```

[Federal Register Volume 76, Number 179 (Thursday, September 15, 2011)]
[Rules and Regulations]
[Pages 57516-57612]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-22329]

[[Page 57515]]

Vol. 76

Thursday,

No. 179

September 15, 2011

Part III

Department of Energy

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10 CFR Part 430

 Energy Conservation Program: Energy Conservation Standards for 
Residential Refrigerators, Refrigerator-Freezers, and Freezers; Energy 
Efficiency Program for Consumer Products: Test Procedures for 
Residential Refrigerators, Refrigerator-Freezers, and Freezers; Final 
Rules

Federal Register / Vol. 76 , No. 179 / Thursday, September 15, 2011 / 
Rules and Regulations

[[Page 57516]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EE-2008-BT-STD-0012]
RIN 1904-AB79

Energy Conservation Program: Energy Conservation Standards for 
Residential Refrigerators, Refrigerator-Freezers, and Freezers

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

ACTION: Final rule.

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

SUMMARY: The Energy Policy and Conservation Act (EPCA) prescribes 
energy conservation standards for various consumer products and 
commercial and industrial equipment, including refrigerators, 
refrigerator-freezers, and freezers. EPCA also requires the U.S. 
Department of Energy (DOE) to determine if more stringent, amended 
standards for these products are technologically feasible and 
economically justified, and would save a significant amount of energy. 
In this final rule, DOE is adopting more stringent energy conservation 
standards for refrigerators, refrigerator-freezers, and freezers. It 
has determined that the amended energy conservation standards for these 
products would result in the significant conservation of energy and are 
technologically feasible and economically justified.

DATES: The effective date of this rule is November 14, 2011. Compliance 
with the amended standards established for refrigerators, refrigerator-
freezers, and freezers in today's final rule is September 15, 2014.

ADDRESSES: For access to the docket to read background documents, the 
technical support document, transcripts of the public meetings in this 
proceeding, or comments received, visit the U.S. Department of Energy, 
Resource Room of the Building Technologies Program, 950 L'Enfant Plaza, 
SW., 6th Floor, Washington, DC 20024, (202) 586-2945, between 9 a.m. 
and 4 p.m., Monday through Friday, except Federal holidays. Please call 
Ms. Brenda Edwards at the above telephone number for additional 
information regarding visiting the Resource Room. You may also obtain 
copies of certain previous rulemaking documents in this proceeding 
(i.e., framework document, notice of public meeting and announcement of 
a preliminary technical support document (TSD), notice of proposed 
rulemaking), draft analyses, public meeting materials, and related test 
procedure documents from the Office of Energy Efficiency and Renewable 
Energy's Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers.html.

FOR FURTHER INFORMATION CONTACT: Lucas Adin, U.S. Department of Energy, 
Office of Energy Efficiency and Renewable Energy, Building Technologies 
Program, EE-2J, 1000 Independence Avenue, SW., Washington, DC 20585-
0121, 202-287-1317, e-mail: Lucas.Adin@ee.doe.gov or Michael Kido, U.S. 
Department of Energy, Office of the General Counsel, GC-71, 1000 
Independence Avenue, SW., Washington, DC 20585-0121, (202) 586-9507, e-
mail: Micahel.Kido@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Final Rule and Its Benefits
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Refrigerators, 
Refrigerator-Freezers, and Freezers
III. General Discussion
    A. Test Procedures
    1. Test Procedure Rulemaking Schedule
    2. Adjustment of the Energy Standards for the New Test Procedure
    a. Products with Variable Anti-Sweat Heater Control
    b. Products With Multiple Defrost Cycle Types
    c. Amendments To Capture Precooling Energy Use
    d. Test Procedures for Special Compartments
    3. Standby and Off Mode Energy Use
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    D. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Life-Cycle Costs
    c. Energy Savings
    d. Lessening of Utility or Performance of Products
    e. Impact of Any Lessening of Competition
    f. Need for National Energy Conservation
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion
    A. Market and Technology Assessment
    1. Exclusion of Wine Coolers From This Rulemaking
    2. Product Classes
    a. General Discussion Regarding Added Product Classes
    b. Possible Combination of Product Class 2 With 1, and Class 12 
With 11
    c. All-Refrigerators and Basic Refrigerators
    d. Built-In Refrigeration Products
    e. Modification of the Definition for Compact Products
    f. Icemaking
    B. Screening Analysis
    1. Discussion of Comments
    a. Compressors
    b. Alternative Refrigerants
    c. Alternative Foam-Blowing Agents
    d. Vacuum-Insulated Panels
    2. Technologies Considered
    C. Engineering Analysis
    1. Discussion of Comments
    2. Adjustment of the Baseline Energy Use Equations
    D. Markups To Determine Product Cost
    E. Energy Use Analysis
    F. Life-Cycle Cost and Payback Period Analyses
    1. Product Cost
    2. Installation Cost
    3. Annual Energy Consumption
    4. Energy Prices
    5. Energy Price Projections
    6. Maintenance and Repair Costs
    7. Product Lifetime
    8. Discount Rates
    9. Compliance Date of Amended Standards
    10. Base Case Efficiency Distribution
    11. Inputs to Payback Period Analysis
    12. Rebuttable-Presumption Payback Period
    G. National Impact Analysis--National Energy Savings and Net 
Present Value Analysis
    1. Shipments
    2. Forecasted Efficiency in the Base Case and Standards Cases
    3. Installed Cost per Unit
    4. Site-to-Source Energy Conversion
    5. Discount Rates
    6. Benefits From Effects of Standards on Energy Prices
    H. Consumer Subgroup Analysis
    I. Manufacturer Impact Analysis
    1. Comments From Interested Parties
    2. GRIM Key Inputs
    a. Product and Capital Conversion Costs
    b. Markup Scenarios
    3. Manufacturer Interviews
    J. Employment Impact Analysis
    K. Utility Impact Analysis
    L. Environmental Assessment
    M. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    c. Current Approach and Key Assumptions
    2. Valuation of Other Emissions Reductions
V. Discussion of Other Comments
    A. Demand Response
    B. Energy Standard Round-Off
    C. Trial Standard Levels and Proposed Standards
    1. Efficiency Levels
    2. Maximum Energy Use Equations
VI. Analytical Results
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period

[[Page 57517]]

    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Cash-Flow Analysis Results
    b. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Sub-Group(s) of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    C. Conclusion
    1. Standard-Size Refrigerator-Freezers
    2. Standard-Size Freezers
    3. Compact Refrigeration Products
    4. Built-In Refrigeration Products
    5. Summary of Benefits and Costs (Annualized) of Amended 
Standards
VII. Procedural Issues and Regulatory Review
    A. Review Under Executive Order 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
    M. Congressional Notification
VIII. Approval of the Office of the Secretary

I. Summary of the Final Rule and Its Benefits

    The Energy Policy and Conservation Act (42 U.S.C. 6291, et seq.; 
EPCA or the Act), as amended, provides that any new or amended energy 
conservation standard DOE prescribes for certain consumer products, 
such as residential refrigerators, refrigerator-freezers, and freezers 
(collectively referred to in this document as ``refrigeration 
products''), shall be designed to ``achieve the maximum improvement in 
energy efficiency * * * which the Secretary determines is 
technologically feasible and economically justified.'' (42 U.S.C. 
6295(o)(2)(A)) The new or amended standard must result in the 
significant conservation of energy. (42 U.S.C. 6295(o)(3)(B)) In 
accordance with these and other statutory provisions discussed in this 
notice, DOE is adopting amended energy conservation standards for 
refrigeration products. The standards in today's final rule, which are 
the maximum allowable energy use expressed as a function of the 
calculated adjusted volume of a given product, are shown in Table I.1. 
These standards apply to all products listed in Table I.1 and 
manufactured in, or imported into, the United States starting in 2014.

            Table I.1--Refrigeration Product Energy Conservation Standards (Effective Starting 2014)
----------------------------------------------------------------------------------------------------------------
                                                        Equations for maximum energy use (kWh/yr)
             Product class              ------------------------------------------------------------------------
                                                 Based on AV (ft \3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerator-freezers and             7.99AV + 225.0                       0.282av + 225.0
 refrigerators other than all-
 refrigerators with manual defrost.
1A. All-refrigerators--manual defrost..  6.79AV + 193.6                       0.240av + 193.6
2. Refrigerator-freezers--partial        7.99AV + 225.0                       0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic      8.07AV + 233.7                       0.285av + 233.7
 defrost with top-mounted freezer
 without an automatic icemaker.
3-BI. Built-in refrigerator-freezer--    9.15AV + 264.9                       0.323av + 264.9
 automatic defrost with top-mounted
 freezer without an automatic icemaker.
3I. Refrigerator-freezers--automatic     8.07AV + 317.7                       0.285av + 317.7
 defrost with top-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
3I-BI. Built-in refrigerator-freezers--  9.15AV + 348.9                       0.323av + 348.9
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A. All-refrigerators--automatic         7.07AV + 201.6                       0.250av + 201.6
 defrost.
3A-BI. Built-in All-refrigerators--      8.02AV + 228.5                       0.283av + 228.5
 automatic defrost.
4. Refrigerator-freezers--automatic      8.51AV + 297.8                       0.301av + 297.8
 defrost with side-mounted freezer
 without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers--   10.22AV + 357.4                      0.361av + 357.4
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic     8.51AV + 381.8                       0.301av + 381.8
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
4I-BI. Built-In Refrigerator-freezers--  10.22AV + 441.4                      0.361av + 441.4
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5. Refrigerator-freezers--automatic      8.85AV + 317.0                       0.312av + 317.0
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers--   9.40AV + 336.9                       0.332av + 336.9
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic     8.85AV + 401.0                       0.312av + 401.0
 defrost with bottom-mounted freezer
 with an automatic icemaker without
 through-the-door ice service.
5I-BI. Built-In Refrigerator-freezers--  9.40AV + 420.9                       0.332av + 420.9
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A. Refrigerator-freezer--automatic      9.25AV + 475.4                       0.327av + 475.4
 defrost with bottom-mounted freezer
 with through-the-door ice service.
5A-BI. Built-in refrigerator-freezer--   9.83AV + 499.9                       0.347av + 499.9
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
6. Refrigerator-freezers--automatic      8.40AV + 385.4                       0.297av + 385.4
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic      8.54AV + 432.8                       0.302av + 432.8
 defrost with side-mounted freezer with
 through-the-door ice service.
7-BI. Built-In Refrigerator-freezers--   10.25AV + 502.6                      0.362av + 502.6
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
8. Upright freezers with manual defrost  5.57AV + 193.7                       0.197av + 193.7

[[Page 57518]]

 
9. Upright freezers with automatic       8.62AV + 228.3                       0.305av + 228.3
 defrost without an automatic icemaker.
9I. Upright freezers with automatic      8.62AV + 312.3                       0.305av + 312.3
 defrost with an automatic icemaker.
9-BI. Built-In Upright freezers with     9.86AV + 260.9                       0.348av + 260.9
 automatic defrost without an automatic
 icemaker.
9I-BI. Built-in upright freezers with    9.86AV + 344.9                       0.348av + 344.9
 automatic defrost with an automatic
 icemaker.
10. Chest freezers and all other         7.29AV + 107.8                       0.257av + 107.8
 freezers except compact freezers.
10A. Chest freezers with automatic       10.24AV + 148.1                      0.362av + 148.1
 defrost.
11. Compact refrigerator-freezers and    9.03AV + 252.3                       0.319av + 252.3
 refrigerators other than all-
 refrigerators with manual defrost.
11A. Compact all-refrigerators--manual   7.84AV + 219.1                       0.277av + 219.1
 defrost.
12. Compact refrigerator-freezers--      5.91AV + 335.8                       0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--      11.80AV + 339.2                      0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13I. Compact refrigerator-freezers--     11.80AV + 423.2                      0.417av + 423.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker.
13A. Compact all-refrigerators--         9.17AV + 259.3                       0.324av + 259.3
 automatic defrost.
14. Compact refrigerator-freezers--      6.82AV + 456.9                       0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
14I. Compact refrigerator-freezers--     6.82AV + 540.9                       0.241av + 540.9
 automatic defrost with side-mounted
 freezer with an automatic icemaker.
15. Compact refrigerator-freezers--      11.80AV + 339.2                      0.417av + 339.2
 automatic defrost with bottom-mounted
 freezer.
15I. Compact refrigerator-freezers--     11.80AV + 423.2                      0.417av + 423.2
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker.
16. Compact upright freezers with        8.65AV + 225.7                       0.306av + 225.7
 manual defrost.
17. Compact upright freezers with        10.17AV + 351.9                      0.359av + 351.9
 automatic defrost.
18. Compact chest freezers.............  9.25AV + 136.8                       0.327av + 136.8
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters.

    DOE's analyses indicate that the amended standards would save a 
significant amount of energy-an estimated 4.84 quads of cumulative 
energy over 30 years (2014 through 2043). This amount is equivalent to 
three times the total energy used annually for refrigeration products 
in U.S. homes.
    The cumulative national net present value (NPV) of total consumer 
costs and savings of the amended standards for products shipped in 
2014-2043, in 2009$, ranges from $6.4 to $10.4 billion (at a 7-percent 
discount rate) to $28.1 to $36.1 billion (at a 3-percent discount 
rate).\1\ The NPV is the estimated total value of future operating-cost 
savings during the analysis period, minus the estimated increased 
product costs, discounted to 2010. 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 (2010 to 2043). Using 
a real discount rate of 7.2 percent, DOE estimates that INPV for 
manufacturers of all refrigeration products in the base case is $3.731 
billion in 2009$. By adopting the amended standards, DOE expects that 
manufacturers may lose 15 to 24 percent of their INPV, or approximately 
$0.573 to $0.887 billion. Using a 7-percent discount rate, the NPV of 
consumer costs and savings from today's amended standards would amount 
to 4 to 16 times the total estimated industry losses. Using a 3-percent 
discount rate, the NPV would amount to 26 to 60 times the total 
estimated industry losses.
---------------------------------------------------------------------------

    \1\ DOE uses discount rates of 7 and 3 percent based on guidance 
from the Office of Management and Budget. See section IV.G for 
further information.
---------------------------------------------------------------------------

    The projected economic impacts of the amended standards on 
individual consumers are generally positive. For example, the estimated 
average life-cycle cost (LCC) savings are $42 for top-mount 
refrigerator-freezers, $22 for bottom-mount refrigerator-freezers, $57 
for side-by-side refrigerator-freezers, $195 for upright freezers, $69 
for chest freezers, $14 for compact refrigerators, $12 for compact 
freezers, and from $2 to $71 for built-in refrigeration products, 
depending on the product class.\2\
---------------------------------------------------------------------------

    \2\ The LCC is the total consumer expense over the life of a 
product, consisting of purchase and installation costs plus 
operating costs (expenses for energy use, maintenance and repair). 
To compute the operating costs, DOE discounts future operating costs 
to the time of purchase and sums them over the lifetime of the 
product. The sources and methods used to derive purchase, 
installation and operating costs are described in section IV.F of 
this notice.
---------------------------------------------------------------------------

    In addition, the amended standards are projected to have 
significant environmental benefits. The energy saved is in the form of 
electricity and DOE expects the energy savings from the amended 
standards to eliminate the need for approximately 4.8 gigawatts (GW) of 
generating capacity by 2043. The savings would result in cumulative 
greenhouse gas emission reductions of 344 million metric tons (Mt) \3\ 
of carbon dioxide (CO2) in 2014-2043. During this period, 
the amended standards would result in emissions reductions \4\ of 
277,000 short tons (tons) of nitrogen oxides (NOX) and 1.45 
tons of mercury (Hg).
---------------------------------------------------------------------------

    \3\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are given in short tons.
    \4\ DOE calculates emissions reductions relative to the most 
recent version of the Annual Energy Outlook (AEO) Reference case 
forecast. This forecast accounts for regulatory emissions reductions 
through 2008, including the Clean Air Interstate Rule (CAIR, 70 FR 
25162 (May 12, 2005)), but not the Clean Air Mercury Rule (CAMR, 70 
FR 28606 (May 18, 2005)). Subsequent regulations, including the 
proposed CAIR replacement rule, the Clean Air Transport Rule (75 FR 
45210 (Aug. 2, 2010)), do not appear in the forecast. DOE notes that 
a new CAIR rule has recently been finalized. See http://www.epa.gov/crossstaterule/.
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent interagency 
process. The derivation of the SCC values is discussed in section IV.M. 
DOE estimates the present monetary value of the CO2 
emissions reduction is between $2.8 and $27.5 billion, expressed in 
2009$ and discounted to 2010. DOE also estimates that the present 
monetary value of the NOX emissions reduction, expressed in 
2009$ and discounted to 2010, is between $35 and $360 million at a 7-
percent discount

[[Page 57519]]

rate, and between $87 and $890 million at a 3-percent discount rate.\5\
---------------------------------------------------------------------------

    \5\ The range of values at each discount rate reflects use of 
low and high estimates of the benefits of avoiding one ton of 
NOX emissions. With respect to mercury, DOE is aware of 
multiple agency efforts to determine the appropriate range of values 
used in evaluating the potential economic benefits of reduced Hg 
emissions. DOE has decided to await further guidance regarding 
consistent valuation and reporting of Hg emissions before it once 
again monetizes Hg in its rulemakings.
---------------------------------------------------------------------------

    Table I.2 summarizes the national economic costs and benefits 
expected to result from today's standards for refrigeration products.

      Table I.2--Summary of National Economic Benefits and Costs of
           Refrigeration Product Energy Conservation Standards
------------------------------------------------------------------------
                                   Present value billion   Discount rate
             Category                      2009$             (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings...........  21.7.................               7
                                   55.4.................               3
CO2 Reduction Monetized Value (at  2.8..................               5
 $4.9/t)*.
CO2 Reduction Monetized Value (at  9.0..................               3
 $22.1/t)*.
CO2 Reduction Monetized Value (at  13.5.................             2.5
 $36.3/t)*.
CO2 Reduction Monetized Value (at  27.5.................               3
 $67.1/t)*.
NOX Reduction Monetized Value (at  0.035................               7
 $447/ton)*.                       0.087................               3
NOX Reduction Monetized Value (at  0.36.................               7
 $4,591/ton)*.                     0.89.................               3
Total Benefits[dagger]...........  30.9.................               7
                                   64.9.................               3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Incremental Installed Costs......  11.3 to 15.3.........               7
                                   19.3 to 27.3.........               3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX[dagger]....  15.6 to 19.5.........               7
                                   37.5 to 45.5.........               3
------------------------------------------------------------------------
* The CO2 values represent global monetized values of the SCC in 2010
  under several scenarios. The values of $4.9, $22.1, and $36.3 per
  metric ton (t) are the averages of SCC distributions calculated using
  5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate.
** The range of results for incremental product costs reflects the range
  of product price forecasts discussed in section IV.G.3.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the SCC value calculated at a 3% discount rate, and the average of the
  low and high NOX values used in DOE's analysis.

    The benefits and costs of today's standards, for products sold in 
2014-2043, 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 2009$, of the benefits from operating 
products that meet the amended standards (consisting primarily of 
operating cost savings from using less energy, minus increases in 
equipment purchase and installation costs, which is another way of 
representing consumer NPV), and (2) the annualized monetary value of 
the benefits of emission reductions, including CO2 emission 
reductions.\6\
---------------------------------------------------------------------------

    \6\ DOE used a two-step calculation process to convert the time-
series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2010, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of three and seven percent 
for all costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.3. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2014 through 2043) that 
yields the same present value. This payment includes benefits to 
consumers which accrue after 2043 from the refrigerators purchased 
from 2014 to 2043. Costs incurred by manufacturers, some of which 
may be incurred prior to 2014 in preparation for the rule, are not 
directly included, but are indirectly included as part of 
incremental equipment costs. The extent of these costs and benefits 
depends on the projected price trends of refrigerators since 
consumer demand of refrigerators is a function of refrigerator 
prices. The fixed annual payment is the annualized value. Although 
DOE calculated annualized values, this does not imply that the time-
series of cost and benefits from which the annualized values were 
determined is a steady stream of payments.
---------------------------------------------------------------------------

    Although 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 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 refrigeration products shipped in 2014-2043. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one ton of carbon 
dioxide in each year. These impacts continue well beyond 2100.
    Estimates of annualized benefits and costs of today's standards are 
shown in Table I.3. The results under the primary estimate, expressed 
in 2009$, are as follows. Using a 7-percent discount rate and the SCC 
series having a value of $22.1/ton in 2010, the cost of the standards 
in today's rule is $1,167 to $1,569 million per year in increased 
equipment costs, while the annualized benefits are $2,275 million per 
year in reduced equipment operating costs, $515 million in 
CO2 reductions, and $21 million in reduced NOX 
emissions. In this case, the net benefit amounts to $1,241 to $1,643 
million per year. Using a 3-percent discount rate and the SCC series 
having a value of $22.1/ton in 2010, the cost of the standards in

[[Page 57520]]

today's rule is $1,081 to $1,526 million per year in increased 
equipment costs, while the benefits are $3,160 million per year in 
reduced operating costs, $515 million in CO2 reductions, and 
$28 million in reduced NOX emissions. In this case, the net 
benefit amounts to $2,176 to $2,622 million per year.

                     Table I.3--Annualized Benefits and Costs of Amended Standards for Refrigeration Products Shipped in 2014-2043 *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Monetized (million 2009$/year)
                                                                     -----------------------------------------------------------------------------------
                                              Discount rate                                       Low net benefits  estimate      High net  benefits
                                                                          Primary estimate *                   *                      estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Operating Cost Savings........  7%..............................  2275......................  1996......................  2560.
                                    3%..............................  3160......................  2720......................  3596.
    CO2 Reduction at $4.9/t **....  5%..............................  162.......................  162.......................  162.
    CO2 Reduction at $22.1/t **...  3%..............................  515.......................  515.......................  515.
    CO2 Reduction at $36.3/t **...  2.5%............................  772.......................  772.......................  772.
    CO2 Reduction at $67.1/t **...  3%..............................  1567......................  1567......................  1567.
    NOX Reduction at $2,519/ton **  7%..............................  21........................  21........................  21.
                                    3%..............................  28........................  28........................  28.
    Total (Operating Cost Savings,  7% plus CO2 range...............  2457 to 3863..............  2178 to 3584..............  2742 to 4148.
     CO2 Reduction and NOX          7%..............................  2810......................  2531......................  3095.
     Reduction) [dagger].
                                    3%..............................  3703......................  3263......................  4139.
                                    3% plus CO2 range...............  3350 to 4755..............  2910 to 4315..............  3786 to 5192.
Costs:
    Incremental Product Costs.....  7%..............................  1167 to 1569..............  1480......................  1232.
                                    3%..............................  1081 to 1526..............  1430......................  1147.
Net Benefits:
    Total [dagger]................  7% plus CO2 range...............  888 to 2696...............  698 to 2103...............  1511 to 2916.
                                    7%..............................  1241 to 1643..............  1051......................  1863.
                                    3%..............................  2176 to 2622..............  1832......................  2993.
                                    3% plus CO2 range...............  1823 to 3674..............  1479 to 2885..............  2640 to 4045.
--------------------------------------------------------------------------------------------------------------------------------------------------------
 *This table presents the annualized costs and benefits associated with refrigerators shipped between 2014 and 2043. These results include benefits to
  consumers which accrue after 2043 from the refrigerators purchased from 2014 to 2043. Costs incurred by manufacturers, some of which may be incurred
  prior to 2014 in preparation for the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The extent
  of these costs and benefits depends on the projected price trends of refrigerators since consumer demand of refrigerators is a function of
  refrigerator prices. The extent of the costs and benefits will depend on the projected price trends of refrigerators, as the consumer demand for
  refrigerators is a function of refrigerator prices. The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and
  housing starts from the AEO2010 Reference case, Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium
  decline rate for projected product price trends in the Primary Estimate, a low decline rate for projected product price trends using a Low Benefits
  Estimate, and a high decline rate for projected product price trends using a High Benefits Estimate. The different techniques used to derive projected
  price trends for each estimate are explained in section IV.G.3. In the Primary estimate, the range of results for incremental product costs reflects
  the range of projected price trends.
** The CO2 values represent global monetized values (in 2009$) of the SCC in 2010 under several scenarios. The values of $4.9, $22.1, and $36.3 per
  metric ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t represents the
  95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2009$) is the average of the low and high values
  used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.1/t in 2010 (in
  2009$). 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.

    DOE has concluded that the standards in today's rule represent the 
maximum improvement in energy efficiency that is both 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 
at least some, if not most, product classes covered by today's ruling. 
Based on the analyses described above, DOE found the benefits of 
today's standards to the Nation (energy savings, positive NPV of 
consumer benefits, consumer LCC savings, and emission reductions) 
outweigh the burdens (loss of INPV for manufacturers and LCC increases 
for some consumers).

II. Introduction

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

A. Authority

    Title III of EPCA sets forth a variety of provisions designed to 
improve energy efficiency. Part A of title III (42 U.S.C. 6291-6309) 
provides for the Energy Conservation Program for Consumer Products 
Other than Automobiles.\7\ EPCA covers consumer products and certain 
commercial equipment (referred to collectively hereafter as ``covered 
products''), including the types of refrigeration products that are the 
subject of this rulemaking. (42 U.S.C. 6292(a)(1)) EPCA prescribed 
energy conservation standards for these products (42 U.S.C. 6295(b)(1)-
(2)), and directed DOE to conduct three cycles of rulemakings to 
determine whether to amend these standards. (42 U.S.C. 
6295(b)(3)(A)(i), (b)(3)(B)-(C), and (b)(4)) As explained in further 
detail in section 0, this rulemaking satisfies the third round of 
amendments under 42 U.S.C. 6295(b). (DOE notes that under 42 U.S.C. 
6295(m), the agency must periodically review its already established 
energy conservation standards for a covered product. Under this 
requirement, the

[[Page 57521]]

next review that DOE would need to conduct would occur six years from 
the issuance of a final rule establishing or amending a standard for a 
covered product.)
---------------------------------------------------------------------------

    \7\ This part was titled Part B in EPCA, but was subsequently 
codified as Part A in the U.S. Code for editorial reasons.
---------------------------------------------------------------------------

    Under the Act, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing, (2) labeling, 
(3) the establishment of Federal energy conservation standards, and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(FTC) is generally responsible for labeling issues for consumer 
products, and DOE implements the remainder of the program. Section 323 
of the Act (codified at 42 U.S.C. 6293) authorizes DOE, subject to 
certain criteria and conditions, to develop test procedures to measure 
the energy efficiency, energy use, or estimated annual operating cost 
of each covered product. 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 under 
EPCA. Id. The test procedures for refrigeration products currently 
appear at title 10, Code of Federal Regulations (CFR), part 430, 
subpart B, appendices A1 and B1, respectively. (These procedures have 
recently been amended and recodified as part of new Appendices A and B, 
which will, pending further comment from interested parties, be 
required to be used when certifying compliance with the standards 
detailed in today's final rule. See 75 FR 78810 (December 16, 2010)).
