reports that a flow control insert would hinder 
CPSV performance, and can often be physically removed by the end user. 
(T&S Brass, No. 12 at p. 5) Additionally, T&S Brass mentioned that the 
nozzle itself is what regulates the flow rate in commercial prerinse 
spray valves. (T&S Brass, No. 12 at p. 5)
    Based on research, DOE did not identify any commercial prerinse 
spray valves on the market that use flow control inserts to regulate 
water flow. Therefore, because flow control inserts are not 
incorporated in commercially available products or working prototypes, 
DOE has screened out flow control inserts from its analysis because 
they are not technologically feasible.
2. Smaller Spray Hole Area
    The spray hole(s) are located at the exterior of the commercial 
prerinse spray valve and allow water to flow out of the nozzle. The 
total spray hole area is the sum of all the areas of the individual 
spray holes. DOE determined that the flow rate and nozzle spray hole 
area are directly related. Additional technical details regarding this 
relationship are provided in chapter 5 of the TSD.
    Given its relationship to flow rate, DOE identified nozzle spray 
hole area as an important factor to consider in the engineering 
analysis. Additionally, reducing the spray hole area is a relatively 
simple design change that satisfies the 4 screening criteria discussed 
above: (1) It is technologically feasible; (2) it would be practicable 
to manufacture, install, and service; (3) it would not have adverse 
impacts on product utility or availability; \26\ and (4) it would not 
have adverse impacts on health and safety. Therefore, DOE will consider 
smaller nozzle tip openings, or a smaller nozzle spray hole area, as a 
design option in the engineering analysis.
---------------------------------------------------------------------------

    \26\ Although smaller spray hole area would result in lower flow 
rates and thus a lower amount of force, DOE's proposed revised 
product class structure would preserve product utility for heavy-
duty applications.
---------------------------------------------------------------------------

3. Aerators
    An aerator is a device that can be used to mix air with water, to 
reduce the flow of water from the device without reducing the water 
pressure. DOE is aware of only one commercial prerinse spray valve that 
incorporates an aerator. DOE tested this unit to determine how the 
aerator reduces water consumption. DOE testing indicated that the 
performance of this aerated unit differed substantially from the more 
common non-aerated units: It exhibited a very low spray force, and did 
not demonstrate the same linear relationship between flow rate and 
spray force that is typical of most other commercial prerinse spray 
valves that DOE tested. At the present time, DOE does not have enough 
information to determine (1) whether the addition of an aerator 
represents a technologically feasible design option for improving CPSV 
efficiency, or (2) whether aerators can be applied more generally to 
other CPSV designs. Therefore, DOE is tentatively screening out 
aerators from the analysis. DOE requests comment about its approach to 
screen out aerators in section V.E.14.
4. Additional Valves
    Plumbing fixtures often use globe valves and butterfly valves to 
regulate water flow. Globe valves are comprised of a movable disk-like 
element and a stationary ring seated in a generally spherical body. The 
most common application of a globe valve is in a standard water faucet, 
such that when the handle is turned, a disc is lowered or raised. 
Butterfly valves regulate flow by means of a disc that rotates on an 
axis across the diameter of a pipe. Based on DOE's research to date, 
however, there are no commercially available products or working 
prototypes of commercial prerinse spray valves that use these 
additional valves. Additionally, T&S Brass also commented that the 
incorporation of additional components, such as backflow preventers, 
additional valves, or hoses, should not be considered as a design 
option because they are not necessarily aspects incorporated within the 
commercial prerinse spray valve itself. (T&S Brass, No. 12 at p. 5). 
DOE considers any component separate from the commercial prerinse spray 
valve to not be part of the covered product, and therefore not subject 
to evaluation as a design option. For these reasons, DOE has screened 
out the incorporation of additional valves from its analysis.
5. Changing Spray Hole Shape
    DOE found evidence that spray hole shape affects flow rate. DOE 
found that commercial prerinse spray valves with circular holes have 
higher flow rates than commercial prerinse spray valves

[[Page 39500]]

with oval-shaped spray holes, if all other design elements are 
identical. Additionally, changing spray hole shape is a design change 
that satisfies the 4 screening criteria discussed above: (1) It is 
technologically feasible; (2) it would be practicable to manufacture, 
install, and service; (3) it would not have adverse impacts on product 
utility or availability; \27\ and (4) it would not have adverse impacts 
on health and safety. Therefore, DOE will consider spray hole shape as 
a design option in the engineering analysis. Chapter 5 of the TSD 
provides further details on spray hole shape.
---------------------------------------------------------------------------

    \27\ Although smaller spray hole area would result in lower flow 
rates and thus a lower amount of force, DOE's proposed revised 
product class structure would preserve product utility for heavy-
duty applications.
---------------------------------------------------------------------------

6. Venturi Meter to Orifice Plate Nozzle Geometries
    DOE has observed that the nozzle geometry affects the flow rate of 
commercial prerinse spray valves. Based on DOE testing, reverse-
engineering teardowns and information available in the literature, DOE 
has determined that a ``venturi meter'' geometry allows water to pass 
through the nozzle more easily than an ``orifice plate'' geometry. 
Therefore, if all other design elements are identical, commercial 
prerinse spray valves with an orifice plate geometry have a lower flow 
rate than commercial prerinse spray valves with a venture meter 
geometry. Additionally, changing spray nozzle geometry is a design 
change that satisfies the 4 screening criteria discussed above: (1) It 
is technologically feasible; (2) it would be practicable to 
manufacture, install, and service; (3) it would not have adverse 
impacts on product utility or availability; \28\ and (4) it would not 
have adverse impacts on health and safety. Therefore, DOE will consider 
spray nozzle geometry as a design option in the engineering analysis. 
Chapter 5 of the TSD provides a more detailed discussion on this topic.
---------------------------------------------------------------------------

    \28\ Although an orifice plate geometry would result in lower 
flow rates and thus a lower amount of force, DOE's proposed revised 
product class structure would preserve product utility for heavy-
duty applications.
---------------------------------------------------------------------------

C. Engineering Analysis

    In the engineering analysis, DOE establishes the relationship 
between the manufacturer production cost (MPC) and improved CPSV 
efficiency. This relationship serves as the basis for cost-benefit 
calculations for individual consumers, manufacturers, and the nation. 
DOE typically structures the engineering analysis using one of three 
approaches: (1) Design option, (2) efficiency level, or (3) reverse 
engineering (or cost assessment). The design-option approach involves 
adding the estimated cost and associated efficiency of various 
efficiency-improving design changes to the baseline to model different 
levels of efficiency. The efficiency-level approach uses estimates of 
costs and efficiencies of products available on the market at distinct 
efficiency levels to develop the cost-efficiency relationship. The 
reverse-engineering approach involves testing products for efficiency 
and determining cost from a detailed bill of materials (BOM) derived 
from reverse engineering representative products.
    For this analysis, DOE structured its engineering analysis for 
commercial prerinse spray valves using a combination of the design-
option approach and the reverse-engineering approach. The analysis is 
performed in terms of incremental decreases in water consumption due to 
the implementation of selected design options, while the estimated MPCs 
for each successive design option are based on product teardowns and a 
bottom-up manufacturing cost assessment. Using this hybrid approach, 
DOE developed the relationship between MPC and CPSV efficiency.
    Chapter 5 of the NOPR TSD discusses the baseline efficiencies for 
each product class (in terms of flow rate), the design options DOE 
considered, the methodology used to develop manufacturing production 
costs, and the cost-efficiency curves. The LCC and PBP analysis uses 
the cost-efficiency relationships developed in the engineering 
analysis.
1. Engineering Approach
    For each of the three proposed product classes, DOE selected a 
baseline efficiency (in terms of flow rate) as a reference point from 
which to measure changes resulting from each design option. DOE then 
developed separate cost-efficiency relationships for each product class 
analyzed. The following is a summary of the method DOE used to 
determine the cost-efficiency relationship for commercial prerinse 
spray valves:
    (1) Perform flow rate and spray force tests on a representative 
sample of commercial prerinse spray valves in every product class.
    (2) Develop a detailed BOM for the tested commercial prerinse spray 
valves through product teardowns, and construct a commercial prerinse 
spray valve cost model.
    (3) Use the test data and cost model to calculate the incremental 
increase in efficiency (i.e., decrease in flow rate) and cost increase 
of adding specific design options to a baseline model.
    In the 2014 Framework document, DOE presented plans for its 
engineering analysis and sought comment on its approach to calculating 
the cost-efficiency relationship for commercial prerinse spray valves. 
T&S Brass stated that the range of efficiency levels should be 
determined based on the performance of commercial prerinse spray valves 
evaluated per ASTM Standard F2324-13. (T&S Brass, No. 12 at p. 5) DOE 
agrees that ASTM Standard F2324-13 reflects the latest changes in the 
industry and conducted all testing in support of this rulemaking using 
ASTM Standard F2324-13.
    The CA IOUs recommended that DOE look at DOE's CCMS and the CEC 
appliance databases for available product data. The CA IOUs also 
provided separate charts that showed the range of flow rates from these 
databases; the ranges reported were from 0.65 to 1.48 gpm. (CA IOUs, 
No. 14 at p. 3) For the analysis, DOE used CCMS and CEC databases to 
incorporate product data for the analysis. Additionally, DOE looked at 
the EPA WaterSense database and the Food Service Technology Center 
(FSTC) commercial prerinse spray valves testing results to determine 
the flow rates and spray forces.
2. Product Classes
    DOE is proposing three product classes, defined by spray force 
ranges, as shown in Table IV.1.

                 Table IV.1--Product Classes Definitions
------------------------------------------------------------------------
            Product class                      Spray force range
------------------------------------------------------------------------
Light-duty...........................   5 ozf and  8 ozf.
------------------------------------------------------------------------

    Chapter 3 of the NOPR TSD includes a detailed discussion regarding 
how the product classes were determined.
3. Baseline and Max-Tech Models
    To analyze technology options for energy efficiency improvements, 
DOE defined a baseline model for each commercial prerinse spray valve 
product class. Typically, the baseline model is a model that just meets 
current energy conservation standards.
    For the heavy-duty product class (spray force greater than 8 ozf), 
DOE determined that the baseline flow rate is the current commercial 
prerinse spray valve energy conservation standard of 1.6 gpm. For the 
standard-duty and

[[Page 39501]]

light-duty product classes, DOE established baseline flow rates that 
correspond to upper spray force bounds of these two product classes. 
DOE determined these baseline flow rates using the linear relationship 
between flow rate and spray force. DOE determined a best-fit linear 
equation that related flow rate and spray force using the test results 
for all the commercial prerinse spray valves that DOE tested. DOE then 
calculated the flow rates that corresponded to the spray force bounds 
for the standard-duty and light-duty product classes using the best fit 
linear equation. Chapter 5 of the NOPR TSD provides more detail on the 
flow rate and spray force relationship.
    T&S Brass cautioned against picking the highest efficiency level 
(max-tech) solely based on flow rate. T&S Brass commented that there 
are products on the market with a low flow rate that have an 
unsatisfactory user rating. T&S Brass suggested also looking at spray 
force when determining the max-tech model. According to T&S Brass, the 
current definition of the max-tech model solely based on flow rate may 
work in certain applications, but may work poorly for a standard market 
application. (T&S Brass, Public Meeting Transcript, No. 6 at p. 51) 
Additionally, T&S Brass also noted that the max-tech model in each 
product class may not adequately perform for all commercial foodservice 
applications. (T&S Brass, No. 12 at p. 6)
    As described above, DOE proposes three product classes, defined by 
spray force ranges, which correspond to three major categories of CPSV 
usage (i.e. light-duty, standard-duty, and heavy-duty). Separating 
commercial prerinse spray valves into three product classes will ensure 
that consumer utility is maintained within each product class. DOE 
believes that the max-tech level selected for each product class would 
not reduce consumer utility for the applications associated with each 
spray force range.
    To develop the relationships between flow rate and the design 
options for commercial prerinse spray valves, DOE used publicly 
available data, including data from government databases, manufacturer 
catalogs and Web sites, and selected product testing for commercial 
prerinse spray valves. The engineering analysis focused on identifying 
and evaluating commercially available prerinse spray valves that 
incorporate design options that reduce flow rate. The analysis also 
identified the lowest flow rate that is commercially available within 
each product class (i.e., the max-tech model).
    Additionally, DOE found that the spray nozzle geometry is a 
variable that affects flow rate. The nozzle geometry is expressed in 
terms of a discharge coefficient. DOE calculated the discharge 
coefficient for the max-tech model in each product class and assumed a 
constant discharge coefficient for each efficiency level within that 
class. DOE requests comments on whether this approach is appropriate.
    Chapter 5 of the NOPR TSD includes details on the baseline flow 
rates and max-tech flow rates considered as part of the engineering 
analysis.
4. Manufacturing Cost Analysis
    DOE estimated the manufacturing costs using a reverse-engineering 
approach, which involves a bottom-up manufacturing cost assessment 
based on a detailed BOM derived from teardowns of the product being 
analyzed. The detailed BOM includes labor costs, depreciation costs, 
utilities, maintenance, tax, and insurance costs, in addition to the 
individual component costs. These manufacturing costs are developed to 
be an industry average and do not take into account how efficiently a 
particular manufacturing facility operates.
    To develop the relationship between cost and performance for 
commercial prerinse spray valves, DOE used a reverse-engineering 
analysis, or teardown analysis. DOE purchased off-the-shelf commercial 
prerinse spray valves available on the market and dismantled them 
component by component to determine what technologies and designs 
manufacturers use to decrease commercial prerinse spray valve flow 
rate. DOE then used independent costing methods, along with component-
supplier data, to estimate the costs of the components.
    T&S Brass stated that materials and processes for metallic, 
plastic, and rubber parts should be taken into consideration in the 
reverse-engineering process. (T&S Brass, No. 12 at p. 5) T&S Brass also 
commented that the costs for incremental efficiency improvements of 
existing commercial prerinse spray valve are different among 
manufacturers, or even among models from the same manufacturer. 
Therefore, the costs to improve efficiency depend on the design of 
commercial prerinse spray valve. (T&S Brass, No. 12 at p. 6)
    DOE derived detailed manufacturing cost estimate data based on its 
reverse engineering analysis, which included the cost of the product 
components, labor, purchased parts and materials, and investment.
    DOE tested three series of commercial prerinse spray valves from 
three manufacturers. Through testing, DOE found that the flow rates of 
the units within each series were different. However, based on the 
reverse-engineering analysis, the manufacturing costs for the units 
within each series were the same. Therefore, DOE concluded that there 
is no manufacturing cost difference for incremental efficiency 
improvements between models within the same series from the same 
manufacturer.
    DOE also tested and performed a teardown analysis on commercial 
prerinse spray valves from additional manufacturers. These commercial 
prerinse spray valves represented a range of baseline to max-tech 
units. The testing and teardown results indicated that the 
manufacturing costs between different units from different 
manufacturers can vary based on the type of material, amount of 
material, and/or process used. However, DOE determined that these 
factors do not affect the efficiency of a commercial prerinse spray 
valve. Therefore, DOE did not include these cost differences in the 
engineering analysis. Chapter 5 of the NOPR TSD provides further 
details on the teardown analysis, component costs, and costs that were 
developed as part of the cost-efficiency curves.

D. Markups Analysis

    The purpose of the markups analysis is to translate the MPC derived 
from the engineering analysis into the final consumer purchase price by 
applying the appropriate markups. The first step in this process is 
converting the MPC into the MSP by applying the manufacturer markup. 
The manufacturer markup includes sales, general and administrative, 
research and development, other corporate expenses, and profit. As 
described further in chapter 6 of the TSD, the manufacturer markup of 
1.30 was calculated as the market share weighted average value for the 
industry. DOE developed this manufacturer markup by examining several 
major CPSV manufacturers' gross margin information from annual reports 
and Securities and Exchange Commission 10-K reports. Because the 10-K 
reports do not provide gross margin information at the subsidiary 
level, the estimated markups represent the average markups that the 
parent company applies over its entire range of equipment offerings, 
and does not necessarily represent the manufacturer markup of the 
subsidiary. Both the MPC and the MSP values are used in the MIA.

[[Page 39502]]

    Next, DOE uses manufacturer-to-consumer markups to convert the MSP 
estimates into consumer purchase prices, which are then used in the LCC 
and PBP analysis, as well as the NIA. Consumer purchase prices are 
necessary for the baseline efficiency level and all other efficiency 
levels under consideration.
    For the markups analysis, DOE identified the following distribution 
channels (i.e. how the product is distributed from the manufacturer to 
the consumer):

A. Manufacturer [rarr] Final Consumer (Direct Sales)
B. Manufacturer [rarr] Authorized Distributor [rarr] Final Consumer
C. Manufacturer [rarr] Retailer [rarr] Final Consumer
D. Manufacturer [rarr] Service Company [rarr] Final Consumer

    During the Framework public meeting and public comment period, 
three comments were received with regard to distribution channels. T&S 
Brass commented that the trade associations did not maintain 
information on the percentage allocations among the various 
distribution channels. T&S Brass stated that such information was 
proprietary. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 71-72) 
T&S Brass also noted that there were numerous combinations of entities 
making up the potential distribution channels, and the three listed by 
DOE (A through C, as listed above) are only but a subset of the 
potential channels. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 
70-71) Additionally, AWE commented that the dominant CPSV sales outlet 
is made up of service companies providing on-demand, on-site 
maintenance and other services to food service operators. (AWE, No. 8 
at p. 2) As such, DOE added a fourth distribution channel (Service 
Company), in addition to the three discussed in the Framework document 
(Direct Sales, Authorized Distributor, and Retail Merchant). Beyond 
this, DOE did not attempt to incorporate additional channels or 
investigate combinations of the existing channels, because of a lack of 
specific information on distribution channels.
    In the 2014 Framework document, DOE discussed both baseline and 
incremental markups. Baseline markups are multipliers that convert the 
MSP of products at the baseline efficiency level to consumer purchase 
price. Incremental markups are multipliers that convert the incremental 
increase in MSP for products at each higher efficiency level (compared 
to the MSP at the baseline efficiency level) to corresponding 
incremental increases in the consumer purchase price. In the analysis 
in this notice, DOE used only baseline markups, as the engineering 
analysis indicated that there is no price increase with improvements in 
efficiency for commercial prerinse spray valves. Chapter 6 of the NOPR 
TSD provides further details on the distribution channels and 
calculated markups.