    EPCA prescribes specific criteria for DOE to consider when amending 
standards for covered products. As indicated above, any amended 
standard for a covered product must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A)) EPCA precludes DOE 
from adopting any standard that would not result in the significant 
conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not 
prescribe a standard for certain products, including refrigeration 
products, (1) if no test procedure has been established for that 
product, or (2) if DOE determines by rule that the amended standard is 
not technologically feasible or economically justified. (42 U.S.C. 
6295(o)(3)(A)-(B)) The Act also provides that, in deciding whether an 
amended standard is economically justified, DOE must determine whether 
the benefits of the standard exceed its burdens. (42 U.S.C. 
6295(o)(2)(B)(i)) DOE must do so 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 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 conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    EPCA also contains what is known as an ``anti-backsliding'' 
provision, which prevents DOE 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, DOE may not prescribe a 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) with performance 
characteristics, features, sizes, capacities, and volumes that are 
substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4))
    Further, EPCA establishes a rebuttable presumption that a standard 
is economically justified if the Secretary finds that the additional 
cost to the consumer of purchasing a product complying with an energy 
conservation standard level will be less than three times the value of 
the energy savings during the first year that the consumer will receive 
as a result of the standard, as calculated under the applicable test 
procedure. See 42 U.S.C. 6295(o)(2)(B)(iii).\8\
---------------------------------------------------------------------------

    \8\ In this context, the presumption provides a legal finding 
that the criteria under 42 U.S.C. 6295(o)(2) have been met if the 
specified level of savings within the first year occur. To ensure 
that it has fully examined the potential costs and benefits of a 
given level, DOE routinely conducts a full analysis of the potential 
standards it considers.
---------------------------------------------------------------------------

    Additionally, 42 U.S.C. 6295(q)(1) specifies the requirements for 
setting classes of a covered product. In such cases, DOE may specify a 
different standard level than that which applies generally to such type 
or class of products ``for any group of covered products which have the 
same function or intended use'' if one of two conditions is met: (A) 
The specific group of products for which a class category would apply 
consume a different kind of energy from that consumed by other covered 
products within such type (or class); or (B) that specific group of 
products has a capacity or other performance-related feature which 
other products within such type (or class) do not have and such feature 
justifies a higher or lower standard'' than applies or will apply to 
the other products within that type or class. Id. In determining 
whether a performance-related feature justifies a different standard 
for a group of products, DOE must ``consider such factors as the 
utility to the consumer of such a feature'' and other factors DOE deems 
appropriate. Id. Any rule prescribing such a standard must include an 
explanation of the basis on which such higher or lower level was 
established. (42 U.S.C. 6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE can, however, grant waivers 
of Federal preemption for particular State laws or regulations in 
accordance with the procedures and other provisions of section 327(d) 
of the Act. (42 U.S.C. 6297(d))
    Section 310(3) of the Energy Independence and Security Act of 2007 
(EISA 2007; Pub. L. 110-140 (codified at 42 U.S.C. 6295(gg))) amended 
EPCA to require that energy conservation standards address standby mode 
and off mode energy use. Specifically, when DOE adopts a standard for a 
covered product after July 1, 2010, it must, if justified by the 
criteria for adoption of standards in section 325(o) of EPCA (42 U.S.C. 
6295(o)), incorporate standby mode and off mode energy use into the 
standard, if feasible, or adopt a separate

[[Page 57522]]

standard for such energy use for that product. (42 U.S.C. 
6295(gg)(3)(A)-(B)) DOE's current (and recently amended) test 
procedures and current standards for refrigeration products address 
standby and off mode energy use, as do the amended standards adopted in 
this final rule. Standby and off mode energy use is measured by the 
test procedures and integrated into the energy use metric, thus 
separate metrics for these quantities are not needed.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563 (76 FR 3281, Jan. 21, 2011). EO 13563 is supplemental to, and 
explicitly reaffirms the principles, structures, and definitions 
governing regulatory review established in, Executive Order 12866. To 
the extent permitted by law, agencies are required by Executive Order 
13563 to: (1) Propose or adopt a regulation only upon a reasoned 
determination that its benefits justify its costs (recognizing that 
some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
``to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible.'' In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include ``identifying changing 
future compliance costs that might result from technological innovation 
or anticipated behavioral changes.'' For the reasons stated in the 
preamble, DOE believes that today's final rule is consistent with these 
principles, including that, to the extent permitted by law, agencies 
adopt a regulation only upon a reasoned determination that its benefits 
justify its costs and select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits.
    Given the range of inputs and parameters analyzed in this 
rulemaking, there may be multiple standards that would maximize 
annualized net benefits.\9\ For some product classes, depending on 
different assumptions, the standard that maximized annualized net 
benefits could fall within a range of TSLs. Five different TSLs were 
considered for each product class grouping with high and low values for 
the maximum annualized net benefits estimated for each TSL. For 
standard-size refrigerator-freezers, the TSL with maximum annualized 
net benefits with the highest value was TSL 3, although certain values 
for maximum annualized net benefits fell within the ranges estimated 
for TSL 1 to TSL 3. For standard-size freezers, the maximum annualized 
net benefits fell within the calculated ranges for TSL 3 to TSL 4. 
However, DOE noted that even using the low end of this range, 
efficiency levels are significantly higher than the most efficient 
products already available on the market (see Section VI.C.2). 
Therefore, DOE selected TSL 2, which DOE also notes corresponds to the 
recommended level in the Joint Comments. For compact refrigeration 
products, the maximum annualized net benefits fell within the 
calculated ranges for TSL 1 to TSL 3, and DOE selected TSL 2. With 
respect to compact refrigeration products, DOE estimates an 
approximately 10 percent increase in total installation costs as a 
result of the standard. Because DOE was unable to estimate the income 
subgroup LCC effects due to lack of data, the agency believes choosing 
a TSL on the lower end of the range of estimated cost impacts (i.e., 
TSL 2) would provide a more conservative approach to minimize any 
potentially negative consumer welfare impacts on lower income 
consumers. For built-in refrigeration products, the TSL with maximum 
annualized net benefits was TSL 2, and DOE selected TSL 2. Therefore, 
consistent with EO 13563, the energy efficiency standards adopted 
herein by DOE achieves maximum net benefits.
---------------------------------------------------------------------------

    \9\ The maximum annualized net benefits included monetized 
emissions savings.
---------------------------------------------------------------------------

B. Background

    The following discussion provides some background information 
describing the events leading up to today's final rule.
1. Current Standards
    In a final rule published on April 28, 1997 (1997 Final Rule), DOE 
prescribed energy conservation standards for refrigeration products 
manufactured on or after July 1, 2001. 62 FR 23102. This 1997 rule set 
the energy conservation standards that are currently in place and 
completed the second round of rulemaking to amend the standards for 
refrigeration products required under 42 U.S.C. 6295(b)(3)(B)-(C). The 
current standards consist of separate equations for each product class. 
Each equation provides a means to calculate the maximum levels of 
energy use permitted under the regulations. These levels vary based on 
the storage volume of the refrigeration product and on the particular 
characteristics and features included in a given product (i.e., based 
on product class). 10 CFR 430.32(a). The current standards are set 
forth in Table II.1. DOE notes that the standard levels denoted in the 
additional product classes listed as 5A and 10A were established by the 
Office of Hearings and Appeals (OHA) through that Office's exception 
relief process, and are applicable to basic models of those types if 
their manufacturer has applied for and been granted exception relief 
for them by OHA.

[[Page 57523]]

   Table II.1--Federal Energy Efficiency Standards for Refrigerators,
                   Refrigerator-Freezers, and Freezers
------------------------------------------------------------------------
                                  Energy standard equations for maximum
         Product class                     energy use  (kWh/yr)
------------------------------------------------------------------------
                                  Made Effective by the 1997 Final Rule
------------------------------------------------------------------------
1. Refrigerators and             8.82AV+248.4
 refrigerator-freezers with      0.31av+248.4
 manual defrost.
2. Refrigerator-freezers--       8.82AV+248.4
 partial automatic defrost.      0.31av+248.4
3. Refrigerator-freezers--       9.80AV+276.0
 automatic defrost with top-     0.35av+276.0
 mounted freezer without
 through-the-door ice service
 and all-refrigerator--
 automatic defrost.
4. Refrigerator-freezers--       4.91AV+507.5
 automatic defrost with side-    0.17av+507.5
 mounted freezer without
 through-the-door ice service.
5. Refrigerator-freezers--       4.60AV+459.0
 automatic defrost with bottom-  0.16av+459.0
 mounted freezer without
 through-the-door ice service.
6. Refrigerator-freezers--       10.20AV+356.0
 automatic defrost with top-     0.36av+356.0
 mounted freezer with through-
 the-door ice service.
7. Refrigerator-freezers--       10.10AV+406.0
 automatic defrost with side-    0.36av+406.0
 mounted freezer with through-
 the-door ice service.
8. Upright freezers with manual  7.55AV+258.3
 defrost.                        0.27av+258.3
9. Upright freezers with         12.43AV+326.1
 automatic defrost.              0.44av+326.1
10. Chest freezers and all       9.88AV+143.7
 other freezers except compact   0.35av+143.7
 freezers.
11. Compact refrigerators and    10.70AV+299.0
 refrigerator-freezers with      0.38av+299.0
 manual defrost.
12. Compact refrigerator-        7.00AV+398.0
 freezer--partial automatic      0.25av+398.0
 defrost.
13. Compact refrigerator-        12.70AV+355.0
 freezers--automatic defrost     0.45av+355.0
 with top-mounted freezer and
 compact all-refrigerator--
 automatic defrost.
14. Compact refrigerator-        7.60AV+501.0
 freezers--automatic defrost     0.27av+501.0
 with side-mounted freezer.
15. Compact refrigerator-        13.10AV+367.0
 freezers--automatic defrost     0.46av+367.0
 with bottom-mounted freezer.
16. Compact upright freezers     9.78AV+250.8
 with manual defrost.            0.35av+250.8
17. Compact upright freezers     11.40AV+391.0
 with automatic defrost.         0.40av+391.0
18. Compact chest freezers.....  10.45AV+152.0
                                 0.37av+152.0
------------------------------------------------------------------------
         Product Class             Made Effective Through OHA Exception
                                                  Relief
------------------------------------------------------------------------
5A. Refrigerator-freezer--       5.0AV+539.0
 automatic defrost with bottom-  0.18av+539.0
 mounted freezer with through-
 the-door ice service.
10A. Chest freezers with         14.76AV+211.5
 automatic defrost.              0.52av+211.5
------------------------------------------------------------------------
AV: Adjusted Volume in ft\3\; av: Adjusted Volume in liters (L).

2. History of Standards Rulemaking for Refrigerators, Refrigerator-
Freezers, and Freezers
    The amendments made to EPCA by the National Appliance Energy 
Conservation Act of 1987 (NAECA; Pub. L. 100-12) included mandatory 
energy conservation standards for refrigeration products and 
requirements that DOE conduct two cycles of rulemakings to determine 
whether to amend these standards. (42 U.S.C. 6295(b)(1), (2), 
(3)(A)(i), and (3)(B)-(C)) DOE completed the first of these rulemaking 
cycles in 1989 and 1990 by adopting amended performance standards for 
all refrigeration products manufactured on or after January 1, 1993. 54 
FR 47916 (November 17, 1989); 55 FR 42845 (October 24, 1990). As 
indicated above, DOE completed a second rulemaking cycle to amend the 
standards for refrigeration products by issuing a final rule in 1997, 
which adopted the current standards for these products. 62 FR 23102 
(April 28, 1997).
    In 2005, DOE granted a petition, submitted by a coalition of state 
governments, utility companies, consumer and low-income advocacy 
groups, and environmental and energy efficiency organizations, 
requesting a rulemaking to amend the standards for residential 
refrigerator-freezers.\10\ DOE then conducted limited analyses to 
examine the technological and economic feasibility of amended standards 
at the ENERGY STAR levels that were in effect for 2005 for the two most 
popular product classes of refrigerator-freezers. These analyses not 
only identified potential energy savings, benefits and burdens from 
such standards, but also assessed other issues related to them. Most 
recently, DOE has undertaken this rulemaking to satisfy

[[Page 57524]]

the statutory requirement that DOE publish a final rule to determine 
whether to amend the standards for refrigeration products manufactured 
in 2014. (42 U.S.C. 6295(b)(4)) The limited 2005 analyses served as 
background for the more extensive analysis conducted for this 
rulemaking.
---------------------------------------------------------------------------

    \10\ The petition, submitted June 1, 2004, can be viewed at 
http://www.standardsasap.org/documents/rfdoe.pdf (last accessed 
August 18, 2010) and is in the docket as item No. 117.
---------------------------------------------------------------------------

    DOE initiated this rulemaking by making available on its Web site a 
framework document for refrigeration products, a PDF copy of which is 
available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framework.pdf). DOE 
also published a notice announcing the availability of the framework 
document and a public meeting to discuss the document. It also 
requested public comment on the document. 73 FR 54089 (September 18, 
2008). The framework document described the procedural and analytical 
approaches that DOE anticipated using to evaluate energy conservation 
standards for refrigeration products and identified various issues to 
resolve during the rulemaking.
    On September 29, 2008, DOE held the framework document public 
meeting and discussed the issues detailed in the framework document. 
DOE also described the analyses that it planned to conduct during the 
rulemaking. Through the public meeting, DOE sought feedback from 
interested parties on these subjects and provided information regarding 
the rulemaking process that DOE would follow. Interested parties 
discussed the following major issues at the public meeting: Test 
procedure revisions; product classes; technology options; approaches to 
the engineering, life-cycle cost, and payback period analyses; 
efficiency levels analyzed in the engineering analysis; and the 
approach for estimating typical energy consumption. At the meeting, and 
during the related comment period, DOE received many comments that 
helped it identify and resolve issues involved in this rulemaking.
    DOE then gathered additional information and performed preliminary 
analyses for the purpose of developing potential amended energy 
conservation standards for refrigeration products. This process 
culminated in DOE's public announcement of the preliminary analysis 
public meeting. 74 FR 58915 (November 16, 2009) (the November 2009 
notice) At that meeting, which was held on December 10, 2009, DOE 
discussed the following matters: The product classes DOE analyzed; the 
analytical framework, models, and tools that DOE was using to evaluate 
standards; the results of the preliminary analyses performed by DOE; 
and potential standard levels that DOE could consider. DOE also invited 
written and verbal comments on these subjects and announced the 
availability on its Web site of a preliminary technical support 
document (preliminary TSD) it had prepared to inform interested parties 
and enable them to provide comments. Id. (The preliminary TSD is 
available at http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/ref_frz_prenopr_prelim_tsd.pdf) DOE also 
sought views concerning other relevant issues that participants 
believed would affect energy conservation standards for refrigeration 
products, or that merited addressing in the Notice of Proposed 
Rulemaking (NOPR). Id. at 58917-18.
    The preliminary TSD provided an overview of the activities DOE 
undertook in developing potential standards for refrigeration products, 
and discussed the comments DOE received in response to the framework 
document. It also described the analytical framework that DOE used, 
including a description of the methodology, the analytical tools, and 
the relationships among the various analyses that are part of the 
rulemaking. The preliminary TSD presented and described in detail each 
analysis DOE had performed up to that point, including descriptions of 
inputs, sources, methodologies, and results. These analyses included a 
market and technology assessment, a screening analysis, an engineering 
analysis, an energy use analysis, a markups analysis, a life-cycle cost 
analysis, a payback period (PBP) analysis, a shipments analysis, a 
national impact analysis, and a preliminary manufacturer impact 
analysis. See the NOPR for an overview of these assessments and 
analyses. 75 FR 59470, 59477 (September 27, 2010).
    At the preliminary analysis meeting, DOE presented the 
methodologies and results of the analyses set forth in the preliminary 
TSD. Major topics discussed at the meeting included test procedure 
revisions, product classes (including wine coolers, all-
refrigerators,\11\ and built-in refrigeration products), the use of 
alternative foam blowing agents and refrigerants, engineering analysis 
tools, the use of vacuum insulated panels (VIPs), mark-ups, field 
energy consumption, life-cycle cost inputs, efficiency distribution 
forecasts, and trial standard level selection criteria. DOE also 
discussed plans for conducting the NOPR analyses. Comment received in 
response to the November 2009 notice, helped shape DOE's resolution of 
the issues raised in the preliminary analysis meeting.
---------------------------------------------------------------------------

    \11\ An ``all-refrigerator'' is defined as ``an electric 
refrigerator which does not include a compartment for the freezing 
and long time storage of food at temperatures below 32 [deg]F (0.0 
[deg]C). It may include a compartment of 0.50 cubic feet capacity 
(14.2 liters) or less for the freezing and storage of ice.'' (10 CFR 
part 430, subpart B, appendix A1, section 1.4).
---------------------------------------------------------------------------

    In response to the preliminary analysis, DOE also received a 
comment submitted jointly by groups representing manufacturers 
(Association of Home Appliance Manufacturers, Whirlpool, General 
Electric Company (GE), Electrolux, LG Electronics, BSH, Alliance 
Laundry, Viking Range, Sub Zero-Wolf, Friedrich A/C, U-Line, Samsung, 
Sharp Electronics, Miele, Heat Controller, AGA Marvel, Brown Stove, 
Haier, Fagor America, Airwell Group, Arcelik, Fisher & Paykel, Scotsman 
Ice, Indesit, Kuppersbusch, Kelon, DeLonghi); energy and environmental 
advocates (American Council for an Energy Efficient Economy, Appliance 
Standards Awareness Project, Natural Resources Defense Council, 
Alliance to Save Energy, Alliance for Water Efficiency, Northwest Power 
and Conservation Council, Northeast Energy Efficiency Partnerships); 
and consumer groups (Consumer Federation of America, National Consumer 
Law Center). This collective set of comments, which DOE refers to in 
this notice as the ``Joint Comments,'' \12\ recommended specific energy 
conservation standards for refrigeration products that, in the 
commenters' view, would satisfy the requirements under EPCA. According 
to this submission, negotiations between these various groups commenced 
in the spring of 2010, resulting in a finalized agreement with 
recommended standards on July 30, 2010. (Joint Comments, No. 52 at p. 
8) Those recommended standards were reported in percentages of energy 
use reductions and in annual energy use based on the test procedure 
then in place but after DOE had published its NOPR proposing to amend 
that procedure. (Id. See also 75 FR 29824 (May 27, 2010)) DOE neither 
organized nor was a member of the group but made its contractors 
available to perform data processing. Consistent with its legal 
obligations when developing an energy conservation standard, DOE 
provided the public with the opportunity to comment on the proposed 
levels that DOE considered adopting for refrigeration products in

[[Page 57525]]

the NOPR, which mirror those recommended in the Joint Comments.
---------------------------------------------------------------------------

    \12\ DOE Docket No. EERE-2008-BT-STD-0012, Comment 49. DOE 
considered the Joint Comments to supersede earlier comments by the 
listed parties regarding issues subsequently discussed in the Joint 
Comments.
---------------------------------------------------------------------------

    DOE published the NOPR on September 27, 2010. 75 FR 59470. The NOPR 
and its accompanying NOPR TSD described the analyses that DOE conducted 
after the preliminary analyses, including revisions of analyses to 
address stakeholder comments. The additional analyses performed during 
the NOPR phase included the consumer subgroup analysis, manufacturer 
impact analysis, employment impact analysis, utility impact analysis, 
environmental analysis, and regulatory impact analysis. The NOPR 
discussed all of the NOPR analyses in depth, including the revision of 
analyses initially conducted in the preliminary analysis phase. (see 75 
FR at 59485-59530 (September 27, 2010)) DOE held a public meeting to 
discuss the NOPR on October 14, 2010. At the meeting, DOE presented its 
analyses and raised issues for comment. The issues discussed at the 
meeting included the measurement changes associated with the new test 
procedures under consideration, product classes, product class 
definitions, status of specific technologies (e.g. high-efficiency 
compressors, VIPs, and isobutane refrigerant), max-tech levels, energy 
use equation slope changes, adjustments to the methodology for field 
energy use estimates, maintenance costs, efficiency distributions, 
energy standard round-off, impacts on small manufacturers, setting 
built-in standards at levels determined to have negative consumer 
impacts, and DOE's treatment of emissions reductions. DOE considered 
comments received at the public meeting and during the NOPR comment 
period in finalizing the standards.
    As discussed in greater detail in section IV.F.1 below, after 
publishing the NOPR, DOE more carefully examined trends in product 
prices and the possible impact of such trends on its analyses. On 
February 22, 2011, DOE published a notice of data availability (NODA) 
that discussed the approach it was considering to use in its forecasts 
of product prices. 76 FR 9696. DOE requested comments on the 
information provided in the NODA, and several stakeholders responded, 
including some that had not commented on the NOPR.
    Table II.2 below lists the stakeholders that provided comments on 
the NOPR and the NODA.

                        Table II.2--Stakeholders Providing Comments on the NOPR and NODA
----------------------------------------------------------------------------------------------------------------
                                                                          NOPR oral
              Name                     Acronym            Type *           comments         Written  comments
----------------------------------------------------------------------------------------------------------------
Air-Conditioning, Heating, and   AHRI..............  IR                ...............  NODA
 Refrigeration Institute.
American Council for an Energy   ACEEE.............  EA                ...............  NODA
 Efficient Economy.
American Gas Association.......  AGA...............  UA                ...............  NODA
American Public Power            APPA..............  UA                ...............  NOPR
 Association.
Appliance Standards Awareness    ASAP..............  EA                       [check]   NODA
 Project (ASAP).
Appliance Standards Awareness    Joint Advocates'    EA, CA            ...............  NOPR
 Project (ASAP) and Others \13\.  Comment (JAC).
Association of Home Appliance    AHAM..............  IR                       [check]   NOPR, NODA
 Manufacturers.
California Investor-Owned        IOUs..............  U                 ...............  NOPR, NODA
 Utilities.
Consumer Federation of America.  CFA...............  CA                ...............  NODA
Earthjustice...................  Earthjustice......  EA                       [check]   NOPR
Edison Electric Institute......  EEI...............  UA                ...............  NOPR, NODA
Electrolux Home Products.......  Electrolux........  M                        [check]   ........................
General Electric Consumer and    GE................  M                        [check]   NOPR
 Industrial.
Ingersoll Rand Residential       Ingersoll Rand....  M                 ...............  NODA
 Solutions.
National Consumer Law Center...  NCLC..............  CA                ...............  NODA
Natural Resources Defense        NRDC..............  EA                ...............  NODA
 Council.
Northeast Energy Efficiency      NEEP..............  EA                ...............  NODA
 Partnerships.
Northwest Energy Efficiency      NEEA..............  EA                ...............  NODA
 Alliance.
Northwest Power and              NPCC..............  UA                       [check]   ........................
 Conservation Council.
People's Republic of China WTO/  PRC...............  FG                ...............  NOPR
 TBT National Notification &
 Enquiry Center.
Portland General Electric        PGEC..............  U                 ...............  NOPR
 Company.
Sacramento Municipal Utility     SMUD..............  U                 ...............  NOPR
 District.
Southern Company...............  SC................  U                 ...............  NOPR, NODA
Sub Zero-Wolf, Inc.............  Sub Zero..........  M                 ...............  NOPR
Traulsen.......................  Traulsen..........  M                 ...............  NODA
Whirlpool Corporation..........  Whirlpool.........  M                        [check]   NOPR
----------------------------------------------------------------------------------------------------------------
* IR: Industry Representative; M: Manufacturer; EA: Efficiency/Environmental Advocate; CA: Consumer Advocate;
  CS: Component Supplier: TE: Technical Expert: I: Individual; U: Utility; UA: Utility Advocate; FG: Foreign
  Government Agency.

    DOE notes that comments from the PRC indicated that it received 
notice of the September 27th NOPR on October 27, 2010, which permitted 
the Chinese government less than 60 days to provide comment on the 
proposed regulation. In DOE's view, the publication of the September 
2010 proposal, along with its immediate availability on the Government 
Printing Office's Web site (http://www.gpoaccess.gov), provided any 
interested party with the specified 60 days of comment period. In 
future, however, to accommodate the PRC's concerns, and to the extent 
feasible, DOE may examine possible steps to ensure the availability of 
its proposals to interested foreign parties.
---------------------------------------------------------------------------

    \13\ Appliance Standards Awareness Project (ASAP), Alliance to 
Save Energy (ASE), American Council for an Energy-Efficient Economy 
(ACEEE), Consumer Federation of America (CFA), National Consumer Law 
Center (NCLC), Natural Resources Defense Council (NRDC), Northeast 
Energy Efficiency Partnerships (NEEP), and Northwest Energy 
Efficiency Alliance (NEEA).
---------------------------------------------------------------------------

III. General Discussion

    The following section discusses various technical aspects related 
to this rulemaking. In particular, it addresses aspects involving the 
test procedures for refrigeration products, the technological 
feasibility of potential standards to assign to these products, and the 
potential energy savings and economic justification for prescribing the

[[Page 57526]]

amended standards for refrigeration products.

A. Test Procedures

    As noted above, DOE's current test procedures for refrigeration 
products appear at 10 CFR part 430, subpart B, appendices A1 (for 
refrigerators and refrigerator-freezers) and B1 (for freezers). DOE 
recently published a notice containing both the test procedure final 
rule (affecting products manufactured prior to 2014) and an interim 
final rule (for products manufactured starting in 2014). The final/
interim final rule notice amended Appendices A1 and B1 (which affect 
pre-2014 products) and created new Appendices A and B (which affect 
products starting in 2014). Appendix A applies to refrigerators and 
refrigerator-freezers covered by today's amended standards (i.e., those 
manufactured or after the 2014 compliance date prescribed by today's 
rule) and Appendix B applies to freezers covered by today's amended 
standards. 75 FR 78810 (December 16, 2010) (this notice contains both 
the final and interim final rules that detail the test procedures for 
refrigeration products). The new Appendices A and B share many of the 
same revisions and additions made in Appendices A1 and B1, but also 
include additional revisions not made in Appendices A1 and B1. See id. 
at 78817-78818 DOE notes, however, that because the new Appendices A 
and B were issued as an interim final rule, these additional amendments 
may be subject to possible adjustment based on comments that DOE 
receives. DOE had previously provided commenters with 60 days within 
which to provide additional feedback regarding the interim final rule. 
Id. at 78810. DOE may reopen this comment period for a limited period 
of time after the publication of today's standards final rule.
    EPCA requires DOE to consider during a test procedure rulemaking 
whether test procedure amendments alter the measured energy use of 
products, and, if so, to amend the energy standards. (42 U.S.C. 
6293(e)(1)-(2)) In this case, DOE simultaneously considered the impacts 
of any measured energy changes within the context of the standards 
rulemaking required by statute. Section III.A.0 discusses the 
adjustment of the final energy conservation standard with respect to 
any test procedure changes. The approach used to implement this 
adjustment is also discussed in the Section 0 below.
1. Test Procedure Rulemaking Schedule
    The NOPR analysis documents were published, and the NOPR public 
meeting was held, prior to publication of the final rule describing the 
amended test procedure on which the analysis was based. The test 
procedure final/interim final rule was issued and DOE made copies 
available to all interested parties prior to the end of the energy 
conservation standard NOPR comment period.
    AHAM and GE both commented that, despite DOE's May 2010 publication 
of its proposed test procedure, it is difficult to prepare comments on 
an energy standard when the final test procedure is not yet known. 
(AHAM, Public Meeting Transcript, No. 67 at p. 18; GE, Public Meeting 
Transcript, No. 67 at p. 37) AHAM clarified that determination of the 
impact on energy use measurement of the test procedure changes cannot 
be done without having a final test procedure (AHAM, Public Meeting 
Transcript, No. 67 at p. 13-14, 35) In written comments, AHAM argued 
that because the test procedure final/interim final rule was not issued 
until November 24, 2010, manufacturers did not have a sufficient 
opportunity to test products to evaluate the impacts of the final test 
procedure changes--as a result, AHAM claimed it was not able to comment 
on the proposed energy standard equations (AHAM, No. 73 at pp. 1-2) 
\14\ GE commented that the industry wanted to know the final test 
procedure before starting test work to determine whether the energy 
standard adjustments implemented by DOE in the NOPR sufficiently 
represent all of the test procedure changes. (GE, Public Meeting 
Transcript, No. 67 at p. 46-47) AHAM also asked whether any rulemaking 
process options allowed under EPCA could be considered to give the 
industry more time to assess the test procedure impacts. (AHAM, Public 
Meeting Transcript, No. 67 at p. 37-38)
---------------------------------------------------------------------------

    \14\ The rule was issued on November 23, 2010, not November 24 
as indicated in AHAM's comments.
---------------------------------------------------------------------------

    DOE notes that the test procedure NOPR was published May 27, 2010, 
roughly two months prior to the completion of negotiations conducted by 
industry and advocates in creating the standards recommended in their 
joint comments. 75 FR 29824 (May 27, 2010). In developing those 
consensus standards, the industry and other stakeholders had knowledge 
of DOE's test procedure proposals and ample time to consider 
adjustments to the negotiated standards to address the proposals for 
today's final rule. DOE also notes that stakeholders have had several 
months since the publication of the test procedure NOPR to quantify the 
impacts of the proposed test procedure amendments. DOE again asked 
stakeholders at the energy conservation standard NOPR public meeting 
for information that would help quantify these impacts. None was 
provided and participants gave no indication that they had performed 
any such testing. In the absence of such information, DOE has developed 
its own information to finalize the energy conservation standards, as 
described in section III.A.0.
    DOE notes that under EPCA, an amended or new energy conservation 
standard may not be prescribed unless a test procedure for the 
regulated product has been prescribed. See 42 U.S.C. 6295(o)(3). DOE 
has met this requirement.
    In response to AHAM's request regarding additional time to evaluate 
the test procedure impacts, DOE has issued the test procedure 
amendments affecting products starting in 2014 as an interim final 
rule. This approach resulted in providing interested parties with an 
additional 60 days to comment on the interim final rule's amendments. 
75 FR at 78810 (December 16, 2010). Additionally, as already indicated, 
DOE plans to provide interested parties with additional time to comment 
on the interim final rule. Notice of that limited reopening of the 
comment period will be provided in the Federal Register.
2. Adjustment of the Energy Standards for the New Test Procedure
    As described above, DOE amended its test procedures for 
refrigeration products. These amendments will impact the measured 
energy use. DOE's amended standard levels incorporated adjustments 
(called a ``crosswalk'') to reflect these changes in energy use 
measurements. DOE described the crosswalk process in its September 2010 
NOPR. See 75 FR at 59502-59505 (September 27, 2010). In short, DOE 
applied the crosswalk to the baseline (current energy standard) 
equations, thus developing baseline energy use equations using the new 
test procedure. DOE applied the percentage energy use reductions 
representing the new energy standards to these baseline equations to 
determine the new energy standards. The NOPR also indicated that DOE 
tentatively concluded that the only test procedure changes that would 
be likely to impact measured energy use are those associated with 
compartment temperatures and the volume measurement method. 75 FR at 
59505 (September 27, 2010). The term ``NOPR crosswalk'' refers to this 
set of energy

[[Page 57527]]

standard adjustments addressing these two test procedure changes.
    Commenters addressed both (a) the NOPR crosswalk addressing test 
procedure changes in compartment temperatures and volume measurements 
and (b) the additional test procedure changes that could affect energy 
use measurements. The NOPR public meeting was held on October 14, 2010, 
before the publication of the test procedure final/interim final rule. 
Hence, stakeholder comments from the meeting addressed the proposed 
test procedure, rather than the final one that DOE ultimately adopted.
    Whirlpool indicated that it could not comment on the proposed 
standard levels prior to publication of the test procedure and 
comprehensive testing to determine the impact of the test procedure 
changes. (Whirlpool, No. 74 at p. 7) GE echoed this comment, indicating 
that it is essential to have the final test procedure to allow 
evaluation of the impacts of the test procedure changes in order to be 
able to comment effectively on the proposed standard levels. (GE, No. 
76 at p. 1) AHAM commented that the NOPR crosswalk is partly 
theoretical since it uses extrapolation and analysis to determine 
adjustments for some product classes. (AHAM, Public Meeting Transcript, 
No. 67 at p. 17) AHAM also commented that it ``is critical'' to do 
testing to determine the impact of the test procedure changes, and that 
the industry was not provided sufficient time between issuance of the 
final/interim final rule and the end of the comment period to conduct 
such testing. (AHAM, 73 at p. 2)
    The IOUs supported DOE's approach for adjustment of the energy 
standards to address test procedure changes. In light of the limited 
time available to complete the rulemaking, the IOUs commented that 
DOE's approach was appropriate in spite of comments by parties at the 
public meeting calling for additional testing to perform a crosswalk. 
(IOUs, No. 77 at p. 2)
    DOE notes that the NOPR crosswalk was based primarily on data 
provided by AHAM--which DOE described in detail in its TSD. See chapter 
5, ``Engineering Analysis'', section 5.4.2. Because AHAM did not 
initially provide data for all product classes, DOE conducted 
additional analysis and developed estimates to supplement the gaps 
present in AHAM's data. These additional steps helped DOE to establish 
appropriate crosswalks for the remaining product classes. DOE first 
presented this process in its preliminary TSD, which DOE posted on its 
Web site in November 2009. Stakeholders have had more than twelve 
months to comment on the crosswalks for these remaining product 
classes, but have not done so.
    Numerous commenters identified other test procedure changes that 
they believed would affect the measured energy use of refrigeration 
products and offered their views on how to address them in a final 
crosswalk. AHAM first indicated that the NOPR crosswalk does not 
represent all of the measurement impacts of the test procedure 
modifications. (AHAM, Public Meeting Transcript, No. 67 at p. 16; AHAM, 
No. 73 at p. 2) It asserted that there are many test procedure changes 
and that some of these changes, other than those changes affecting 
compartment temperature and volume calculation, can impact measured 
energy use. (AHAM asserted that the impact of these changes cannot be 
determined as a sum of the impacts of the individual changes, but did 
not provide data illustrating this assertion, nor did AHAM explain why 
an additive approach is not reasonable. (Id. at p. 35-36)) To this end, 
AHAM identified four specific proposed test procedure changes that it 
believed would impact measured energy use: (1) Test procedures 
addressing products with variable anti-sweat heater control, (2) use of 
the highest energy use position for special compartments, (3) 
modification of the long-time-defrost test procedure to capture 
precooling energy use, and (4) test procedures addressing products with 
multiple defrost cycle types. (Id. at 42-43) DOE notes that AHAM 
identified these same four additional test procedure changes in its 
comments on the test procedure rulemaking NOPR (AHAM, Test Procedure 
for Residential Refrigerators, Refrigerator-Freezers, and Freezers, 
Docket Number EERE-2009-BT-TP-0003, No. 16 at p. 3) In its written 
comments, AHAM indicated that the final test procedure that DOE 
developed for products with variable anti-sweat heater control does not 
alter measured energy use, since DOE adopted the procedure provided in 
waivers already granted to companies who manufacture products with such 
features. (AHAM, No. 73 at p. 3)
    Whirlpool asserted that applying the highest energy usage setting 
for special compartments, including procedures designed to capture 
precooling energy and to address products that use multiple defrost 
cycles, will alter measured energy use. (Whirlpool, No. 74 at p. 7)
    The IOUs agreed that there were additional test procedure changes 
that could alter measured energy use that had not been considered in 
establishing the proposed standards, including test procedures for 
products with variable anti-sweat heater control, new procedures to 
capture precooling energy use, and new procedures for special 
compartments. The IOUs recommended that the energy standards should be 
adjusted to account for these test procedure changes. They noted that 
if the measured impacts of these test procedure changes have not been 
determined through testing, DOE should estimate their impact and 
direction of the impact (positive or negative). They added that if 
these impacts are small or applicable to only a small portion of the 
market, DOE should not adjust the baseline energy use equations \15\ to 
avoid the risk of backsliding on the standard levels. (IOUs, No. 77 at 
p. 2) The IOUs indicated that they did not have any additional data 
regarding the impacts of the test procedure changes. (Id.)
---------------------------------------------------------------------------

    \15\ The baseline energy use equations represent energy use for 
baseline products (i.e. products which are minimally compliant using 
the current test procedure) when tested using the new test 
procedure.
---------------------------------------------------------------------------

    GE generally noted the importance of conducting tests to evaluate 
the impacts of the test procedure changes. It also expressed concerns 
that a number of the test procedure changes may have significant 
measurement impacts. GE did not, however, specifically identify these 
test procedure changes. (GE, Public Meeting Transcript, No. 67 at pp. 
36-37) Whirlpool commented that the test procedures addressing products 
with variable anti-sweat heater controls represent a significant test 
burden (in some cases, an additional week of test time) and could 
impact the measured energy use of a given product. (Whirlpool, Public 
Meeting Transcript, No. 67 at pp. 44-45) Whirlpool further identified 
electric heaters and/or fans in special compartments that may be used 
to prevent freezing in such compartments as a factor in the potential 
energy use measurement impact of the test procedure amendments for 
special compartments. (Id.)
    When asked by DOE whether there are any manufacturer data that 
quantify the impacts of the cited additional test procedure amendments, 
AHAM indicated that they did not have such data. Instead, AHAM cited 
DOE's own statement from the refrigeration product test procedure 
rulemaking public meeting presentation discussing the NOPR that the 
amendments to capture defrost precooling energy use would increase 
energy use 2 percent for one tested product (AHAM, Public Meeting 
Transcript, No. 67 at pp. 44, 45-46, 43)

[[Page 57528]]

AHAM further stressed the importance of evaluating the entire modified 
test procedure rather than investigating the potential impacts from 
individual changes, because the measurement impacts of the changes may 
not be additive. (Id. at pp. 26-27) However, AHAM did not provide data 
illustrating or supporting this assertion, nor did AHAM explain why an 
additive approach is not reasonable.
    Stakeholders also commented on the approach used to apply the 
projected energy measurement impacts to the energy conservation 
standards. When asked by DOE during the public meeting if the crosswalk 
should apply to the population average of the minimally compliant 
products, AHAM agreed, indicating that the Joint Agreement used the 
words ``average'' and ``minimally compliant'', but that the crosswalk 
should also be based on evaluating low-volume and high-volume products 
to properly reflect capacity impacts. (AHAM, Public Meeting Transcript, 
No. 67 at pp. 33-34) ASAP also agreed that the crosswalk should apply 
to the ``average''. (ASAP, Public Meeting Transcript, No. 67 at p. 34) 
DOE agrees that a shipment-weighted average approach for applying the 
energy use measurement impacts of test procedure changes is appropriate 
and is consistent with the requirements of EPCA. (42 U.S.C. 6293(e)(2)) 
Consistent with this approach, and the requirements of 42 U.S.C. 
6293(e)(2), DOE applied a shipment-weighted approach, which provides 
the best indication across all shipped products of the magnitude of the 
impact.
    AHAM also commented that anti-backsliding considerations would not 
apply because the changes in test procedures and energy standards will 
take effect simultaneously. (AHAM, Public Meeting Transcript, No. 67 at 
p. 41) DOE notes that amending a test procedure without an accompanying 
energy standard rulemaking that increases stringency may result in an 
increase in the maximum allowable energy use for some products. Such a 
change would not be allowed if the anti-backsliding provisions of EPCA 
(42 U.S.C. 6295(o)(1)) applied to any particular product rather than to 
the average for the product class population. However, such 
considerations do not apply in this case, as indicated by AHAM, because 
the test procedure and energy standard changes will occur 
simultaneously.
    DOE notes that it has received no new information from stakeholders 
quantifying the changes in measured energy use associated with any of 
the test procedure changes. Hence, DOE adjusted its standards using the 
data discussed above that AHAM provided during the preliminary analysis 
phase, as well as supplemental data and analysis (e.g. testing DOE 
conducted during the rulemaking) that DOE developed on its own.
a. Products With Variable Anti-Sweat Heater Control
    DOE amended its test procedures to require the use of the procedure 
currently being used by manufacturers under waivers that DOE granted. 
This procedure, along with a change to assure the consistency of 
compartment temperatures during testing, will be required to establish 
compliance with the 2014 standards for variable anti-sweat heater 
control-equipped products. The change involves the description of the 
conditions that apply to the anti-sweat heater wattages used in the 
calculation of the anti-sweat heater adjustment factor: the wattages 
will apply to a 0 [deg]F freezer compartment temperature and a 39 
[deg]F fresh food compartment temperature, rather than the 5 [deg]F and 
45 [deg]F, respectively, used in the waivers. 75 FR at 78828-78830 
(December 16, 2010). DOE considers that the adjustments made to the 
energy conservation standards to account for compartment temperature 
changes also apply to the adjustment factor for anti-sweat heaters 
operating with variable control. Hence, no additional energy standard 
adjustment is needed to address this test procedure amendment.
b. Products With Multiple Defrost Cycle Types
    DOE amended the test procedure to address products with multiple 
defrost cycle types. Id. at 78836-78838. As explained in the test 
procedure final rule, the previous procedure could not ensure that the 
entire defrost energy used for such products would be sufficiently 
captured. DOE received one test procedure waiver petition for such 
products, from Samsung, requesting waiver of the current test procedure 
of Appendix A1 for products manufactured before 2014. 76 FR 16760 
(March 25, 2011). The waiver petition requests use of the same test 
procedure to address multiple defrost cycle types that was set forth in 
the test procedure interim final rule for Appendix A. Samsung did not 
provide information regarding the change in measured energy use 
associated with the modified test procedure. Furthermore, they 
indicated that the current energy efficiency standards are adequate, 
and they did not request adjustment of the standards for the products 
that are the subject of the waiver petition. Id. at p. 16763. DOE is 
unaware of any other manufacturer who employs this type of design. 
Accordingly, DOE is unaware of any impact on the measured energy use of 
these multiple defrost cycle products associated with this test 
procedure amendment.
c. Amendments To Capture Precooling Energy Use
    DOE amended the test procedure for products with long-time or 
variable defrost to capture precooling and partial recovery energy use. 
Id. at 78832-78836. Testing performed during the engineering phase of 
this rulemaking indicates that capturing precooling energy use would 
yield an impact of roughly two percent of the total measured energy 
use. Additionally, the impact of capturing the energy from full 
temperature recovery (i.e. extending the test period until the 
compartment temperatures have recovered to their steady-state levels) 
for products exhibiting partial recovery may comprise another 0.5 
percent of total measured energy use for those products that do not 
achieve a full temperature recovery within the test period prescribed 
by the current test procedure. Of the nine refrigerator-freezers tested 
during the engineering analysis phase, two of these units incorporated 
precooling. These units fell into current product classes 5 
(refrigerator-freezers--automatic defrost with bottom-mounted freezer 
without through-the-door ice service) and 7 (refrigerator-freezers--
automatic defrost with side-mounted freezer with through-the-door ice 
service). DOE is unaware of any significant percentage of products that 
currently do not fully recover temperature within the time period 
allotted by the current test procedure. DOE has adjusted the energy 
standard levels for these and related product classes using the 
observed measurement impact for capturing precooling energy use and 
applying that measured impact consistently with the frequency with 
which this feature has been observed in this group of tested products. 
The adjustment details are described in detail in section 0 below.
d. Test Procedures for Special Compartments
    DOE amended the test procedures to require that products with 
special compartments using the addition of heat (``heat addition'') as 
a form of temperature control be tested twice. The energy use 
measurement of such products will be an average of measurements made 
with the special compartment temperature controls set in the warmest 
position for the first test

[[Page 57529]]

and in the coldest position for the second test. Id. at 78825-78826. Of 
the eleven refrigerator-freezers purchased for reverse engineering 
analysis performed during the engineering analysis phase, two had 
special compartments with separate temperature control. Neither of 
these products used heat addition for controlling special compartment 
temperatures. In examining features of refrigeration products on 
manufacturer Web sites, DOE found that the prevalence of special 
compartments in standard-size refrigerator-freezers comprised 20 
percent of the models examined. Id. at 78823. Because of the limited 
nature of these data, DOE conducted further study of products that 
employ heat addition.
    DOE identified thirteen basic models that have heated special 
compartments. In this assessment, DOE concluded that special 
compartments use heaters for temperature control if the high end of 
their controllable temperature range is significantly higher than 
typical fresh food compartment temperatures. DOE considered typical 
fresh food compartment temperature to be the default settings set at 
the factory. These default settings are in the 37 [deg]F to 39 [deg]F 
range. (see, e.g., GE Bottom Freezer Refrigerators, No. 78 at p. 4; LG 
Owner's Manual LFX28978**, No. 79 at p. 23) The controllable 
temperature range of heated special compartments typically reaches 
temperatures of up to 41 [deg]F or 42 [deg]F. By comparison, special 
compartments that rely on cooling air to manage temperatures do not 
exceed the typical fresh food compartment temperature range. (See, 
e.g., GE Bottom Freezer Refrigerators, No. 78 at p. 18; Use and Care 
Guide Electrolux 242046401, No. 80 at p. 18) The thirteen products 
identified include products from current products classes 5 
(refrigerator-freezers--automatic defrost with bottom-mounted freezer 
without through-the-door ice service), 5A (refrigerator-freezer--
automatic defrost with bottom-mounted freezer with through-the-door ice 
service), and 7 (refrigerator-freezers--automatic defrost with side-
mounted freezer with through-the-door ice service). (Heated Special 
Compartments Web Pages, No. 81)
    DOE does not have information on shipment weighting for these 
products. As a proxy for shipment weighting, DOE instead determined the 
percentage of available products represented by the identified products 
with heated special compartments for each of the represented product 
classes. To do this, DOE considered the number of available products 
listed in the California Energy Commission (CEC) database, adjusted to 
account for out-of-date product listings. The details of this approach 
are described in the TSD in chapter 5, section 5.4.2.6. The calculated 
percentages of products having heated special compartments are 10.6 
percent for current product class 5A, 1.5 percent for current product 
class 5, and 0.7 percent for current product class 7. DOE used these 
percentages to adjust the standards for these product classes. The 
determination of the adjustment is discussed in greater depth in 
section 0 below.
    DOE initially conducted analysis, described below in section 
IV.C.2, to estimate what the projected impact from the relevant test 
procedures would be on the measured energy use for a product with a 
heated special compartment. Initial estimates indicated that the change 
would increase measured energy use by 5.9 percent for this type of 
product. DOE also conducted testing for two of the thirteen products 
that were identified as having heated special compartments. These tests 
compared the measured energy use not including icemaking energy use 
when tested using the interim final test procedures set forth in the 
new Appendix A with a modified test procedure in which the heated 
special compartment is tested only in its coldest setting. For both of 
these tests, the Appendix A requirement to average measurements 
representing the coldest and warmest setting of the compartment 
resulted in higher energy use. The impacts were 6.5 percent for one 
product and 1.7 percent for the other--the average impact determined 
for these tests was 4.1 percent, which is somewhat lower than the 
estimated 5.9 percent impact.
    After reviewing these results, DOE determined that, because the 
test data represent only two products, the uncertainty associated with 
the average of the measured impacts is fairly high. As a result, DOE 
concluded that the more conservative approach of basing its adjustment 
of the energy standard on the calculation rather than the limited 
testing data is appropriate to ensure that the final standard is not 
overly aggressive. Taking such an approach is consistent in this 
instance with EPCA's prohibition to make subsequent adjustments that 
would increase the permitted energy usage (or reduce the energy 
efficiency) of a regulated product. See 42 U.S.C. 6295(o)(1). 
Accordingly, as described in greater detail in section IV.C.2, the 
results of the more conserevative calculation were used to adjust the 
energy standard.
3. Standby and Off Mode Energy Use
    DOE notes that EPCA, as amended by EISA 2007, requires DOE to amend 
its test procedures for all covered products, including those for 
refrigeration products, to include a measurement for standby mode and 
off mode energy consumption, except where current test procedures fully 
address such energy consumption. (42 U.S.C. 6295(gg)(2)) As indicated 
above, DOE's test procedures for refrigeration products, both the 
previous and recently amended versions, already fully address standby 
and off mode energy use. Whirlpool agreed with this assessment. 
(Whirlpool, No. 74 at p. 7) No commenters challenged this assessment. 
Because the test procedures address standby and off mode energy use, 
the energy conservation standards, which are based on the test 
procedures, also address this energy use.

B. Technological Feasibility

1. General
    In each standards rulemaking, DOE conducts a screening analysis 
based on information gathered on all current technology options and 
prototype designs that have the potential to improve product or 
equipment efficiency. To conduct the analysis, DOE typically develops a 
list of design options for consideration in consultation with 
manufacturers, design engineers, and other interested parties. DOE then 
determines which of these options are technologically feasible. DOE 
considers a design option to be technologically feasible if it is 
currently in use by the relevant industry or if a working prototype 
exists. See 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(i) 
(providing that ``[t]echnologies incorporated in commercially available 
products or in working prototypes will be considered technologically 
feasible.'')
    Once DOE has determined that particular design options are 
technologically feasible, it evaluates each one using the following 
additional screening criteria: (1) Practicability to manufacture, 
install, or service; (2) adverse impacts on product utility or 
availability; and (3) adverse impacts on health or safety. (10 CFR part 
430, subpart C, appendix A, section 4(a)(4)). Section IV.B of this 
notice discusses the results of the screening analysis for 
refrigeration products, namely, the designs DOE considered, those it 
screened out, and those that are the basis for the trial standard 
levels (TSLs) in this rulemaking. For further details on the screening 
analysis for this rulemaking, see chapter 4, Screening Analysis, of the 
NOPR TSD.

[[Page 57530]]

2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt (or not adopt) an amended standard for a 
type or class of covered product, it must ``determine the maximum 
improvement in energy efficiency or maximum reduction in energy use 
that is technologically feasible'' for such product. (42 U.S.C. 
6295(p)(1)) Accordingly, DOE determined the maximum technologically 
feasible (``max-tech'') reductions in energy use for refrigeration 
products in the engineering analysis.
    As described in the preliminary TSD, DOE conducted a full analysis 
of a set of product classes that comprise a large percentage of product 
shipments in the market today. DOE's approach for extending amended 
standard levels established for these product classes to the non-
analyzed product classes is described in chapter 2, Analytical 
Framework, of the preliminary TSD, in section 2.15. Similarly, this 
section of today's rule reports the max-tech efficiency levels for the 
fully analyzed product classes, which include Classes 3 (refrigerator-
freezer--automatic defrost with top-mounted freezer without through-
the-door ice service), 5 (refrigerator-freezers--automatic defrost with 
bottom-mounted freezer without through-the-door ice service), 7 
(refrigerator-freezers--automatic defrost with side-mounted freezer 
with through-the-door ice service), 9 (upright freezers with automatic 
defrost), 10 (chest freezers), 11 (compact refrigerators and 
refrigerator-freezers with manual defrost), 18 (compact chest 
freezers), 3A-BI (built-in all-refrigerators--automatic defrost), 5-BI 
(built-in Refrigerator-freezers--automatic defrost with bottom-mounted 
freezer without through-the-door ice service), 7-BI (built-in 
Refrigerator-freezers--automatic defrost with side-mounted freezer with 
through-the-door ice service, and 9-BI (built-in upright freezers with 
automatic defrost). DOE considers the max-tech levels for these product 
classes to be representative of the max-tech levels of similar product 
classes. For example, product class 7 can be considered to represent 
product class 4 (refrigerator-freezers--automatic defrost with side-
mounted freezer without through-the-door ice service) because they are 
both side-mount refrigerator-freezers, the only difference being the 
through-the-door ice feature of product class 7.
    In determining the max-tech efficiency levels of the directly 
analyzed product classes, DOE used the amended test procedures that 
would apply once manufacturers are required to meet the new standard. 
The efficiency levels are defined as reductions in that portion of the 
energy use not associated with icemaking. As described in section 
III.A, above, the energy use associated with icemaking under the 
amended test procedure is a fixed quantity not correlated with an 
efficiency level. Separating this fixed quantity of energy use from the 
established efficiency level allows a more direct comparison of 
products, irrespective of whether a given product is equipped with an 
automatic icemaker. This approach also allows DOE to compare the 
efficiency levels based on the amended test procedure (i.e., 
projections of possible energy use reductions) against the energy use 
based on the existing test procedure and current standard.\16\
---------------------------------------------------------------------------

    \16\ In other words, a product with energy usage that is a 
certain percentage below the current energy standard should remain 
the same percentage below the baseline energy use under the proposed 
test procedure after subtracting icemaking energy use. Hence, the 
max-tech levels expressed as a percentage of energy use reduction 
should be the same for both sets of test procedures.
---------------------------------------------------------------------------

    DOE used the full set of design options considered applicable to 
these directly analyzed product classes to determine their max-tech 
efficiency levels. (See chapter 5 of the NOPR TSD, section 5.4.4.) 
Table III.1 lists the max-tech levels that DOE determined for this 
rulemaking. The table also presents the max-tech levels that are 
commercially available. The max-tech levels differ from those presented 
in the preliminary TSD and are generally lower (i.e., the percent 
energy use reductions are lower for the NOPR analysis, thus, the max-
tech energy use is higher). The reduction in the max-tech efficiency 
levels is due to the revisions DOE implemented in the NOPR engineering 
analysis to address new information obtained during this phase of the 
rulemaking (see the discussion of changes made to the engineering 
analysis in the NOPR, Table IV.10. 75 FR 59470, 59501-59502 (September 
27, 2010)). DOE obtained the new information through NOPR phase 
interviews with manufacturers.

 Table III.1--Max-Tech Efficiency Levels for the Refrigeration Products
                               Rulemaking
------------------------------------------------------------------------
                                             Efficiency level (percent
                                               energy use reduction)
                                         -------------------------------
  Product class         Description                          Max tech
                                           DOE analysis    commercially
                                             (percent)       available
                                                             (percent)
------------------------------------------------------------------------
                   Standard-Size Refrigerator-Freezers
------------------------------------------------------------------------
3...............  Refrigerator-freezers--             36              30
                   automatic defrost
                   with top-mounted
                   freezer without
                   through-the-door ice
                   service.
5...............  Refrigerator-freezers--             36              33
                   automatic defrost
                   with bottom-mounted
                   freezer without
                   through-the-door ice
                   service.
7...............  Refrigerator-freezers--             33              32
                   automatic defrost
                   with side-mounted
                   freezer with through-
                   the-door ice service.
------------------------------------------------------------------------
                         Standard-Size Freezers
------------------------------------------------------------------------
9...............  Upright freezers with               44              27
                   automatic defrost.