E. Energy and Water Use Analysis

    The purpose of the energy and water use analysis is to establish 
the annual energy and water consumption used by the product to assess 
the associated energy and water savings potential of different product 
efficiencies. To this end, DOE performed an energy and water use 
analysis that calculated energy and water use of commercial prerinse 
spray valves for each product class and efficiency level identified in 
the engineering analysis. The energy and water use analysis provided 
the basis for other analyses DOE performed, particularly the LCC and 
PBP analysis and the NIA.
    In the 2014 Framework document, DOE indicated the analysis 
conducted for the NOPR is intended to capture and estimate water 
savings as a result of reduced flow rate and the related energy savings 
as a result of reduced hot water use. DOE calculated the energy and 
water use by determining the representative daily operating time of the 
product by major building types that contain commercial kitchens found 
in the Commercial Building Energy Consumption Survey (CBECS).\29\ The 
daily commercial prerinse spray valve operating time was annualized 
based on operating schedules for each building type. Water use for each 
product class was determined by multiplying the annual operating time 
by the flow rate at an operating pressure of 60 pounds per square inch 
(psi) for each efficiency level.\30\
---------------------------------------------------------------------------

    \29\ Survey data available at www.eia.gov/consumption/commercial/data/2003/index.cfm.
    \30\ DOE considered a range of operating pressures in the 
analysis to account for the variations in water pressure supplied to 
buildings across the country. Through a sensitivity analysis on the 
impacts of water pressure on the flow rate of the prerinse spray 
valve, DOE concluded that 60 psi is a representative water pressure 
for prerinse spray valves. DOE used flow rates at a water pressure 
of 60 psi for each efficiency level in the energy and water use 
analysis, which is further discussed in the energy and water use TSD 
chapter.
---------------------------------------------------------------------------

    Energy use was calculated by multiplying the annual water use in 
gallons by the energy required to heat each gallon of water to an end-
use temperature of 108 [deg]F.\31\ Cold water supply temperatures used 
in this calculation were derived for the nine U.S. census regions based 
on ambient air temperatures and hot water supply temperature was 
assumed to be 140 [deg]F based on ASHRAE Standard 12-2000.\32\ The 
proportion of buildings which used natural gas or electricity for water 
heating found in the CBECS database were multiplied by the energy 
consumption of each kind of water heater, taking into account the 
efficiency level of the product, to obtain the total energy consumption 
of each product class and efficiency level of commercial prerinse spray 
valves.
---------------------------------------------------------------------------

    \31\ End-use temperature was determined based on a review of 
several field studies. See chapter 7 of the NOPR TSD for a list of 
the field studies reviewed.
    \32\ ASHRAE Standard 12-2000: Minimizing the Risk of 
Legionellosis Associated with Building Water Systems, (February 
2000).
---------------------------------------------------------------------------

    In response to the 2014 Framework document, DOE received several 
comments related to potential data sources for the energy and water use 
analysis. IAPMO asked whether the rulemaking team had coordinated with 
DOE's Water, Energy, and Technology team. (IAPMO, Public Meeting 
Transcript, No. 6 at pp. 77-78) WaterSense asked how DOE planned to 
collect data on CPSV operation. (WaterSense, Public Meeting Transcript, 
No. 6 at pp. 78-79) T&S Brass noted that operation data might be 
available through NAFEM and FSTC. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 80) Finally, AWE commented that it had data 
available on operating time and water temperature from California Urban 
Water Conservation Council (CUWCC) studies. (AWE, No. 8 at p.3)
    In response to these comments, and as discussed above, DOE 
collected data from several end-use studies that measured operating 
time of commercial prerinse spray valves in field applications, such as 
restaurants and cafeteria settings. Data on water temperature measured 
in the field studies were also utilized by DOE to determine the hot 
water and end-use temperature.
    Additionally, T&S Brass commented that operational patterns varied 
widely across applications that use CPSV products. The different 
operational patterns across applications are a result of such factors 
as the volume of dishwashing or ware washing (i.e., number of pieces) 
requiring prerinsing, the rate at which dishwashing or ware washing 
needs to be done in order to return the commercial ware back into 
service, the difficulty in cleaning debris from the commercial ware, 
and operational patterns for product classes. T&S Brass added that 
these operational

[[Page 39503]]

patterns will vary in duration of usage, as flow rates change within 
each application. (T&S Brass, No. 12 at p. 6)
    DOE acknowledges comments submitted by T&S Brass regarding varying 
operational spray patterns and considered the varying operational 
patterns across applications of commercial prerinse spray valves in the 
analysis for this notice. As described in further detail in chapter 7 
of the NOPR TSD, DOE determined operational time for the product based 
on operational patterns of distinct building types that house 
commercial prerinse spray valves, including educational facilities, 
food retail, healthcare, lodging, and restaurants. Operational patterns 
taken into consideration for each building category included operating 
days per week, operating hours per day, and estimated daily number of 
meals served. DOE assumed the same operating time for different flow 
rates based on the conclusion of the EPA WaterSense field study that 
determined the flow rate of a CPSV did not significantly impact the 
operating time of the unit.\33\
---------------------------------------------------------------------------

    \33\ EPA WaterSense, Prerinse Spray Valves Field Study Report, 
(March 2011) (Available at: www.epa.gov/watersense/docs/final_epa_prsv_study_report_033111v2_508.pdf.).
---------------------------------------------------------------------------

    T&S Brass also commented that potential energy savings due to a 
lower flow rate might be offset by using a higher water temperature 
that would create water savings, but not energy savings due to the 
increase in water temperature. (T&S, No. 12 at p. 8)
    In regards to the comment submitted by T&S Brass, DOE assumed an 
end-use temperature of 108[emsp14][deg]F based on measured temperatures 
in field studies for commercial prerinse spray valves of varying flow 
rates. The field studies demonstrated that the end-use temperature did 
not significantly vary with flow rate. Therefore, DOE tentatively 
concludes this temperature is a reasonable representation of the 
temperature used by the majority of CPSV consumers, regardless of the 
flow rate of the unit.
    In response to the 2014 Framework document, NEEA commented that it 
had access to the data for utility programs in the Northwest. (NEEA, 
No. 13 at p. 2)
    DOE appreciates the comment from NEEA regarding their access to 
regional utility program data. In the analysis for this NOPR, DOE 
utilized field studies and data that approximated national potable 
water supply temperatures and operational water temperatures.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted the LCC and PBP analysis to evaluate the economic 
impacts on individual consumers of potential amended energy 
conservation standards for commercial prerinse spray valves. The LCC is 
the total consumer expense over the life of the product, consisting of 
purchase and installation costs plus operating costs (expenses for 
energy and water 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 
potential increased purchase cost (including installation) of more 
efficient products through lower operating costs. DOE calculates the 
PBP by dividing the change in purchase cost at higher efficiency levels 
by the change in annual operating cost for the year that new standards 
are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to an estimate of the no-new-standards case product efficiency 
distribution. The no-new-standards case estimate reflects the market in 
the absence of amended energy conservation standards, including the 
market for products that exceeds the current energy conservation 
standard. In contrast, the PBP is measured relative to the baseline 
product.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes MSPs, distribution channel markups, and 
sales taxes--and installation costs. Inputs to the calculation of 
operating expenses include annual energy and water consumption, energy 
prices and price projections, combined water prices (which include 
water and wastewater prices) and price projections, repair and 
maintenance costs, product lifetimes, discount rates. DOE created 
distributions of values for product lifetime, discount rates, energy 
and combined water prices, and sales taxes, with probabilities attached 
to each value to account for their uncertainty and variability.
    The computer model DOE used to calculate the LCC and PBP, which 
incorporates Crystal BallTM (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 CPSV user samples. The model calculated the LCC and 
PBP for products at each efficiency level for 10,000 CPSV users per 
simulation run.
    DOE calculated the LCC and PBP for all consumers as if each were to 
purchase a new commercial prerinse spray valve in the first year of the 
analysis period. For this rulemaking, DOE anticipates any amended 
standards would apply to commercial prerinse spray valves manufactured 
3 years after the date on which any final amended standard is 
published. For this rulemaking, DOE anticipates publication of any 
final standards in late 2015 and compliance in late 2018. However, for 
the purposes of this analysis, DOE used 2019 instead of 2018 as the 
beginning of the analysis period for the LCC and PBP analysis, due to 
the anticipated compliance date being late in the year 2018.
    Table IV.2 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 NOPR TSD.

                    Table IV.2--Summary of Inputs and Methods for the LCC and PBP Analysis *
----------------------------------------------------------------------------------------------------------------
                               Inputs                                                Source/method
----------------------------------------------------------------------------------------------------------------
Product Cost........................................................  Derived by multiplying MSPs by
                                                                       distribution channel markups and sales
                                                                       tax, as appropriate.
Installation Costs..................................................  Baseline installation cost determined with
                                                                       data from U.S. Department of Labor.
                                                                       Assumed no change with efficiency level.
Annual Energy and Water Use.........................................  Determined from the energy required to
                                                                       heat a gallon of water used at the
                                                                       prerinse spray valve multiplied by the
                                                                       average annual operating time and flow
                                                                       rate of each product class.
                                                                      Variability: By census region

[[Page 39504]]

 
Energy, Water and Wastewater Prices.................................  Energy: Based on EIA's Form 826 data for
                                                                       2013. Variability: By State
                                                                      Water: Based on 2012 AWWA Survey.
                                                                      Variability: By State
Energy and Water Price Trends.......................................  Energy: Forecasted using AEO2014 price
                                                                       forecasts.
                                                                      Water: Forecasted using BLS historic water
                                                                       price index information.
Maintenance and Repair Costs........................................  Assumed no change with efficiency level.
Product Lifetime....................................................  DOE assumed an average lifetime of 5
                                                                       years.
                                                                      Variability: Characterized using modified
                                                                       Weibull probability distributions.
Discount Rates......................................................  Estimated using the average cost of
                                                                       capital to commercial prerinse spray
                                                                       valve consumers. Cost of capital was
                                                                       found using information from the federal
                                                                       reserve and from Damodaran online data.
First Year of Analysis Period.......................................  2019
----------------------------------------------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided in the sections following the table or in
  chapter 8 of the NOPR TSD.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MSPs 
developed in the engineering analysis by the distribution channel 
markups described in section IV.D (along with sales taxes). As stated 
earlier in this notice, DOE used baseline markups, but did not apply 
incremental markups, because the engineering analysis indicated that 
there is no price increase with improvements in efficiency for 
commercial prerinse spray valves. Product costs are assumed to remain 
constant over the analysis period.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the product. DOE received the 
following comments to the 2014 Framework document regarding 
installation costs of commercial prerinse spray valves.
    T&S Brass commented that installation costs typically did not 
increase with higher-efficiency prerinse spray valves due to this 
process being a simple swap out. Under certain circumstances, depending 
on the manufacturer, additional materials may be necessary. (T&S Brass, 
Public Meeting Transcript, No. 6 at pp. 83-85) T&S Brass also commented 
that depending upon the manufacturer, dealer, or installer, the initial 
installation costs of new products may or may not change for higher-
efficiency models. The valve is typically a pre-assembled component of 
a prerinse unit installed into new facilities, but is usually provided 
separately for pre-existing installations. For retrofit applications 
where an existing valve is replaced with a higher-efficiency valve, the 
cost may increase depending upon the degree of design change required 
to manufacture the commercial valve to the higher-efficiency 
requirement. This may require additional components, or revised 
upstream components, that are needed for proper installation and/or 
performance. This again is dependent upon the various manufacturers, 
dealers, or installers. (T&S Brass, No. 12 at p. 7)
    DOE has not received any specific data or other comments regarding 
installation cost as a function of product efficiency. Given the 
relatively simple nature of installing spray valves, and because there 
are no substantial differences in size, shape, or function of more 
efficient units relative to baseline efficiency units, DOE assumes that 
installation costs for more efficient units are the same as the costs 
for baseline products.
3. Annual Energy and Water Consumption
    Chapter 7 of the NOPR TSD details DOE's analysis of CPSV annual 
energy and water use at various efficiency levels. For each sampled 
building type, DOE determined the energy and water consumption for a 
commercial prerinse spray valve at different efficiency levels using 
the approach described in section IV.E of this notice.
4. Energy Prices
    DOE derived energy prices from the EIA regional average energy 
price data for the commercial sectors. DOE used projections of these 
energy prices for commercial consumers to estimate future energy prices 
in the LCC and PBP analysis. EIA's Annual Energy Outlook (AEO2014) was 
used as the default source of projections for future energy prices.
    DOE developed estimates of commercial electricity and natural gas 
prices for each state and the District of Columbia (DC). DOE derived 
average regional energy prices from data that are published annually 
based on EIA Form 826. DOE then used EIA's AEO2014 price projections to 
estimate commercial electricity and natural gas prices in future years. 
EIA's AEO2014 price projections have an end year of 2040. To estimate 
price trends after 2040, DOE used the average annual rate of change in 
prices from 2030 to 2040. DOE assumed that 100 percent of installations 
were in commercial locations. DOE did not receive any comments to the 
2014 Framework document regarding its method for determining energy 
prices.
5. Water and Wastewater Prices
    In the 2014 Framework document, DOE indicated that it would 
determine marginal water and wastewater rates in the U.S. that would be 
used in the LCC and PBP analysis, as well as the NIA. It further stated 
that it would investigate American Water Works Association's (AWWA's) 
biannual water and wastewater rate survey when modeling water and 
wastewater marginal pricing and projected future rate escalations. DOE 
received the following comments regarding the determination of the 
appropriate water prices for applicable analyses.
    T&S Brass recommended using AWWA as a source for water prices. (T&S 
Brass, Public Meeting Transcript, No. 6 at p. 88) T&S Brass also 
commented that it recognized the relationship between wastewater 
discharge and water usage. The impact of wastewater discharge is 
dependent upon municipal wastewater charges, such as sewer rate. 
Therefore, similar to the costs of municipal water, wastewater charges 
are based upon the location across the nation. (T&S Brass, No. 12 at p. 
7) T&S Brass suggested that DOE should contact AWWA to determine 
marginal water and wastewater rates and methods to break out water and 
wastewater rates across different pricing segments, such as regionally 
or by state, as well as future trends in water and wastewater rate 
escalations. (T&S Brass, Public Meeting Transcript, No. 6 at pp. 94-96)
    In response to T&S Brass's comments, and consistent with the 2014 
Framework document, DOE obtained

[[Page 39505]]

data on water and wastewater prices from the 2012 AWWA surveys for this 
notice. For each state and DC, DOE combined all individual utility 
observations within the state to develop one value for water and 
wastewater service. Because water and wastewater charges are frequently 
tied to the same metered commodity values, DOE combined the prices for 
water and wastewater into one total dollar per thousand gallons figure. 
This figure is referred to as the combined water price. DOE used the 
consumer price index (CPI) data for water related consumption (1970-
2013) in developing a real growth rate for combined water price 
forecasts.
    Chapter 8 of the NOPR TSD provides more detail about DOE's approach 
to developing water and wastewater prices.
6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing components 
that have failed in the product; maintenance costs are associated with 
maintaining the operation of the product. Typically, small incremental 
increases in product efficiency produce no changes, or only minor 
changes, in repair and maintenance costs compared to baseline 
efficiency product.
    In the 2014 Framework document, DOE requested information as to 
whether maintenance and repair costs are a function of efficiency level 
and product class. T&S Brass commented that determining whether repair 
costs may change for more efficient products, or whether commercial 
prerinse spray valves were typically replaced upon failure or repaired, 
depends on how the manufacturer markets their products. Some 
manufacturers and distributors place a premium on their more efficient 
products. Others view it as doing a service to the environment and to 
consumers by offering the same price. (T&S Brass, Public Meeting 
Transcript, No. 6 at pp. 94-96). T&S Brass also commented that some 
manufacturers offer repair kits. Some manufacturers view commercial 
prerinse spray valves as ``throwaway'' items, but T&S Brass does not, 
and stated that it could document that some of its original spray 
valves had been in use for over 60 years. (T&S Brass, Public Meeting 
Transcript, No. 6 at p. 86) Additionally T&S Brass commented that 
although its products can last longer than 5 years, end users decide 
whether to replace the entire unit or repair the unit in the field. 
(T&S Brass, Public Meeting Transcript, No. 6 at pp. 96-97) T&S Brass 
also stated that it offers an array of repair kits for commercial 
prerinse spray valves. (T&S Brass, No. 12 at pp. 7-8)
    DOE acknowledges T&S Brass's comments. But, based on the lack of 
data regarding repair rates in the industry, DOE assumed that consumers 
would replace the commercial prerinse spray valve upon failure rather 
than repairing the product. DOE assumed that there are no changes in 
maintenance or repair costs between different efficiency levels.
7. Product Lifetime
    Because product lifetime varies depending on utilization and other 
factors, DOE developed a distribution of product lifetimes. In the 2014 
Framework document, DOE assumed an average CPSV lifetime of 5 years.
    T&S Brass commented that water temperature and pressure, as well as 
frequency and duration of usage, were key considerations when 
determining the life expectancy of a unit. (T&S Brass, No. 12 at p. 3) 
T&S Brass also commented that they do not know of a correlation between 
spray valve usage and life expectancy. (T&S Brass, No. 12 at p. 3) T&S 
Brass pointed out that life-cycle testing for mechanical endurance is a 
prerequisite for third-party certification of commercial prerinse spray 
valves. (T&S Brass, No. 12 at p. 3)
    DOE did not find sufficient data to support the use of factors such 
as usage, or water temperature and pressure, as a way to determine the 
distribution of lifetimes of commercial prerinse spray valves in the 
analysis for this notice.
    T&S Brass commented that lifetime values cannot be accurately 
quantified because of the range and number of variables, as well as the 
various end-user applications that must be considered. (T&S, No. 12 at 
p. 3)
    DOE developed a Weibull distribution with an average lifetime of 5 
years and a maximum lifetime of 10 years. The use of a lifetime 
distribution for this analysis helps account for the variability of 
product lifetimes.
    However, NEEA commented that it expected the actual lifetime to be 
reduced due to an observed 10 percent attrition after 1 year because of 
events such as businesses closing, the unit being replaced, or rinsing 
stations being removed in Northwest utility programs. Additionally, 
NEEA pointed out that SBW Consulting's evaluation report estimated that 
CPSV lifetimes might be as low as 2 years based on reported sales 
volume and the estimated population of commercial prerinse spray 
valves. (NEEA, No. 13 at pp. 1-2)
    In consideration of NEEA's comment regarding the lifetime 
distributions used for commercial prerinse spray valves, in the NOPR 
analysis DOE modified the Weibull distribution to reflect 10 percent of 
commercial prerinse spray valves failing within the first year after 
installation. See chapter 8 of the NOPR TSD for further details on the 
method and sources DOE used to develop CPSV lifetimes.
8. Discount Rates
    In the calculation of LCC, DOE developed discount rates by 
estimating the average cost of capital to commercial prerinse spray 
valve consumers. DOE applies discount rates to commercial consumers to 
estimate the present value of future cash flows derived from a project 
or investment. Most companies use both debt and equity capital to fund 
investments, so the cost of capital is the weighted-average cost to the 
firm of equity and debt financing. See chapter 8 in the NOPR TSD for 
further details on the development of consumer discount rates.
9. No-New-Standards Case Efficiency Distribution
    To accurately estimate the share of consumers that would be 
affected by a potential energy conservation standard at a particular 
efficiency level, DOE's LCC and PBP analysis considered the projected 
distribution of product efficiencies that consumers purchase under the 
no-new-standards case. DOE refers to this distribution of product 
efficiencies as a no-new-standards case efficiency distribution.
    To estimate the no-new-standards case efficiency distribution of 
commercial prerinse spray valves in 2019 (the first year of the 
analysis period), DOE relied on data from the Food Service Technology 
Center and DOE's CCMS Database for commercial prerinse spray 
valves.\34\ Additionally, DOE conducted general internet searches and 
examined manufacturer literature to understand the characteristics of 
the spray valves currently offered on the market. DOE assumed that the 
no-standards case percentages in 2019 would stay the same through the 
analysis period. The no-standards case efficiency distribution is 
described in chapter 8 of the NOPR TSD.
---------------------------------------------------------------------------

    \34\ The Food Service Technology Center test data for prerinse 
spray valves is available at www.fishnick.com/equipment/sprayvalves/
. The DOE compliance certification data for commercial prerinse 
spray valves is available at www.regulations.doe.gov/certification-data/.
---------------------------------------------------------------------------

    The estimated shares for the no-standards case efficiency 
distribution

[[Page 39506]]

for commercial prerinse spray valves are shown in Table IV.3.

 Table IV.3--Commercial Prerinse Spray Valve No-Standards Case Efficiency Distribution by Product Class in 2019
----------------------------------------------------------------------------------------------------------------
                                                         Light duty  (% of  Standard duty  (%  Heavy duty  (% of
                    Efficiency level                         shipments)       of shipments)        shipments)
----------------------------------------------------------------------------------------------------------------
Baseline...............................................                 15                 40                 40
1......................................................                 35                 50                 50
2......................................................                  0                  0                  5
3......................................................                 50                 10                  5
----------------------------------------------------------------------------------------------------------------

10. 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 product, through energy and water 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 
completely recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed. As explained in the engineering analysis 
of this notice (IV.C) there are no additional installed costs for more 
efficient commercial prerinse spray valves, making the PBP zero.
11. Rebuttable-Presumption Payback Period
    EPCA, as amended, establishes a rebuttable presumption that a 
standard is economically justified if DOE 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 first year's energy (and, as applicable, water) savings resulting 
from 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 combined water price forecast for the 
year in which compliance with the amended standard would be required. 
The results are summarized in section V.B.1.c of this notice.

G. Shipments

    DOE uses projections of product shipments to calculate the national 
impacts of potential amended energy conservation standards on energy 
and water use, NPV, and future manufacturer cash flows. DOE develops 
shipment projections based on historic economic figures and an analysis 
of key market drivers for commercial prerinse spray valves. In DOE's 
shipments model, CPSV shipments are driven by both 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 in-service product is a key input 
to calculations of both the national energy savings (NES), national 
water savings, 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 efficiency levels.
    In the 2014 Framework document, DOE stated its intention to use 
historical shipment data for commercial prerinse spray valves obtained 
from trade organization surveys and commercial floor space growth data 
to characterize CPSV shipments. In response, NEEA recommended including 
a broader mix of building types beyond just restaurants, such as 
grocery stores and institutional facilities, to estimate total 
shipments. (NEEA, No. 13 at p. 1)
    In the shipments analysis for this notice, DOE gathered information 
pertaining to commercial prerinse spray valves for many building types 
besides just restaurants from the National Restaurant Association, 
Puget Sound Energy Program, EPA WaterSense Field Study, and other 
industry reports.
    DOE did not receive any shipments data from interested parties in 
response to the 2014 Framework document. DOE based the retirement 
function (the time at which the product fails and is replaced) on the 
probability distribution for product lifetime that was developed in the 
LCC and PBP analysis. The shipments model assumes that no units are 
retired below a minimum product lifetime (one year of service) and that 
all units are retired before exceeding a maximum product lifetime (ten 
years of service).
    In the 2014 Framework document, DOE indicated that it intended to 
derive standards case shipments projections using the same data used in 
the development of the base case projections. DOE assumed that any 
potential amended energy conservation standards for commercial prerinse 
spray valves would not impact the total volume of shipments over the 
analysis period. Rather, in response to the proposed standards, product 
shipments may move from one efficiency level to another, but the total 
number of units shipped remains the same between the base and standards 
cases.
    DOE determined that a roll-up scenario is most appropriate to 
establish the distribution of efficiencies for the year that compliance 
with amended CPSV standards would be required. Under the ``roll-up'' 
scenario, DOE assumes: (1) Product efficiencies in the no-standards 
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. The details of DOE's approach to forecast efficiency trends 
are described in chapter 8 of the NOPR TSD.
    The nature of the market for commercial prerinse spray valves makes 
it possible that consumers may, under examined TSLs and product 
classes, opt to switch product classes to a commercial prerinse spray 
valve that consumes more water and energy than their current product. 
In particular, if current choices of product correspond to consumers' 
optimal product under

[[Page 39507]]

the current regulatory environment, it is probable that some consumers 
would switch from the standard-duty product class to the heavy-duty 
product class in response to proposed standards, given the lack of 
restrictions on doing so. DOE implemented a mechanism in the shipments 
model to estimate such consumer choices. The economics resulting from 
product-class switching may result in lower optimal efficiency levels 
and reduced estimates of water and energy savings, as compared to the 
case without class switching. A detailed description of DOE's method to 
model product-class switching is contained in chapter 9 of the NOPR 
TSD.

H. National Impact Analysis

    The NIA assesses the NES, national water savings, and NPV of total 
consumer costs and savings that would be expected to result from 
amended standards at specific efficiency levels. DOE calculates the 
NES, national water savings, and NPV based on projections of annual 
CPSV shipments, along with the annual energy and water consumption and 
total installed cost data from the energy and water use analysis, as 
well as the LCC and PBP analysis. DOE forecasted the energy and water 
savings, operating cost savings, product costs, and NPV of consumer 
benefits over the lifetime of products sold from 2019 through 2048.
    DOE evaluates the impacts of new and amended standards by comparing 
a base-case projection with standards-case projections. The base-case 
projection characterizes energy and water use and consumer costs for 
each product class in the absence of new or amended energy conservation 
standards. For the base-case projection, DOE considers historical 
trends in efficiency and various forces that are likely to affect the 
mix of efficiencies over time. DOE compares the base-case projection 
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 
standards cases, DOE considers how a given standard would likely affect 
the market shares of products with efficiencies greater than the 
standard.
    DOE uses a spreadsheet model to calculate the energy and water 
savings, and the national consumer costs and savings for each TSL. 
Chapter 10 of the NOPR TSD describes the models and how to use them; 
interested parties can review DOE's analyses by changing various input 
quantities within the spreadsheet. The NIA spreadsheet model uses 
typical or weighted-average mean values (as opposed to probability 
distributions) as inputs.
    DOE used projections of energy and combined water prices as 
described in section IV.F.4 and IV.F.5, as well as chapter 8 of the 
NOPR TSD. As part of the NIA, DOE analyzed scenarios that used inputs 
from the AEO2014 Low Economic Growth and High Economic Growth cases. 
Those cases have higher and lower energy price trends compared to the 
reference case. NIA results based on these cases are presented in 
appendix 10A of the NOPR TSD.
    Table IV.4 summarizes the inputs and methods DOE used for the NIA 
analysis. Discussion of these inputs and methods follows the table. See 
chapter 10 of the NOPR TSD for further details.

                   Table IV.4--Summary of Inputs and Methods for the National Impact Analysis
----------------------------------------------------------------------------------------------------------------
                               Inputs                                                   Method
----------------------------------------------------------------------------------------------------------------
Shipments...........................................................  Annual shipments from shipments model.
First Year of Analysis Period.......................................  2019
No-Standards Case Forecasted Efficiencies...........................  Efficiency distributions are forecasted
                                                                       based on historical efficiency data.
Standards Case Forecasted Efficiencies..............................  Used a ``roll-up'' scenario.
Annual Energy and Water Consumption per Unit........................  Annual weighted-average values are a
                                                                       function of energy and water use at each
                                                                       TSL.
Total Installed Cost per Unit.......................................  Annual weighted-average values are a
                                                                       function of cost at each TSL.
                                                                      Incorporates forecast of future product
                                                                       prices based on historical data.
Annual Energy and Combined Water Cost per Unit......................  Annual weighted-average values as a
                                                                       function of the annual energy and water
                                                                       consumption per unit, and energy, and
                                                                       combined water treatment prices.
Energy Prices.......................................................  AEO2014 forecasts (to 2040) and
                                                                       extrapolation through 2058.
Energy Site-to-Source Conversion Factors............................  Varies yearly and is generated by NEMS-BT.
Discount Rate.......................................................  3 and 7 percent real.
Present Year........................................................  Future expenses discounted to 2015, when
                                                                       the NOPR will be published.
----------------------------------------------------------------------------------------------------------------

1. National Energy and Water Savings
    The national energy and water savings analysis involves a 
comparison of national energy and water consumption of the considered 
product in each potential standards case (TSL) with consumption in the 
no-standards case with no amended energy and water conservation 
standards. DOE calculated the national energy and water consumption by 
multiplying the number of units (stock) of each product unit (by 
vintage or age) by the unit energy and water consumption (also by 
vintage). Then, DOE calculated annual NES and national water savings 
based on the difference in national energy and water consumption for 
the no-standards case (without amended efficiency standards) and for 
each higher efficiency standard. DOE estimated energy consumption and 
savings based on site energy, and converted the electricity consumption 
and savings to primary energy using annual conversion factors derived 
from the AEO2014 version of NEMS. Cumulative energy and water savings 
are the sum of the annual NES and national water savings for each year 
over the timeframe of the analysis. DOE has historically presented NES 
in terms of primary energy savings. In the case of electricity use and 
savings, this quantity includes the energy consumed by power plants to 
generate delivered (site) electricity.
    In response to the recommendations of a committee on ``Point-of-Use 
and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency 
Standards'' appointed by the National Academy of Sciences, DOE 
announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the 
approaches discussed in the August 18, 2011 proposed statement of 
policy, DOE published a statement of amended policy in the Federal 
Register in which DOE explained its determination that NEMS is the most 
appropriate tool for

[[Page 39508]]

its FFC analysis, as well as its intention to use NEMS for that 
purpose. 77 FR 49701 (Aug. 17, 2012).
2. Forecasted Efficiency in the No-Standards Case and Standards Cases
    A key component of the NIA is the trend in energy efficiency 
projected for the no-standards case (without new or amended standards) 
and the standards case. Section IV.F.9 of this notice describes how DOE 
developed a no-standards 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.
3. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers are: (1) Total annual installed cost, (2) 
total annual savings in operating costs, and (3) a discount factor to 
calculate the present value of costs and savings. DOE calculates net 
savings each year as the difference between the no-standards case and 
each standards case in terms of total savings in operating costs versus 
total increases in installed costs. DOE calculates operating cost 
savings over the lifetime of each product unit shipped during the 
forecast period. The operating cost savings are energy and combined 
water cost savings.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. DOE 
estimated the NPV of 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.\35\ The 
discount rates for the determination of NPV are in contrast to the 
discount rates used in the LCC and PBP analysis, which are designed to 
reflect an individual 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 is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \35\ OMB Circular A-4, section E (Sept. 17, 2003) (Available at: 
www.whitehouse.gov/omb/memoranda/m03-21.html.).
---------------------------------------------------------------------------

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by an amended 
national standard. DOE evaluated impacts on particular subgroups of 
consumers by analyzing the LCC impacts and PBP for those particular 
consumers from alternative standard levels. For this rulemaking, DOE 
analyzed the impacts of the considered standard levels on single 
entities and limited service establishment end users.
    In general, the higher the cost of capital and the lower the cost 
of energy and water, the more likely it is that an entity would be 
disproportionately affected by the requirement to purchase higher 
efficiency product. In this analysis, a single entity would be a small, 
independent, or family-owned business that operates in a single 
location. Compared to large corporations and franchises, these single 
entities might be subjected to higher costs of capital. For the purpose 
of the subgroup analysis, a limited service establishment is a consumer 
that is likely to have a significantly lower operating time than the 
average consumer. A lower operating time would lead to lower operating 
cost savings over the lifetime of the product, making this subgroup of 
consumers disproportionately affected by amended efficiency standards. 
Chapter 11 in the NOPR TSD describes the consumer subgroup analysis in 
greater detail.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impacts of amended 
energy conservation standards on manufacturers of commercial prerinse 
spray valves and to estimate the potential impacts of such standards on 
employment and manufacturing capacity. The MIA has both quantitative 
and qualitative aspects and includes analyses of forecasted industry 
cash flows, the INPV, investments in research and development (R&D) and 
manufacturing capital, and domestic manufacturing employment. 
Additionally, the MIA seeks to determine how amended energy 
conservation standards might affect manufacturing employment, capacity, 
and competition, as well as how standards contribute to overall 
regulatory burden. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups, including small 
business manufacturers.
    The quantitative elements of the MIA rely on the Government 
Regulatory Impact Model (GRIM), an industry cash-flow model customized 
for this rulemaking. See section IV.J.2 for details on the GRIM. The 
qualitative parts of the MIA address factors such as product 
characteristics, characteristics of particular firms, and market 
trends. The complete MIA is discussed in chapter 12 of the NOPR TSD. 
DOE conducted the MIA in the three phases.
    In Phase 1 of the MIA, DOE prepared a profile of the commercial 
prerinse spray valve manufacturing industry based on the market and 
technology assessment, information on the present and past market 
structure and characteristics of the industry, 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, Standard 
& Poor's stock reports, and corporate annual reports released by 
publicly held companies.\36\ DOE used this and other publicly available 
information to derive preliminary financial inputs for the GRIM, 
including an industry discount rate, manufacturer markup, cost of goods 
sold and depreciation, selling, general, and administrative (SG&A) 
expenses, and research and development (R&D) expenses.
---------------------------------------------------------------------------

    \36\ SEC Form 10-K filings are available at www.sec.gov/edgar.shtml. Stock reports are available at 
www.standardandpoors.com.
---------------------------------------------------------------------------

    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) Create a need for increased investment, (2) 
raise per-unit production costs, and (3) alter manufacturer revenue due 
to possible changes in sales volumes and/or manufacturer's per-unit 
gross margins. DOE used the GRIM to model these effects in a cash-flow 
analysis of the commercial prerinse spray valve manufacturing industry. 
In performing this analysis, DOE used the financial parameters 
developed in Phase 1, the cost-efficiency curves from the engineering 
analysis, and the shipment assumptions from the NIA.
    In phase 3, DOE evaluated subgroups of manufacturers that may be 
disproportionately impacted by standards or that may not be accurately 
represented by the average cost assumptions used to develop the 
industry cash-flow analysis. For example, small businesses, 
manufacturers of niche products, or companies exhibiting a cost 
structure that differs significantly from the

[[Page 39509]]

industry average could be more negatively affected. While DOE did not 
identify any other subgroup of manufacturers of commercial prerinse 
spray valves that would warrant a separate analysis, DOE specifically 
investigated impacts on small business manufacturers. See section 
V.B.2.d and section VI.B of this notice for more information.
    The MIA also addresses the direct impact on employment tied to the 
manufacturing of commercial prerinse spray valves. Using the GRIM and 
census data, DOE estimated the domestic labor expenditures and number 
of domestic production workers in the no-standards case and at each TSL 
from 2015 to 2048. See section V.B.2.b of this notice and chapter 12 of 
the NOPR TSD for more information on direct employment impacts.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in cash flow that result 
in a higher or lower industry value due to energy conservation 
standards. The GRIM is a standard, discounted cash-flow model that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs, and models changes in manufacturing 
costs, shipments, investments, and margins that may result from amended 
energy conservation standards. The GRIM uses these inputs to arrive at 
a series of annual cash flows, beginning with the base year of the 
analysis, 2015, and continuing to 2048. DOE uses the industry-average 
weighted average cost of capital (WACC) of 6.9 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 no-standards case with 
INPV at each TSL (the standards case). The difference in INPV between 
the base and standards cases represents the financial impact of the 
amended standard on manufacturers. Additional details about the GRIM 
can be found in chapter 12 of the NOPR TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
    Manufacturer production costs are the costs to the manufacturer to 
produce a commercial prerinse spray valve. These costs include 
materials, labor, overhead, and depreciation. Changes in the MPCs of 
commercial prerinse spray valves can affect revenues, gross margins, 
and cash flow of the industry, making product cost data key inputs for 
DOE's analysis. DOE estimated the MPCs for the three commercial 
prerinse spray valve product classes at the baseline and higher 
efficiency levels, as described in section IV.C of this notice. The 
cost model also disaggregated the MPCs into the cost of materials, 
labor, overhead, and depreciation. DOE used the MPCs and cost 
breakdowns as described in section IV.C of this notice, and further 
detailed in chapter 5 of the NOPR TSD, for each efficiency level 
analyzed in the GRIM.
No-Standards Case Shipments Forecast
    The GRIM estimates manufacturer revenues in each year of the 
forecast based in part on total unit shipments and the distribution of 
these values by efficiency level and product class. Generally, changes 
in the efficiency mix and total shipments at each standard level affect 
manufacturer finances. The GRIM uses the NIA shipments forecasts from 
2015 to 2048, the end of the analysis period.
    To calculate shipments, DOE developed a shipments model for each 
product class based on an analysis of key market drivers for commercial 
prerinse spray valves. For greater detail on the shipments analysis, 
see section IV.G of this notice and chapter 9 of the NOPR TSD.
Product and Capital Conversion Costs
    Amended energy conservation standards may cause manufacturers to 
incur conversion costs to make necessary changes to their production 
facilities and bring 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 R&D, 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 contacted manufacturers of commercial prerinse spray valves for 
the purpose of conducting interviews. However, no manufacturer agreed 
to participate in an interview. In the absence of information from 
manufacturers, DOE created estimates of capital and product conversion 
costs using the engineering cost model and information gained during 
product teardowns. DOE's estimates of the product and capital 
conversion costs for the CPSV manufacturing industry can be found in 
section IV.J.2 of this notice and in chapter 12 of the NOPR TSD. DOE 
seeks information on capital and product conversion costs associated 
with amended standards for commercial prerinse spray valves.
b. GRIM Scenarios
Standards Case Shipments Forecasts
    The MIA results presented in section V.B.2 of this notice use 
shipments from the NIA. For standards case shipments, DOE assumed that 
commercial prerinse spray valve consumers would choose to buy the 
commercial prerinse spray valve that has the flow rate that is closest 
to the flow rate of the product they currently use and that complies 
with the new standard (and, accordingly, manufacturers would choose to 
produce products with the closest flow rate to those they currently 
produce). Due to the structure of the product classes and efficiency 
levels for this rule, in certain instances, product class switching is 
predicted to occur, wherein consumers choose to buy the product with 
the flow rate that is closest to their current product's flow rate even 
if it has a higher spray force (putting those products into a different 
product class). Where product class switching does not occur, no-
standards case shipments of products that did not meet the new standard 
would roll up to meet the standard starting in the compliance year. See 
section IV.G of this notice for a description of the standards case 
efficiency distributions.
    The NIA also 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, which assumes constant 
pricing. See section IV.F.1 of this notice 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, 
depreciation, and overhead estimated in DOE's MPCs) and all non-
production costs (i.e., SG&A, R&D, and interest), along with profit.
    DOE used the baseline manufacturer markup of 1.30, developed during 
Phase 1 and subsequently revised, for all products when modeling the 
no-standards case in the GRIM. DOE requests comment on the use of 1.30 
as an appropriate baseline markup for all commercial prerinse spray 
valves.
    For the standards case in the GRIM, DOE modeled two markup 
scenarios to represent the uncertainty regarding the potential impacts 
on prices and

[[Page 39510]]