10..............  Chest freezers and all              41              16
                   other freezers except
                   compact freezers.
------------------------------------------------------------------------
                            Compact Products
------------------------------------------------------------------------
11..............  Compact refrigerators               59              27
                   and refrigerator-
                   freezers with manual
                   defrost.
18..............  Compact chest freezers              42              23

[[Page 57531]]

 
                            Built-In Products
------------------------------------------------------------------------
3A-BI...........  Built-In All-                       28              31
                   refrigerators--automa
                   tic defrost.
5-BI............  Built-In Refrigerator-              27              27
                   freezers--automatic
                   defrost with bottom-
                   mounted freezer
                   without through-the-
                   door ice service.
7-BI............  Built-In Refrigerator-              22              21
                   freezers--automatic
                   defrost with side-
                   mounted freezer with
                   through-the-door ice
                   service.
9-BI............  Built-In Upright                    27              27
                   freezers with
                   automatic defrost.
------------------------------------------------------------------------

    The max-tech efficiency levels identified for commercially 
available products are, in most cases, different from the max-tech 
levels shown in Table III.1. The levels in Table III.1 are 
significantly higher than the commercially available max-tech levels 
for product classes 9 (upright freezers with automatic defrost), 10 
(chest freezers), 11 (compact refrigerators and refrigerator-freezers 
with manual defrost), and 18 (compact chest freezers). DOE determined 
that higher max-tech levels for these products were possible because 
available products generally do not use all of the energy efficient 
design options considered in the DOE max-tech analyses. Prototypes with 
the DOE max-tech levels have not been identified, but the design 
options are all used in commercially available products.
    DOE determined the max-tech levels using a program initially 
developed by the Environmental Protection Agency (EPA) called the 
Efficient Refrigerator Analysis program (known simply as the ERA) to 
conduct energy modeling. DOE conducted this energy modeling for 
specific products examined during the engineering analysis. DOE created 
energy models for the existing products and adjusted these models to 
represent modified designs using the screened-in design options. The 
max-tech levels represent the most efficient design option combinations 
applicable for the analyzed products. This process is described in 
Chapter 5 of the NOPR TSD. See NOPR TSD, sections 5.4.4 and 5.7. DOE 
considered different sets of design options for each product class, as 
indicated in Table III.2.

Table III.2 Design Options Considered for Max Tech
[GRAPHIC] [TIFF OMITTED] TR15SE11.108

    DOE requested comments on its max-tech efficiency levels and on the 
evaluated groups of design options DOE's analyses indicated would be 
necessary to employ to achieve these levels. 75 FR at 59484 (September 
27, 2010). Sub Zero commented that DOE's analysis leading to the max-
tech feasible levels is reasonable. (Sub Zero, No. 69

[[Page 57532]]

at p. 1) Sub Zero also commented that many of the design options still 
available to improve the efficiency of freestanding products have 
already been used in built-in products that are available on the 
market.
    Whirlpool commented that some of the design option combinations may 
not be practical, that the resulting efficiency gains may not be 
additive, and that the combinations may not be cost-effective. 
Whirlpool also commented that it does not believe that DOE has met the 
obligation to demonstrate the technical and economic feasibility of 
these combinations. (Whirlpool, No. 74 at p. 1). Whirlpool did not 
identify the specific combinations that it believed to be impractical. 
Accordingly, DOE has not adjusted its max-tech analysis. DOE adds that 
max-tech efficiency levels are not required to be cost-effective 
levels, but that DOE is required by EPCA to determine the maximum 
improvement that is technologically feasible, and to explain why the 
standard is not set at this level, if it is not. (42 U.S.C. 6295(p)(1))

C. Energy Savings

1. Determination of Savings
    DOE used its National Impact Analysis (NIA) spreadsheet model to 
estimate the energy savings from amended standards for the 
refrigeration products covered by this rulemaking.\17\ For each TSL, 
DOE forecasted energy savings beginning in 2014, the year that 
manufacturers would be required to comply with amended standards, and 
ending in 2043. DOE quantified the energy savings attributable to each 
TSL as the difference in energy consumption between the standards case 
and the base case. The base case represents the forecast of energy 
consumption in the absence of amended mandatory efficiency standards 
and considers market demand for more-efficient products.
---------------------------------------------------------------------------

    \17\ The NIA spreadsheet model is described in section IV.G of 
this rule.
---------------------------------------------------------------------------

    The NIA spreadsheet model calculates the electricity savings in 
``site energy'' expressed in kilowatt-hours (kWh). Site energy is the 
energy directly consumed by refrigeration products at the locations 
where they are used. DOE reports national energy savings on an annual 
basis in terms of the aggregated source (primary) energy savings, which 
is the savings in the energy that is used to generate and transmit the 
site energy. (See TSD chapter 10.) To convert site energy to source 
energy, DOE derived annual conversion factors from the model used to 
prepare the Energy Information Administration's (EIA) Annual Energy 
Outlook 2010 (AEO2010).
2. Significance of Savings
    As noted above, DOE must adopt a standard for a covered product 
that results in ``significant'' energy savings. 42 U.S.C. 
6295(o)(3)(B). While the term ``significant'' is not defined in the 
Act, the U.S. Court of Appeals, in Natural Resources Defense Council v. 
Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), indicated that 
Congress intended ``significant'' energy savings in this context to be 
savings that were not ``genuinely trivial.'' The energy savings for all 
of the TSLs considered in this rulemaking are nontrivial, and, 
therefore, DOE considers them ``significant'' within the meaning of 
section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
    As noted in section II.A, EPCA provides seven factors for DOE to 
consider when evaluating whether a potential energy conservation 
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i)) The 
following sections discuss how DOE has addressed each of those seven 
factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    As required by EPCA, DOE considered the economic impact of 
potential standards on consumers and manufacturers. (42 U.S.C. 
6295(o)(2)(B)(i)(I)) For consumers, DOE measured the economic impact as 
the change in installed cost and life-cycle operating costs (i.e., the 
change in LCC). (See section 0, section 0 and chapter 8 of the final 
rule TSD.) DOE investigated the impacts on manufacturers through the 
manufacturer impact analysis (MIA). (See section 0 and section 0 of 
today's final rule, and chapter 12 of the final rule TSD accompanying 
this rule.) The economic impact on consumers and manufacturers is 
discussed in detail in the NOPR. See 75 FR at 59484-59485, 59512-59516, 
59519-59526, 59532-59537, and 59537-59549 (September 27, 2010).
    For individual consumers, measures of economic impact include the 
changes in life-cycle cost (LCC) and payback period (PBP) associated 
with new or amended standards. The LCC, which is separately specified 
in EPCA as one of the seven factors to be considered in determining the 
economic justification for a new or amended standard, 42 U.S.C. 
6295(o)(2)(B)(i)(II), is discussed in the following section. For 
consumers in the aggregate, DOE also calculates the national net 
present value of the economic impacts on consumers over the forecast 
period used in a particular rulemaking.
b. Life-Cycle Costs
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including energy and 
maintenance and repair expenditures) discounted over the lifetime of 
the product. The LCC savings for the considered efficiency levels are 
calculated relative to a base case that reflects likely trends in the 
absence of amended standards. The LCC analysis requires a variety of 
inputs, such as product prices, product energy consumption, energy 
prices, maintenance and repair costs, product lifetime, and consumer 
discount rates. DOE assumed in its analysis that consumers will 
purchase the products affected by this rule in 2014.
    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. A distinct advantage 
of this approach is that DOE can identify the percentage of consumers 
estimated to receive LCC savings or experience an LCC increase, in 
addition to the average LCC savings associated with a particular 
standard level. Aside from identifying ranges of impacts, DOE evaluates 
the LCC impacts of potential standards on identifiable subgroups of 
consumers that may be disproportionately affected by a national 
standard, such as low-income people or the elderly.
c. Energy Savings
    While the significant conservation of energy is a separate 
statutory requirement for imposing an energy conservation standard, in 
determining the economic justification of a standard, DOE must consider 
the total projected energy savings that are expected to result directly 
from the standard. 42 U.S.C. 6295(o)(2)(B)(i)(III). DOE uses the NIA 
spreadsheet results in its consideration of total projected energy 
savings.
d. Lessening of Utility or Performance of Products
    In establishing product classes, and in evaluating design options 
and the impact of potential standard levels, DOE sought to develop 
standards for refrigeration products that would not lessen the utility 
or performance of these products. None of the TSLs presented in today's 
final rule would substantially reduce the utility or performance of the 
products under

[[Page 57533]]

consideration in the rulemaking. However, the cost premium for features 
that increase energy use, such as multiple drawers, may increase, thus 
shifting their availability to higher-priced products. 42 U.S.C. 
6295(o)(2)(B)(i)(IV).
e. Impact of Any Lessening of Competition
    EPCA requires DOE to consider any lessening of competition that is 
likely to result from setting new or amended standards for a covered 
product. Consistent with its obligations under EPCA, DOE sought the 
views of the United States Department of Justice (DOJ). DOE asked DOJ 
to provide a written determination of the impact, if any, of any 
lessening of competition likely to result from the amended standards, 
together with an analysis of the nature and extent of such impact. 42 
U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii).
    To assist DOJ in making such a determination, DOE provided DOJ with 
copies of both the NOPR and NOPR TSD for review. DOJ did not provide 
DOE with comments on this rulemaking. Accordingly, DOE concludes that 
today's final rule would not be likely to lead to a lessening of 
competition.
f. Need for National Energy Conservation
    Certain benefits of the amended standards are likely to be 
reflected in 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.
    Energy savings from the amended standards are also likely to result 
in environmental benefits in the form of reduced emissions of air 
pollutants and greenhouse gases associated with energy production. DOE 
reported the environmental effects from the amended standards for 
refrigeration products, and from each TSL it considered, in the 
environmental assessment contained in chapter 15 in the NOPR TSD. DOE 
also reported estimates of the economic value of emissions reductions 
resulting from the considered TSLs.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
In developing this final rule, DOE also considered the comments of the 
stakeholders, including those raised in the Joint Comments, which DOE 
believes sets forth a statement by interested persons that are fairly 
representative of relevant points of view (including representatives of 
manufacturers of covered products, States, and efficiency advocates) 
and contains recommendations with respect to an energy conservation 
standard that are in accordance with 42 U.S.C. 6295(o).
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii), EPCA creates a 
rebuttable presumption that an energy conservation standard is 
economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first-year of 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 payback period for 
consumers of potential amended energy conservation standards. These 
analyses include, but are not limited to, the 3-year payback period 
contemplated under the rebuttable presumption test. However, DOE 
routinely conducts an economic analysis that considers the full range 
of impacts to the consumer, manufacturer, Nation, and environment, as 
required under 42 U.S.C. 6295(o)(2)(B)(i). The results of this analysis 
serve as the basis for DOE to definitively evaluate the economic 
justification for a potential standard level (thereby supporting or 
rebutting the results of any preliminary determination of economic 
justification). The rebuttable presumption payback calculation is 
discussed in section IV.F.12 and chapter 8 of the final rule TSD.

IV. Methodology and Discussion

    DOE used two spreadsheet tools to estimate the impact of today's 
amended standards. The first spreadsheet calculates LCCs and payback 
periods of new energy conservation standards. The second one provides 
shipments forecasts, and then calculates national energy savings and 
net present value impacts of new energy conservation standards. DOE 
also assessed manufacturer impacts, largely through use of the 
Government Regulatory Impact Model (GRIM). The two spreadsheets are 
available online at the rulemaking Web site: http://www1.eere.energy.gov/buildings/appliance_standards/residential/refrigerators_freezers.html.
    Additionally, DOE estimated the impacts on utilities and the 
environment stemming from energy efficiency standards for refrigeration 
products. DOE used a version of EIA's National Energy Modeling System 
(NEMS) for the utility and environmental analyses. The NEMS model 
simulates the energy sector of the U.S. economy. EIA uses NEMS to 
prepare its Annual Energy Outlook, a widely known energy forecast for 
the United States. The version of NEMS used for appliance standards 
analysis is called NEMS-BT \18\, and is based on the AEO version with 
minor modifications.\19\ The NEMS-BT offers a sophisticated picture of 
the effect of standards because it accounts for the interactions 
between the various energy supply and demand sectors and the economy as 
a whole.
---------------------------------------------------------------------------

    \18\ BT stands for DOE's Building Technologies Program.
    \19\ The EIA allows 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. For more information on NEMS, refer to The 
National Energy Modeling System: An Overview, DOE/EIA-0581 (98) 
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
---------------------------------------------------------------------------

A. Market and Technology Assessment

    When initiating an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the products concerned, including the purpose of the products, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments, based primarily on 
publicly available information. The subjects addressed in the market 
and technology assessment for this rulemaking include product classes 
and manufacturers; quantities, and types of products sold and offered 
for sale; retail market trends; regulatory and non-regulatory programs; 
and technologies or design options that could improve the energy 
efficiency of the product(s) under examination. See chapter 3, Market 
and Technology Assessment, of the TSD for further discussion of the 
market and technology assessment.
    Discussion presented in this section of today's notice primarily 
addresses the scope of coverage of refrigeration products, the product 
class structure, and product class definitions. These issues were 
discussed during the NOPR public meeting. In response to comments 
raised during that meeting

[[Page 57534]]

and from written comments, DOE has modified the product class 
structure, as discussed in section 0, below.
1. Exclusion of Wine Coolers from This Rulemaking
    The NOPR explained that wine coolers are not covered products under 
the definition for electric refrigerator, and hence, are not covered by 
this rulemaking. 75 FR at 59486 (September 27, 2010). DOE explained 
that it would consider initiating a future rulemaking to establish 
coverage and energy standards for these products. Id. Whirlpool 
commented that it agrees that wine coolers do not meet the definition 
of electric refrigerator, but that DOE should reconsider its decision 
not to include these products in this rulemaking. (Whirlpool, No. 74 at 
p. 8) GE commented that DOE should regulate these products and should 
consider the proper mechanism for doing so. (GE, No. 76 at p. 2) In 
light of the timetable prescribed by EPCA, insufficient time and 
resources are available for DOE to conduct the necessary analyses for 
these products within the context of the current rulemaking. In 
response to the preliminary analysis, the California Investor Owned 
Utilities agreed with DOE's initial decision not to include wine 
coolers in this rulemaking, indicating that they operate at 
temperatures outside the range defined for refrigerators, and that they 
have been covered by California's energy standards since 2002. (IOUs, 
No. 39 at p. 12) The IOUs submitted no new comments on this topic in 
response to the NOPR. Sub Zero indicated in the preliminary analysis 
public meeting that the California energy standard for these products 
has become a de-facto national standard. (Preliminary Analysis Public 
Meeting Transcript, No. 30 at pp. 108-109). As previously indicated, 
DOE will revisit the coverage of these products in the future.
2. Product Classes
    In evaluating and establishing energy conservation standards, DOE 
generally divides covered products into classes by the type of energy 
used, or by capacity or other performance-related feature that 
justifies a different standard for those products. (See 42 U.S.C. 
6295(q)). In deciding whether a feature justifies a different standard, 
DOE must consider factors such as the utility of the feature to users. 
(Id.) DOE normally establishes different energy conservation standards 
for different product classes based on these criteria. DOE's 
regulations currently set forth 18 product classes for refrigerators, 
refrigerator-freezers, and freezers.\20\ These classes are based on the 
following characteristics: type of unit (refrigerator, refrigerator-
freezer, or freezer), size of the cabinet (standard or compact), type 
of defrost system (manual, partial, or automatic), presence or absence 
of through-the-door (TTD) ice service, and placement of the fresh food 
and freezer compartments for refrigerator-freezers (top, side, bottom).
---------------------------------------------------------------------------

    \20\ Title 10--Energy, Chapter II--Department of Energy, Part 
430--Energy Conservation Program for Consumer Products, Subpart A--
General Provisions, Section 430.32--Energy and Water Conservation 
Standards and Effective Dates.
---------------------------------------------------------------------------

    DOE has created 24 new product classes to account for the 
increasingly wider number of variants of products. Six new product 
classes were discussed and proposed in the preliminary analysis phase, 
and an additional 13 were proposed in the NOPR. 75 FR at 59486-59487 
(September 27, 2010). Table IV.1 presents the product classes 
established in this rulemaking, including both current and new classes. 
DOE changed the designation of some of the current product classes to 
address the division of these product classes. The subsections below 
provide additional details and discussion of comments relating to the 
product classes that have been added.

         Table IV.1--Product Classes for Refrigeration Products
------------------------------------------------------------------------
            Number                           Product class
------------------------------------------------------------------------
                   Classes Currently Listed in the CFR
------------------------------------------------------------------------
1............................  Refrigerators and refrigerator-freezers
                                with manual defrost.
2............................  Refrigerator-freezers--partial automatic
                                defrost.
3............................  Refrigerator-freezers--automatic defrost
                                with top-mounted freezer without an
                                automatic icemaker.
4............................  Refrigerator-freezers--automatic defrost
                                with side-mounted freezer without an
                                automatic icemaker.
5............................  Refrigerator-freezers--automatic defrost
                                with bottom-mounted freezer without an
                                automatic icemaker.
6............................  Refrigerator-freezers--automatic defrost
                                with top-mounted freezer with through-
                                the-door ice service.
7............................  Refrigerator-freezers--automatic defrost
                                with side-mounted freezer with through-
                                the-door ice service.
8............................  Upright freezers with manual defrost.
9............................  Upright freezers with automatic defrost
                                without an automatic icemaker.
10...........................  Chest freezers with manual defrost and
                                all other freezers except compact
                                freezers.
11...........................  Compact refrigerators and refrigerator-
                                freezers with manual defrost.
12...........................  Compact refrigerator-freezers--partial
                                automatic defrost.
13...........................  Compact refrigerator-freezers--automatic
                                defrost with top-mounted freezer.
14...........................  Compact refrigerator-freezers--automatic
                                defrost with side-mounted freezer.
15...........................  Compact refrigerator-freezers--automatic
                                defrost with bottom-mounted freezer.
16...........................  Compact upright freezers with manual
                                defrost.
17...........................  Compact upright freezers with automatic
                                defrost.
18...........................  Compact chest freezers.
------------------------------------------------------------------------
            Product Classes Introduced in the Preliminary TSD
------------------------------------------------------------------------
1A...........................  All-refrigerators--manual defrost.
3A...........................  All-refrigerators--automatic defrost.
5A...........................  Refrigerator-freezers--automatic defrost
                                with bottom-mounted freezer with through-
                                the-door ice service.
10A..........................  Chest freezers with automatic defrost.
11A..........................  Compact all-refrigerators--manual
                                defrost.
13A..........................  Compact all-refrigerators--automatic
                                defrost.
------------------------------------------------------------------------

[[Page 57535]]

 
             Additional Product Classes Proposed in the NOPR
------------------------------------------------------------------------
3-BI.........................  Built-in refrigerator-freezer--automatic
                                defrost with top-mounted freezer without
                                an automatic icemaker.
3I...........................  Refrigerator-freezers--automatic defrost
                                with top-mounted freezer with an
                                automatic icemaker without through-the-
                                door ice service.
3I-BI........................  Built-in refrigerator-freezers--automatic
                                defrost with top-mounted freezer with an
                                automatic icemaker without through-the-
                                door ice service.
3A-BI........................  Built-in all-refrigerators--automatic
                                defrost.
4I...........................  Refrigerator-freezers--automatic defrost
                                with side-mounted freezer with an
                                automatic icemaker without through-the-
                                door ice service.
4-BI.........................  Built-in refrigerator-freezers--automatic
                                defrost with side-mounted freezer
                                without an automatic icemaker.
4I-BI........................  Built-in refrigerator-freezers--automatic
                                defrost with side-mounted freezer with
                                an automatic icemaker without through-
                                the-door ice service.
5I...........................  Refrigerator-freezers--automatic defrost
                                with bottom-mounted freezer with an
                                automatic icemaker without through-the-
                                door ice service.
5-BI.........................  Built-in refrigerator-freezers--automatic
                                defrost with bottom-mounted freezer
                                without an automatic icemaker.
5I-BI........................  Built-in refrigerator-freezers--automatic
                                defrost with bottom-mounted freezer with
                                an automatic icemaker without through-
                                the-door ice service.
5A-BI........................  Built-in refrigerator-freezer--automatic
                                defrost with bottom-mounted freezer with
                                through-the-door ice service.
7-BI.........................  Built-in refrigerator-freezers--automatic
                                defrost with side-mounted freezer with
                                through-the-door ice service.
9-BI.........................  Built-in upright freezers with automatic
                                defrost without an automatic icemaker.
------------------------------------------------------------------------
                       Additional Product Classes
------------------------------------------------------------------------
9I...........................  Upright freezers with automatic defrost
                                with an automatic icemaker.
9I-BI........................  Built-in upright freezers with automatic
                                defrost with an automatic icemaker.
13I..........................  Compact refrigerator-freezers--automatic
                                defrost with top-mounted freezer with an
                                automatic icemaker.
14I..........................  Compact refrigerator-freezers--automatic
                                defrost with side-mounted freezer with
                                an automatic icemaker.
15I..........................  Compact refrigerator-freezers--automatic
                                defrost with bottom-mounted freezer with
                                an automatic icemaker.
------------------------------------------------------------------------

a. General Discussion Regarding Added Product Classes
    DOE introduced six new product classes in the preliminary TSD. Two 
of these, product class 5A, ``automatic defrost refrigerator-freezers 
with bottom-mounted freezer with through-the-door ice service,'' and 
product class 10A, ``chest freezers with automatic defrost,'' were 
identified in the framework document as product classes 19 and 20. DOE 
modified the designation of these product classes in order to maintain 
consistency with the product class designations adopted by Canada and 
ease the overall burden on manufacturers in ascertaining which 
standards to apply to these products. Id. at 59487-59488. AHAM 
supported adding the new product classes 5A and 10A. (AHAM, No. 73 at 
p. 6)
    Four additional product classes introduced in the preliminary TSD 
are all-refrigerators. As described in the NOPR, the new test procedure 
has led DOE to establish separate product classes for these products. 
Id. at 59488.
    The NOPR also proposed 13 additional new product classes. These 
classes are based on the incorporation of icemaking energy use into the 
test procedure and address the different consumer utility and energy 
use characteristics of built-in products. Id. at 59489-59493.
    EPCA provides that separate product classes be based on either (A) 
consumption of a different kind of energy from that consumed by other 
covered products within such type (or class); or (B) a capacity or 
other performance-related feature which other products within such type 
(or class) do not have, where such feature justifies a higher or lower 
standard from that which applies to other products within such type (or 
class). (42 U.S.C. 6295(q)). The second of these criteria applies to 
all of the new product classes in this rulemaking. DOE detailed the 
reasons for this approach in the NOPR. Id. at 59487-59493. DOE received 
no comments challenging this approach.
    DOE also requested comment on whether any additional product 
classes should be established as built-in or automatic icemaker 
variants of products to address the range of commercially available 
products. Sub Zero recommended including additional product classes 9I 
and 9I-BI, freestanding and built-in versions of upright freezers with 
automatic defrost equipped with an automatic icemaker. The company 
asserted that such products currently are being sold (Sub Zero, No. 69 
at p. 3) DOE's research confirms the existence of these two product 
classes (Upright Freezers with Automatic Icemakers, No. 86).
    AHAM and Whirlpool recommended including product classes 9I, 9I-BI, 
13I, 14I, and 15I as variants of proposed products without through-the-
door ice service that may have automatic icemakers. (AHAM, No. 73 at 
pp. 6-7; Whirlpool, No. 74 at pp. 1-2, 3) AHAM also recommended 
including product class 9A, described as ``upright freezers with 
automatic defrost with an automatic icemaker with through-the-door ice 
service''. (AHAM, No. 73 at pp. 6-7) DOE has adopted product classes 
9I, 9I-BI, 13I, 14I, and 15I. DOE's research identified at least one 
existing compact bottom-freezer product with an automatic icemaker 
(product class 15I, Compact Products with Automatic Icemakers, No. 85 
at p. 3). DOE was not able to positively identify any compact side-
mount products with automatic icemakers (product class 14I), nor any 
compact top-mount products (product class 13I), but did identify one 
existing product whose product class is not clearly indicated in the 
manufacturer's literature that is either a 13I or 14I product. (Compact 
Products with Automatic Icemakers, No. 85 at p. 1)
    The standard levels for these classes are equal to the standards of 
their counterparts without an icemaker plus the addition of 84 kWh to 
help account for the energy consumed by the automatic icemaker. 
However, the suggested product class 9A is not a

[[Page 57536]]

variant of any of the proposed product classes. Instead, it constitutes 
a new class that DOE had not considered within the context of this 
rulemaking. Accordingly, DOE is declining to incorporate this 
particular class as part of the final rule.
    Lastly, Whirlpool asserted that the negotiated agreement intended 
to combine product classes 13 and 15, and Whirlpool likewise appeared 
to recommend combining product classes 13I and 15I, by grouping them 
together in its comments. (Whirlpool, No. 74 at p. 2) Whirlpool offered 
no support for this view and no other comments indicated that these 
product classes should be combined. Hence, DOE is maintaining separate 
classes for Classes 13, 15, 13I, and 15I.
b. Possible Combination of Product Class 2 With 1, and Class 12 With 11
    DOE also indicated in the NOPR that it did not propose the 
combination of two pairs of product classes that had been discussed in 
the preliminary TSD--specifically, a potential combination of product 
classes 1 (refrigerators and refrigerator-freezers with manual defrost) 
and 2 (refrigerator-freezers--partial automatic defrost) and, 
separately, a potential combination of product classes 11 (compact 
refrigerators and refrigerator-freezers with manual defrost) and 12 
(compact refrigerator-freezers--partial automatic defrost). DOE 
requested comment on its proposal not to combine these pairs of product 
classes. Id. at 59493. AHAM and NPCC agreed with this proposal. (AHAM, 
Public Meeting Transcript, No. 67 at p. 52; AHAM, No. 73 at p. 6; NPCC, 
Public Meeting Transcript, No. 67 at p. 52) Whirlpool presented a table 
suggesting that they were opposed to keeping product classes 1 and 2 
separated. (Whirlpool, No. 74 at p. 2), but noted that it had nothing 
substantive to add on this matter because it does not manufacture these 
products. (Whirlpool, No. 74 at p. 3) In light of these comments, which 
generally favored DOE's proposed approach, DOE is not combining these 
product class pairs.
c. All-Refrigerators and Basic Refrigerators
    All-refrigerators are refrigerators that do not have a compartment 
for the freezing and long-term storage of food below 32 [deg]F, but 
which may have a compartment not larger than 0.5 cubic foot in size for 
freezing and storage of ice. (10 CFR part 430, subpart B, appendix A1, 
section 1.2) The definition for refrigerator appears in 10 CFR 430.2 
and it includes both all-refrigerators and refrigerators that are not 
all-refrigerators. This latter category of refrigerator, which does 
include a compartment for the storage of food below 32 [deg]F, is given 
the name ``basic refrigerator'' in both AHAM standards HRF-1-1979 and 
HRF-1-2008. Appendix A1 and Appendix A, respectively, both reference 
these industry-developed definitions.
    AHAM supported establishing separate product classes for all-
refrigerators, indicating that these new product classes were supported 
in the negotiated agreement described in the Joint Comments. (AHAM, No. 