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 is based on the 
assumption that efficiency is not the primary factor influencing 
purchasing decisions for commercial prerinse spray valve consumers. The 
two standards case markup scenarios are (1) a preservation of gross 
margin as a percentage of revenues markup scenario, and (2) a 
preservation of per-unit earnings before interest and taxes (EBIT) 
markup scenario.
    The preservation of gross margin as a percentage of revenues markup 
scenario assumes that the baseline markup of 1.30 is maintained for all 
products in the standards case. Typically, this scenario represents the 
upper bound of industry profitability, as manufacturers are able to 
fully pass through additional costs due to amended standards to their 
consumers under this scenario.
    The preservation of per-unit EBIT markup scenario is similar to the 
preservation of gross margin as a percentage of revenues markup 
scenario, with the exception that in the standards case minimally 
compliant products lose a fraction of the baseline markup. Typically, 
this scenario represents the lower bound for profitability and a more 
substantial impact on the industry as manufacturers accept a lower 
margin in an attempt to offer price competitive entry level products 
while maintaining the same level of EBIT, on a per-unit basis, that 
they saw prior to amended standards.
    For the commercial prerinse spray valve industry, there is no 
difference between the preservation of gross margin as a percentage of 
revenues and the preservation of per-unit EBIT markup scenarios 
described previously. This is explained by the fact that manufacturing 
production costs are estimated to be constant across all standard 
efficiency levels (i.e., baseline, EL 1, EL 2, EL 3), total shipments 
are constant across standards efficiency levels, and changes in 
standard case shipments for certain product classes as a result of 
product class switching (e.g., a decrease in Standard Duty commercial 
prerinse spray valve shipments and an equivalent increase in Heavy Duty 
commercial prerinse spray valve shipments at all TSLs) are controlled 
for by using the per-unit EBIT in modeling the lower bound of industry 
profitability. Because the preservation of gross margin as a percentage 
of revenues and the preservation of per-unit EBIT markup scenarios 
produce the same results in the GRIM, DOE does not break out the 
results of each in the presentation of INPV impacts in section V.B.2.a 
of this notice. DOE requests comment on the appropriateness of assuming 
a constant manufacturer markup across all product classes and 
efficiency levels.
Capital Conversion Cost Scenarios
    In order to estimate an upper and lower bound of industry 
profitability as a result of amended energy conservation standards for 
commercial prerinse spray valves, DOE developed two model scenarios for 
the capital conversion costs required to meet each TSL. The assumption 
underlying both scenarios is that capital conversion costs associated 
with increasing the efficiency of commercial prerinse spray valves are 
exclusively related to the fabrication of plastic nozzles, as 
manufacturers would have to redesign nozzle molds to produce a nozzle 
with fewer or smaller spray holes. DOE does not believe there would be 
capital conversion costs associated with the in-house fabrication of 
metal nozzles. A more detailed discussion of capital conversion cost 
assumptions is provided in chapter 12 of the NOPR TSD.
    One capital conversion cost scenario, representing the upper bound 
of industry profitability, assumes that the majority of commercial 
prerinse spray valve manufacturers source components (including the 
nozzle) from component suppliers and simply assemble the commercial 
prerinse spray valves (i.e., Sourced Components Scenario). The second 
scenario, representing the lower bound of industry profitability, 
assumes that all of the commercial prerinse spray valve manufacturers 
currently selling products with plastic spray nozzles fabricate these 
nozzles in-house (i.e., Fabricated Components Scenario). More detail 
regarding these capital conversion cost scenarios is provided in 
chapter 12 of the NOPR TSD. Additionally, DOE requests comment on which 
capital conversion cost scenario more accurately reflects the expected 
capital conversion costs associated with amended standards for 
commercial prerinse spray valves.
3. Discussion of Comments
    During the public comment period following the 2014 Framework 
public meeting, trade associations and a small business manufacturer of 
commercial prerinse spray valves provided several comments on the 
potential impact of amended energy conservation standards on 
manufacturers.
    PMI stated that manufacturers are required to comply with Federal, 
state, and local regulations, and often strive to obtain additional 
certifications under EPA's WaterSense program, IAPMO, and the Canadian 
Standards Association (CSA). PMI stated that commercial prerinse spray 
valve manufacturers are required to file their products with many 
agencies, including the Federal Trade Commission (FTC), DOE, CEC, the 
State of Texas, and the State of Massachusetts. Collectively, these 
requirements impose a worrisome burden on manufacturers in terms of 
time and cost. (PMI, No. 10 at p. 2) T&S Brass commented that 
manufacturers of commercial prerinse spray valves are familiar with 
industry standards such as ASME A112.18.1/CSA B125.1 and ASTM F2324-13, 
and that manufacturers recognize the added burden of re-testing and 
certification due to design and/or performance changes. (T&S, No. 12 at 
p. 6)
    DOE acknowledges the existence of Federal regulations, cleanability 
standards established by the State of California,\37\ and third-party 
certification programs impacting commercial prerinse spray valve 
manufacturers. DOE investigates cumulative regulatory burden impacts 
associated with this rulemaking in section V.B.2.e of this notice, and 
in more detail in chapter 12 of the NOPR TSD. Additionally, DOE 
requests comment on the recertification costs associated with complying 
with industry standards that result from amended DOE standards for 
commercial prerinse spray valves. DOE will consider any such additional 
information when estimating product conversion costs for the final rule 
(section VII.E. of this notice).
---------------------------------------------------------------------------

    \37\ Commercial pre-rinse spray valves manufactured on or after 
January 1, 2006, shall be capable of cleaning 60 plates in an 
average time of not more than 30 seconds per plate. (http://www.energy.ca.gov/2014publications/CEC-400-2014-009/CEC-400-2014-009-CMF.pdf)
---------------------------------------------------------------------------

    NAFEM commented that DOE failed to show how the considerable costs 
of the regulation are economically justified. NAFEM also suggested that 
the economic impact on manufacturers and consumers, particularly small 
businesses, is considerable because the technology options suggested by 
DOE in the Framework document are not technologically feasible. (NAFEM, 
No. 9 at p. 2) Both T&S Brass and NAFEM agreed that small businesses 
should be analyzed as a manufacturer subgroup in the manufacturer 
impact analysis. (T&S, Public Meeting Transcript, No. 6 at p. 65 and 
NAFEM, No. 9 at p. 2) Additionally, T&S Brass commented that small 
businesses operate on strict budgets and operating costs. (T&S, No. 12 
at p. 8)

[[Page 39511]]

    The economic impact on manufacturers is presented in section V.B.2. 
The economic impact on consumers is presented in section V.B.1. DOE 
analyzes the impacts of the rulemaking on small business manufacturers 
as a subgroup in section VI.B of this notice, and in section 12.6 of 
the NOPR TSD.
    T&S Brass suggested that DOE include importers of commercial 
prerinse spray valves as a subgroup because the lack of enforcement by 
government agencies on importers has adverse effects on other 
commercial prerinse spray valve manufacturers who do follow the current 
regulations. (T&S, No. 12 at p.8)
    Energy conservation standards set by DOE apply to imported 
commercial prerinse spray valves as well as commercial prerinse spray 
valves assembled or manufactured domestically. Commercial prerinse 
spray valves are subject to DOE's enforcement authority for energy 
conservation standards, regardless of whether they are imported or 
manufactured domestically. For this reason, DOE does not believe that 
importers of commercial prerinse spray valves should be considered as a 
manufacturing subgroup for this analysis.
4. Manufacturer Interviews
    DOE contacted manufacturers representing an estimated 100 percent 
of the U.S. commercial prerinse spray valve market for the purpose of 
conducting interviews. However, no manufacturer agreed to participate 
in an interview.

K. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of CO2, NOX, SO2, and 
Hg from potential energy conservation standards for commercial prerinse 
spray valves. In addition to estimating impacts of standards on power 
sector emissions, DOE estimated emissions impacts in production 
activities (extracting, processing, and transporting fuels) that 
provide the energy inputs to power plants. These are referred to as 
``upstream'' emissions. Together, these emissions account for the FFC. 
In accordance with DOE's FFC Statement of Policy (76 FR 51281 (Aug. 18, 
2011) as amended at 77 FR 49701 (August 17, 2012)), the FFC analysis 
also includes impacts on emissions of methane (CH4) and 
nitrous oxide (N2O), both of which are recognized as 
greenhouse gases.
    DOE conducted the emissions analysis using emissions factors for 
CO2 and most of the other gases derived from data in 
AEO2014. Combustion emissions of CH4 and N2O were 
estimated using emissions intensity factors published by the EPA in its 
Greenhouse Gas (GHG) Emissions Factors Hub.\38\ DOE developed separate 
emissions factors for power sector emissions and upstream emissions. 
The method that DOE used to derive emissions factors is described in 
chapter 13 of the NOPR TSD.
---------------------------------------------------------------------------

    \38\ See EPA emission factors for GHG inventories available at 
www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of the greenhouse gas by the gas's global 
warming potential (GWP) over a 100-year time horizon. Based on the 
Fifth Assessment Report of the Intergovernmental Panel on Climate 
Change,\39\ DOE used GWP values of 28 for CH4 and 265 for 
N2O.
---------------------------------------------------------------------------

    \39\ IPCC, Climate Change 2013: The Physical Science Basis. 
Contribution of Working Group I to the Fifth Assessment Report of 
the Intergovernmental Panel on Climate Change [Stocker, T.F., D. 
Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, 
Y. Xia, V. Bex and P.M. Midgley (eds.)] Cambridge University Press, 
Cambridge, United Kingdom and New York, NY, USA. Chapter 8 (2013).
---------------------------------------------------------------------------

    EIA prepares the AEO using NEMS. Each annual version of NEMS 
incorporates the projected impacts of existing air quality regulations 
on emissions. AEO2014 generally represents current legislation and 
environmental regulations, including recent government actions, for 
which implementing regulations were available as of October 31, 2013.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States and DC. 
SO2 emissions from 28 eastern States and DC were also 
limited under the Clean Air Interstate Rule (CAIR). 70 FR 25162 (May 
12, 2005).
    CAIR created an allowance-based trading program that operates along 
with the Title IV program. In 2008, CAIR was remanded to EPA by the 
U.S. Court of Appeals for the District of Columbia Circuit, but it 
remained in effect.\40\ In 2011, EPA issued a replacement for CAIR, the 
Cross-State Air Pollution Rule (CSAPR). 76 FR 48208 (August 8, 2011). 
On August 21, 2012, the DC Circuit issued a decision to vacate 
CSAPR,\41\ and the court ordered EPA to continue administering CAIR. On 
April 29, 2014, the U.S. Supreme Court reversed the judgment of the DC 
Circuit and remanded the case for further proceedings consistent with 
the Supreme Court's opinion.\42\ On October 23, 2014, the DC Circuit 
lifted the stay of CSAPR.\43\ Pursuant to this action, CSAPR went into 
effect (and CAIR ceased to be in effect) as of January 1, 2015.
---------------------------------------------------------------------------

    \40\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
    \41\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
    \42\ See EPA v. EME Homer City Generation, 134 S.Ct. 1584, 1610 
(U.S. 2014). The Supreme Court held in part that EPA's methodology 
for quantifying emissions that must be eliminated in certain States 
due to their impacts in other downwind States was based on a 
permissible, workable, and equitable interpretation of the Clean Air 
Act provision that provides statutory authority for CSAPR.
    \43\ See Georgia v. EPA, Order (D.C. Cir. filed October 23, 
2014) (No. 11-1302).
---------------------------------------------------------------------------

    Because AEO2014 was prepared prior to the Supreme Court's opinion, 
it assumed that CAIR remains a binding regulation through 2040. Thus, 
DOE's analysis used emissions factors that assume that CAIR, not CSAPR, 
is the regulation in force. However, the difference between CAIR and 
CSAPR is not relevant for the purpose of DOE's analysis of emissions 
impacts from energy conservation standards.
    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Beginning in 2016, however, SO2 emissions will 
decline significantly as a result of the Mercury and Air Toxics 
Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the 
final MATS rule, EPA established a standard for hydrogen chloride as a 
surrogate for acid gas hazardous air pollutants (HAP), and also 
established a standard for SO2 (a non-HAP acid gas) as an 
alternative equivalent surrogate standard for acid gas HAP. The same 
controls are used to reduce HAP and non-HAP acid gas; thus, 
SO2 emissions will be reduced as a result of the control 
technologies installed on coal-fired power plants to comply with the 
MATS requirements for acid gas. AEO2014 assumes that, in order to 
continue operating, coal plants must have either flue gas 
desulfurization or dry sorbent injection systems installed by 2016. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Under the MATS, emissions will be far 
below the cap established by CAIR, so it is unlikely that excess 
SO2 emissions allowances resulting from the lower 
electricity demand would be

[[Page 39512]]

needed or used to permit offsetting increases in SO2 
emissions by any regulated EGU. Therefore, DOE believes that energy 
efficiency standards will reduce SO2 emissions in 2016 and 
beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
States and DC.\44\ Energy conservation standards are expected to have 
little effect on NOX emissions in those States covered by 
CAIR because excess NOX emissions allowances resulting from 
the lower electricity demand could be used to permit offsetting 
increases in NOX emissions. However, standards would be 
expected to reduce NOX emissions in the States not affected 
by the caps, so DOE estimated NOX emissions reductions from 
the standards considered in this NOPR for these States.
---------------------------------------------------------------------------

    \44\ CSAPR also applies to NOX, and it would 
supersede the regulation of NOX under CAIR. As stated 
previously, the current analysis assumes that CAIR, not CSAPR, is 
the regulation in force. The difference between CAIR and CSAPR with 
regard to DOE's analysis of NOX is slight.
---------------------------------------------------------------------------

    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps. DOE estimated mercury emissions using emissions 
factors based on AEO2014, which incorporates the MATS.
    In the 2014 Framework document, DOE requested comment and 
information on potential methods and data sources that can be used to 
assess emissions reductions as a result of water savings. In response 
to DOE's request, the Advocates commented that the analysis should take 
into account the off-site energy embedded by public water suppliers, 
private wells, and wastewater treatment systems serving locations with 
covered products that use water. The Advocates further stated that they 
intend to develop a more substantial recommendation regarding methods 
and data sources for this docket at a later date. (Advocates, No. 11 at 
pp. 2-3) DOE recognizes that there are emission reductions related to 
reduction in water production and distribution. However, currently 
there are no standardized models or tools that adequately account for 
these reductions as a result of water savings, and DOE was not able to 
analyze these potential emissions reductions.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation analogous 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 values considered in this notice.
    For this notice, DOE relied on a set of values for the SCC that was 
developed by a Federal interagency process. The basis for these values 
is summarized in the following sections, and a more detailed 
description of the methodologies used is provided as an appendix to 
chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
    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 CO2. A domestic SCC value is 
meant to reflect the value of damages in the United States resulting 
from a unit change in CO2 emissions, while a global SCC 
value is meant to reflect the value of damages worldwide.
    Under section 1(b) of Executive Order 12866, ``Regulatory Planning 
and Review,'' 58 FR 51735 (Oct. 4, 1993), 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. 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
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \45\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs, (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 questions of science, economics, and 
ethics, and should be viewed as provisional.
---------------------------------------------------------------------------

    \45\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. National Academies Press: 
Washington, DC (2009).
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. 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 values 
appropriate for that year. The NPV 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.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate changes and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and will consider public 
comments as part of the ongoing interagency process.
b. Development of Social Cost of Carbon Values
    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 Federal agencies, the Administration 
sought to develop a transparent and defensible method, specifically 
designed for the rulemaking process, to

[[Page 39513]]

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$) of $55, $33, $19, $10, and $5 per metric 
ton of CO2. These interim values represented 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.
c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specifically, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: the FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change (IPCC). 
Each model was given equal weight in the SCC values that were 
developed.
    Each model takes a slightly different approach in modeling 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 sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from the three integrated assessment models, at discount rates of 2.5, 
3, and 5 percent. The fourth set, which represents the 95th percentile 
SCC estimate across all three models at a 3-percent discount rate, was 
included to represent higher-than-expected impacts from temperature 
change further out in the tails of the SCC distribution. The 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 effects,\46\ 
although preference is given to consideration of the global benefits of 
reducing CO2 emissions. Table IV.5 presents the values in 
the 2010 interagency group report,\47\ which is reproduced in appendix 
14-A of the NOPR TSD.
---------------------------------------------------------------------------

    \46\ 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.
    \47\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                      Table IV.5--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           [2007$ per Metric Ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                      Year                                                                            3% 95th
                                                    5% Average      3% Average     2.5% Average     percentile
----------------------------------------------------------------------------------------------------------------
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
----------------------------------------------------------------------------------------------------------------

    The SCC values used for this notice were generated using the most 
recent versions of the three integrated assessment models that have 
been published in the peer-reviewed literature.\48\
---------------------------------------------------------------------------

    \48\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised November 2013) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
---------------------------------------------------------------------------

    Table IV.6 shows the updated sets of SCC estimates in 5-year 
increments from 2010 to 2050. The full set of annual SCC estimates 
between 2010 and 2050 is reported in appendix 14-B of the NOPR TSD. The 
central value that emerges is the average SCC across models at the 3-
percent discount rate. However, for purposes of capturing the 
uncertainties involved in regulatory impact analysis, the interagency 
group emphasizes the importance of including all four sets of SCC 
values.

[[Page 39514]]

        Table IV.6--Annual SCC Values From 2013 Interagency Report, 2010-2050 (2007$ per Metric Ton CO2)
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                      Year                                                                            3% 95th
                                                    5% Average      3% Average     2.5% Average     percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              11              32              51              89
2015............................................              11              37              57             109
2020............................................              12              43              64             128
2025............................................              14              47              69             143
2030............................................              16              52              75             159
2035............................................              19              56              80             175
2040............................................              21              61              86             191
2045............................................              24              66              92             206
2050............................................              26              71              97             220
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 2009 National 
Research Council report 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 analytical challenges that are 
being addressed by the research community, including research programs 
housed in many of the Federal agencies participating in the interagency 
process to estimate the SCC. The interagency group intends 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 summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report adjusted to 2014$ using the implicit price 
deflator for GDP from the Bureau of Economic Analysis. For each of the 
four sets of SCC values, the values for emissions in 2015 were $12.2, 
$41.1, $63.3, and $121 per metric ton avoided (values expressed in 
2014$). DOE derived values after 2050 using the relevant growth rates 
for the 2040-2050 period in the interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. 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.
2. Valuation of Other Emissions Reductions
    DOE has taken into account how amended energy conservation 
standards would reduce site NOX emissions nationwide and 
increase power sector NOX emissions in those 22 States not 
affected by the CAIR. DOE estimated the monetized value of net 
NOX emissions reductions resulting from each of the TSLs 
considered for this notice based on estimates found in the relevant 
scientific literature. Estimates of monetary value for reducing 
NOX from stationary sources range from $483 to $4,964 per 
short ton in 2014$.\49\ DOE calculated monetary benefits using a medium 
value for NOX emissions of $2,723 per short ton (in 2014$), 
and real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \49\ 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) (Available at: www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf.).
---------------------------------------------------------------------------

    DOE is evaluating appropriate monetization of avoided 
SO2 and Hg emissions in energy conservation standards 
rulemakings. DOE has not included monetization of those emissions in 
the current analysis.

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the 
electric power generation industry that would result from the adoption 
of new or amended energy conservation standards. In the utility impact 
analysis, DOE analyzes the changes in installed electrical capacity and 
generation that would result for each TSL. The utility impact analysis 
is based on published output from NEMS, which is a public domain, 
multi-sectored, partial equilibrium model of the U.S. energy sector. 
Each year, NEMS is updated to produce the AEO reference case, as well 
as a number of side cases that estimate the economy-wide impacts of 
changes to energy supply and demand. DOE uses published side cases that 
incorporate efficiency-related policies to estimate the marginal 
impacts of reduced energy demand on the utility sector. The output of 
this analysis is a set of time-dependent coefficients that capture the 
change in electricity generation, primary fuel consumption, installed 
capacity, and power sector emissions due to a unit reduction in demand 
for a given end use. These coefficients are multiplied by the stream of 
energy savings calculated in the NIA to provide estimates of selected 
utility impacts of new or amended energy conservation standards. 
Chapter 15 of the NOPR TSD describes the utility impact analysis in 
further detail.

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
both direct and indirect impacts. Direct employment impacts are any 
changes in the number of employees of manufacturers of the product 
subject to standards, their suppliers, and related service firms. The 
direct employment impacts are addressed in the MIA. Indirect employment 
impacts from standards consist of the net jobs created or eliminated in 
the national economy, other than those in the manufacturing sector 
being regulated, caused by: (1) Reduced spending by end users on energy 
and water, (2) reduced spending on new energy supply by the utility 
industry, (3) potential 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

[[Page 39515]]

Labor Statistics (BLS).\50\ The BLS regularly publishes its estimates 
of the number of jobs per million dollars of economic activity in 
different sectors of 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.\51\ 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 commercial prerinse spray valves.
---------------------------------------------------------------------------

    \50\ 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.
    \51\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II), U.S. Department of Commerce (1992).
---------------------------------------------------------------------------

    For the amended standard levels considered in this notice, 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).\52\ 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.
---------------------------------------------------------------------------

    \52\ 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 rulemaking. Because ImSET predicts 
small job impacts resulting from this rulemaking, regardless of these 
uncertainties, the actual job impacts are likely to be negligible in 
the overall economy. For more details on the employment impact 
analysis, see chapter 16 of the NOPR TSD.

V. Analytical Results

    The following section addresses the results from DOE's analyses 
with respect to potential amended energy conservation standards for 
commercial prerinse spray valves. It addresses the TSLs examined by DOE 
and the projected impacts of each of these levels if adopted as energy 
conservation standards for commercial prerinse spray valves. Additional 
details regarding DOE's analyses are contained in the NOPR TSD 
supporting this notice.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of four TSLs for commercial 
prerinse spray valves. These TSLs were developed using combinations of 
efficiency levels (ELs) for the product classes analyzed by DOE. DOE 
presents the results for those TSLs in this notice. DOE presents the 
results for all efficiency levels that were analyzed in the NOPR TSD. 
Table V.1 presents the TSLs and the corresponding efficiency levels for 
commercial prerinse spray valves. TSL 4 represents the maximum 
technologically feasible (``max-tech'') improvements in energy and 
water efficiency. TSL 3 is the combination of efficiency levels for 
each product class that yields the maximum total NPV. TSL 2 consists of 
the next efficiency level below the max-tech level for all product 
classes. TSL 1 consists of the first efficiency level considered above 
the baseline for all commercial prerinse spray valve product classes.

                                          Table V.1--Trial Standard Levels for Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Light duty (5 ozf and 8 ozf)
                                                         --------------------------------              ozf)              -------------------------------
                           TSL                                                           --------------------------------
                                                                EL           Flow rate                       Flow rate          EL           Flow rate
                                                                               (gpm)            EL             (gpm)                           (gpm)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               1            0.72               1            1.10               1            1.44
2.......................................................               2            0.68               2            0.97               2            1.28
3.......................................................               3            0.65               2            0.97               3            1.24
4.......................................................               3            0.65               3            0.94               3            1.24
--------------------------------------------------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on commercial prerinse spray 
valve consumers by looking at the effects potential amended standards 
would have on the LCC and PBP. DOE also examined the impacts of 
potential standards on consumer subgroups. These analyses are discussed 
below.
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of potential amended energy 
conservation standards on consumers of commercial prerinse spray 
valves, DOE conducted an LCC and PBP analysis for each TSL. In general, 
higher-efficiency products would affect consumers in two ways: (1) 
Purchase price would increase and (2) annual operating costs would 
decrease. Because DOE did not find that the purchase price of 
commercial prerinse spray valves increased with increasing efficiency, 
the only effect of higher-efficiency products to consumers is decreased 
operating costs. Inputs used for calculating the LCC and PBP include 
total installed costs (i.e., product price plus installation costs) and 
operating costs (i.e., energy, and combined water prices, energy and 
combined water price trends). The LCC calculation also uses product 
lifetime and a discount rate. Chapter 8 of the

[[Page 39516]]

NOPR TSD provides detailed information on the LCC and PBP analyses.
    Table V.2 through Table V.7 show the LCC and PBP results for all 
efficiency levels considered for commercial prerinse spray valves. In 
the first of each pair of tables, the simple payback is measured 
relative to the baseline product. In the second of each pair of tables, 
the LCC savings are measured relative to the no-standards case 
efficiency distribution in the first year of the analysis period (see 
section IV.F.9 of this notice). No impacts occur when the no-standards 
case efficiency for a specific consumer equals or exceeds the 
efficiency at a given TSL as a standard would have no effect because 
the product installed would be at or above that standard level without 
amended standards. For commercial prerinse spray valves, DOE determined 
that there was no increase in purchase price with increasing efficiency 
level within each product class. Therefore, LCC and PBP results instead 
reflect differences in operating costs due to decreased energy and 
water use for each EL.

                  Table V.2--Average LCC and PBP Results by Efficiency Level for Light Duty (5 ozf and 5 ozf and 8 ozf) Commercial Prerinse Spray Valves
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Average costs (2014$)
                                                         ---------------------------------------------------------------- Simple payback      Average
                   TSL                          EL                         First year's      Lifetime                         (years)        lifetime
                                                          Installed cost  operating cost  operating cost        LCC                           (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       0              79             785           4,120           4,199  ..............             4.9
1.......................................               1              79             707           3,708           3,787             0.0             4.9
2.......................................               2              79             628           3,296           3,375             0.0             4.9
3, 4....................................               3              79             609           3,193           3,272             0.0             4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.

 Table V.7--Average LCC Savings Relative to the No-New-Standards Case Efficiency Distribution for Heavy Duty (>8
                                      ozf) Commercial Prerinse Spray Valves
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers
                               TSL                                      EL             that           Average
                                                                                    experience       savings *
                                                                                    (net cost)        (2014$)
----------------------------------------------------------------------------------------------------------------
1...............................................................               1               0             412
2...............................................................               2               0             595
3, 4............................................................               3               0             667
----------------------------------------------------------------------------------------------------------------
Note: The calculation includes consumers with zero LCC savings (no impact).

b. Consumer Subgroup Analysis
    As described in section IV.I of this notice, DOE determined the 
impact of the considered TSLs on small businesses and limited service 
establishments. Table V.8 through Table V.10 compare 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 commercial prerinse spray valves. The average LCC savings for 
single entities and limited service establishments at the considered 
efficiency levels are not substantially different from the average for 
all consumers. Chapter 11 of the NOPR TSD presents the complete LCC and 
PBP results for the two subgroups.

      Table V.8--Light Duty (8 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and
                                                                      All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                                                Limited                                         Limited
                                                              Single          service      All consumers      Single          service      All consumers
                                                             entities     establishments                     entities     establishments
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................             290             247             309             0.0             0.0             0.0
2.......................................................             444             378             472             0.0             0.0             0.0
3.......................................................             444             378             472             0.0             0.0             0.0
4.......................................................             516             439             549             0.0             0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

      Table V.10--Heavy Duty (>8 ozf) Commercial Prerinse Spray Valves: Comparison of Average LCC Savings for Consumer Subgroups and All Consumers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2014$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                                                Limited                                         Limited
                                                              Single          service      All consumers      Single          service      All consumers
                                                             entities     establishments                     entities     establishments
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................             387             330             412             0.0             0.0             0.0
2.......................................................             559             476             595             0.0             0.0             0.0
3.......................................................             627             533             667             0.0             0.0             0.0
4.......................................................             627             533             667             0.0             0.0             0.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

c. Rebuttable Presumption Payback
    As discussed in section IV.F.11, EPCA provides a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for products that meets the 
standard is less than three times the value of the first-year energy 
and water 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 and water use 
calculation on the DOE test procedures for commercial prerinse spray 
valves. As a result, DOE calculated a single rebuttable presumption 
payback value, and not a distribution of payback periods, for each 
efficiency level. Table V.11 presents the rebuttable-presumption 
payback periods for the considered TSLs. While DOE examined the 
rebuttable-presumption criterion, it considered whether the standard 
levels considered for this proposed 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). As indicated in the engineering analysis, there is no 
increased purchase cost for products that meets the standard, so the 
rebuttable PBP for each considered TSL is zero.

                          Table V.11--Commercial Prerinse Spray Valves: Rebuttable PBPs
----------------------------------------------------------------------------------------------------------------
                                                    Rebuttable payback period for trial standard level (years)
                  Product class                  ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
Light Duty (5 ozf and 8 ozf).............................             0.0             0.0             0.0             0.0
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of commercial prerinse spray 
valves. Section V.B.2.a describes the expected impacts on manufacturers 
at each TSL. Chapter 12 of the NOPR TSD explains the analysis in 
further detail.
a. Industry Cash Flow Analysis Results
    DOE modeled two scenarios using different markup assumptions and 
two scenarios using different conversion cost assumptions, for a total 
of four different scenarios, in order to evaluate the range of cash 
flow impacts on the commercial prerinse spray valve manufacturing 
industry of amended energy conservation standards. However, as 
described in section IV.J.2, given constant manufacturing production 
costs for all product classes and across all standard efficiency 
levels, and constant total industry shipments, there is no difference 
in INPV impacts between the two markup scenarios. Therefore, DOE 
reports only the two capital conversion cost scenario's INPV results. 
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 capital conversion costs that DOE anticipates

[[Page 39519]]

could occur in the standards case. The following tables illustrate the 
financial impacts (represented by changes in INPV) of amended energy 
conservation standards on manufacturers of commercial prerinse spray 
valves, as well as the conversion costs that DOE estimates 
manufacturers would incur for each product class at each TSL.
    The INPV results refer to the difference in industry value between 
the no-standards case and the standards case, which DOE calculated by 
summing the discounted industry cash flows from the base year (2015) 
through the end of the analysis period (2048). The discussion also 
notes the difference in cash flow between the no-standards case and the 
standards case in the year before the compliance date of potential 
amended energy conservation standards.

      Table V.12--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Sourced Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                        Units              No-standards  ---------------------------------------------------------------
                                                                               case              1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  2014$ millions..............             9.1             8.5             8.1             8.0             8.0
Change in INPV............................  2014$ millions..............  ..............           (0.6)           (1.0)           (1.1)           (1.1)
                                            %...........................  ..............           (7.0)          (11.5)          (12.1)          (12.1)
Product Conversion Costs..................  2014$ millions..............  ..............             1.1             1.7             1.8             1.8
Capital Conversion Costs..................  2014$ millions..............  ..............             0.1             0.2             0.2             0.2
Total Conversion Costs....................  2014$ millions..............  ..............             1.2             1.9             2.0             2.0
Free Cash Flow (2018).....................  2014$ millions..............             0.5            0.17          (0.04)          (0.07)          (0.07)
                                            % Change....................  ..............          (65.8)         (108.2)         (113.8)         (113.8)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

     Table V.13--Manufacturer Impact Analysis for Commercial Prerinse Spray Valves--With the Fabricated Components Capital Conversion Costs Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                        Units              No-standards  ---------------------------------------------------------------
                                                                               case              1               2               3               4
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  2014$ millions..............             9.1             7.7             7.2             7.1             7.1
Change in INPV............................  2014$ millions..............  ..............           (1.4)           (1.9)           (2.0)           (2.0)
                                            %...........................  ..............          (15.0)          (21.0)          (21.6)          (21.6)
Product Conversion Costs..................  2014$ millions..............  ..............             1.1             1.7             1.8             1.8
Capital Conversion Costs..................  2014$ millions..............  ..............             0.9             1.2             1.2             1.2
Total Conversion Costs....................  2014$ millions..............  ..............             2.0             2.9             3.0             3.0
Free Cash Flow (2018).....................  2014$ millions..............             0.5           (0.2)           (0.5)           (0.5)           (0.5)
                                            % Change....................  ..............         (142.8)         (198.8)         (204.4)         (204.4)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative values.

    At TSL 1, DOE estimates impacts on INPV to range from -$1.4 million 
to -$0.6 million, or a change in INPV of -15.0 percent to -7.0 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Costs scenarios, respectively. At this level, industry free cash flow 
is estimated to decrease by as much as 142.8 percent to -$0.2 million, 
compared to the no-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. As DOE 
forecasts that approximately 65 percent of commercial prerinse spray 
valves in the no-standards case shipments scenario will meet TSL 1 in 
the first year that standards are in effect (2019), 35 percent of the 
market is affected at this standard level. The impact on INPV at TSL 1 
stems exclusively from the conversion costs associated with the 
conversion of baseline units to those meeting the standards set at TSL 
1. At TSL 1, because the industry already produces a substantial number 
of products at this efficiency level, product and capital conversion 
costs are limited to approximately $1.2 million for the Sourced 
Components Capital Conversion Costs scenario and $2.0 million for the 
Fabricated Components Capital Conversion Costs scenario.
    DOE notes that the shift of 20 percent of shipments from the 
Standard Duty to Heavy Duty product class does not have a significant 
impact on overall INPV because MPCs are the same across all product 
classes. For this reason, and because per-unit product conversion costs 
are the same for any product that has a change in flow rate and spray 
force at each efficiency level, and because capital conversion costs 
are a function of the material of the spray nozzle rather than the 
spray force (i.e., product class), DOE does not believe product class 
switching will have a detrimental impact on commercial prerinse spray 
valve manufacturers beyond the impact felt in the absence of product 
class switching.
    At TSL 2, DOE estimates impacts on INPV to range from -$1.9 million 
to -$1.0 million, or a change in INPV of -21.0 percent to -11.5 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Costs scenarios, respectively. At this level, industry free cash flow 
is estimated to decrease by as much as 198.8 percent to -$0.5 million, 
compared to the no-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. As it is 
estimated that only approximately 20 percent of commercial prerinse 
spray valves will meet the efficiency levels specified at TSL 2 in the 
first year that standards are in effect (2019), a substantial fraction 
of the market is affected at this standard level. As with TSL 1, the 
impact on INPV at TSL 2 stems exclusively from the conversion costs 
associated with the conversion of

[[Page 39520]]

lower efficiency units to those meeting the standards set at TSL 2. At 
TSL 2, because the majority of commercial prerinse spray valves will 
have to be updated to reach the standard level, product and capital 
conversion costs are estimated to be approximately $1.9 million for the 
Sourced Components Capital Conversion Costs scenario and $2.9 million 
for the Fabricated Components Capital Conversion Costs scenario. Again, 
DOE notes that the shift of 20 percent of shipments from the Standard 
Duty to Heavy Duty product class, at this TSL does not have a 
significant impact on overall INPV due to the fact that MPCs are 
constant across all product classes and conversion costs are not a 
function of product class.
    At TSL 3, DOE estimates impacts on INPV to range from -$2.0 million 
to -$1.1 million, or a change in INPV of -21.6 percent to -12.1 percent 
for the Fabricated Components and Sourced Components Capital Conversion 
Cost scenarios, respectively. At this level, industry free cash flow is 
estimated to decrease by as much as 204.4 percent to -$0.5 million, 
compared to the no-standards case value of $0.5 million in the year 
leading up to the amended energy conservation standards. As it is 
estimated that less than 20 percent of commercial prerinse spray valves 
will meet the efficiency levels specified at TSL 3 in the first year 
that standards are in effect (2019), a substantial fraction of the 
market is affected at this standard level. Again, the impact on INPV at 
TSL 3 stems exclusively from the conversion costs associated with the 
conversion of lower efficiency units to those meeting the standards set 
at TSL 3. At this TSL, because the majority of commercial prerinse 
spray valves will have to be updated to reach the standard level, 
product and capital conversion costs are estimated to be approximately 
$2.0 million for the Sourced Components Capital Conversion Costs 
scenario and $3.0 million for the Fabricated Components Capital 
Conversion Costs model. Again, DOE notes that the shift of 20 percent 
of shipments from the Standard Duty to Heavy Duty product class, at 
this TSL does not have a significant impact on overall INPV due to the 
fact that MPCs are constant across all product classes and conversion 
costs are not a function of product class.
    Finally, at TSL 4, DOE estimates impacts on INPV to range from -
$2.0 million to -$1.1 million, or a change in INPV of -21.6 percent to 
-12.1 percent for the Fabricated Components and Sourced Components 
Capital Conversion Cost scenarios, respectively. Impacts are the same 
as at TSL 3 due to the fact that no Standard Duty commercial prerinse 
spray valves at efficiency level 2 (greater than 0.94 gpm and less than 
or equal to 0.97 gpm) are currently marketed. At this level, industry 
free cash flow is estimated to decrease by as much as 204.4 percent to 
-$0.5 million, compared to the no-standards case value of $0.5 million 
in the year leading up to the amended energy conservation standards. 
Again, the impact on INPV at TSL 4 stems exclusively from the 
conversion costs associated with the conversion of lower efficiency 
units to those meeting the standards set at TSL 4. At this TSL, because 
the majority of commercial prerinse spray valves will have to be 
updated to reach the standard level, product and capital conversion 
costs are estimated to be approximately $2.0 million for the Sourced 
Components Capital Conversion Costs scenario and $3.0 million for the 
Fabricated Components Capital Conversion Costs scenario. DOE notes that 
the shift of 45 percent of shipments from the Standard Duty to Heavy 
Duty product class, at this TSL does not have a significant impact on 
overall INPV due to the fact that MPCs are constant across all product 
classes and conversion costs are not a function of product class.
b. Impacts on Employment
    DOE used the GRIM to estimate the domestic labor expenditures and 
number of domestic production workers in the no-standards case and at 
each TSL from 2014 to 2048. DOE used the labor content of each product 
and the MPCs from the engineering analysis to estimate the total annual 
labor expenditures associated with commercial prerinse spray valves 
sold in the United States. Using statistical data from the most recent 
U.S. Census Bureau's 2011 ``Annual Survey of Manufactures'' (2011 ASM) 
as well as market research, DOE estimates that 100 percent of 
commercial prerinse spray valves sold in the United States are 
assembled domestically, and hence that portion of total labor 
expenditures is attributable to domestic labor. Labor expenditures for 
the manufacturing of products 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 
commercial prerinse spray valve production labor in 2019 will be 
approximately $2.0 million. Using the $21.86 hourly wage rate including 
fringe benefits and 2,039 production hours per year per employee found 
in the 2011 ASM, DOE estimates there will be approximately 44 domestic 
production workers involved in assembling and, to a lesser extent, 
fabricating components for commercial prerinse spray valves in 2019, 
the year in which any amended standards would go into effect. In 
addition, DOE estimates that 22 non-production employees in the United 
States will support commercial prerinse spray valve production. The 
employment spreadsheet of the commercial prerinse spray valve 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 commercial prerinse spray valves 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 12 of the NOPR TSD.
    Table V.14 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. The following discussion 
includes a qualitative evaluation of the likelihood of negative 
domestic production employment impacts at the various TSLs.