73 at p. 4) However, AHAM indicated that the product classes for 
refrigerators that are not all-refrigerators should be renamed using 
``basic refrigerator'' to ensure that they exclude all-refrigerators. 
(Id.) Whirlpool supported this view. (Whirlpool, No. 74 at p. 2)
    DOE agrees with AHAM that clarifying the product class names for 
certain classes will improve overall clarity. DOE notes that this 
change affects product classes 1 (refrigerators and refrigerator-
freezers with manual defrost) and 11 (compact refrigerators and 
refrigerator-freezers with manual defrost). (These are the product 
class names as proposed--and currently used in the CFR.) DOE has also 
considered whether to rely on referencing the definition sections of 
HRF-1-1979 and HRF-1-2008, as described above, to provide the 
definition for basic refrigerator. The definitions for basic 
refrigerator are the same in these standards and they read as follows:

    3.1.1 Basic Refrigerator A refrigerator which includes a low 
temperature compartment for the freezing and storage of ice and 
intended for short-term storage of food at temperatures below 32 
[deg]F (0 [deg]C) and normally above 8 [deg]F (-13.3 [deg]C). It is 
characterized by a refrigerated surface(s) that partially encloses 
the low temperature compartment and cools the fresh food compartment 
by natural convection. It frequently has a partition (called the 
chiller or drip tray) which when removed or adjusted exposes an 
additional area of the refrigerated surface to the fresh food 
compartment.

HRF-1-1979, HRF-1-2008, section 3.1.1.

    DOE notes two concerns regarding this definition of basic 
refrigerator.
    First, the definition does not define a lower size limit for the 
low temperature compartment, nor does it specify a temperature range 
for it. The clause ``short-term storage of food at temperatures below 
32 [deg]F'' does not distinguish the temperature range of such a 
compartment from the compartment of an all-refrigerator that is ``for 
freezing and storage of ice'', since freezing and storage of ice also 
requires temperatures less than 32 [deg]F. As a result, it is not clear 
whether a product with a low temperature compartment capable of 
reaching temperatures less than 32 [deg]F and above 8 [deg]F and a size 
no greater than 0.5 cubic foot is an all-refrigerator or a basic 
refrigerator under the AHAM definition.
    Second, characterizing the basic refrigerator by describing the 
low-temperature compartment's sides and how they transfer cooling air 
to the fresh food compartment could exclude some types of refrigerators 
from AHAM's basic refrigerator definition. For instance, a product that 
uses a fan to provide forced convection transfer of cooling air to the 
fresh food compartment from the refrigerated surfaces enclosing the 
low-temperature compartment would not fit the definition. If the 
product class were renamed using ``basic refrigerators'', such products 
that do not fit the basic refrigerator definition would not be included 
within the product class. A manufacturer could claim such a product is 
not covered, assuming it does not meet the requirements of the all-
refrigerator definition either.
    To resolve these issues, DOE has decided to clarify the product 
class names for product classes 1 and 11, indicating that these product 
classes do not include all-refrigerators. The new names for these 
product classes are ``1. Refrigerator-freezers and refrigerators other 
than all-refrigerators with manual defrost'' and ``11. Compact 
refrigerator-freezers and refrigerators other than all-refrigerators 
with manual defrost.'' DOE has taken this approach rather than using 
the term ``basic refrigerator'' and modifying its definition, thus 
allowing the existing definition for basic refrigerator to retain its 
current meaning.
    AHAM provided in its written comments a table (Table A) showing the 
suggested changes to all of the product class names. A similar table 
appears in Whirlpool's comments. In addition to the suggested name 
changes for product classes 1 and 11, AHAM and Whirlpool included the 
following suggestions.
     Inclusion of basic refrigerators in product class 3.
     Correction of the proposed name for product class 11A.
     Insertion of an ``s'' to pluralize ``all-refrigerators'' 
in the product class 13 name.

(AHAM, No. 73 at p. 5; Whirlpool, No. 74 at p. 2)

    DOE notes that basic refrigerators have not previously been part of 
product class 3 (they instead have been

[[Page 57537]]

part of product class 1), which makes the incorporation of this 
suggestion inappropriate. DOE notes that product class 3 denotes 
``Refrigerator-freezers-automatic defrost with top-mounted freezer 
without an automatic icemaker''. Basic refrigerators do not belong in 
this product class because they are not refrigerator-freezers. For this 
reason, DOE is declining to adopt this suggestion and will retain its 
proposed name for this class --``refrigerator-freezers--automatic 
defrost with top-mounted freezer without an automatic icemaker'' as 
proposed. However, DOE agrees with the other two suggestions and has 
implemented them in this final rule.
d. Built-In Refrigeration Products
    DOE requested comment on its proposal to establish separate product 
classes for built-in products. 75 FR at 59492 (September 27, 2010). 
AHAM, Sub Zero, and Whirlpool agreed with this proposal. (AHAM, No. 73 
at p. 3; Sub Zero, No. 69 at p. 2; Whirlpool, No. 74 at p. 3) DOE 
received no comments opposing the creation of built-in product classes.
    DOE proposed to define built-in products as any refrigerator, 
refrigerator-freezer or freezer with 7.75 cubic feet or greater total 
volume and 24 inches or less depth, excluding handles and custom front 
panels. Such a product would also be designed to be encased on the 
sides and rear by cabinetry, securely fastened to adjacent cabinetry, 
walls or floor, and have sides that are not fully finished and not 
designed to be visible after installation. See 75 FR at 59492 
(September 27, 2010).
    AHAM and NPCC noted that the proposed definition differed from the 
definition developed as part of the consensus agreement and asked why 
it was different. (AHAM, Public Meeting Transcript, No. 67 at pp. 54-
55; AHAM, No. 73 at pp. 3-4; NPCC, Public Meeting Transcript, No. 67 at 
pp. 53, 55) Sub Zero commented that the definition developed during the 
negotiations should be adopted. (Sub Zero, No. 69 at p. 3) Whirlpool 
also supported this view. (Whirlpool, No. 74 at p. 3) AHAM recommended 
that DOE adopt the consensus agreement definition. AHAM also pointed 
out that the most important difference between the consensus agreement 
definition and DOE's proposed definition is the specification in the 
consensus definition of what is not part of the 24-inch depth limit--
specifically, the doors, panels, and/or handles. AHAM indicated that 
these components may extend beyond 24 inches in many built-in products. 
In AHAM's view, DOE's proposed definition would not account for such 
situations. (AHAM, No. 73 at p. 4) The JAC also commented that the 
proposed definition was not the same as the definition of the 
negotiated agreement, and suggested that DOE adopt this definition with 
any minor changes that DOE deems necessary. (JAC, No. 75 at p. 2)
    The negotiated agreement presented to DOE included the following 
definition for built-in products:

    Definition of `Built-in' product class--refrigerators, freezers 
and refrigerators with freezer units that are 7.75 cubic feet or 
greater in total volume and 24 inches or less cabinet depth not 
including doors, handles and custom front panels; are designed to be 
totally encased by cabinetry or panels attached during installation; 
are designed to accept a custom front panel or equipped with an 
integral factory-finished face; are designed to be securely fastened 
to adjacent cabinetry, walls or floor; and have sides which are not 
fully finished and are not intended to be visible after 
installation.

(Joint Comments, No. 52 at p. 30)

    The substantive differences between this definition and the 
definition DOE proposed in its NOPR are as follows.
     The 24-inch depth allowed by the Joint Comments definition 
does not include the door depth. Technically, this removes the depth of 
the door edge and the gasket, a difference expected to be typically 
about 2 inches.
     The Joint Comments mention being ``totally encased'' by 
cabinetry or panels, while the proposed definition mentions being 
encased on the sides and rear by cabinetry. DOE did not propose to use 
the term ``totally encased'' as suggested in AHAM's preliminary 
analysis comment because the door is not always encased. 75 FR at 59492 
(September 27, 2010). The Joint Comments added ``panels'' to apply to 
the cabinetry that may encase the product.
     The Joint Comments provide that the ``panels [are] 
attached during installation'' (emphasis added).
     The Joint Comments include the clause, ``are designed to 
accept a custom front panel or equipped with an integral factory-
finished face'' whereas the proposed definition did not include this 
clause.
     The Joint Comments indicate that the sides ``are not 
intended to be visible after installation'', while the proposed 
definition uses ``not designed to be''.
    DOE was aware when proposing the definition that, although 
establishing a depth limitation is entirely consistent with built-in 
designs and their use, the exact dimension that would be appropriate 
for this limit would be subject to further refinement from stakeholder 
discussion and comment. DOE considers the slightly less restrictive 
definition of the Joint Comments to embody the consideration and 
consensus of interested parties regarding the appropriate dimension, 
and will for this reason adopt the suggested change to the depth 
limitation.
    Regarding the use of the term ``totally encased,'' DOE recognizes 
the limitation of its initially proposed approach and that the term 
does not necessarily mean fully encapsulated to the extent that 
absolutely no surface of the delivered product is visible after 
installation. Hence, DOE has reverted to the use of ``totally encased'' 
to indicate encased on all surfaces but the door, which clearly needs 
to be accessible to consumers for the product to function properly. DOE 
also agrees to the addition of the term ``panels'' that may also serve 
to encase the product, such as in the case where a product is installed 
at the end of a row of cabinets and one of the sides is covered with a 
panel. Further, DOE agrees with the inclusion of the words ``attached 
during installation'' in reference to panels, since this clause clearly 
distinguishes a built-in product from a freestanding product, for which 
there would be no attachment of panels during delivery and 
installation.
    DOE is not convinced, however, that the clause ``are designed to 
accept a custom front panel or equipped with an integral factory-
finished face'' helps distinguish built-in products from freestanding 
products, since freestanding products generally come with an integral 
factory-finished face that is part of the door assembly. Based on the 
language used in the Joint Comments definition, as well as the 
existence of built-in products that are not designed to accept custom 
front panels, DOE suspects that the purpose of including this clause is 
to ensure that built-in products that do not accept custom front panels 
are not excluded from the definition. Many built-in products have doors 
with a stainless steel finish (see, e.g., http://products.geappliances.com/ApplProducts/Dispatcher?REQUEST=SPECPAGE&SKU=ZISP480DXSS&SITEID=MON2&TABID=2). Such 
products are not designed to accept custom front panels, but otherwise 
have the same distinguishing design features of built-in products that 
do accept custom front panels. DOE has decided to use language to 
clarify that such products are not excluded from the built-in category.
    Additionally, DOE believes that the definition proposed by the 
Joint Commenters in their negotiated

[[Page 57538]]

agreement needs to be altered to mitigate the risk of manufacturers 
applying the built-in definition to a free-standing product. To address 
this risk, DOE is requiring that a built-in product be one that is 
designed, intended, and marketed exclusively in a manner that would be 
consistent with how a built-in product would be installed for consumer 
use. Factors that DOE would likely consider relevant in this context 
could include whether the product is sold in an unfinished state and 
how the product is advertised. DOE believes that by specifying these 
additional conditions, the definition clearly requires that a 
manufacturer take affirmative steps establishing the built-in nature of 
its products. In effect, DOE has taken the ``intended'' language 
presented in the negotiated agreement's proposal and clarified this 
concept by specifying the conditions that must be met for a particular 
model to be considered a built-in product.
    Because of the problems that both DOE and the industry have faced 
with respect to the actions taken by certain manufacturers, DOE 
believes that it needs to take a stronger approach than that proposed 
in the negotiated agreement with respect to the delineation of these 
products. Adopting this stronger approach helps establish a clear 
distinction between built-in and free-standing products. Such a 
distinction is necessary in light of the considerably higher energy 
consumption of these built-in products, a fact that DOE views with some 
concern. Should DOE receive reports that manufacturers are misapplying 
this definition or otherwise abusing it, DOE will avail itself of all 
other options at its disposal to correct that situation and may re-
examine this definition to assess whether additional modifications are 
required.
    Accordingly, based on the above considerations, the final 
definition for built-in products will read as follows:

    Built-in refrigerator/refrigerator-freezer/freezer means any 
refrigerator, refrigerator-freezer or freezer with 7.75 cubic feet 
or greater total volume and 24 inches or less depth not including 
doors, handles, and custom front panels; with sides which are not 
finished and not designed to be visible after installation; and that 
is designed, intended, and marketed exclusively (1) to be installed 
totally encased by cabinetry or panels that are attached during 
installation, (2) to be securely fastened to adjacent cabinetry, 
walls or floor, and (3) to either be equipped with an integral 
factory-finished face or accept a custom front panel.
e. Modification of the Definition for Compact Products
    DOE proposed to eliminate the 36-inch height restriction in the 
definition for compact products. DOE underscored two reasons for this 
change. First, DOE noted that an increased height level provides no 
energy efficiency benefit. Second, DOE explained that the reason for 
this 36-inch height restriction, which applies to undercounter 
products, is not appropriate for the majority of compact products that 
are not undercounter products. DOE requested comment on this proposal. 
75 FR at 59493-59494 (September 27, 2010).
    ASAP and AHAM both indicated that the consensus agreement did not 
eliminate the 36-inch height limitation for compact products. (ASAP, 
Public Meeting Transcript, No. 67 at pp. 57-58; AHAM, Public Meeting 
Transcript, No. 67 at p. 58; AHAM, No. 73 at p. 6) (DOE notes that the 
consensus agreement is silent on this definition. (See, generally, 
Joint Comments, No. 52)) Whirlpool commented that the current 36-inch 
limitation should be retained to maintain consistency with the 
consumer's view of compact, and prevent ``gaming'', i.e., 
circumvention. (Whirlpool, No. 74 at p. 3) The JAC agreed, noting that 
this limit helps to distinguish compact products from standard-size 
products and prevents the weakening of standards in other countries 
where products taller than 36'' but within the 7.75 cubic foot volume 
limit are more prevalent. (JAC, No. 75 at p. 2)
    Whirlpool's comments do not indicate how removing the 36-inch 
limitation could lead to circumvention. The new test procedure includes 
a modified volume calculation method that was specifically developed to 
limit circumvention associated with false volume claims. 75 FR at 
78839-78840 (December 16, 2010). Further, given the importance of 
volume as an attribute important to consumers,\21\ DOE does not believe 
that consumers will consider tall, but low-volume, products to be 
standard-size. None of the commenters took issue with any of the 
analysis or any of the reasons that DOE presented in the NOPR to 
support the decision to propose eliminating the height restriction. DOE 
notes that the impact of U.S. standards in other countries, while an 
important concern, are factors beyond the scope of DOE's authority to 
control. Hence, DOE is eliminating the height restriction as proposed.
---------------------------------------------------------------------------

    \21\ See, for example the discussion of the importance of 
product volume in the 1995 TSD supporting the rulemaking to 
establish the 2001 energy conservation standard, in the discussion 
regarding increasing insulation thickness in Section 3, page 3-6.
---------------------------------------------------------------------------

f. Icemaking
    DOE requested comments on its proposal to establish product classes 
for products with automatic icemakers, including its proposed approach 
to account for icemakers in the product class structure. 75 FR at 59489 
(September 27, 2010). Sub Zero expressed support for AHAM's intent to 
work cooperatively with DOE to develop a robust repeatable laboratory-
based test procedure to measure automatic icemaking energy use. Sub 
Zero also encouraged DOE to conduct field surveys to provide 
information on consumer use of ice by icemaker type (automatic or 
manual), product class, demographics, time of year, etc. This 
information, when combined with the laboratory test and accompanying 
results, would allow determination of the actual energy used by 
consumers to make ice. (Sub Zero, No. 69 at p. 2) Sub Zero did not 
object to DOE's proposed product class structure to address icemaking. 
(Id.) DOE received no comments objecting to DOE's proposed product 
class structure to integrate icemaking energy use.
    AHAM supported the approach proposed by DOE to integrate automatic 
icemaking into the product class structure. However, AHAM suggested 
that some additional product classes, not specifically proposed by DOE, 
have been sold with automatic icemakers. (AHAM, No. 73 at pp. 5-6) 
These added product classes were previously discussed in section 
IV.A.2.0 above.
    AHAM also commented that products equipped with the option to 
install an automatic icemaker (``kitable models'') should be considered 
to be products with icemakers, explaining that this approach is 
consistent with the test procedure and that lack of clarity on this 
point would create confusion among manufacturers. (AHAM, No. 73 at p. 
6)
    DOE disagrees that AHAM's suggested approach with respect to the 
treatment of ``kitable models'' would be consistent with the test 
procedure. If such a product is installed in a residence without the 
icemaker installed, it will not use the additional energy use allocated 
for automatic icemaking, which is set at 84 kWh in the test procedure. 
The added energy associated with manual icemaking is likely to be 
significantly less, as indicated by initial test results conducted by 
the National Institute for Standards and Technology (NIST). These 
initial results suggest that the energy use associated with the 
mechanisms that are used to eject ice in

[[Page 57539]]

automatic icemakers is significantly greater than the energy use 
associated with the thermal load of freezing the ice. (NIST, Test 
Procedure for Residential Refrigerators, Refrigerator-Freezers, and 
Freezers, Docket Number EERE-2009-BT-TP-0003, Public Meeting 
Transcript, No. 10 at pp. 157-158) DOE agrees that some understanding 
of the energy use associated with manual icemaking should be developed 
to allow more accurate reporting of the energy use of products that do 
not have automatic icemakers but have freezers that allow for the 
freezing and storage of ice. However, prior to the development of a 
manual icemaking factor to account for this energy usage, better 
consistency with the test procedure will be maintained by certifying 
kitable models as two separate models (i.e., with an automatic icemaker 
and without an automatic icemaker), since a consumer may purchase 
either version.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
design options are suitable for further consideration in a standards 
rulemaking:
    1. Technological feasibility. DOE will consider technologies 
incorporated in commercially available products or in working 
prototypes to be technologically feasible.
    2. Practicability to manufacture, install, and service. If mass 
production and reliable installation and servicing of a technology in 
commercially available products could be achieved on the scale 
necessary to serve the relevant market at the time the standard comes 
into effect, DOE would consider that technology practicable to 
manufacture, install, and service.
    3. Adverse impacts on product utility or product availability. If 
DOE determines that a technology would significantly impact in an 
adverse way the utility of the product for significant subgroups of 
consumers or would result in the unavailability of any covered product 
type with performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as products generally available in the United States at the time, 
it will not consider this technology further.
    4. Adverse impacts on health or safety. If DOE determines that a 
technology will have significant adverse impacts on health or safety, 
it will not consider this technology further.
    10 CFR part 430, subpart C, appendix A, (4)(a)(4) and (5)(b)
    In the framework document \22\ and accompanying public workshop 
held on September 29, 2008, DOE identified the energy efficient 
technologies under consideration for the rulemaking analyses. These 
technologies are listed below in Table IV.2. Please see chapter 3 of 
the TSD for detailed descriptions of these technology options.
---------------------------------------------------------------------------

    \22\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framework.pdf.

  Table IV.2--Technologies DOE Considered for Residential Refrigeration
                                Products
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Insulation                                  Expansion Valve
    Improved resistivity of insulation       Improved expansion valves
    Increased insulation thickness          Cycling Losses
    VIPs                                     Fluid control or solenoid
                                             valve
    Gas-filled panels                       Defrost System
Gasket and Door Design                       Reduced energy for
                                             automatic defrost
    Improved gaskets                         Adaptive defrost
    Double door gaskets                      Condenser hot gas
    Improved door face frame                Control System
    Reduced heat load for TTD feature        Temperature control
Anti-Sweat Heater                            Air-distribution control
    Condenser hot gas                       Other Technologies
    Electric heater sizing                   Alternative refrigerants
    Electric heater controls                 Component location
Compressor                                  Alternative Refrigeration
                                             Cycles
    Improved compressor efficiency           Lorenz-Meutzner cycle
    Variable-speed compressors               Dual-loop system
    Linear compressors                       Two-stage system
Evaporator                                   Control valve system
    Increased surface area                   Ejector refrigerator
    Improved heat exchange                   Tandem system
Condenser                                   Alternative Refrigeration
                                             Systems
    Increased surface area                   Stirling cycle
    Improved heat exchange                   Thermoelectric
    Force convection condenser               Thermoacoustic
Fans and Fan Motor                          ............................
    Evaporator fan and fan motor            ............................
     improvements
    Condenser fan and fan motor             ............................
     improvements
------------------------------------------------------------------------

    DOE requested, but did not receive, any comments at either the 
framework workshop or during the framework comment period that 
identified additional technologies that DOE should consider. Likewise, 
DOE received no comments recommending additional technologies during 
the preliminary analysis or NOPR public meetings or comment periods.
    As described in chapter 4 of the TSD, Screening Analysis, DOE 
screened out several of the technologies listed in Table IV.2 from 
consideration in this rulemaking based on one or more of the screening 
criteria described above. A summary of the screening analysis 
identifying technologies that were screened out and the EPCA criteria 
used for the screening is presented in Table IV.3. The checkmarks in 
the table indicate which screening criteria were used to screen out the 
listed technologies. For greater detail

[[Page 57540]]

regarding the screening analysis, see chapter 4 of the TSD.

Table IV.3 Summary of Screening Analysis
[GRAPHIC] [TIFF OMITTED] TR15SE11.109

    In addition to this screening, DOE did not analyze a number of 
technologies in the engineering analysis because they were judged 
unsuitable for improving the measured energy use of refrigeration 
products for one or more of the following reasons:
     Technology already used in baseline products and incapable 
of generating additional energy efficiency or reducing energy 
consumption;
     Technology does not reduce energy use; or
     Insufficient data available demonstrating benefit of the 
technology.
    The technologies not analyzed for these reasons include Improved 
Expansion Valves, Off-Cycle Valves, Reduced Energy for Automatic 
Defrost, Condenser Hot Gas Defrost, Reduced Heat Load for TTD Feature, 
Warm Liquid or Hot Gas Refrigerant Anti-Sweat Heating, Electric Anti-
Sweat Heater Sizing, Electronic Temperature Control, Air Distribution 
Control, Fan Blade Improvements, and Dual Loop System. Chapter 4 of the 
NOPR TSD discusses in greater detail the reasons for not analyzing 
these technologies.
1. Discussion of Comments
    DOE discussed several screening issues in the NOPR. These issues 
are summarized, along with comments responding to the NOPR, in the 
sections below.
a. Compressors
    DOE explained in the NOPR that the proprietary status of a 
technology is not a screening criterion. 75 FR at 59495 (September 27, 
2010). However, DOE pointed out that selected technologies may be 
screened out if their proprietary status constrains their supply, and 
that DOE must consider ``the impact of any lessening of competition * * 
* that is likely to result from the imposition of the standard'' (42 
U.S.C. 6295(o)(2)(B)(i)(V)). DOE indicated in the NOPR that it 
considered potential supply issues of high-efficiency single-speed and 
variable speed compressors, but concluded that the compressor 
performance levels analyzed would not likely be subject to significant 
supply constraints that would merit omitting the consideration of this 
particular design option. DOE requested comment on this position. Id.
    Sub Zero commented that, as a smaller manufacturer, it may have 
more difficulty obtaining high-efficiency and variable speed 
compressors as compressor vendors ramp up to meet refrigeration product 
manufacturer demands in 2014. In its view, because of the proposed 
increased stringency of the standards, larger companies will demand 
many more of these compressors than they are currently

[[Page 57541]]

using. (Sub Zero, No. 69 at p. 3) While it is difficult to predict the 
events that will occur up to the 2014 transition, DOE notes that it 
reached its tentative conclusion based on its NOPR phase investigation 
that indicated the compressor industry has been working to develop high 
efficiency and variable speed compressors for the residential 
refrigeration market for many years. (See, e.g., http://www.panasonic.com/industrial/includes/pdf/invertercompressors-improvingefficiency.pdf, a discussion of Panasonic's development of 
variable speed compressors, including initial introduction of variable 
speed compressors in refrigerators in 1996.) These efforts led DOE to 
believe that the refrigeration industry has had sufficient lead time to 
prepare for the possible increased demands for higher efficiency and 
variable speed compressors. Although the submitted comments reiterated 
the concerns of certain stakeholders, none contained information that 
would help justify altering the analysis DOE conducted regarding the 
projected supply of compressors available to manufacturers.
    Whirlpool concurred with DOE's findings that availability of high-
efficiency and variable-speed compressors will expand to meet demand, 
but indicated that prices might increase. (Whirlpool, No. 74 at p. 3) 
Whirlpool did not, however, provide any specific information about 
compressor prices that would allow DOE to accurately revise its 
analysis to address this comment. Accordingly, the analysis was not 
altered in this respect.
b. Alternative Refrigerants
    Most refrigeration products sold in the U.S. currently use HFC-134a 
refrigerant, a hydrofluorocarbon (HFC) with a high global warming 
potential (GWP).
    The NOPR described comments from several stakeholders made in 
response to the preliminary analysis. These comments indicated that the 
DOE analysis should acknowledge the widespread acceptance of 
hydrocarbon refrigerants in other parts of the world and the growing 
interest in their use in the U.S. Id. at 59496. The NOPR cited the 
ongoing consideration of these refrigerants for use in residential 
refrigerators, particularly isobutane, in Underwriters Laboratories' 
(UL's) ongoing revision of UL Standard 250, ``Household Refrigerators 
and Freezers'' (UL 250), and in the EPA's proposed rule (see 75 FR 
25799 (May 10, 2010)) to add this refrigerant to its list of allowed 
substances under the Significant New Alternatives Policy (SNAP) 
program. DOE explained in the NOPR that the EPA proposal calls for a 
total charge limit of 57 g of isobutane. Id. at 25803 (May 10, 2010). 
Neither effort has been finalized at the time of the preparation of 
this notice.
    The NOPR explained that DOE's consideration of isobutane 
refrigerant was based on the 57 g limit proposed by the EPA, and that 
this limit was sufficient to allow consideration of the use of 
isobutane refrigerant only for compact refrigerators, based on the 
refrigerant charge amounts of the reverse-engineered products. The 
preliminary analyses for compact refrigerators, which did not include 
isobutane refrigerant as a design option, were adjusted during the NOPR 
phase to include this design option. DOE acknowledged in the NOPR that 
multiple sealed systems could potentially be used in larger products 
without exceeding the charge limit per sealed system, but that it 
rejected this approach due to the potential reduction of consumer 
utility associated with the extra space that the additional sealed 
system would require. 75 FR at 59496-7 (September 27, 2010). DOE notes 
that the EPA's SNAP proposal did not clearly specify whether the 57 
gram limit was intended to apply to each sealed system or each 
appliance. 75 FR at 25803 (May 10, 2010).
    DOE requested comment on its approach in considering isobutane only 
for compact refrigerators.
    Whirlpool commented that many compact and full-size refrigerators 
using hydrocarbon refrigerants are sold all over the world, but that 
the safety threshold in the U.S. is higher than many other countries. 
Whirlpool noted the possible tradeoffs of venting versus capturing and 
transporting flammable refrigerants--venting such refrigerants must be 
done with caution, but it alleviates the need for transport of 
flammable refrigerants, which may represent even greater risk, since 
many pounds of refrigerant captured from many products would be 
transported (as opposed to ounces that are in each individual product), 
and the duration of transport is much greater than the duration of the 
venting procedure. Capture and transport, however, avoid release of the 
refrigerant, thus limiting the small global warming impact of these 
refrigerants and avoiding concerns associated with volatile organic 
compound releases. Whirlpool suggested that DOE contact the Consumer 
Product Safety Commission and/or UL regarding the safety aspects 
related to the use of these refrigerants. (Whirlpool, No. 74 at p. 4) 
DOE's assessment of the use of isobutane did not extend to 
determination of the servicing approach. DOE notes that Section 608 of 
the Clean Air Act generally prohibits any person in the course of 
maintaining an appliance to knowingly vent refrigerants from that 
appliance. See generally, 42 U.S.C. 7671g. EPA regulations at 40 CFR 
part 82, subpart F, further clarify this prohibition and permit only de 
minimis releases where good faith attempts to recycle or recover 
refrigerants are made.
    GE criticized DOE's approach. First, GE indicated that the UL 
standard and the EPA proposal are based on charge limits per sealed 
system, not per product, and that DOE did not fully consider the 
potential to use dual system designs to implement a switch to isobutane 
refrigerant. Second, GE commented that the lack of information 
regarding refrigeration product technologies using isobutane 
refrigerant stems to a large extent from the fact that this refrigerant 
currently is not allowed for use in these products. GE asserted that 
when the EPA SNAP approval is finalized, much more information will 
become available as products are commercialized. (GE, Public Meeting 
Transcript, No. 67 at pp. 60-61) In written comments, GE highlighted 
recent activities related to the introduction of isobutane products, 
including the EPA SNAP rulemaking and GE's own plans to start selling 
an isobutane product. It also mentioned that manufacturers will have to 
redesign products to use this new refrigerant, thus reiterating its 
view that assessing current products does not provide a complete 
picture of the potential use of isobutane. (GE, No. 76 at p. 2)
    Sub Zero commented that some studies show that isobutane, when 
limited to a charge of 57 to 60 grams, is suitable for products up to 
18 cubic feet in volume. Further, using multiple separate refrigeration 
systems, each limited to 57 to 60 grams, would allow the use of 
isobutane in many full-size products. Sub Zero also highlighted the 
current uncertainty about potential future regulation of HFC 
refrigerants and blowing agents, and suggested that the industry could 
potentially be compelled to use alternative substances by 2014, which 
would require significant additional capital investment. The company 
requested that DOE recognize in this rulemaking the possible impacts of 
new requirements for refrigerants and blowing agents on system 
efficiency and insulating performance when setting the standards. (Sub 
Zero, No. 69 at p. 4)
    AHAM cited three issues with DOE's treatment of isobutane in the 
NOPR:

[[Page 57542]]

     There is a pending EPA Significant New Alternatives Policy 
(SNAP) decision that would approve hydrocarbons for household use and 
is expected to lead to sale of full-size refrigeration products in the 
U.S. that use isobutane refrigerant.
     DOE's review of the suitability of isobutane was based on 
review of existing products rather than future products.
     DOE concluded that the UL limit of 50 grams would apply to 
the entire product rather than to each refrigeration system of a 
product, thus overlooking the possibility that multiple systems could 
be used to produce full-size products using isobutane.

(AHAM, No. 73 at pp. 7-8)

    In response, DOE agrees that a dual-system design would be an 
available option that could, depending on the SNAP rulemaking, permit 
manufacturers to use isobutane refrigerant within the limits of the UL 
standard and the anticipated EPA rule. DOE also acknowledges increased 
manufacturer interest in this approach, as exemplified by GE's stated 
intention to introduce such products as soon as the EPA rule is final 
(see, for example, GE's announcement for such a product as reported by 
Appliance Magazine on October 6, 2010, http://www.appliancemagazine.com/news.php?article=1434814&zone=0&first=1, GE 
Designs Isobutane Fridge for Smaller Dwellings, No. 82 at p. 1). DOE 
explained in the NOPR that consideration of the potential negative 
consumer utility impact of reduced internal volume was a key reason for 
not adopting isobutane refrigerant as a design option for the larger 
product classes. 75 FR at 59497 (September 27, 2010). Other 
considerations included the lack of information regarding (1) the 
possible emergence of new heat exchanger designs that would alleviate 
the need to consider dual system approaches and (2) the performance 
characteristics of low-charge designs using existing heater exchanger 
technology. As a result, although isobutane products may become 
available in the near future, considering the switch to isobutane 
refrigerant as a design option to reduce energy use could not be 
considered in the analysis, because of the consumer value concerns and 
the insufficient information regarding the energy savings 
characteristics and the costs of these potential new designs.
    Moreover, DOE notes that because the parameters of whatever limits 
that EPA or UL may consider are not yet final, DOE is declining to 
speculate what these final limits might be. Without further information 
regarding the elements described above, DOE cannot ascertain the 
overall costs and benefits that could be reasonably ascribed to an 
isobutane refrigerant-based design. Accordingly, in evaluating the 
standards set by today's final rule, DOE is continuing to retain the 
basic approach laid out in its NOPR and related analyses.
c. Alternative Foam-Blowing Agents
    DOE discussed in the NOPR the potential that legislation or newly 
enacted rules may restrict the use of HFC blowing agents in the future. 
DOE indicated that it was prepared to address this issue by evaluating 
the efficiency improvement and trial standard levels for products using 
alternative foam insulation materials, if such legislation or rules 
banning HFCs should be enacted or otherwise become effective. 75 FR at 
59497 (September 27, 2010). As mentioned above, Sub Zero commented that 
DOE should recognize the potential impacts of restriction on HFC 
blowing agent usage in this rulemaking. (Sub Zero, No. 69 at p. 4) DOE 
recognizes that such restrictions may occur sometime in the future. 
However, as DOE explained in the NOPR, DOE believes that basing energy 
conservation standards on the uncertain prospect of passage of specific 
legislation would be speculative. Such restrictions have not emerged 
within the timeframe of the preparation of this final rule. Hence, DOE 
has not adjusted its analysis to account for this possibility.
d. Vacuum-Insulated Panels
    The NOPR discussed DOE's assessment of the potential issues 
regarding VIP supply, longevity, durability, and quality that 
stakeholders raised during the preliminary analysis comment period. DOE 
concluded that potential issues surrounding this technology do not rise 
to a level justifying that it be screened out. DOE requested comment on 
this tentative conclusion in the NOPR. 75 FR at 59497-59500 (September 
27, 2010). Sub Zero commented on this topic, reiterating concerns 
regarding availability, quality, and potential impact on warranty costs 
associated with the expected increase in VIP usage. (Sub Zero, No. 69 
at p. 4) Whirlpool commented in a similar fashion, indicating that VIPs 
are not appropriate for improving efficiency in all situations, are 
subject to damage during shipment from the supplier and during 
installation, and expressing concern about the ability of VIP suppliers 
and the industry to ramp up demand sufficiently. However, the comments 
provided no new information or arguments that would impact DOE's 
conclusions regarding the viability of VIPs. Hence, DOE's final 
analysis continues to include VIPs as a design option.
2. Technologies Considered
    DOE has concluded that: (1) All of the efficiency levels discussed 
in today's final rule are technologically feasible; (2) products at 
these efficiency levels could be manufactured, installed, and serviced 
on a scale needed to serve the relevant markets; (3) these efficiency 
levels would not force manufacturers to use technologies that would 
adversely affect product utility or availability; and (4) these 
efficiency levels would not adversely affect consumer health or safety. 
Thus, the efficiency levels that DOE analyzed and is discussing in this 
notice are all achievable using ``screened in'' technology options 
identified through the screening analysis. The technologies DOE 
considered for each group of products are shown in Table IV.4.
BILLING CODE 6450-01-P

IV.4 Technologies Considered by DOE for Residential Refrigeration 
Products, by Product Group

[[Page 57543]]

[GRAPHIC] [TIFF OMITTED] TR15SE11.110

    Note 1: Increased Insulation Thickness was not considered for 
built-in standard-size freezers.
BILLING CODE 6450-01-C

C. Engineering Analysis

    The engineering analysis uses cost-efficiency relationships to show 
the manufacturing cost increases associated with achieving increased 
efficiency. DOE has identified the following three methodologies to 
generate the manufacturing costs needed for the engineering analysis: 
(1) The design-option approach, which provides the incremental costs of 
adding design options to a baseline model that will improve its 
efficiency; (2) the efficiency-level approach, which provides the 
relative costs of achieving increases in energy efficiency levels, 
without regard to the particular design options used to achieve such 
increases; and (3) the cost-assessment (or reverse engineering) 
approach, which provides ``bottom-up'' manufacturing cost assessments 
for achieving various levels of increased efficiency, based on detailed 
data on costs for parts and material, labor, shipping/packaging, and 
investment for models that operate at particular efficiency levels.
    DOE conducted the engineering analysis for this rulemaking using a 
combined efficiency level/design option/reverse engineering approach. 
DOE defined efficiency levels using percentages representing energy use 
reductions. The reductions were defined to apply to energy use (not 
including icemaking energy use) measured using the new test procedure. 
DOE's premise that efficiency levels expressed as a percentage of 
energy use lower than that of baseline products are equivalent when 
calculated based on both the current test procedure and the new test 
procedure (without icemaking energy use) allowed DOE to compare 
information developed from different sources. However, DOE's analysis 
is based on the efficiency improvements associated with groups of 
design options. DOE developed estimates for efficiency improvements for 
design options through energy use modeling analysis conducted for 
selected reverse-engineered products. The energy models were first 
established based on the existing product designs and the models were 
subsequently adjusted to reflect application of the groups of design 
options considered for analysis. DOE based some of the design option 
information on data gained through reverse-engineering analysis, but 
also used other sources, such as component vendor inquiries and 
discussions with manufacturers as appropriate. Details of

[[Page 57544]]

the engineering analysis are provided in the NOPR TSD chapter 5.
    In the NOPR, DOE addressed preliminary analysis comments regarding 
the engineering analysis. DOE explained the selection of product 
classes for detailed analysis, adjustment of the analyses based on new 
information collected in preparation of the NOPR, development of the 
baseline energy use equations representing baseline product energy use 
using the new energy test procedure (less automatic icemaking energy 
use), the approach used to adjust the slopes of some of these 
equations, the range of efficiency levels considered, treatment of 
design options in the analyses, development of cost-efficiency curves, 
and the development of standards for low-volume product classes. 75 FR 
at 59500-59508 (September 27, 2010).
1. Discussion of Comments
    DOE requested comments and information on the following topics in 
the NOPR:
    (1) The approach used to adjust the slopes of the baseline energy 
use equations of some product classes. Id. at 59505.
    (2) The treatment of design options in the engineering analysis. 
Id. at 59507.
    (3) Information that would help improve the ERA energy use model 
used for the engineering analysis. Id. at 59507.
    Whirlpool commented that analyzing design options is an appropriate 
means of assessing technological capability, but that DOE should 
establish minimum efficiency standards without specifying particular 
design options to use. In its view, this approach would permit 
manufacturers the freedom to develop products in a fashion which they 
believe best meets the needs of consumers. (Whirlpool, No. 74 at p. 5) 
DOE notes that the standards are expressed in terms of maximum energy 
use and do not specify the use of particular design options in 
satisfying these standards.
    DOE received no additional comments on these topics. Consequently, 
in the absence of any other comments, DOE has not adjusted its 
engineering analysis for the final rule.
2. Adjustment of the Baseline Energy Use Equations
    Comments addressing adjustment of the standard to account for test 
procedure changes (the ``crosswalk'') are discussed in section III.A.2 
above. As part of the engineering analysis, DOE adjusted the energy 
standard equations to address the modifications to the test procedures. 
DOE initially made such adjustments during the preliminary analysis 
based on consideration of the anticipated compartment temperature and 
volume calculation method changes. DOE used an approach to account for 
the test procedure changes that involved developing energy use 
equations representing baseline products based on testing under the new 
test procedures. Baseline products are those that are minimally 
compliant under the current energy standard when tested using the 
current test procedure. The initial baseline energy use equations are 
presented in the preliminary TSD in Chapter 5, ``Engineering Analysis'' 
in section 5.4.2. The efficiency levels examined in this rulemaking are 
represented as percentages of energy use reductions from the energy use 
of baseline products. Hence, the efficiency levels expressed in terms 
of the new test procedures are equal to these same percentage 
reductions applied to the baseline energy use equations.
    Based on the comments responding to the preliminary analysis, as 
well as the additional information DOE obtained during the NOPR phase, 
DOE adjusted the baseline energy use equations for three product 
classes. These changes corrected the low slope of the maximum energy 
use equation of the current energy standards for product classes 4 
(refrigerator-freezers--automatic defrost with side-mounted freezer 
without through-the-door ice service), 5 (refrigerator-freezers--
automatic defrost with bottom-mounted freezer without through-the-door 
ice service), and 5A (refrigerator-freezer--automatic defrost with 
bottom-mounted freezer with through-the-door ice service). See the NOPR 
TSD, Chapter 5, section 5.4.2.4. The NOPR-phase adjusted baseline 
energy use equations are presented in the NOPR TSD in Chapter 5, in 
section 5.4.2.
    Stakeholder comments recommending further adjustment to the 
baseline energy use equations to address test procedure changes are 
discussed in section III.A.2 above. These comments addressed both (1) 
extrapolating the analysis to product classes for which DOE did not 
have relevant test data for the crosswalk associated with compartment 
temperature changes and volume calculation method changes, and (2) 
measurement changes, including other test procedure changes that were 
not captured in the NOPR crosswalk. As discussed in section III.A.2, 
DOE has made adjustments to account for two of these additional test 
procedure changes--those changes that capture precooling energy use and 
that address the testing for products with heater-based temperature 
control for special compartments. The analysis to implement these 
changes is discussed below.
Special Compartments With Heater-Based Control
    During the NOPR public meeting, DOE requested information regarding 
heater-based control systems used to control the temperatures of 
special compartments. DOE sought this information to help it better 
understand and evaluate the energy use impact of these features and the 
manner in which the new (then proposed) test procedure may change the 
measured energy use of products having such compartments. DOE received 
no information. In the absence of any information, DOE developed an 
analysis to help represent the energy use of these compartments, 
including the change in measured energy use associated with the new 
test procedure. The calculated energy use impact was multiplied by the 
percentages of products that are believed to have such features in each 
of the applicable product classes to develop average impacts associated 
with the test procedure amendments. The determination of the prevalence 
of products with these features is discussed in section 0 above.
    The analysis describing the change in energy use for a product with 
a heated special compartment is described in the TSD in Chapter 5, 
``Engineering Analysis,'' (Section 5.4.2.6). DOE conducted this 
analysis for a baseline-efficiency refrigerator-freezer with automatic 
defrost and a bottom-mounted freezer with a total capacity of 25 cubic 
feet. The baseline energy use for this product is 733 kWh per year, 
excluding icemaking energy use. This value was calculated using the 
baseline energy use equation for product class 5 as presented in Table 
5.4.12 of the NOPR TSD. The special compartment was assumed to be 
located at the bottom of the fresh food compartment and to be 20 inches 
deep, 32 inches wide, and 4 inches high. (These dimensions were based 
on one of the reverse engineered products evaluated by DOE during the 
engineering analysis. This product had a special compartment (without 
heater-based control) at the bottom of the fresh food compartment of 
roughly the selected dimensions.)
    The analysis determined the energy use for the product when tested 
both with the special compartment set for its coldest temperature and 
with the compartment set at its warmest temperature (selected as 28 
[deg]F and 42 [deg]F, respectively, consistent with the

[[Page 57545]]

widest range identified for special compartment temperature control for 
the product (see Use and Care Guide Electrolux 242046401, No. 80 at p. 
18)), with the fresh food and freezer compartments operating at 39 
[deg]F and 0 [deg]F, respectively. The influences on the compartment 
temperature that DOE considered in the analysis include (1) the 39 
[deg]F fresh food compartment air surrounding the top, sides, back, and 
front of this special compartment, transferring heat through the \3/
16\-inch plastic compartment wall, and the air film thermal resistances 
outside and inside the special compartment, (2) the air near the top of 
the freezer compartment, at an average temperature of -5 [deg]F (at 0 
[deg]F when the compressor is not operating, and at -10 [deg]F when the 
compressor is operating and the evaporator discharge air blows forward 
along the underside of the mullion, and assuming a 50 percent 
compressor run time), transferring heat from the special compartment 
through the special compartment's bottom surface, the 1.5-inch thick 
mullion, and through four air films surrounding the compartment bottom 
and the mullion, (3) -10 [deg]F evaporator discharge air diverted to 
the special compartment, if needed to maintain a low temperature, and 
(4) electric resistive heating, if needed to maintain a high 
temperature. At the 28 [deg]F setting for the special compartment, a 
small amount of evaporator discharge air (less than 1 cubic foot per 
minute) is needed to maintain the compartment temperature, while a 
heater input of 5.8 W is needed to maintain the 42 [deg]F setting. DOE 
calculated the additional system energy use associated with removing 
the 5.8 W of heat input by assuming that the system efficiency is 5 
Btu/h-W, which represents a system with a compressor with an Energy 
Efficiency Ratio (EER) rating of 5.5 and some additional evaporator and 
condenser fan power input. As described in the TSD, Chapter 5, section 
5.84, standard-size baseline refrigerator-freezers typically use 
compressors with an EER in the range 5.0 to 5.5. DOE used the high end 
of this range for the estimate, recognizing that a shipment-weighted 
average EER would also include higher-efficiency compressors.
    The calculated energy use impact of the test procedure change 
(measurement with the special compartment set at its coldest 
temperature, as is done under the current test procedure, as compared 
with an average of tests with the special compartment setting in the 
coldest position for one test and in the warmest position for the 
second test) is 43 kWh, a 5.9 percent energy use increase. As discussed 
above in section III.A.2, DOE has conducted testing for two products 
that have heated special compartments. The average measured impact of 
the test procedure change for these productss was 4.1 percent, 
suggesting that the calculated 5.9 percent impact is conservative. DOE 
chose to use the more conservative 5.9 percent impact in adjusting the 
energy conservation standards due to the uncertainty associated with 
the small data sample and the EPCA requirements prohibiting upward 
adjustment of maximum allowable energy use after such a standard has 
been set. See 42 U.S.C. 6295(o)(1).
    As discussed in section III.A.2, DOE assumed that this energy use 
impact applies to the percentage of products of applicable product 
classes which currently have such features. Hence, applying the 
calculated measurement impact to the product model percentages of 10.6 
percent (determination of this value was discussed in section III.A.2) 
for current product class 5A (refrigerator-freezer--automatic defrost 
with bottom-mounted freezer with through-the-door ice service), 1.5 
percent for current product class 5 (refrigerator-freezers--automatic 
defrost with bottom-mounted freezer without through-the-door ice 
service), and 0.7 percent for current product class 7 (refrigerator-
freezers--automatic defrost with side-mounted freezer with through-the-
door ice service) results in average impacts for these product classes 
equal to 0.62 percent for product class 5A, 0.088 percent for product 
class 5, and 0.041 percent for product class 7.
Precooling
    DOE conducted energy tests of nine standard-size refrigerator-
freezers during the engineering analysis. Two of these products 
exhibited precooling. The increase in measured energy use for these 
products when using the modified approach that includes precooling 
energy use was 2.3 percent for one product and 1.7 percent for the 
other. (See docket documents Precooling Product 1 and Precooling 
Product 2, Nos. 82.1 and 82.2). DOE has adopted an average impact of 2 
percent based on these measurements. DOE calculated the shipment-
weighted average energy use impact of precooling using this value and 
the observed frequency of precooling as follows: 2% x (\2/9\) = 0.44%. 
DOE applied this adjustment to all standard-size refrigerator-freezers 
with automatic defrost.
Combined Impact
    To combine the impact of the two test procedure adjustments, DOE 
multiplied the factors representing their impact. For example, for 
product class 5A: 1. 0062 x 1.0044 = 1. 0106.\23\ This approach 
addresses the need to consider the compounding of the impact inherent 
in multiple influences, similar to the compounding of interest in 
finance. DOE used similar calculations for other product classes for 
which one or both of the test-procedure-based adjustments to the 
standard apply. These adjustments are reflected in the table showing 
the final baseline energy use equations in the TSD, Chapter 5, Table 
5.4.14. The final energy standards are based on applying the percentage 
energy use reductions to these adjusted baseline energy use equations.
---------------------------------------------------------------------------

    \23\ Note that multiplying a number by 1.000062 is equivalent to 
increasing it by 0.62%. Hence, the 1.0062 factor represents the 
adjustment to the energy use equation associated with the 0. 62% 
increase to account for the heated special compartment shipment-
weighted average measurement change for product class 5A. Similarly, 
the 1.0044 factor represents the 0.44% adjustment for the precooling 
shipment-weighted average measurement change. The resulting factor, 
1.0106, means that the energy use equation is increased 1.06%.
---------------------------------------------------------------------------

D. Markups To Determine Product Cost

    The markups analysis develops appropriate markups in the 
distribution chain to convert the manufacturer cost estimates derived 
in the engineering analysis to consumer prices. DOE determined the 
distribution channels for refrigeration products and the markups 
associated with the main parties in the distribution chain, 
manufacturers and retailers. DOE developed an average manufacturer 
markup by examining the annual Securities and Exchange Commission (SEC) 
10-K reports filed by four publicly-traded manufacturers primarily 
engaged in appliance manufacturing and whose combined product range 
includes residential refrigeration products. For retailers, DOE 
developed separate markups for baseline products (baseline markups) and 
for the incremental cost of more-efficient products (incremental 
markups). Incremental markups are coefficients that relate the change 
in the manufacturer sales price of higher-efficiency models to the 
change in the retailer sales price.
    In response to comments that were received on the preliminary 
analysis, DOE extensively reviewed its incremental markup approach in 
the NOPR. Among the tasks DOE performed included assembling and 
analyzing relevant data from other retail sectors. DOE found that 
empirical evidence is lacking with respect to appliance retailer markup 
practices when a product increases in cost (due to

[[Page 57546]]

increased efficiency or other factors). DOE understands that real-world 
retailer markup practices vary depending on market conditions and on 
the magnitude of the change in cost of goods sold (CGS) associated with 
an increase in appliance efficiency.
    Given this uncertainty with respect to actual markup practices in 
appliance retailing, DOE uses an approach that reflects two key 
concepts. First, changes in the efficiency of the appliances sold are 
not expected to increase economic profits. Thus, DOE calculates 
markups/gross margins to allow cost recovery for retailers (including 
changes in the cost of capital) without changes in company profits. 
Second, efficiency improvements only impact some distribution costs. 
DOE sets markups to cover only the variable costs expected to change 
with efficiency.
    DOE's separation of operating expenses into fixed and variable 
components to estimate an incremental markup follows from the above 
concepts. DOE defines fixed expenses as including labor and occupancy 
expenses because these costs are not likely to increase as a result of 
a rise in CGS due to amended efficiency standards. All other expenses, 
as well as the net profit, are assumed to vary in proportion to the 
change in CGS. DOE acknowledges that its allocation of expenses into 
fixed and variable categories is based largely on limited information 
and sought additional information from interested parties to help 
refine its allocation approach during the NOPR phase. DOE's method 
results in an outcome in which retailers are assumed to cover their 
costs while maintaining their profit margins when the CGS of appliances 
changes.
    As part of its review, DOE developed a new breakdown into fixed and 
variable components using the latest expense data provided by the U.S. 
Census for Electronics and Appliance Stores, which cover 2002. The 
newly-derived incremental markup, which would be applied to an 
incremental change in CGS, is 1.17, which is slightly higher than the 
value of 1.15 that DOE used in the preliminary analysis. DOE requested 
information regarding the likely retailer responses to incremental 
changes in the CGS of appliances associated with the proposed 
standards. Whirlpool stated that it would not expect retailers to 
accept reduced margins as a result of higher costing, more efficient 
products, and asserted that most major retailers are publicly traded 
companies whose stockholders demand consistent (or increasing) margins 
(Whirlpool, No. 74 at p. 5) No information or other comments were 
received addressing this issue. Given the lack of quantitative 
information, DOE has decided to continue to apply an incremental markup 
to the incremental MSP of products with higher efficiency than the 
baseline products. Chapter 6 of the final rule TSD provides a 
description of both the method and its current application.

E. Energy Use Analysis

    DOE's analysis of the energy use of refrigeration products 
estimated the annual energy use of products in the field that would 
meet the considered efficiency levels, i.e., as they are actually used 
by consumers. The energy use analysis provides the basis for other 
analyses DOE performs, particularly assessments of the energy-savings 
and the savings in consumer operating costs that could result from 
DOE's adoption of amended standard levels. In contrast to the DOE test 
procedure, which provides standardized results that can serve as the 
basis for comparing the performance of different appliances used under 
the same conditions, the energy use analysis seeks to capture the range 
of operating conditions for refrigeration products in U.S. homes.
    To determine the field energy use of products that would meet 
possible amended standard levels, DOE used data from the Energy 
Information Administration (EIA)'s 2005 Residential Energy Consumption 
Survey (RECS), which was the most recent such survey available at the 
time of DOE's analysis.\24\ RECS is a national sample survey of housing 
units that collects statistical information on the consumption of, and 
expenditures for, energy in housing units along with data on energy-
related characteristics of the housing units and occupants. RECS 
provides sufficient information to establish the type (product class) 
of refrigeration product used in each household, and also provides an 
estimate of the household's energy consumption attributable to 
``refrigerators'' or ``freezers''. As a result, DOE was able to develop 
household samples for the representative product classes for standard-
size units. DOE did not use RECS for compact refrigerators and freezers 
because a large fraction of these products are used outside the 
residential sector. Instead, it based the energy use for these products 
on the DOE test procedure.
---------------------------------------------------------------------------

    \24\ For information on RECS, see http://www.eia.doe.gov/emeu/recs/.
---------------------------------------------------------------------------

    DOE believes that, in general, using RECS data in the estimation of 
field energy use of refrigeration products is valid. However, it 
acknowledges that the approach used in the preliminary analysis has 
limits. To compensate for these limits, DOE developed a new approach 
for the NOPR to estimate energy use of refrigeration products in U.S. 
homes. This approach involved collecting field-metered electricity use 
data for residential refrigeration products. Details of this approach 
and the engineering assumptions that DOE used to estimate energy use of 
refrigeration products in U.S. homes were described in chapter 7 of the 
NOPR TSD. DOE sought comment on its approach for developing energy use 
estimates using field-metered data. 75 FR at 59512 (September 27, 
2010).
    Commenting on the NOPR TSD, AHAM stated that DOE should rely on the 
test procedure, rather than RECS data, for determining energy use, but 
offered no reason or data. (AHAM, Public Meeting Transcript, No. 67 at 
p. 78).
    As discussed in section IV.E of the NOPR (75 FR at 59510 (September 
27, 2010)), test procedures must be reasonably designed to produce test 
results which measure energy efficiency, energy use or estimated annual 
operating cost of a covered product during a representative average use 
cycle or period of use. (42 U.S.C. 6293(b)(3)) Relying solely on a 
representative average use cycle or period of use does not provide an 
accurate measure of the possible energy savings since this approach 
inadequately evaluates the economic impact of the standard on consumers 
and the savings in operating costs throughout the estimated life of the 
product--two factors under EPCA that DOE must consider when 
promulgating an amended energy conservation standard. Further, the 
approach suggested by AHAM would not account for the variability 
stemming from household differences or be consistent with the above-
cited guidance contained in 10 CFR part 430, subpart C, appendix A. In 
contrast, the approach that DOE has used in residential product 
rulemakings for over a decade, and continues to apply here, accounts 
for all of these factors.