[[Page 39521]]

                             Table V.14--Total Number of Domestic Commercial Prerinse Spray Valve Production Workers in 2019
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                             Trial standard level
                                                                       No-standards  -------------------------------------------------------------------
                                                                           case              1                2                3                4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2019 (without                     44               44               44               44               44
 changes in production locations)..................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The design option specified for achieving greater efficiency levels 
(i.e. changing the total spray hole area of the commercial prerinse 
spray valve nozzle) does not increase the labor content (measured in 
dollars) of commercial prerinse spray valves at any EL, nor does it 
increase total MPC. Additionally, total industry shipments are 
forecasted to be constant across TSLs. Therefore, DOE predicts no 
change in domestic manufacturing employment levels provided 
manufacturers do not relocate production facilities outside of the 
United States.
c. Impacts on Manufacturing Capacity
    Less than 20 percent of shipments of commercial prerinse spray 
valves already comply with the amended energy conservation standards 
proposed in this rulemaking. Not every manufacturer that ships 
commercial prerinse spray valves offers products that meet these 
amended energy conservation standards. However, because DOE believes 
that manufacturers would not need to make substantial platform changes 
by the 2019 compliance date in order to upgrade their products to meet 
the amended energy conservation standards proposed in this rulemaking, 
DOE does not foresee any impact on manufacturing capacity during the 
period leading up to the compliance date. DOE seeks additional comment 
on the impact to manufacturing capacity between the issuance date and 
the compliance date of any amended energy conservation standards for 
commercial prerinse spray valves.
d. Impacts on Subgroups 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 product 
manufacturers, and manufacturers exhibiting a cost structure 
substantially different from the industry average could be affected 
disproportionately. DOE examined the potential for disproportionate 
impacts on small business manufacturers, as discussed in section VI.B 
of this notice. DOE did not identify any other manufacturer subgroups 
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 energy 
conservation standards rulemakings.
    For the cumulative regulatory burden, DOE considers other DOE 
regulations that could affect commercial prerinse spray valve 
manufacturers that will take effect approximately 3 years before or 
after the analysis compliance date of amended energy conservation 
standards. The compliance years and expected industry conversion costs 
of energy conservation standards that may also impact commercial 
prerinse spray valve manufacturers are indicated in Table V.15

Table V.15--Compliance Dates and Expected Conversion Expenses of Federal
 Energy Conservation Standards Affecting Commercial Prerinse Spray Valve
                              Manufacturers
------------------------------------------------------------------------
                                                           Estimated
           Regulation                 Approximate      conversion costs
                                    compliance date        (million)
------------------------------------------------------------------------
General Service Fluorescent       1/26/2018.........  $38.6
 Lamps; 80 FR 4041 (January 26,
 2015).
Commercial Refrigerators,         3/27/2017.........  43.1
 Freezers and Refrigerator-
 Freezers; 79 FR 17725 (March
 28, 2014).
External Power Supplies; 79 FR    2/10/2016.........  43.4
 7846 (February 10, 2014).
------------------------------------------------------------------------
* Estimated compliance date.

    In addition to DOE's energy conservation regulations for commercial 
prerinse spray valves and other products also sold by commercial 
prerinse spray valve manufacturers, several other existing and pending 
regulations apply to commercial prerinse spray valves. In response to 
the Framework document and public meeting for this rulemaking, 
manufacturers and trade groups provided comments relating to regulatory 
burdens associated with third-party and international industry 
standards and certification programs (e.g., ASME A112.18.1/CSA B125.1, 
ASTM F2324) and state water efficiency regulations (e.g. California, 
Texas, and Massachusetts). DOE summarized these comments in section 
IV.J.3 of this notice. See chapter 12 of the NOPR 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 and water savings attributable to potential 
standards for commercial prerinse spray valves, DOE compared the energy 
and water consumption of these product types under the no-standards 
case to their anticipated energy and water consumption under each TSL. 
Table V.16 through Table V.19 present DOE's

[[Page 39522]]

projections of the national energy savings and national water savings 
for each TSL considered for commercial prerinse spray valves. The 
savings were calculated using the approach described in section IV.H.1 
of this notice.

 Table V.16--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2048 for TSL 1
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
1.....................................  Light Duty (5 ozf              0.206           0.223         265.371
                                         and 8 ozf).....         (0.193)         (0.209)       (248.840)
                                                                 -----------------------------------------------
                                        TOTAL TSL 1.............           0.014           0.015          17.836
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.17--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2048 for TSL 2
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
2.....................................  Light Duty (5 ozf              0.234           0.252         300.718
                                         and 8 ozf).....         (0.157)         (0.169)       (201.856)
                                                                 -----------------------------------------------
                                        TOTAL TSL 2.............           0.081           0.088         104.517
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.18--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2048 for TSL 3
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
3.....................................  Light Duty (5 ozf              0.234           0.252         300.718
                                         and 8 ozf).....         (0.147)         (0.159)       (189.458)
                                                                 -----------------------------------------------
                                        TOTAL TSL 3.............           0.093           0.101         120.178
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.19--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2048 for TSL 4
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                         Product class      --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
4.....................................  Light Duty (5 ozf              0.439           0.474         564.457
                                         and 8 ozf).....         (0.409)         (0.442)       (526.609)
                                                                 -----------------------------------------------
                                        TOTAL TSL 4.............           0.036           0.039          46.766
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

    OMB 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.\53\ Circular A-4 also 
directs agencies to consider the variability of key elements underlying 
the estimates of benefits and costs. For this rulemaking, DOE undertook 
a sensitivity analysis using 9, rather than 30, years of product 
shipments. The choice of a 9-year period is a proxy for the timeline in 
EPCA for the review of certain energy conservation standards and 
potential revision of and compliance with such

[[Page 39523]]

revised standards.\54\ The review timeframe established in EPCA is 
generally not synchronized with the product lifetime, product 
manufacturing cycles, or other factors specific to CPSV equipment. 
Thus, such results are presented for informational purposes only, and 
are not indicative of any change in DOE's analytical methodology. Table 
V.20 through Table V.23 report cumulative national energy and water 
savings associated with this shorter analysis period of 2019-2027. The 
impacts are counted over the lifetime of products purchased during this 
period.
---------------------------------------------------------------------------

    \53\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis,'' section E, (Sept. 17, 2003) (Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \54\ EPCA requires DOE to review its standards at least once 
every 6 years, and requires, for certain products, 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 previous standards. (42 U.S.C. 
6313(a)(6)(C)) 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 may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

 Table V.20--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2027 for TSL 1
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                        Equipment class     --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
1.....................................  Light Duty (5 ozf              0.057           0.062          71.472
                                         and 8 ozf).....         (0.054)         (0.058)        (67.019)
                                                                 -----------------------------------------------
                                        TOTAL TSL 1.............           0.004           0.004           4.804
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.21--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2027 for TSL 2
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                        Equipment class     --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
2.....................................  Light Duty (5 ozf              0.065           0.070          80.992
                                         and 8 ozf).....         (0.044)         (0.047)        (54.365)
                                                                 -----------------------------------------------
                                        TOTAL TSL 2.............           0.023           0.024          28.149
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.22--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2027 for TSL 3
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                        Equipment class     --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
3.....................................  Light Duty (5 ozf              0.065           0.070          80.992
                                         and 8 ozf).....         (0.041)         (0.044)        (51.026)
                                                                 -----------------------------------------------
                                        TOTAL TSL 3.............           0.026           0.028          32.367
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

 Table V.23--Commercial Prerinse Spray Valves: Cumulative National Energy and Water Savings for Products Shipped
                                             in 2019-2027 for TSL 4
----------------------------------------------------------------------------------------------------------------
                                                                      National energy savings
                                                                             (quads) *            National water
                  TSL                        Equipment class     --------------------------------     savings
                                                                      Primary           FFC        (billion gal)
----------------------------------------------------------------------------------------------------------------
4.....................................  Light Duty (5 ozf              0.122           0.131         152.024
                                         and 8 ozf).....         (0.114)         (0.122)       (141.830)
                                                                 -----------------------------------------------
                                        TOTAL TSL 4.............           0.010           0.011          12.595
----------------------------------------------------------------------------------------------------------------
* quads = quadrillion British thermal units.

[[Page 39524]]

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 commercial prerinse spray valves. In accordance with OMB's 
guidelines on regulatory analysis, DOE calculated NPV using both a 7-
percent and a 3-percent real discount rate.
    Table V.24 through Table V.27 show the consumer NPV results for 
each TSL DOE considered for commercial prerinse spray valves. The 
impacts are counted over the lifetime of products purchased in 2019-
2048.

   Table V.24--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
                                         Shipped in 2019-2048 for TSL 1
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1.............................................  Light Duty (5 ozf and 8 ozf).............         (1.507)         (3.095)
                                                                                 -------------------------------
                                                TOTAL TSL 1.....................           0.105           0.216
----------------------------------------------------------------------------------------------------------------

   Table V.25--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
                                         Shipped in 2019-2048 for TSL 2
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
2.............................................  Light Duty (5 ozf and 8 ozf).............         (1.230)         (2.524)
                                                                                 -------------------------------
                                                TOTAL TSL 2.....................           0.616           1.269
----------------------------------------------------------------------------------------------------------------

   Table V.26--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
                                         Shipped in 2019-2048 for TSL 3
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
3.............................................  Light Duty (5 ozf and 8 ozf).............         (1.157)         (2.374)
                                                                                 -------------------------------
                                                TOTAL TSL 3.....................           0.708           1.459
----------------------------------------------------------------------------------------------------------------

   Table V.27--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Consumer Benefits for Product
                                         Shipped in 2019-2048 for TSL 4
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                 Product class          -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
4.............................................  Light Duty (5 ozf and 8 ozf).............         (3.195)         (6.559)
                                                                                 -------------------------------
                                                TOTAL TSL 4.....................           0.276           0.568
----------------------------------------------------------------------------------------------------------------

    As described previously in the discussion of the energy and water 
savings results, DOE also determined financial impacts for a 
sensitivity case utilizing a 9-year analysis period. Table V.28 through 
Table V.31 report NPV results associated with this shorter analysis 
period. The impacts are counted over the lifetime of products purchased 
in 2019-2027. As mentioned previously, this information is presented 
for informational purposes

[[Page 39525]]

only, and is not indicative of any change in DOE's analytical 
methodology or decision criteria.

  Table V.28--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
                                         Shipped in 2019-2027 for TSL 1
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                Equipment class         -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
1.............................................  Light Duty (5 ozf and 8 ozf).............         (0.665)         (0.971)
                                                                                 -------------------------------
                                                TOTAL TSL 1.....................           0.046           0.068
----------------------------------------------------------------------------------------------------------------

  Table V.29--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
                                         Shipped in 2019-2027 for TSL 2
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                Equipment class         -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
2.............................................  Light Duty (5 ozf and 8 ozf).............         (0.544)         (0.793)
                                                                                 -------------------------------
                                                TOTAL TSL 2.....................           0.271           0.397
----------------------------------------------------------------------------------------------------------------

  Table V.30--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
                                         Shipped in 2019-2027 for TSL 3
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                Equipment class         -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
3.............................................  Light Duty (5 ozf and 8 ozf).............         (0.511)         (0.746)
                                                                                 -------------------------------
                                                TOTAL TSL 3.....................           0.312           0.456
----------------------------------------------------------------------------------------------------------------

  Table V.31--Commercial Prerinse Spray Valves: Cumulative Net Present Value of Customer Benefits for Equipment
                                         Shipped in 2019-2027 for TSL 4
----------------------------------------------------------------------------------------------------------------
                                                                                    Net present value (billion
                                                                                              $2014)
                      TSL                                Equipment class         -------------------------------
                                                                                     7-percent       3-percent
                                                                                   discount rate   discount rate
----------------------------------------------------------------------------------------------------------------
4.............................................  Light Duty (5 ozf and 8 ozf).............         (1.411)         (2.059)
                                                                                 -------------------------------
                                                TOTAL TSL 4.....................           0.121           0.177
----------------------------------------------------------------------------------------------------------------

c. Impacts on Employment
    DOE develops estimates of the indirect employment impacts of 
potential standards on the economy in general. As discussed previously, 
DOE expects energy conservation standards for commercial prerinse spray 
valves to reduce energy and water bills for product owners, 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. Thus, indirect employment impacts may 
result from expenditures shifting between goods (the substitution 
effect) and changes in income and overall expenditures (the income 
effect) that could occur due to amended energy conservation standards. 
As described in section IV.N of this notice, DOE used an

[[Page 39526]]

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 
(2020-2025), where these uncertainties are reduced.
    The results suggest that the proposed amended standards are likely 
to have negligible impact on the net demand for labor in the economy. 
All TSLs increase net demand for labor by fewer than 500 jobs. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics, and it might be offset by other, unanticipated 
effects on employment. Chapter 16 of the NOPR TSD presents detailed 
results regarding indirect employment impacts. As shown in Table V.32, 
DOE estimates that net indirect employment impacts from a CPSV amended 
standard are small relative to the national economy.

         Table V.32--Net Short-Term Change In Employment (Jobs)
------------------------------------------------------------------------
          Trial standard level                 2020            2025
------------------------------------------------------------------------
1.......................................              16              45
2.......................................              95             266
3.......................................             109             306
4.......................................              43             119
------------------------------------------------------------------------

4. Impact on Utility or Performance of Products
    Based on testing conducted in support of this proposed rule, and 
discussed in section IV.C.1, DOE has tentatively concluded that the 
standards proposed in this NOPR would not reduce the utility or 
performance of the commercial prerinse spray valves under consideration 
in this rulemaking. Manufacturers of these products currently offer 
units that meet or exceed the proposed amended standards.
5. Impact of Any Lessening of Competition
    DOE considers 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)(ii))
    DOE will transmit a copy of this notice 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 proposed rule in 
preparing the final rule, and DOE will publish and respond to DOJ's 
comments in that document.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the nation's energy security, strengthens the economy, and reduces the 
environmental impacts of energy production. Reduced electricity demand 
due to energy conservation standards is also likely to reduce the cost 
of maintaining the reliability of the electricity system, particularly 
during peak-load periods. As a measure of this reduced demand, chapter 
15 in the NOPR TSD presents the estimated reduction in generating 
capacity for the TSLs that DOE considered in this rulemaking.
    Energy savings from amended standards for commercial prerinse spray 
valves could also produce environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases associated with 
electricity production. Table V.33 provides DOE's estimate of 
cumulative emissions reductions to result from the TSLs considered in 
this rulemaking. DOE reports annual CO2, NOX, and 
Hg emissions reductions for each TSL in chapter 13 of the NOPR TSD.

 Table V.33--Cumulative Emissions Reduction Estimated for Commercial Prerinse Spray Valves Trial Standard Levels
                                        for Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                                TSL
                                                 ---------------------------------------------------------------
                                                         1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                         Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            0.78            4.58            5.27            2.05
NOX (thousand tons).............................            0.85            4.99            5.73            2.23
Hg (tons).......................................          0.0011          0.0064          0.0074          0.0029
N2O (thousand tons).............................          0.0063          0.0371          0.0427          0.0166
CH4 (thousand tons).............................            0.05            0.27            0.31            0.12
SO2 (thousand tons).............................            0.36            2.09            2.40            0.93
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            0.07            0.43            0.49            0.19
NOX (thousand tons).............................            1.11            6.51            7.49            2.91
Hg (tons).......................................         0.00001          0.0001          0.0001          0.0000
N2O (thousand tons).............................            0.00            0.00            0.00            0.00
CH4 (thousand tons).............................            6.92           40.55           46.63           18.15
SO2 (thousand tons).............................            0.00            0.02            0.03            0.01
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................            0.85            5.01            5.76            2.24

[[Page 39527]]

 
NOX (thousand tons).............................            1.96           11.50           13.22            5.15
Hg (tons).......................................          0.0011          0.0065          0.0074          0.0029
N2O (thousand tons).............................          0.0066          0.0388          0.0446          0.0174
N2O (thousand tons CO2eq).......................            1.75           10.28           11.82            4.60
CH4 (thousand tons).............................            6.97           40.83           46.94           18.27
CH4 (thousand tons CO2eq))......................          195.09         1143.16         1314.46          511.51
SO2 (thousand tons).............................            0.36            2.11            2.43            0.94
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.

    As part of the analysis for this proposed rule, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 and NOX that DOE estimated for each of the 
TSLs considered for commercial prerinse spray valves. As discussed in 
section IV.L of this notice, for CO2, DOE used the most 
recent values for the SCC developed by an interagency process. The four 
sets of SCC values for CO2 emissions reductions in 2015 
resulting from that process (expressed in 2014$) are represented by 
$12.2 per metric ton (the average value from a distribution that uses a 
5-percent discount rate), $41.1 per metric ton (the average value from 
a distribution that uses a 3-percent discount rate), $63.3 per metric 
ton (the average value from a distribution that uses a 2.5-percent 
discount rate), and $121 per metric 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 (emissions-related 
costs) as the projected magnitude of climate change increases.
    Table V.34 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values, and these results are presented in 
chapter 14 of the NOPR TSD.

  Table V.34--Estimates of Global Present Value of CO2 Emissions Reduction for Commercial Prerinse Spray Valve
                                              Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                    SCC Case * (million 2014$)
                                                 ---------------------------------------------------------------
                       TSL                          5% discount     3% discount    2.5% discount    3% discount
                                                   rate, average   rate, average   rate, average    rate, 95th
                                                         *               *               *         percentile *
----------------------------------------------------------------------------------------------------------------
                                            Primary Energy Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             6.0            26.7            42.0            82.4
2...............................................            35.2           156.3           246.2           482.9
3...............................................            40.5           179.7           283.1           555.2
4...............................................            15.8            69.9           110.2           216.1
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             0.6             2.5             3.9             7.6
2...............................................             3.2            14.4            22.7            44.6
3...............................................             3.7            16.6            26.1            51.3
4...............................................             1.4             6.5            10.2            20.0
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             6.6            29.1            45.9            90.0
2...............................................            38.5           170.7           268.9           527.5
3...............................................            44.2           196.3           309.2           606.5
4...............................................            17.2            76.4           120.3           236.0
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.1, $63.3, and $121
  per metric ton (2014$).

    DOE is well aware that scientific and economic knowledge regarding 
the contribution of CO2 and other GHG emissions to changes 
in the future global climate as well as the potential resulting damages 
to the world economy continues to evolve rapidly. Thus, any value 
placed on reducing CO2 emissions in this rulemaking is 
subject to change. DOE, together with other Federal agencies, will 
continue to review various methodologies for estimating the monetary 
value of reductions in CO2 and other 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 proposed rule the

[[Page 39528]]

most recent values and analyses resulting from the interagency process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from amended standards for commercial prerinse 
spray valves. The dollar-per-ton values that DOE used are discussed in 
section IV.L of this notice. Table V.35 presents the cumulative present 
values for each TSL calculated using 7-percent and 3-percent discount 
rates.

 Table V.35--Estimates of Present Value of NOX Emissions Reduction Under
         Commercial Prerinse Spray Valves Trial Standard Levels
                             [Million 2014$]
------------------------------------------------------------------------
                TSL                  3% discount rate   7% discount rate
------------------------------------------------------------------------
                         Power Sector Emissions
------------------------------------------------------------------------
1.................................                1.3                0.7
2.................................                7.6                3.9
3.................................                8.7                4.5
4.................................                3.4                1.8
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................                1.7                0.8
2.................................                9.7                4.9
3.................................               11.1                5.6
4.................................                4.3                2.2
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1.................................                2.9                1.5
2.................................               17.2                8.8
3.................................               19.8               10.1
4.................................                7.7                3.9
------------------------------------------------------------------------

7. Summary of National Economic Impacts
    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.36 presents 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 sets of SCC values discussed in section V.B.6.