    Sub Zero and AHAM also indicated that more comprehensive field data 
be collected, including data on ice usage and icemaker energy 
consumption, for use in future rulemakings (Sub Zero, No. 69 at pp. 4-
5; AHAM, No. 73 at p. 8). DOE has retained the approach detailed in the 
NOPR for the final rule. In future rulemakings, DOE may evaluate the 
appropriateness of collecting additional field data as suggested by 
these commenters.
    In order to make the 2005 RECS sample more representative of 
current

[[Page 57547]]

refrigeration products, DOE made two modifications for the NOPR 
analysis. First, DOE modified the RECS weights for top- vs. bottom-
mount refrigerators in order to reflect current information on the 
relationship between income and refrigerator door style (i.e., top- or 
bottom-mount) provided by AHAM in 2010. Second, DOE examined recent 
data from three sources \25\ to scale the average interior volume of 
standard-size refrigerator-freezers from the 2005 RECS data. DOE 
requested comments on the weighting of the RECS sample using income 
relationships and volume scaling.
---------------------------------------------------------------------------

    \25\ California Energy Commission, Appliances Database--
Refrigeration, 1998-2009. http://www.energy.ca.gov/appliances/database/excel_based_files/Refrigeration/ (Last accessed April 25, 
2009); The NPD Group, Inc., The NPD Group/NPD Houseworld--POS, 
Refrigerators, January-December 2008, 2007-2008, Port Washington, 
NY; and Association of Home Appliance Manufacturers, data from 2005-
2008, memoranda dated January 19, 2009 and March 26, 2010, 
Washington, DC.
---------------------------------------------------------------------------

    Whirlpool supported efforts to re-weight the RECS data to better 
reflect income and volume; however, it reiterated its previously stated 
reservations regarding the outdated nature of RECS. (Whirlpool, No. 74 
at p. 5) AHAM did not view the weighting of the RECS sample as having 
meaningfully contributed to the proposed levels, and as a result, did 
not comment on these approaches. Instead, it emphasized that the lack 
of comment on its part did not signify agreement with the approaches. 
(AHAM, No. 73 at p. 8)
    Given the value of continuing to apply the RECS-based approach, the 
analysis modifications to address the limits of the RECS data, and the 
analysis DOE performed using updated data from AHAM and other sources, 
DOE believes that this approach sufficiently accounts for the full 
range of estimated energy savings experienced by households. 
Accordingly, DOE has retained its above-described approach for the 
final rule. However, DOE did revise its usage adjustment factor (UAF) 
formulas, which raised the average UAF by 6 to 14 percent, depending on 
the product class. The revision is described in chapter 7 of the final 
rule TSD.

F. Life-Cycle Cost and Payback Period Analyses

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
refrigeration products. The LCC is the total consumer expense over the 
life of a product, consisting of purchase and installation costs plus 
operating costs (expenses for energy use, maintenance and repair). To 
compute the operating costs, DOE discounts future operating costs to 
the time of purchase and sums them over the lifetime of the product. 
The PBP is the estimated amount of time (in years) it takes consumers 
to recover the increased purchase cost (including installation) of a 
more efficient product through lower operating costs. DOE calculates 
the PBP by dividing the change in purchase cost (normally higher) due 
to a more stringent standard by the change in average annual operating 
cost (normally lower) that results from the standard.
    For any given efficiency level, DOE measures the PBP and the change 
in LCC relative to an estimate of the base-case appliance efficiency 
levels. The base-case estimate reflects the market in the absence of 
amended energy conservation standards, including the market for 
products that exceed the current energy conservation standards.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
housing units. For both the NOPR and final rule analyses, DOE developed 
household samples from the 2005 RECS. For each sampled household, DOE 
determined the energy consumption for the refrigeration product and the 
electricity price. By developing a representative sample of households, 
the analysis captured the variability in energy consumption and energy 
prices associated with the use of residential refrigeration products.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes manufacturer selling prices, retailer 
markups, and sales taxes--and installation costs. Inputs to the 
calculation of operating costs include annual energy consumption, 
energy prices and price projections, repair and maintenance costs, 
product lifetimes, discount rates, and the year that amended standards 
take effect. DOE determined the operating costs for each sampled 
household using that household's unique energy consumption and the 
household's energy price. DOE created distributions of values for some 
inputs, with probabilities attached to each value, to account for their 
uncertainty and variability. DOE used probability distributions to 
characterize product lifetime, discount rates, and sales taxes.
    The computer model DOE uses to calculate the LCC and PBP, which 
incorporates Crystal Ball (a commercially available software program), 
relies on a Monte Carlo simulation to incorporate uncertainty and 
variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and household 
samples. The model calculated the LCC and PBP for products at each 
efficiency level for 10,000 housing units per simulation run. Details 
of the spreadsheet model, and of all the inputs to the LCC and PBP 
analyses, are contained in the final rule TSD chapter 8 and its 
appendices.
    Table IV.5 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The table provides the data and 
approach DOE used for the NOPR TSD, as well as the changes made for 
today's final rule. The subsections that follow discuss the initial 
inputs and the changes DOE made to them. Unless otherwise specified, 
DOE received no comments on these inputs.

  Table IV.5--Summary of Inputs and Key Assumptions in the LCC and PBP
                               Analysis *
------------------------------------------------------------------------
                                                       Changes for the
           Inputs                     NOPR               final rule
------------------------------------------------------------------------
                             Installed Costs
------------------------------------------------------------------------
Product Cost................  Derived by            Applied a price
                               multiplying           trend to estimate
                               manufacturer cost     equipment prices in
                               by manufacturer and   2014.
                               retailer markups
                               and sales tax, as
                               appropriate.
------------------------------------------------------------------------

[[Page 57548]]

 
                             Operating Costs
------------------------------------------------------------------------
Annual Energy Use...........  Based on a multiple   Revised UAF
                               linear regression     function, raising
                               of field-metered      average UAF values
                               energy use data,      by 6 to 14 percent,
                               adjusted using a      depending on
                               UAF function based    product class.
                               on 2005 RECS
                               household
                               characteristics.
Energy Prices...............  Electricity: Based    No change.
                               on EIA's Form 861
                               data for 2007.
                              Variability:
                               Regional energy
                               prices determined
                               for 13 regions.
Energy Price Trends.........  Forecasted using      No change.
                               Annual Energy
                               Outlook 2010
                               (AEO2010).
Repair and Maintenance Costs  Used repair cost      No change.
                               estimation method
                               that estimates the
                               rate of failure for
                               selected components
                               along with the
                               incremental cost of
                               repair or
                               replacement
                               compared to the
                               baseline product.
------------------------------------------------------------------------
                 Present Value of Operating Cost Savings
------------------------------------------------------------------------
Product Lifetime............  Estimated using       No change.
                               survey results from
                               RECS (1990, 1993,
                               1997, 2001, 2005)
                               and the U.S. Census
                               American Housing
                               Survey (2005,
                               2007), along with
                               historic data on
                               appliance shipments.
                              Variability:
                               Characterized using
                               Weibull probability
                               distributions.
Discount Rates..............  Approach involves     No change.
                               identifying all
                               possible debt or
                               asset classes that
                               might be used to
                               purchase the
                               considered
                               appliances, or
                               might be affected
                               indirectly. Primary
                               data source was the
                               Federal Reserve
                               Board's SCF ** for
                               1989, 1992, 1995,
                               1998, 2001, 2004
                               and 2007.
Compliance Date of New        2014................  No change.
 Standard.
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the TSD.
** Survey of Consumer Finances.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the 
manufacturer selling prices developed in the engineering analysis by 
the supply-chain markups described in section IV.E (along with sales 
taxes). DOE used different retail markups for baseline products and 
higher-efficiency products because DOE applies an incremental markup to 
the MSP increase associated with higher-efficiency products.
    In the NOPR analysis, DOE assumed that the manufacturer selling 
prices and retail prices of products meeting various efficiency levels 
remain fixed, in real terms, after 2010 (the year for which the 
engineering analysis estimated costs) and throughout the analysis 
period. Subsequently, examination of historical price data for various 
appliances and equipment indicates that the assumption of constant real 
prices and costs may, in many cases, over-estimate long-term appliance 
and equipment price trends. Economic literature and historical data 
suggest that the real costs of these products may in fact trend 
downward over time, partially because of ``learning'' or 
``experience.'' \26\
---------------------------------------------------------------------------

    \26\ A draft paper, ``Using the Experience Curve Approach for 
Appliance Price Forecasting,'' posted on the DOE Web site at http://www.eere.energy.gov/buildings/appliance_standards, provides a 
summary of the data and literature currently available to DOE that 
is relevant to price forecasts for selected appliances and 
equipment.
---------------------------------------------------------------------------

    In light of the historical data and DOE's aim to improve the 
accuracy and robustness of its analyses, on February 22, 2011, DOE 
published a notice that discussed the approach it was considering to 
use to incorporate experience in its forecasts of product prices. 76 FR 
9696. DOE requested public comment on the potential inclusion of this 
approach for its future rulemaking activities, as well as on the merits 
of adopting this approach within the context of its ongoing rulemaking 
to set standards for refrigeration products.
    DOE received a number of comments on the merits of incorporating 
experience in its forecasts of product prices. Support for the 
inclusion of experience in appliance standards rulemakings was 
expressed by NEEP, NCLC, ACEEE, ASAP, NRDC, CFA, NEEA, and the 
IOUs.\27\ (NEEP, No. 107 at p. 2; NCLC, No. 100 at pp. 1-2; ACEEE, No. 
109 at p. 1; ASAP, No. 108 at p. 1; NRDC, No. 104 at p. 2; CFA, No. 105 
at p. 2; NEEA, No. 101 at p. 4; IOUs, No. 111 and 112 at p. 1) The 
IOUs, ASAP, NRDC, and CFA specifically noted that incorporation of an 
experience curve would align with other analyses that contribute to 
analysis of appliance standards, such as the approach used in NEMS. 
(IOUs, No. 111 and 112 at p. 1; ASAP, No. 108 at p. 2; NRDC, No. 104 at 
p. 4; CFA, No. 105 at p. 4) ASAP and NRDC included as part of their 
comments an appendix that found that the model described in the NODA 
offers appropriate methodology. (ASAP, No. 108 at p. 10; NRDC, No. 104 
at p. 5)
---------------------------------------------------------------------------

    \27\ Pacific Gas and Electric Company, Southern California Gas 
Company, and San Diego Gas and Electric submitted a joint letter, 
while Southern California Edison submitted an identical letter; 
comments from these letters are referred to as made by IOUs.
---------------------------------------------------------------------------

    DOE also received a number of comments expressing opposition to, or

[[Page 57549]]

concern with, the proposed incorporation of experience into forecasts 
of product prices. (AHAM, No. 113 at p. 1; AHRI, No. 106 at p. 2; EEI, 
No. 102 at pp. 2-5; SC, No. 110 at p. 1) The American Gas Association 
(AGA) criticized the use of experience curves, stating that the current 
approach offers better opportunities to transparently assess costs. 
(AGA, No. 115 at p. 2) Traulsen, a manufacturer of commercial 
refrigerators, contended that a price decrease for technology over time 
only holds true if market forces prevail. (Traulsen, No. 99 at p. 3)
    The comments that expressed opposition or reservation regarding 
application of the experience curve approach cited several factors. 
Ingersoll Rand noted that the experience curve is at best a heuristic 
model, and it urged more extensive examination of several points 
related to experience curves. (Ingersoll Rand, No. 103 at p. 2) AHAM 
and AHRI noted that experience curves apply only to specific products 
or companies and should not be inflated to industry wide cases. (AHAM, 
No. 113 at pp. 53-54; AHRI, No. 106 at p. 2) AGA noted that experience 
curves could be useful for some DOE regulated products at the early 
stages of development and commercialization, but would not be relevant 
to a wide range of equipment with mature designs and markets, including 
space heating and water heating. (AGA, No. 115 at p. 2) Similarly, AHAM 
stated that the experience curve came from early-stage industries, and 
at current cost reduction rates is not reliable enough to apply in 
mature industries with large cumulative production. (AHAM, No. 113 at 
p. 54) AHRI and SC noted that past performance does not necessarily 
indicate future performance, as past trends may have reached a plateau. 
(AHRI, No. 106 at pp. 2-3; SC, No. 110 at p. 2) DOE's proposed approach 
used experience curves that reflect broad industry-wide changes 
resulting from many factors. The historical data over lengthy periods 
(not only early-stage industries) suggest that experience curves are 
mathematically applicable to mature products as well as newer products. 
The historic decline in inflation-adjusted PPI of household appliances 
has slowed since 2000, but there is no evidence of a plateau.
    AHAM and AHRI opposed DOE's analysis using prices, when experience 
or experience curves are actually based on cost. (AHAM, No. 113 at p. 
55; AHRI, No. 106 at p. 3) Ingersoll Rand stated that while variable 
manufacturing costs may assume an experience curve, fixed costs and 
retail price do not. (Ingersoll Rand, No. 103 at p. 2) EEI stated that 
the primary cause of experience is outsourcing, so the domestic 
Producer Price Index (PPI) should not be used when a significant 
fraction of manufacturers are overseas. (EEI, No. 102 at pp. 3-5) In 
response, DOE acknowledges that the literature generally approaches 
these effects through the costs of production and that the price of the 
relevant good will not reflect learning as directly as the costs. This 
is because the price is a reflection of market conditions. 
Nevertheless, DOE notes that experience curves can be based on either 
cost or price, and that the historical data in the case of 
refrigerators show that real price declines occurred well before 
outsourcing became a significant factor in manufacturing. DOE does not 
attempt to forecast the impact of future outsourcing of production in 
its forecasts of appliance manufacturing costs.
    SC noted that the PPI incorporates a performance correction so it 
would not reflect a true price change. (SC, No. 110 at p. 4) EEI stated 
that refrigerators and freezers have undergone significant changes over 
the years in terms of types and features and DOE did not explain how 
they accounted for this. (EEI, No. 102 at pp. 2-3) Ingersoll Rand 
stated that product performance has changed dramatically over many 
years, and therefore it is unclear what the PPI is actually measuring. 
(Ingersoll Rand, No. 103 at p. 4) In response, DOE notes that the PPI 
includes a quality adjustment, which attempts to factor out physical 
changes in the product that affect the price.\28\ For that reason, the 
PPI is a better measure of the trends in prices than actual wholesale 
prices would be without quality adjustment.
---------------------------------------------------------------------------

    \28\ See the Bureau of Labor Statistics' Handbook of Methods 
(Chapter 14: Producer Prices). http://www.bls.gov/opub/hom/homch14.htm.
---------------------------------------------------------------------------

    DOE also received several comments related to forecasting error and 
the time period of the data used. Ingersoll Rand urged consideration of 
the expanding uncertainty band as the forecast period expands, and AHAM 
also noted that error in forecasts increases with time. (Ingersoll 
Rand, No. 103 at p. 1; AHAM, No. 113 at pp. 59-62) EEI stated that for 
refrigerators, the starting period used by DOE corresponds to a unique, 
post-war boom. (EEI, No. 102 at p. 2) SC stated that the choice of time 
period for PPI changes results. (SC, No. 110 at p. 4) In response to 
these comments, DOE conducted a sensitivity analysis that considers 
different time periods for estimating product price trends. DOE also 
notes that potentially growing forecast error is diminished by the 
discounting used in DOE's analysis.
    AHRI and Ingersoll Rand expressed concern related to products that 
use significant quantities of commodities, as these prices have been 
volatile and cannot be predicted. (AHRI, No. 106 at p. 3; Ingersoll 
Rand, No. 103 at pp. 5-6) DOE will rely on historical data to determine 
whether commodity price volatility is a concern when estimating 
experience curves for specific products.
    Some of the parties generally supporting DOE's proposed approach to 
incorporating experience into price forecasting for appliance standards 
requested specific changes to the proposed approach. ACEEE, NEEA, ASAP, 
NRDC, and the IOUs expressed concern with the proposal to assume no 
experience curve in cases with limited or no data; instead they 
recommended using scenarios or running sensitivity analyses to examine 
a range of experience rates. (ACEEE, No. 109 at p. 1; NEEA, No. 101 at 
p. 5; ASAP, No. 108 at p. 3; NRDC, No. 104. at p. 5; IOUs, No. 111 and 
112 at p. 2) EEI expressed agreement with the IOUs with respect to 
running sensitivity analyses. (EEI Supplemental Comments, No. 116 at p. 
2) ASAP and NRDC also requested that, where possible, DOE should 
attempt to analyze the more efficient models of certain products 
separately from the baseline models. (ASAP, No. 108 at p. 27; NRDC, No. 
104 at p. 31) Similarly, the IOUs suggested that separate experience 
coefficients should be used for the base case and the standards case. 
(IOUs, No. 111 and 112 at p. 2) In cases with limited or no data, DOE 
is considering using data at a higher level of aggregation to estimate 
future product prices. DOE's approach in future rulemakings will be 
based on available data. At this time DOE is not aware of data 
sufficient to separately analyze baseline models and efficient models.
    In conclusion, DOE evaluated the concerns expressed about its 
proposed approach for incorporating experience in its forecasts of 
product prices and determined that retaining an assumption-based 
approach of a constant real price trend was not consistent with the 
historical data for the products covered in this rule. In its stead, 
DOE developed a range of potential price trends that was consistent 
with the available data. For the default price trend for this final 
rule, DOE estimated an experience rate for residential refrigerators 
and freezers based on an analysis of long-term historical data. DOE 
derived a refrigerator/freezer price index from 1947 to 2010 by 
creating a hybrid index that changed proportional to PPI data

[[Page 57550]]

for the period when PPI data were available, and changed proportional 
to the relevant CPI data for the period where CPI data were available. 
DOE then divided the results by the GDP deflator for the relevant year 
to produce an inflation-adjusted index. This proxy for historic price 
data was then regressed on the quantity of refrigerators and freezers 
produced: a corresponding series for total shipments of refrigerators 
and freezers.
    To calculate an experience rate, a least-squares power-law fit was 
performed on the refrigerator/freezer price index versus cumulative 
shipments. DOE then derived an index, with 2010 equal to 1, to forecast 
prices (using PPI and CPI data as proxies) in 2014, the compliance date 
for amended energy conservation standards in the LCC and PBP analysis, 
and for the NIA, for each subsequent year through 2043. The index value 
in each year is a function of the experience rate and the cumulative 
production through that year. Projected shipments were obtained from 
the base case projections made for the NIA (see section IV.G.1 of this 
notice). The average annual rate of price decline in the default case 
is 1.87 percent. DOE applied the same index value to forecast prices 
for each group of refrigeration products at each considered efficiency 
level.
    DOE notes that experience rates may decrease over time since 
returns from experience about a single technology may diminish over 
time. As part of its sensitivity analysis, DOE included models that 
derive an experience rate based on different time periods, which may 
reflect such a ``flattening'' of the experience curve across time, as 
well as a model with an explicit term that incorporates ``flattening.'' 
These models usually incorporate the decrease in learning through a 
variable representing time. DOE includes in the suite of modeling 
results for learning in this analysis models that do and do not reflect 
such a ``flattening'' of learning across time; however, the models near 
the middle range of estimates in its analysis do reflect this effect. 
DOE will continue to explore the basis and the appropriateness of 
incorporating for compounding changing learning effects for future 
rulemaking analyses.
    For the NIA, DOE also analyzed two sensitivity cases that use a 
price trend based on an exponential in time extrapolation of 
refrigeration equipment PPI data. Because cumulative shipments for 
refrigerators can be fit to an exponential function of time for long 
time periods, the experience curve formulation and an exponential in 
time extrapolation of PPI data provide mathematically very similar 
price trend forecasts in many cases. In addition to the default price 
trend, the NIA considered a high price decline case and a low price 
decline case. See section IV.G.3 for further discussion.
    In recognition of the uncertainty regarding estimation of the 
future product price trends, DOE will continue to review the relevant 
literature and seek to continually improve and refine its methodology 
through research, enhancements to its models and by seeking public 
input. DOE will also work to ensure the robustness of its data sets as 
a means to ensure the reliability of its projections.
    For further information on the method and data sources used to 
develop price trends for residential refrigeration products, see 
appendix 8E of the final rule TSD.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. DOE did not 
include an installation cost for refrigeration products because it 
understands that this cost would be the same at all of the considered 
efficiency levels.
3. Annual Energy Consumption
    For each sampled household, DOE determined the energy consumption 
for a refrigeration product at different efficiency levels using the 
approach described above in section IV.E.
4. Energy Prices
    DOE derived average energy prices for 13 geographic areas 
consisting of the nine U.S. Census divisions, with four large States 
(New York, Florida, Texas, and California) treated separately. For 
Census divisions containing one of these large States, DOE calculated 
the regional average excluding the data for the large State.
    DOE estimated average residential electricity prices for each of 
the 13 geographic areas based on data from EIA Form 861, ``Annual 
Electric Power Industry Database.'' DOE calculated an average annual 
regional residential electricity price by: (1) Estimating an average 
residential price for each utility (by dividing the residential 
revenues by residential sales); and (2) weighting each utility by the 
number of residential consumers served in that region (based on EIA 
Form 861). DOE calculated average commercial electricity prices in a 
similar manner. For both the NOPR and final rule analyses, DOE used EIA 
data for 2007.
5. Energy Price Projections
    To estimate energy prices in future years for the NOPR, DOE 
multiplied the above average regional electricity prices by the 
forecast of annual average residential electricity price changes in the 
Reference Case using AEO2010, which has an end year of 2035.\29\ To 
estimate the electricity price trend after 2035, DOE used the average 
annual rate of change in prices from 2020 to 2035. DOE used the same 
energy price forecasts for the final rule.
---------------------------------------------------------------------------

    \29\ U.S. Energy Information Administration. Annual Energy 
Outlook 2010. Washington, DC. April 2010.
---------------------------------------------------------------------------

6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing components 
that have failed in the appliance, whereas maintenance costs are 
associated with maintaining the operation of the equipment. For the 
NOPR, DOE developed a repair cost estimation method that estimates the 
rate of failure for selected components (compressor, evaporator, 
condenser, evaporator fan, condenser fan, electronics and automatic 
icemaker). The estimated average annual repair cost for a given 
efficiency level can be expressed as the product of two elements: the 
average rate of repair of a component (expressed as an annual 
probability of failure) times the incremental cost of repair or 
replacement compared to the baseline product. DOE requested comment on 
its approach used for estimating repair costs. 75 FR at 59514 
(September 27, 2010).
    Sub Zero commented that VIPs could add repair and/or replacement 
costs that have not been adequately evaluated or estimated (Sub Zero, 
No. 69 at p. 5). However, they did not provide estimates that would 
allow DOE to modify its approach.
    Whirlpool supported DOE's approach to estimate repair costs for 
more efficient refrigerators and freezers. However, it pointed out that 
the data shown in Table IV.14 of the NOPR did not appear to be 
consistent with the logic expressed in section IV.F.6 of the NOPR. It 
added that the use of commercial refrigeration failure rates, may lead 
to inaccuracies (Whirlpool, No. 74 at pp. 5-6).
    With regard to the alleged inconsistency between Table IV.14 of the 
NOPR (75 FR at 59514 (September 27, 2010)) and the accompanying 
discussion, DOE has checked the accuracy of the table and notes that 
the table indicated only incremental repair costs, not total repair 
costs, which add between $7.66 and $21.90 depending on

[[Page 57551]]

standard-size refrigerator-freezer product class. DOE also acknowledges 
the potential inaccuracy of using commercial failure rate data, but 
notes that (a) no other data were available, and (b) these data were 
scaled downward so that the total failure rate (sum of all component 
failure rates) was equal to observed rates for residential 
refrigeration products as reported in Consumer Reports (see chapter 8 
of TSD).
    Accordingly, DOE retained the approach for the final rule. Details 
of this approach can be found in chapter 8 of the final rule TSD.
7. Product Lifetime
    Because the basis for lifetime estimates in the literature for 
refrigeration products is uncertain, DOE used other data sources to 
estimate the distribution of standard-size refrigerator and freezer 
lifetimes in the field for both the NOPR and today's final rule. By 
combining survey results from various years of RECS and the U.S. 
Census's American Housing Survey \30\ with the known history of 
appliance shipments, DOE estimated the fraction of appliances of a 
given age still in operation. The survival function, which DOE assumed 
has the form of a cumulative Weibull distribution, provides an average 
and median appliance lifetime.
---------------------------------------------------------------------------

    \30\ U.S. Census Bureau, American Housing Survey. Available at: 
http://www.census.gov/hhes/www/housing/ahs/ahs.html.
---------------------------------------------------------------------------

    For compact refrigerators, DOE estimated an average lifetime of 5.6 
years in the NOPR using data on shipments and the stock-in-place (i.e., 
the number of units in use). DOE found that, given the data on historic 
shipments of compact refrigerators, using a longer lifetime would 
result in an equipment stock that is far larger than the stock given by 
2005 RECS and EIA's 2003 Commercial Building Energy Consumption Survey. 
See chapter 8 of the final rule TSD for further details on the method 
and sources DOE used to develop product lifetimes for this final rule.
8. Discount Rates
    To establish discount rates for the LCC analysis, DOE identified 
all debt or asset classes that might be used to purchase refrigeration 
products, including household assets that might be affected indirectly. 
DOE used data from the Federal Reserve Board's ``Survey of Consumer 
Finances'' (SCF) for 1989, 1992, 1995, 1998, 2001, 2004, and 2007 to 
estimate the average percentages of the various debt and equity classes 
in the average U.S. household portfolios. DOE used SCF data and other 
sources to develop distributions of interest or return rates associated 
with each type of equity and debt. The average rate across all types of 
household debt and equity, weighted by the shares of each class, is 5.1 
percent. While this value corresponds to the average discount rate, DOE 
assigned each sample household a specific discount rate drawn from the 
distributions.
    DOE derived the discount rate for commercial-sector compact 
refrigeration products from the cost of capital of publicly-traded 
firms in the sectors that purchase those products (including lodging 
and other commercial sectors). The firms typically finance equipment 
purchases through debt and/or equity capital. DOE estimated the cost of 
the firms' capital as the weighted average of the cost of equity 
financing and the cost of debt financing for recent years for which 
data were available (2001 through 2008). The estimated average discount 
rate for companies that purchase compact refrigeration products is 6.2 
percent.
    See chapter 8 in the final rule TSD for further details on the 
development of discount rates for refrigeration products.
9. Compliance Date of Amended Standards
    In the context of EPCA, the compliance date is the future date when 
parties subject to the requirements of a new standard must begin to 
comply with that standard. As described in DOE's semi-annual 
implementation report for energy conservation standards activities 
submitted to Congress, a final rule for the refrigeration products that 
are the subject of this rulemaking is scheduled for completion. 
Compliance with amended standards for refrigeration products 
promulgated by DOE is required in 2014. DOE calculated the LCC and PBP 
for refrigeration products as if consumers would purchase new products 
in the year compliance with the standard is required.