Table V.36--Present Value of Consumer Savings Combined with Present Value of Monetized Benefits from CO2 and NOX
                                              Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                                     Billion 2014$
                                     ---------------------------------------------------------------------------
                                         SCC value of       SCC value of       SCC value of    SCC value of $121/
                 TSL                   $12.2/metric ton   $41.1/metric ton   $63.3/metric ton   metric ton CO2*
                                       CO2* and medium    CO2* and medium    CO2* and medium    and medium value
                                       value for NOX**    value for NOX**    value for NOX**       for NOX**
----------------------------------------------------------------------------------------------------------------
Consumer NPV at 3% Discount Rate
 added with:
    1...............................              0.226              0.249              0.265              0.309
    2...............................              1.324              1.457              1.555              1.813
    3...............................              1.523              1.675              1.788              2.085
    4...............................              0.593              0.652              0.696              0.811
Consumer NPV at 7% Discount Rate
 added with:
    1...............................              0.113              0.136              0.152              0.197
    2...............................              0.663              0.795              0.894              1.152
    3...............................              0.762              0.914              1.027              1.325
    4...............................              0.297              0.356              0.400              0.515
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.2, $41.1, $63.3, and $121
  per metric ton (2014$).
** The medium value for NOX is $2,723 per short ton (2014$).

    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 
the SCC are performed with different methods that use different time 
frames for analysis. The national operating cost savings is measured 
for the lifetime of products shipped in 2019 to 2048. Because 
CO2 emissions have a very long residence

[[Page 39529]]

time in the atmosphere,\55\ the SCC values in future years reflect 
future climate-related impacts resulting from the emission of 
CO2 that continue beyond 2100.
---------------------------------------------------------------------------

    \55\ The atmospheric lifetime of CO2 is estimated of 
the order of 30-95 years. Jacobson, MZ, ``Correction to `Control of 
fossil-fuel particulate black carbon and organic matter, possibly 
the most effective method of slowing global warming,' '' J. Geophys. 
Res. 110. pp. D14105 (2005).
---------------------------------------------------------------------------

8. 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)) DOE 
did not consider any other factors in this analysis.

C. Conclusion

    When considering proposed standards, the new or amended energy 
conservation standard that DOE adopts for any type (or class) of 
covered products must be designed to achieve the maximum improvement in 
energy efficiency that the Secretary determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) 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 a significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    DOE considered the impacts of standards at each TSL, beginning with 
a 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, Table V.37 and Table V.38 present a summary 
of the results of DOE's quantitative analysis for each TSL. In addition 
to the quantitative results presented in the tables, DOE also considers 
other burdens and benefits that affect economic justification. Those 
include the impacts on identifiable subgroups of consumers that may be 
disproportionately affected by a national standard and impacts on 
employment. Section V.B.1.b presents the estimated impacts of each TSL 
for these subgroups. DOE discusses the impacts on direct employment in 
CPSV manufacturing in section IV.J.4, and discusses the indirect 
employment impacts in section IV.N.
1. Benefits and Burdens of TSLs Considered for Commercial Prerinse 
Spray Valves
    Table V.37 and Table V.38 summarize the quantitative impacts 
estimated for each TSL for commercial prerinse spray valves. The 
efficiency levels contained in each TSL are described in section V.A of 
this notice.

   Table V.37--Summary of Results for Commercial Prerinse Spray Valve Trial Standard Levels: National Impacts
----------------------------------------------------------------------------------------------------------------
              Category                      TSL 1              TSL 2              TSL 3              TSL 4
----------------------------------------------------------------------------------------------------------------
                                      Cumulative FFC Energy Savings (quads)
----------------------------------------------------------------------------------------------------------------
                                                   0.01               0.09               0.10               0.04
----------------------------------------------------------------------------------------------------------------
                                     Cumulative Water Savings (billion gal)
----------------------------------------------------------------------------------------------------------------
                                                  17.84             104.52             120.18              46.77
----------------------------------------------------------------------------------------------------------------
                                    NPV of Consumer Benefits (2014$ billion)
----------------------------------------------------------------------------------------------------------------
3% discount rate....................               0.22               1.27               1.46               0.57
7% discount rate....................               0.11               0.62               0.71               0.28
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons)...........               0.85               5.01               5.76               2.24
NOX (thousand tons).................               1.96              11.50              13.22               5.15
Hg (tons)...........................             0.0011             0.0065             0.0074             0.0029
N2O (thousand tons).................             0.0066             0.0388             0.0446             0.0174
N2O (thousand tons CO2eq *).........               1.75              10.28              11.82               4.60
CH4 (thousand tons).................               6.97              40.83              46.94              18.27
CH4 (thousand tons CO2eq *).........             195.09            1143.16            1314.46             511.51
SO2 (thousand tons).................               0.36               2.11               2.43               0.94
----------------------------------------------------------------------------------------------------------------
                                          Value of Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 (2014$ million) * *.............        6.6 to 90.0      38.5 to 527.5      44.2 to 606.5      17.2 to 236.0
NOX-3% discount rate (2014$ million)               2.94              17.25              19.83               7.72
NOX-7% discount rate (2014$ million)               1.50               8.82              10.14               3.95
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
* * Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
  emissions.

[[Page 39530]]

     Table V.38--Summary of Results for Commercial Prerinse Spray Valve Trial Standard Levels: Consumer and
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
              Category                      TSL 1             TSL 2 *            TSL 3 *            TSL 4 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Industry NPV Relative to a No-               7.7 to 8.5         7.2 to 8.1         7.1 to 8.0         7.1 to 8.0
 Standards Case Value of 9.1 (2014$
 million, 6.9% discount rate).......
Industry NPV (% change).............    (15.0) to (7.0)   (21.0) to (11.5)   (21.6) to (12.1)   (21.6) to (12.1)
----------------------------------------------------------------------------------------------------------------
                                            Direct Employment Impacts
----------------------------------------------------------------------------------------------------------------
Potential Increase in Domestic                        0                  0                  0                  0
 Production Workers in 2019.........
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2014$)
----------------------------------------------------------------------------------------------------------------
Light Duty (5 and 8 ozf).................                166                541                640                640
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Light Duty (5 and 8 ozf).................                0.0                0.0                0.0                0.0
----------------------------------------------------------------------------------------------------------------
                                      Distribution of Consumer LCC Impacts
----------------------------------------------------------------------------------------------------------------
Light Duty (5 and 8 ozf).................  .................  .................  .................  .................
Net Cost (%)........................                 0%                 0%                 0%                 0%
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change
  in the standard at certain TSLs.

    DOE first considered TSL 4, which represents the max-tech 
efficiency levels. TSL 4 would save 0.04 quads of energy and 46.77 
billion gallons of water. Under TSL 4, the NPV of consumer benefit 
would be $0.28 billion using a discount rate of 7 percent, and $0.57 
billion using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 2.24 Mt of 
CO2, 5.15 thousand tons of NOX, 0.94 thousand 
tons of SO2, 0.003 tons of Hg, 0.02 thousand tons of 
N2O, and 18.27 thousand tons of CH4. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 4 ranges from $17 million to $236 million.
    At TSL 4, the average LCC impact is a savings of $107 for light 
duty CPSV models, $499 for standard duty models, and $640 for heavy 
duty models. The simple payback period is 0.0 years for all CPSV 
models. The fraction of consumers experiencing an LCC net cost is 0 
percent for all CPSV models.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$2.0 million to a decrease of $1.1 million. If the lower bound of the 
range of impacts is reached, TSL 4 could result in a net loss of up to 
21.6 percent in INPV for manufacturers.
    Although TSL 4 for commercial prerinse spray valves provides 
positive LCC savings, and a positive total NPV of consumer benefits, 
TSL 3 provides for greater energy savings at a similar burden to the 
industry. Consequently, DOE has tentatively concluded that TSL 4 does 
not provide the maximum reduction in energy use that is technologically 
feasible. (42 U.S.C. 6295(p)(1)
    Next DOE considered TSL 3, which saves an estimated total of 0.10 
quads of energy, and 120.18 billion gallons of water. TSL 3 has an 
estimated NPV of consumer benefit of $0.71 billion using a 7-percent 
discount rate, and $1.46 billion using a 3-percent discount rate. TSL 3 
provides the maximum total NPV, energy savings, and water savings.
    The cumulative emissions reductions at TSL 3 are 5.76 Mt of 
CO2, 13.22 thousand tons of NOX, 2.43 thousand 
tons of SO2, 0.007 tons of Hg, and 46.94 thousand tons of 
CH4. The estimated monetary value of the CO2 
emissions reductions at TSL 3 ranges from $44 million to $606 million.
    At TSL 3, the average LCC impact is a savings of $107 for light 
duty CPSV models, $429 for standard duty models, and $640 for heavy 
duty models. The simple payback period is 0.0 years for all CPSV 
models. The fraction of consumers experiencing an LCC net cost is 0 
percent for all CPSV models.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$2.0 million to a decrease of $1.1 million. If the lower bound of the 
range of impacts is reached, TSL 3 could result in a net loss of up to 
21.6 percent in INPV for manufacturers.
    DOE tentatively concludes that at TSL 3 for commercial prerinse 
spray valves, 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 negative impacts on manufacturers, including the 
conversion costs that could result in a reduction in INPV for 
manufacturers.
    After considering the analysis and the benefits and burdens of TSL 
3, DOE tentatively 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 and water. Therefore, DOE proposes TSL 3 for commercial 
prerinse spray valves. The proposed amended energy conservation 
standards for commercial prerinse spray

[[Page 39531]]

valves, which are a maximum water flow rate, are shown in Table V.39.

     Table V.39--Proposed Amended Energy Conservation Standards for
                    Commercial Prerinse Spray Valves
------------------------------------------------------------------------
                                                            Compliance
                                                            date: Month
                                                             Day, 2018
                      Product class                      ---------------
                                                           Maximum water
                                                             flow rate
                                                               (gpm)
------------------------------------------------------------------------
Light Duty (5 ozf and 8 ozf).....................................            1.24
------------------------------------------------------------------------

2. Summary of Benefits and Costs (Annualized) of the Standards
    The benefits and costs of the proposed 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 
2014$, of the benefits from operating products that meets 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.\56\ The value of the CO2 reductions, 
otherwise known as the SCC, is calculated using a range of values per 
metric ton of CO2 developed by a recent interagency process.
---------------------------------------------------------------------------

    \56\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total customer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2014. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates, as 
shown in Table V.40. Using the present value, DOE then calculated 
the fixed annual payment over a 30-year period, starting in the 
compliance year, which yields the same present value.
---------------------------------------------------------------------------

    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 different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of products shipped in 2019-2048. The SCC 
values, on the other hand, reflect the present value of all future 
climate-related impacts resulting from the emission of 1 ton of carbon 
dioxide in each year. These impacts continue well beyond 2100.
    Table V.40 shows the annualized values for commercial prerinse 
spray valves under TSL 3, expressed in 2014$. 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 $41.1 per metric ton in 2015 (in 2014$), there are no 
increased product costs associated with the standards in the proposed 
rule, while the annualized benefits are $70.65 million per year in 
reduced product operating costs, $10.94 million in CO2 
reductions, and $1.00 million in reduced NOX emissions. In 
this case, the net benefit amounts to $82.59 million per year. Using a 
3-percent discount rate for all benefits and costs, and the SCC series 
corresponding to a value of $41.1 per metric ton in 2015 (in 2014$), 
there are no increased product costs associated with the standards in 
this proposed rule, while the benefits are $82.20 million per year in 
reduced operating costs, $10.94 million in CO2 reductions, 
and $1.11 million in reduced NOX emissions. In this case, 
the net benefit amounts to $94.25 million per year.

  Table V.40--Annualized Benefits and Costs of Proposed Amended Standards (TSL 3) for Commercial Prerinse Spray
                                            Valves Sold in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                          Million 2014$/year
                                                     -----------------------------------------------------------
                                     Discount rate                         Low net benefits    High net benefits
                                                      Primary estimate *      estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.  7%................  69.90.............  65.90.............  72.70.
                                  3%................  81.32.............  75.92.............  85.10.
CO2 Reduction at $12.0/t * *....  5%................  3.33..............  3.33..............  3.33.
CO2 Reduction at $40.5/t * *....  3%................  10.94.............  10.94.............  10.94.
CO2 Reduction at $62.4/t * *....  2.5%..............  15.91.............  15.91.............  15.91.
CO2 Reduction at $119/t * *.....  3%................  33.81.............  33.81.............  33.81.
NOX Reduction at $2,723/ton.....  7%................  1.00..............  1.00..............  1.00.
                                  3%................  1.11..............  1.11..............  1.11.
----------------------------------------------------------------------------------------------------------------
    Total [dagger]..............  7% plus CO2 range.  74 to 105.........  70 to 101.........  77 to 108.
                                  7%................  81.85.............  77.84.............  84.64.
                                  3% plus CO2 range.  86 to 116.........  80 to 111.........  90 to 120.
                                  3%................  93.37.............  87.96.............  97.15.
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Manufacturer Conversion Costs     7%................  0.16 to 0.24......  0.16 to 0.24......  0.16 to 0.24.
 [dagger].
                                  3%................  0.10 to 0.15......  0.10 to 0.15......  0.10 to 0.15.
----------------------------------------------------------------------------------------------------------------
                                               Total Net Benefits
----------------------------------------------------------------------------------------------------------------
    Total [Dagger]..............  7% plus CO2 range.  74 to 105.........  70 to 101.........  77 to 108.
                                  7%................  81.85.............  77.84.............  84.64.
                                  3% plus CO2 range.  86 to 116.........  80 to 111.........  90 to 120.

[[Page 39532]]

 
                                  3%................  93.37.............  87.96.............  97.15.
----------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2048 from the commercial prerinse spray valves
  purchased from 2019 through 2048. Costs incurred by manufacturers, some of which may be incurred in
  preparation for the rule, are not directly included, but are indirectly included as part of incremental
  product costs. The extent of the costs and benefits will depend on the projected CPSV price trends, as the
  consumer demand for products is a function of CPSV prices. The Primary, Low Benefits, and High Benefits
  Estimates utilize forecasts of energy prices and building starts from the AEO2014 Reference case, Low
  Estimate, and High Estimate, respectively.
* * The CO2 values represent global values (in 2014$) of the social cost of CO2 emissions in 2015 under several
  scenarios. The values of $12.2, $41.1, and $63.3 per metric ton are the averages of SCC distributions
  calculated using 5 percent, 3 percent, and 2.5 percent discount rates, respectively. The value of $121 per ton
  represents the 95th percentile of the SCC distribution calculated using a 3 percent discount rate.
[dagger] The lower value of the range represents costs associated with the Sourced Components conversion cost
  scenario. The upper value represents costs for the Fabricated Components scenario.
[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 $41.1 per metric ton in 2015 (in 2014$). 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. Manufacturer Conversion Costs are
  not included in the Net Benefits calculations.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 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. 58 FR 51735 (Oct. 4, 
1993). The problems that the proposed standards address are as follows.
    (1) Insufficient information and the high costs of gathering and 
analyzing relevant information leads some consumers to miss 
opportunities to make cost-effective investments in energy efficiency.
    (2) In some cases, the benefits of more efficient products are not 
realized because of misaligned incentives between purchasers and users. 
An example of such a case is when the product purchase decision is made 
by a building contractor or building owner who does not pay the energy 
costs.
    (3) There are external benefits resulting from improved energy 
efficiency of commercial prerinse spray valves that are not captured by 
the users of such products. These benefits include externalities 
related to public health, environmental protection, and national 
security that are not reflected in energy prices, such as reduced 
emissions of air pollutants and greenhouse gases that impact human 
health and global warming. DOE attempts to quantify some of the 
external benefits through use of social cost of carbon values.
    In addition, DOE has determined that the proposed regulatory action 
is a ``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 
this 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 has 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.
    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, OIRA 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 this NOPR 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 (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 (Aug. 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

[[Page 39533]]

rulemaking process. 68 FR 7990. DOE has made its procedures and 
policies available on the Office of the General Counsel's Web site 
(http://energy.gov/gc/office-general-counsel).
1. Description and Estimated Number of Small Entities Regulated
    For manufacturers of commercial prerinse spray valves, 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/files/Size_Standards_Table.pdf. 
Commercial prerinse spray valves manufacturing is classified under 
NAICS 332919, ``Other metal valve and pipe fitting 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 that could be impacted 
by the amended energy conservation standards, DOE conducted a market 
survey using public information to identify potential small 
manufacturers. DOE reviewed the DOE's Compliance Certification 
Management System (CCMS), EPA's WaterSense program database, individual 
company Web sites, and various marketing research tools (e.g., Hoovers 
reports) to create a list of companies that import, assemble, or 
otherwise manufacture commercial prerinse spray valves covered by this 
rulemaking. DOE screened out companies that do not offer products 
covered by this rulemaking, do not meet the definition of a ``small 
business,'' or are foreign-owned and operated.
    DOE identified 11 commercial spray valve manufacturers selling 
commercial prerinse spray valves in the United States, 8 of which are 
small businesses. DOE contacted all identified commercial prerinse 
spray valve manufacturers for interviews. Ultimately, no manufacturers 
agreed to participate in an interview.
2. Description and Estimate of Compliance Requirements
    The eight small domestic commercial spray valve manufacturers 
account for approximately 83 percent of commercial spray valve basic 
models currently on the market. The remaining 17 percent of commercial 
spray valve spray basic models currently on the market are offered by 
three large manufacturers.
    Using basic model counts, DOE estimated the distribution of 
industry conversion costs between small manufacturers and large 
manufacturers. Using its count of manufacturers, DOE calculated capital 
conversion costs (under both capital conversion costs scenarios, Table 
VI.1) and product conversion costs (Table VI.2) for an average small 
manufacturer versus an average large manufacturer. To provide context 
on the size of the conversion costs relative to the size of the 
businesses, DOE presents the conversion costs relative to annual 
revenue and annual operating profit under the proposed standard level 
for the two capital conversion cost scenarios considered in the MIA, as 
shown in Table VI.3 and Table VI.4. The current annual revenue and 
annual operating profit estimates are derived from the GRIM's industry 
revenue calculations and the market share breakdowns of small versus 
large manufacturers. Due to the lack of direct market share data for 
individual manufacturers, DOE used basic model counts as a percent of 
total basic models currently available on the market as a proxy for 
market share.

           Table VI.1--Comparison of Typical Small and Large Manufacturer's Capital Conversion Costs *
----------------------------------------------------------------------------------------------------------------
                                           Sourced components capital           Fabricated components capital
                                            conversion costs scenario             conversion costs scenario
                                     ---------------------------------------------------------------------------
                                           Capital            Capital            Capital            Capital
        Trial standard level           conversion costs   conversion costs   conversion costs   conversion costs
                                      for typical small  for typical large  for typical small  for typical large
                                         manufacturer       manufacturer       manufacturer       manufacturer
                                       (2014$ millions)   (2014$ millions)   (2014$ millions)   (2014$ millions)
----------------------------------------------------------------------------------------------------------------
TSL 1...............................              $0.00              $0.00              $0.09              $0.06
TSL 2...............................               0.01               0.01               0.11               0.08
TSL 3...............................               0.01               0.01               0.11               0.08
TSL 4...............................               0.01               0.01               0.11               0.08
----------------------------------------------------------------------------------------------------------------
* Capital conversion costs are the capital investments made during the 3-year period between the publication of
  the final rule and the analysis compliance year of the proposed standard.

Table VI.2--Comparison of Typical Small and Large Manufacturer's Product
                           Conversion Costs *
------------------------------------------------------------------------
                                         Product            Product
                                     conversion costs   conversion costs
       Trial standard level         for typical small  for typical large
                                       manufacturer       manufacturer
                                     (2014$ millions)   (2014$ millions)
------------------------------------------------------------------------
TSL 1.............................              $0.12              $0.06
TSL 2.............................               0.18               0.09
TSL 3.............................               0.19               0.10
TSL 4.............................               0.19               0.10
------------------------------------------------------------------------
* Product conversion costs are the R&D and other product development
  investments made during the 3-year period between the publication of
  the final rule and the analysis compliance year of the proposed
  standard.

[[Page 39534]]

  Table VI.3--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
                              Sourced Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
                                                                            Conversion costs/  Conversion costs/
                                           Capital            Product       conversion period  conversion period
                                       conversion cost    conversion cost       revenue *       operating profit
                                       (2014$ millions)   (2014$ millions)      (percent)         * (percent)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer..................              $0.01              $0.19                  9                 81
Large Manufacturer..................               0.01               0.10                  8                 79
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the analysis compliance year for
  this rulemaking, is 3 years.

  Table VI.4--Comparison of Conversion Costs for an Average Small and an Average Large Manufacturer at TSL 3--
                             Fabricated Components Capital Conversion Costs Scenario
----------------------------------------------------------------------------------------------------------------
                                                                            Conversion costs/  Conversion costs/
                                           Capital            Product       conversion period  conversion period
                                       conversion cost    conversion cost       revenue *       operating profit
                                       (2014$ millions)   (2014$ millions)      (percent)         * (percent)
----------------------------------------------------------------------------------------------------------------
Small Manufacturer..................              $0.11              $0.19                 13                120
Large Manufacturer..................               0.08               0.10                 14                129
----------------------------------------------------------------------------------------------------------------
* The conversion period, the time between the final rule publication year and the analysis compliance year for
  this rulemaking, is 3 years.

    At the proposed level, depending on the capital conversion cost 
scenario, DOE estimates total conversion costs for an average small 
manufacturer to range from $20,000 to $30,000 for the Sourced 
Components Capital Conversion Costs scenario and the Fabricated 
Components Capital Conversion Costs scenario, respectively. This 
suggests that an average small manufacturer would need to reinvest 
roughly 81 percent to 120 percent of its operating profit per year over 
the conversion period to comply with standards. Depending on the 
capital conversion cost scenario, the total conversion costs for an 
average large manufacturer range from $11,000 to $18,000 for the 
Sourced Components Capital Conversion Costs scenario and the Fabricated 
Components Capital Conversion Costs scenario, respectively. This 
suggests that an average large manufacturer would need to reinvest 
roughly 79 percent to 129 percent of its commercial prerinse spray 
valve-related operating profit per year over the 3-year conversion 
period.
    As noted earlier, because of a lack of data pertaining to true 
market shares of individual manufacturers, DOE requests additional 
information and data regarding the number and market share of domestic 
small manufacturers of commercial prerinse spray valves, as well as 
small business impacts related to the proposed energy conservation 
standards. DOE will consider any such additional information when 
formulating and selecting TSLs for the final rule (section VII.E. of 
this notice).
3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being proposed today.
4. Significant Alternatives to the Rule
    The previous discussion analyzes impacts on small businesses that 
would result from DOE's proposed rule. In addition to the other TSLs 
being considered, a regulatory impact analysis (RIA) can be found in 
the NOPR TSD chapter 17. For commercial prerinse spray valves, the RIA 
discusses the following policy alternatives: (1) No change in standard, 
(2) consumer rebates, (3) consumer tax credits, (4) voluntary energy 
efficiency targets, and (5) bulk government purchases. Although these 
alternatives may mitigate, to some extent, the economic impacts on 
small entities compared to the standards, DOE determined that the 
energy savings of these alternatives are significantly smaller than 
those that would be expected to result from adoption of the proposed 
standard levels. Accordingly, DOE is declining to adopt any of these 
alternatives and is proposing the standards set forth in this 
rulemaking. See chapter 17 of the NOPR TSD for further detail on the 
policy alternatives DOE considered.
    Additional compliance flexibilities may be available through other 
means. For example, individual manufacturers may petition for a waiver 
of the applicable test procedure. Further, EPCA provides that a 
manufacturer whose annual gross revenue from all of its operations does 
not exceed $8,000,000 may apply for an exemption from all or part of an 
energy conservation standard for a period not longer than 24 months 
after the compliance date of a final rule establishing the standard. 
(42 U.S.C. 6295(t)) Additionally, Section 504 of the Department of 
Energy Organization Act, 42 U.S.C. 7194, provides authority for the 
Secretary to adjust a rule issued under EPCA in order to prevent 
``special hardship, inequity, or unfair distribution of burdens'' that 
may be imposed on that manufacturer as a result of such rule. 
Manufacturers should refer to 10 CFR part 430, subpart E, and part 1003 
for additional details.

C. Review Under the Paperwork Reduction Act

    Manufacturers of commercial prerinse spray valves 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 commercial prerinse 
spray valves, 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 products, including commercial prerinse spray valves. 76 FR 
12422 (March 7, 2011); 80 FR 5099 (Jan. 30, 2015). 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 30 hours per response, including the time for 
reviewing instructions, searching existing data sources, gathering and 
maintaining the

[[Page 39535]]

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 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 the proposed 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, 
appendix B, B5.1(b); 1021.410(b) and appendix B, B(1)-(5). The proposed 
rule fits within the category of actions because it is a rulemaking 
that establishes energy conservation standards for consumer products or 
industrial product, 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 proposed rule. 
DOE's CX determination for this proposed rule is available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

    Executive Order 13132, ``Federalism,'' imposes certain requirements 
on Federal agencies formulating and implementing policies or 
regulations that preempt State law or that have Federalism 
implications. 64 FR 43255 (Aug. 10, 1999). 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. DOE has examined this 
proposed rule and has tentatively determined that it would not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. EPCA 
governs and prescribes Federal preemption of State regulations as to 
energy conservation for the products that are the subject of this 
proposed 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, (3) 
provide a clear legal standard for affected conduct rather than a 
general standard, and (4) 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 proposed 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 (Pub. L. 104-4, sec. 201 codified at 2 U.S.C. 1531). For 
a proposed 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 proposed ``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 http://energy.gov/sites/prod/files/gcprod/documents/umra_97.pdf.
    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 proposed 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 this document and TSD chapter 17, 
the ``Regulatory Impact Analysis,'' for this proposed 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 proposed 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(o) 
and (dd), this proposed rule would amend energy conservation standards 
for commercial prerinse spray valves 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'', chapter 17 of the TSD for this proposed 
rule.

[[Page 39536]]

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

    Pursuant to Executive Order 12630, ``Governmental Actions and 
Interference with Constitutionally Protected Property Rights,'' 53 FR 
8859 (March 15, 1988), DOE has determined that this proposed rule 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 of 2001 (44 U.S.C. 3516, note) provides for Federal agencies to 
review most disseminations of information to the public under 
information quality 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 this NOPR 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 proposed 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 proposed 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 tentatively concluded that this regulatory action, which 
sets forth energy conservation standards for commercial prerinse spray 
valves, is not a significant energy action because the proposed 
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 proposed 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.'' Id. at 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.

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this notice. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or Brenda.Edwards@ee.doe.gov.
    Please note that foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures which require advance 
notice prior to attendance at the public meeting. If a foreign national 
wishes to participate in the public meeting, please inform DOE of this 
fact as soon as possible by contacting Ms. Regina Washington at (202) 
586-1214 or by email (Regina.Washington@ee.doe.gov) so that the 
necessary procedures can be completed.
    DOE requires visitors to have laptops and other devices, such as 
tablets, checked upon entry into the Forrestal Building. Any person 
wishing to bring these devices into the building will be required to 
obtain a property pass. Visitors should avoid bringing these devices, 
or allow an extra 45 minutes to check in. Please report to the 
visitor's desk to have devices checked before proceeding through 
security.
    Due to the REAL ID Act implemented by the Department of Homeland 
Security (DHS), there have been recent changes regarding identification 
(ID) requirements for individuals wishing to enter Federal buildings 
from specific States and U.S. territories. As a result, driver's 
licenses from several States or territories will not be accepted for 
building entry, and instead, one of the alternate forms of ID listed 
below will be required.
    DHS has determined that regular driver's licenses (and ID cards) 
from the following jurisdictions are not acceptable for entry into DOE 
facilities: Alaska, American Samoa, Arizona, Louisiana, Maine, 
Massachusetts, Minnesota, New York, Oklahoma, and Washington. 
Acceptable alternate forms of Photo-ID include: U.S. Passport or 
Passport Card; an Enhanced Driver's License or Enhanced ID-Card issued 
by the States of Minnesota, New York or Washington (Enhanced licenses 
issued by these States are clearly marked Enhanced or Enhanced Driver's 
License); a military ID or other Federal government-issued Photo-ID 
card.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's

[[Page 39537]]

Web site at: www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/54. Participants are responsible for ensuring 
their systems are compatible with the webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this notice. The request and advance copy of statements must be 
received at least one week before the public meeting and may be 
emailed, hand-delivered, or sent by mail. DOE prefers to receive 
requests and advance copies via email. Please include a telephone 
number to enable DOE staff to make follow-up contact, if needed.

C. Conduct of the Public Meeting

    DOE will designate a DOE official to preside at the public meeting 
and may also use a professional facilitator to aid discussion. The 
meeting will not be a judicial or evidentiary-type public hearing, but 
DOE will conduct it in accordance with section 336 of EPCA. (42 U.S.C. 
6306) A court reporter will be present to record the proceedings and 
prepare a transcript. DOE reserves the right to schedule the order of 
presentations and to establish the procedures governing the conduct of 
the public meeting. There shall not be discussion of proprietary 
information, costs or prices, market share, or other commercial matters 
regulated by U.S. anti-trust laws. After the public meeting, interested 
parties may submit further comments on the proceedings as well as on 
any aspect of the rulemaking until the end of the comment period.
    The public meeting will be conducted in an informal, conference 
style. DOE will present summaries of comments received before the 
public meeting, allow time for prepared general statements by 
participants, and encourage all interested parties to share their views 
on issues affecting this rulemaking. Each participant will be allowed 
to make a general statement (within time limits determined by DOE), 
before the discussion of specific topics. DOE will allow, as time 
permits, other participants to comment briefly on any general 
statements.
    At the end of all prepared statements on a topic, DOE will permit 
participants to clarify their statements briefly and comment on 
statements made by others. Participants should be prepared to answer 
questions by DOE and by other participants concerning these issues. DOE 
representatives may also ask questions of participants concerning other 
matters relevant to this rulemaking. The official conducting the public 
meeting will accept additional comments or questions from those 
attending, as time permits. The presiding official will announce any 
further procedural rules or modification of the above procedures that 
may be needed for the proper conduct of the public meeting.
    A transcript of the public meeting will be included in the docket, 
which can be viewed as described in the Docket section at the beginning 
of this notice and will be accessible on the DOE Web site. In addition, 
any person may buy a copy of the transcript from the transcribing 
reporter.

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this notice.
    Submitting comments via regulations.gov. The www.regulations.gov 
Web page will require you to provide your name and contact information. 
Your contact information will be viewable to DOE Building Technologies 
staff only. Your contact information will not be publicly viewable 
except for your first and last names, organization name (if any), and 
submitter representative name (if any). If your comment is not 
processed properly because of technical difficulties, DOE will use this 
information to contact you. If DOE cannot read your comment due to 
technical difficulties and cannot contact you for clarification, DOE 
may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to www.regulations.gov information for which 
disclosure is restricted by statute, such as trade secrets and 
commercial or financial information (hereinafter referred to as 
Confidential Business Information (CBI)). Comments submitted through 
www.regulations.gov cannot be claimed as CBI. Comments received through 
the Web site will waive any CBI claims for the information submitted. 
For information on submitting CBI, see the Confidential Business 
Information section.
    DOE processes submissions made through www.regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that www.regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery/courier, or 
mail also will be posted to www.regulations.gov. If you do not want 
your personal contact information to be publicly viewable, do not 
include it in your comment or any accompanying documents. Instead, 
provide your contact information in a cover letter. Include your first 
and last names, email address, telephone number, and optional mailing 
address. The cover letter will not be publicly viewable as long as it 
does not include any comments
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible, in 
which case it is not necessary to submit printed copies. No 
telefacsimiles (faxes) will be accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form

[[Page 39538]]

letter with a list of supporters' names compiled into one or more PDFs. 
This reduces comment processing and posting time.
    Confidential Business Information. Pursuant to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
One copy of the document marked ``confidential'' including all the 
information believed to be confidential, and one copy of the document 
marked ``non-confidential'' with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential 
status of the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person that would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. DOE requests comment on the efficiency levels selected for its 
analysis. Specifically, DOE requests feedback on whether cleaning 
performance or any other consumer utility is affected at any of the 
analyzed efficiency levels.
    2. DOE requests comment on the recertification costs associated 
with complying with industry standards, which result from amended DOE 
standards for commercial prerinse spray valves.
    3. DOE seeks additional information on industry capital and product 
conversion costs of compliance associated with the amended standards 
for commercial prerinse spray valves proposed in this notice.
    4. DOE requests comment on which capital conversion cost scenario 
more accurately reflects the expected capital conversion costs 
associated with amended standards for commercial prerinse spray valves.
    5. DOE requests additional information and data regarding the 
number and market share of domestic small manufacturers of commercial 
prerinse spray valves, as well as small business impacts related to the 
proposed energy conservation standards.
    6. DOE requests comment on the probability of consumers switching 
product classes as a result of amended standards, as well as the 
current methods to account for such switching in the shipments model.
    7. DOE requests comment on the appropriateness of assuming a 
constant manufacturer markup across all product classes and efficiency 
levels.
    8. DOE requests comment on any variation in installation costs of 
commercial prerinse spray valves that is correlated to increases in 
commercial prerinse spray valve efficiency.
    9. DOE requests comment on the estimated MSPs for each of the 
analyzed efficiency levels. DOE seeks input on what design options 
manufacturers are likely to incorporate into commercial prerinse spray 
valve at each of the analyzed efficiency levels, as well as their 
associated costs.
    10. DOE requests comment on what impact, if any, the proposed 
energy conservation standards would have on domestic manufacturing 
facilities and their associated employment. DOE requests information on 
whether domestic manufacturers would move production overseas or source 
an increased number of products from foreign OEMs under the proposed 
standards.
    11. DOE requests comment on the potential rebound effect from 
setting the proposed energy conservation standards for commercial 
prerinse spray valves. DOE requests comments on the potential 
technology options identified by DOE for improving the efficiency of 
commercial prerinse spray valves and its screening analysis used to 
select the most viable options for consideration in setting the 
proposed standards (see sections IV.A and IV.B of this notice).
    12. DOE requests comment on its estimate that standards do not 
affect a consumer's decision to replace or repair a failed commercial 
prerinse spray valve. Specifically, DOE seeks any data that indicate 
how commercial prerinse spray valve replace versus repair decisions are 
impacted by increased total installed cost, increased repair cost, and 
energy cost savings.
    13. DOE requests comments on the electric water heater thermal 
efficiency used in the analysis. DOE also requests additional data and 
references to the potential increase in efficiency that commercial 
electric and natural gas water heaters will achieve over time.
    14. DOE requests comments on whether aerators represent a 
technologically feasible design option that can be applied to all 
commercial prerinse spray valves. Additionally DOE requests comment on 
what kind of utility aerated commercial prerinse spray valves provide 
to the consumer, and if it is any different from a commercial prerinse 
spray valve without an aerator.
    15. DOE requests comment on the approach to delineate product 
classes by spray force. Specifically, DOE requests comment on whether 
the spray force criteria is appropriate, or whether there are any other 
characteristics that need to be incorporated to determine product 
classes.
    16. DOE requests comment on the proposed product classes, the spray 
force bounds used to separate product classes, and the number of 
product classes.
    17. DOE requests comment on the approach taken to use the discharge 
coefficient of the max-tech throughout all efficiency levels. 
Furthermore, DOE requests information what design decisions 
manufacturers make to adjust the discharge coefficients of their spray 
nozzles.
    18. DOE requests comment on the cost analysis methodology used to 
create the MSP-efficiency relationship for each product class.
    19. DOE requests comment on the use of 1.30 as an appropriate 
baseline markup for all commercial prerinse spray valves.

VIII. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this notice of 
proposed rulemaking.

List of Subjects

10 CFR Part 429

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

[[Page 39539]]

10 CFR Part 431

    Administrative practice and procedure, Confidential business 
information, Energy conservation test procedures, Incorporation by 
reference, and Reporting and recordkeeping requirements.

    Issued in Washington, DC, on June 17, 2015.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons stated in the preamble, DOE is proposing to amend 
parts 429 and 431 of Chapter II of Title 10, Code of Federal 
Regulations 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. Section 429.51(b) is revised to read as follows:

Sec.  429.51  Commercial prerinse spray valves.

* * * * *
    (b) Certification reports. (1) The requirements of Sec.  429.12 are 
applicable to commercial prerinse spray valves; and
    (2) Pursuant to Sec.  429.12(b)(13), a certification report must 
include the following public product-specific information: The maximum 
flow rate in gallons per minute (gpm), rounded to the nearest 0.01 
gallon, and the average spray force in ounce-force (ozf), rounded to 
the nearest 0.1 ozf.

PART 431--ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND 
INDUSTRIAL EQUIPMENT

0
3. The authority citation for part 431 continues to read as follows:

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

0
4. Section 431.266 is revised to read as follows:

Sec.  431.266  Energy conservation standards and their effective dates.

    (a) Commercial prerinse spray valves manufactured on or after 
January 1, 2006 and before [DATE 3 YEARS AFTER PUBLICATION OF THE FINAL 
RULE ESTABLISHING AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL 
PRERINSE SPRAY VALVES IN THE FEDERAL REGISTER], shall have a flow rate 
of not more than 1.6 gallons per minute.
    (b) Commercial prerinse spray valves manufactured on or after [DATE 
3 YEARS AFTER PUBLICATION OF THE FINAL RULE ESTABLISHING AMENDED ENERGY 
CONSERVATION STANDARDS FOR COMMERCIAL PRERINSE SPRAY VALVES IN THE 
FEDERAL REGISTER] shall have a flow rate that does not exceed the 
following:

------------------------------------------------------------------------
                                                           Maximum flow
       Product class  (spray force in ounce-force)        rate  (gallons
                                                            per minute)
------------------------------------------------------------------------
Light Duty (5 ozf and 8 ozf).....................................            1.24
------------------------------------------------------------------------

[FR Doc. 2015-16336 Filed 7-8-15; 8:45 am]
BILLING CODE 6450-01-P
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