10. Base Case Efficiency Distribution
    To accurately estimate the share of consumers that would be 
affected by a standard at a particular efficiency level, DOE's LCC 
analysis considered the projected distribution of product efficiencies 
that consumers purchase under the base case (i.e., the case without new 
energy efficiency standards). DOE refers to this distribution of 
product of efficiencies as a base-case efficiency distribution. DOE 
developed base-case efficiency distributions for each of the seven 
representative product classes. These distributions were developed from 
industry-supplied data for the year 2007 and were comprised of product 
efficiencies ranging from existing baseline levels (i.e., meeting 
existing energy conservation standards) to levels meeting and exceeding 
ENERGY STAR levels. DOE then projected these distributions to the year 
that today's standards would become effective (2014).
    DOE modified its approach for estimating base-case efficiency 
distributions for the NOPR analysis for certain product classes. DOE 
believes that, because the current ENERGY STAR efficiency level is 
higher than it was prior to the requirements established in 2008, the 
growth in market share may be slower than before due to the reduction 
in sales generally associated with higher cost, more efficient 
products. For the NOPR, DOE adopted a projected market share of ENERGY 
STAR models in 2014 (under current requirements) that is equal to the 
average of ENERGY STAR market shares in 2007 (the last year under the 
old requirements) and 2008 (when current requirements took effect). 
With this approach, the ENERGY STAR market shares for product class 3 
(refrigerator-freezer--automatic defrost with top-mounted freezer 
without through-the-door ice service) and product class 5 
(refrigerator-freezers--automatic defrost with bottom-mounted freezer 
without through-the-door ice service) are projected to grow more slowly 
between 2008 and 2014 than they had under the old requirements before 
2008. ENERGY STAR products reach a market share in 2014 of 8 percent 
for product class 3 and 68 percent for bottom-mount refrigerator-
freezers.
    DOE requested comment on its approach for estimating base case 
efficiency distributions. 75 FR at 59515 (September 27, 2010). 
Whirlpool stated it had no comment on the approach (Whirlpool, No. 74 
at p. 6), and no other comments were received. In light of the absence 
of any comments on its approach, DOE maintained the same approach for 
the final rule as it used in the NOPR for all of the product classes. 
For further information on DOE's estimate of base-case efficiency 
distributions, see chapter 8 of the final rule TSD.
11. Inputs To Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more-efficient products, 
compared to baseline products, through energy cost savings.

[[Page 57552]]

The simple payback period does not account for changes in operating 
expense over time or the time value of money. Payback periods are 
expressed in years. Payback periods that exceed the life of the product 
indicate that the increased total installed cost is not recovered in 
reduced operating expenses.
    The inputs to the PBP calculation are the total installed cost of 
the equipment to the customer for each efficiency level and the average 
annual operating expenditures for each efficiency level. The PBP 
calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
12. Rebuttable-Presumption Payback Period
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard is economically justified if the Secretary 
finds that the additional cost to the consumer of purchasing a product 
complying with an energy conservation standard level will be less than 
three times the value of the energy (and, as applicable, water) savings 
during the first year that the consumer will receive as a result of the 
standard, as calculated under the test procedure in place for that 
standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency 
level, DOE determined the value of the first year's energy savings by 
calculating the quantity of those savings in accordance with the 
applicable DOE test procedure, and multiplying that amount by the 
average energy price forecast for the year in which compliance with the 
amended standard would be required.

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

    The national impact analysis (NIA) assesses the national energy 
savings (NES) and the national net present value (NPV) of total 
consumer costs and savings that would be expected to result from new or 
amended standards at specific efficiency levels. (``Consumer'' in this 
context refers to consumers of the product being regulated.) DOE 
calculates the NES and NPV based on projections of annual appliance 
shipments, along with the annual energy consumption and total installed 
cost data from the energy use and LCC analyses. For the present 
analysis, DOE forecasted the energy savings, operating cost savings, 
product costs, and NPV of consumer benefits for products sold from 2014 
through 2043.
    DOE evaluates the impacts of new and amended standards by comparing 
base-case projections with standards-case projections. The base-case 
projections characterize energy use and consumer costs for each product 
class in the absence of new or amended energy conservation standards. 
DOE compares these projections with projections characterizing the 
market for each product class if DOE adopted new or amended standards 
at specific energy efficiency levels (i.e., the TSLs or standards 
cases) for that class. For the base case forecast, DOE considers 
historical trends in efficiency and various forces that are likely to 
affect the mix of efficiencies over time. For the standards cases, DOE 
also considers how a given standard would likely affect the market 
shares of efficiencies greater than the standard.
    To make the analysis more accessible and transparent to all 
interested parties, DOE uses an MS Excel spreadsheet model to calculate 
the energy savings and the national consumer costs and savings from 
each TSL.\31\ The TSD and other documentation that DOE provides during 
the rulemaking help explain the models and how to use them, and 
interested parties can review DOE's analyses by changing various input 
quantities within the spreadsheet. The NIA spreadsheet model uses 
typical values as inputs (as opposed to probability distributions).
---------------------------------------------------------------------------

    \31\ MS Excel is the most widely used spreadsheet calculation 
tool in the United States and there is general familiarity with its 
basic features. Thus, DOE's use of MS Excel as the basis for the 
spreadsheet models provides interested parties with access to the 
models within a familiar context.
---------------------------------------------------------------------------

    For the current analysis, the NIA used projections of energy prices 
and housing starts from the AEO2010 Reference case. In addition, DOE 
analyzed scenarios that used inputs from the AEO2010 Low Economic 
Growth and High Economic Growth cases. These cases have higher and 
lower energy price trends compared to the Reference case, as well as 
higher and lower housing starts, which result in higher and lower 
appliance shipments to new homes. NIA results based on these cases are 
presented in appendix 10-A of the final rule TSD.
    Table IV.6 summarizes the inputs and key assumptions DOE used for 
the NIA analysis contained in the overall NOPR analysis and the changes 
to the analyses for the final rule. Discussion of these inputs and 
changes follows the table. See chapter 10 of the final rule TSD for 
further details.

   Table IV.6--Approach and Data Used for National Energy Savings and
                   Consumer Net Present Value Analyses
------------------------------------------------------------------------
                                                       Changes for the
           Inputs                     NOPR               final rule
------------------------------------------------------------------------
Shipments...................  Annual shipments      No change.
                               from shipments
                               model, using 2008
                               data to estimate
                               the ratio of bottom-
                               mount share to side-
                               by-side share.
Compliance Date of Standard.  2014................  No change.
Base-Case Forecasted          Used a ``roll-up +    No change.
 Efficiencies.                 ENERGY STAR''
                               scenario to
                               establish the
                               distribution of
                               efficiencies.
Standards-Case Forecasted     Used a ``roll-up +    No change.
 Efficiencies.                 ENERGY STAR''
                               scenario to
                               establish the
                               distribution of
                               efficiencies.
Annual Energy Consumption     Annual weighted-      No change.
 per Unit.                     average values as a
                               function of SWEUF *.
Total Installed Cost per      Annual weighted-      Applied a price
 Unit.                         average values as a   trend to estimate
                               function of SWEUF *.  future product
                                                     prices.
Energy Cost per Unit........  Annual weighted-      No change.
                               average values as a
                               function of the
                               annual energy
                               consumption per
                               unit and energy
                               prices.
Repair and Maintenance Cost   Annual values as a    No change.
 per Unit.                     function of
                               efficiency level.
Escalation of Energy Prices.  AEO2010 forecasts     No change.
                               (to 2035) and
                               extrapolation
                               through 2043.
Energy Site-to-Source         Varies yearly and is  No change.
 Conversion Factor.            generated by DOE/
                               EIA's NEMS.

[[Page 57553]]

 
Discount Rate...............  Three and seven       No change.
                               percent real.
Present Year................  Future expenses are   No change.
                               discounted to 2010.
------------------------------------------------------------------------
* Shipments-Weighted Energy Use Factor.

1. Shipments
    Forecasts of product shipments are needed to calculate the national 
impacts of standards on energy use, NPV, and future manufacturer cash 
flows. DOE develops shipment forecasts based on an analysis of key 
market drivers for each considered product. In DOE's shipments model, 
product shipments are driven by new construction, stock replacements, 
and other types of purchases. The shipments models take an accounting 
approach, tracking market shares of each product class and the vintage 
of units in the existing stock. Stock accounting uses product shipments 
as inputs to estimate the age distribution of in-service product stocks 
for all years. The age distribution of in-service product stocks is a 
key input to calculations of both the NES and NPV, because operating 
costs for any year depend on the age distribution of the stock. DOE 
also considers the impacts on shipments from changes in product 
purchase price and operating cost associated with higher energy 
efficiency levels.
    In projecting shipments for refrigeration products, DOE accounted 
for installations in new homes and replacement of failed equipment. In 
addition, for standard-size refrigerator-freezers, DOE estimated 
purchases driven by the conversion of a first refrigerator to a second 
refrigerator. It also estimated purchases by existing household 
consumers who enter the market as new owners for standard-size 
freezers.
    In conducting the analysis for today's rule, DOE examined the 
historical trends in the market shares of different refrigerator-
freezer configurations to disaggregate the total shipments of 
refrigerator-freezers into the three considered refrigerator-freezer 
product categories (top-mount, bottom-mount and side-by-side 
configurations). The market share of side-by-side refrigerator-freezer 
models has grown significantly during the past two decades. Bottom-
freezer models historically had a small market share, but that share 
has also grown in recent years. However, because DOE had insufficient 
data to forecast long-term growth of this product class, it made the 
assumption, based on past sales trends, that consumer behavior related 
to bottom-mount models in the future would mirror behavior regarding 
side-by-side models. DOE developed a model to forecast the combined 
bottom-mount and side-by-side market shares throughout the 30-year 
forecast period (beginning in 2014), and assumed that the ratio of 
bottom-mount share to side-by-side share would remain constant at the 
2008 level (the last year for which DOE had disaggregated data).
    To estimate the effects on product shipments from increases in 
product price projected to accompany amended standards at higher 
efficiency levels, DOE applied a price elasticity parameter. It 
estimated this parameter with a regression analysis that used purchase 
price and efficiency data specific to residential refrigerators, 
clothes washers, and dishwashers over the period 1980-2002. The 
estimated ``relative price elasticity'' incorporates the impacts from 
purchase price, operating cost, and household income, and it also 
declines over time. DOE estimated shipments in each standards case 
using the relative price elasticity along with the change in the 
relative price between a standards case and the base case. For details 
on the shipments analysis, see chapter 9 of the final rule TSD.
2. Forecasted Efficiency in the Base Case and Standards Cases
    A key component of the NIA is the trend in energy efficiency 
forecasted for the base case (without new or amended standards) and 
each of the standards cases. Section IV.X described how DOE developed a 
base-case energy efficiency distribution (which yields a shipment-
weighted average efficiency) for each of the considered product classes 
for the first year of the forecast period. Based on recent trends, DOE 
assumed no improvement of energy efficiency in the base case and held 
the base-case energy efficiency distribution constant throughout the 
forecast period.
    To estimate efficiency trends in the standards cases, DOE used a 
``roll-up'' scenario in its standards rulemakings. Under the ``roll-
up'' scenario, DOE assumes: (1) Product efficiencies in the base case 
that do not meet the standard level under consideration would ``roll-
up'' to meet the new standard level; and (2) product efficiencies above 
the standard level under consideration would not be affected.
    For the NOPR, DOE refined its forecast for the base case and each 
of the standards cases using information obtained from ENERGY STAR 
program staff. To project the efficiency distributions after 2014 for 
the base case, DOE first considered the potential for changes to the 
ENERGY STAR qualification levels. DOE assumed that, in the absence of a 
new standard, the ENERGY STAR program would re-examine and possibly 
revise its qualification levels regardless of the market share in 2014. 
When setting a minimum product efficiency level to qualify for ENERGY 
STAR, one important metric is that the average payback period compared 
to the current standard level should not exceed five years. Using the 
payback period calculation described in section IV.F, DOE applied this 
criterion to all product classes to evaluate the extent to which the 
current ENERGY STAR efficiency levels would be increased in the future.
    DOE then estimated the market shares for ENERGY STAR products in 
2021 based on past experience in the market for these products. Rather 
than make long-term projections based on limited information, DOE 
assumed there would be no further change in market shares between 2021 
and the end of the forecast period. DOE recognizes that some change in 
shares is likely to occur in reality. However, since DOE used the same 
assumption in the standards cases, the accuracy of the assumption makes 
no difference to the analysis of energy savings.
    For the standards cases (also referred to as candidate standard 
levels, or CSLs), DOE used the same approach as for the base case and 
assumed that in the case of amended standards, the ENERGY STAR program 
would re-evaluate its qualifying levels for all product classes using 
the five-year payback period criterion. For each CSL, DOE identified 
the maximum efficiency level with a payback period of five years or 
less. If that level was below the current ENERGY STAR level, DOE 
maintained the current ENERGY STAR

[[Page 57554]]

level. At higher CSLs, there is no efficiency level above the standard 
level with a payback period of less than 5 years. DOE assumed that the 
ENERGY STAR program would be suspended with standards at higher CSLs on 
a product-class specific basis. This result is projected to occur for 
all product classes at CSL 3 and above; for product classes 9 (upright 
freezers with automatic defrost) and 10 (chest freezers and all other 
freezers except compact freezers), it occurs at lower CSLs. The market 
share estimates for ENERGY STAR products in 2021 and beyond were based 
on a similar approach as for the base case.
    DOE requested comment on its approach for forecasting base case and 
standards case efficiency distributions. 75 FR at 59518 (September 27, 
2010). Whirlpool stated it had no comment on the approach (Whirlpool, 
No. 74 at p. 6), and no other comments were received. As a result, DOE 
retained its approach for the final rule. For further details about the 
forecasted efficiency distributions, see chapter 10 of the final rule 
TSD.
3. Installed Cost per Unit
    In the NOPR analysis, DOE followed its past practice and assumed 
that the manufacturer costs and retail prices of products meeting 
various efficiency levels remain fixed, in real terms, after 2008 (the 
year for which the engineering analysis estimated costs) and throughout 
the period of the analysis. As discussed in section IV.F.1, for the 
final rule DOE used a price trend based on an experience curve derived 
using historical data on shipments and refrigeration equipment PPI. DOE 
applied the same price trend to forecast prices for each group of 
refrigeration products at each considered efficiency level. The average 
projected annual rate of price decline in the default case is 1.87 
percent.
    For the NIA, DOE also analyzed two cases that use a price trend 
based on an exponential in time extrapolation of refrigeration 
equipment PPI data. DOE selected a high projected price trend decline 
case and a low projected price trend decline case from among a number 
of price trends that it analyzed (see appendix 8E of the final rule 
TSD). The high projected price trend decline case is based on the upper 
end of the 95 percent confidence interval for an exponential fit to the 
PPI series in 1991-2010 divided by the relevant GDP deflator data from 
those years. The low projected price trend decline case is based on the 
lower end of the 95 percent confidence interval for an exponential fit 
to the PPI series in 1976-2010 before dividing it by the relevant GDP 
deflator data from those years. The annual rate of projected price 
trend decline is 3.12 percent in the high projected price trend decline 
case and 1.14 percent in the low projected price trend decline case.
4. Site-to-Source Energy Conversion
    For each year in the forecast period, DOE calculates the NES for 
each standard level by multiplying the stock of equipment affected by 
the energy conservation standards by the per-unit annual energy 
savings.
    To estimate the national energy savings expected from appliance 
standards, DOE uses a multiplicative factor to convert site energy 
consumption (at the home or commercial building) into primary or source 
energy consumption (the energy required to convert and deliver the site 
energy). These conversion factors account for the energy used at power 
plants to generate electricity and losses in transmission and 
distribution, as well as for natural gas losses from pipeline leakage 
and energy used for pumping. For electricity, the conversion factors 
vary over time due to projected changes in generation sources (i.e., 
the power plant types projected to provide electricity to the country). 
The factors that DOE developed are marginal values, which represent the 
response of the system to an incremental decrease in consumption 
associated with appliance standards.
    For the NOPR and today's final rule, DOE updated its annual site-
to-source conversion factors based on the version of NEMS that 
corresponds to AEO2010, which provides energy forecasts through 2035. 
For 2036-2043, DOE used conversion factors that remain constant at the 
2035 values.
    In response to a request from DOE's Office of Energy Efficiency and 
Renewable Energy (EERE), the National Academy of Sciences (NAS), 
appointed a committee on ``Point-of-Use and Full-Fuel-Cycle Measurement 
Approaches to Energy Efficiency Standards'' to conduct a study required 
by section 1802 of the Energy Policy Act of 2005 (Pub. L. 109-58 
(August 8, 2005)). The fundamental task before the committee was to 
evaluate the methodology used for setting energy efficiency standards 
and to comment on whether site (point-of-use) or source (full-fuel-
cycle) measures of energy savings would better support rulemaking 
efforts to achieve energy conservation goals. The NAS committee defined 
full-fuel-cycle energy consumption as including, in addition to site 
energy use, the following: energy consumed in the extraction, 
processing, and transport of primary fuels such as coal, oil, and 
natural gas; energy losses in thermal combustion in power generation 
plants; and energy losses in transmission and distribution to homes and 
commercial buildings.\32\
---------------------------------------------------------------------------

    \32\ The National Academies, Board on Energy and Environmental 
Systems, Letter to Dr. John Mizroch, Acting Assistant Secretary, 
U.S. DOE, Office of EERE from James W. Dally, Chair, Committee on 
Point-of-Use and Full-Fuel-Cycle Measurement Approaches to Energy 
Efficiency Standards, May 15, 2009.
---------------------------------------------------------------------------

    In evaluating the merits of using point-of-use and full-fuel-cycle 
measures, the NAS committee noted that DOE uses what the committee 
referred to as ``extended site'' energy consumption to assess the 
impact of energy use on the economy, energy security, and environmental 
quality. The extended site measure of energy consumption includes the 
energy consumed during the generation, transmission, and distribution 
of electricity but, unlike the full-fuel-cycle measure, does not 
include the energy consumed in extracting, processing, and transporting 
primary fuels. A majority of the NAS committee concluded that extended 
site energy consumption understates the total energy consumed to make 
an appliance operational at the site. As a result, the NAS committee 
recommended that DOE consider shifting its analytical approach over 
time to use a full-fuel-cycle measure of energy consumption when 
assessing national and environmental impacts, especially with respect 
to the calculation of greenhouse gas emissions. The NAS committee also 
recommended that DOE provide more comprehensive information to the 
public through labels and other means, such as an enhanced Web site. 
For those appliances that use multiple fuels (e.g., water heaters), the 
NAS committee indicated that measuring full-fuel-cycle energy 
consumption would provide a more complete picture of energy consumed 
and permit comparisons across many different appliances, as well as an 
improved assessment of impacts.
    In response to the NAS recommendations, DOE issued, on August 20, 
2010, (75 FR 51423), a Notice of Proposed Policy proposing to 
incorporate a full-fuel cycle analysis into the methods it uses to 
estimate the likely impacts of energy conservation standards on energy 
use and emissions. Specifically, DOE proposed to use full-fuel-cycle 
(FFC) measures of energy and greenhouse gas (GHG) emissions, rather 
than the primary (extended site) energy measurement it currently uses. 
Additionally, DOE proposed to work collaboratively with the Federal 
Trade Commission (FTC) to make FFC energy

[[Page 57555]]

and GHG emissions data available to the public to enable consumers to 
make cross-class comparisons. On October 7, 2010, DOE held an informal 
public meeting to discuss and receive comments on its planned approach. 
The materials related to this proposed policy are available at: http://www.regulations.gov/search/Regs/home.html#docketDetail?R=EERE-2010-BT-NOA-0028. Following the close of the public comment period, DOE intends 
to develop a final policy statement on these subjects and then take 
steps to begin implementing that policy in rulemakings and other 
activities that are undertaken during 2011.
5. Discount Rates
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers of the considered appliances are: (1) Total 
annual installed cost, (2) total annual savings in operating costs, and 
(3) a discount factor. DOE calculates net savings each year as the 
difference between the base case and each standards case in total 
savings in operating costs and total increases in installed costs. DOE 
calculates operating cost savings over the life of each product shipped 
in the forecast period.
    DOE multiplies the net savings in future years by a discount factor 
to determine their present value. For today's final rule, DOE estimated 
the NPV of appliance consumer benefits using both a 3-percent and a 7-
percent real discount rate. DOE uses these discount rates in accordance 
with guidance provided by the Office of Management and Budget (OMB) to 
Federal agencies on the development of regulatory analysis.\33\ The 
discount rates for the determination of NPV are in contrast to the 
discount rates used in the LCC analysis, which are designed to reflect 
a consumer's perspective. The 7-percent real value is an estimate of 
the average before-tax rate of return to private capital in the U.S. 
economy. The 3-percent real value represents the ``societal rate of 
time preference,'' which is the rate at which society discounts future 
consumption flows to their present value.
---------------------------------------------------------------------------

    \33\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs. Available at: http://www.whitehouse.gov/omb/memoranda/m03-21.html.
---------------------------------------------------------------------------

6. Benefits From Effects of Standards on Energy Prices
    A decrease in electricity consumption associated with amended 
standards for refrigeration products could reduce the electricity 
prices charged to consumers in all sectors of the economy and thereby 
reduce their electricity expenditures. In chapter 2 of the preliminary 
analysis TSD, DOE explained that, because the power industry is a 
complex mix of fuel and equipment suppliers, electricity producers and 
distributors, it did not plan to estimate the value of potentially 
reduced electricity costs for all consumers associated with amended 
standards for refrigeration products. In response, the Northeast Energy 
Efficiency Partnerships urged DOE to quantify electricity demand 
reductions achieved by these updated standards in financial terms. 
(NEEP, No. 41 at p. 1)
    For the NOPR and today's final rule, DOE used NEMS-BT to assess the 
impacts of the reduced need for new electric power plants and 
infrastructure projected to result from standards. In NEMS-BT, changes 
in power generation infrastructure affect utility revenue requirements, 
which in turn affect electricity prices. DOE estimated the impact on 
electricity prices associated with each considered TSL. Although the 
aggregate benefits for electricity users are potentially large, there 
may be negative effects on some of the actors involved in the supply of 
electricity, particularly power plant providers and fuel suppliers. 
Because there is uncertainty about the extent to which the benefits for 
electricity users from reduced electricity prices would be a transfer 
from actors involved in electricity supply to electricity consumers, 
DOE has concluded that, at present, because of this uncertainty, it 
should not give a heavy weight to this factor in its consideration of 
the economic justification of new or amended standards. DOE is 
continuing to investigate the extent to which electricity price changes 
projected to result from standards represent a net gain to society.

H. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable sub-groups of 
consumers that may be disproportionately affected by a national 
standard. DOE evaluates impacts on particular sub-groups of consumers 
primarily by analyzing the LCC impacts and PBP for those particular 
consumers from alternative standard levels. For both the NOPR and 
today's final rule, DOE analyzed the impacts of the considered standard 
levels on low-income consumers and senior citizens. DOE did not 
estimate the impacts for compact refrigeration products because the 
household sample sizes were not large enough to yield meaningful 
results. For further details on DOE's consumer sub-group analysis, see 
Chapter 11 in the final rule TSD.

I. Manufacturer Impact Analysis

    DOE conducted the MIA to estimate the financial impact of amended 
energy conservation standards on manufacturers of residential 
refrigeration products, and to assess the impacts of such standards on 
employment and manufacturing capacity.
    The MIA is both a quantitative and qualitative analysis. The 
quantitative part of the MIA relies on the Government Regulatory Impact 
Model (GRIM), an industry cash-flow model customized for the 
residential refrigeration products covered in this rulemaking. The key 
MIA output is industry net present value (INPV). DOE used the GRIM to 
calculate cash flows using standard accounting principles and to 
compare changes in INPV between a base case and various TSLs (the 
standards cases). The difference in INPV between the base and standards 
cases represents the financial impact of the amended standard on 
manufacturers. Different sets of assumptions (scenarios) produce 
different results. DOE reports the MIA impacts of amended energy 
conservation standards by grouping together the impacts on 
manufacturers of certain product classes. DOE presents the industry 
impacts by the major product types (i.e., standard size refrigerator-
freezers, standard size freezers, compact refrigerators and freezers, 
and built-in refrigeration products). These product groupings represent 
markets that are served by the same manufacturers. By segmenting the 
results into these product types, DOE is able to discuss how these 
subgroups of manufacturers will be impacted by amended energy 
conservation standards.
    The qualitative part of the MIA addresses factors such as product 
characteristics, characteristics of particular firms, and market 
trends. The qualitative discussion also includes an assessment of the 
impacts of standards on subgroups of manufacturers. DOE outlined its 
complete methodology for the MIA in the NOPR. 75 FR at 59519-59526 
(September 27, 2010). The complete MIA is presented in chapter 12 of 
the NOPR and final rule TSD.
1. Comments From Interested Parties
    DOE received a number of comments from interested parties in 
response to the NOPR. Sub Zero commented that while it is not a small 
business, it is a small refrigerator manufacturer

[[Page 57556]]

compared to its competition. It argued that its smaller size places it 
at a disadvantage compared to larger competitors with respect to the 
supply chain for compressors, which could cause Sub Zero to experience 
supply disruptions that would seriously impact their business and 
ability to compete. (Sub Zero, No. 69 at p. 3) Sub Zero added that its 
cost and distribution structures are different from the majority of the 
industry, and its small scale results in higher costs per unit 
production, including engineering related expenses. (Sub Zero, No. 69 
at p. 2) Sub Zero commented that the new standards on smaller 
manufacturers in any segment of the appliance industry introduce costs 
and personnel requirements that represent a larger percentage of 
resources than those required by larger competitors. (Sub Zero, No. 69 
at p. 3) Whirlpool simply stated that it was not a small business and 
offered no comment on the proposal's impact on small manufacturers. 
(Whirlpool, No. 74 at p. 6)
    DOE agrees that a smaller manufacturer could face all of the 
additional challenges raised by Sub Zero relative to a larger 
competitor. DOE also notes that while many larger refrigerator 
manufacturers also produce built-in units and could experience some 
benefits in the built-in market from their overall scale, built-in 
production volumes for any manufacturer are likely to be much lower for 
built-in products than free-standing products. While a smaller 
manufacturer could face all the challenges listed by Sub Zero, DOE 
believes that the separate analysis and presentation of results for 
built-in products adequately addresses Sub Zero's concerns about the 
potential impacts on built-in manufacturers. DOE continues to believe 
that presenting the built-in analysis results separately from other 
categories is the most appropriate way to analyze the lower production 
volumes and different cost structure for built-in manufacturing.
    In the NOPR, DOE investigated whether small business manufacturers 
should be analyzed as a manufacturer subgroup. 75 FR at 59520, 59548 
(September 27, 2010). As part of this effort, DOE identified one 
company that manufactures products covered by this rulemaking and 
qualifies as a small business under the applicable Small Business 
Administration (SBA) definition.\34\ DOE did not analyze a separate 
subgroup of small business manufacturers in the NOPR because it 
determined this rulemaking would not have a significant economic impact 
on a substantial number of small entities. Id. at 59571-59572. DOE 
requested comment on this determination and sought any information 
concerning small businesses that could be impacted by this rulemaking 
as well as the nature and extent of those potential impacts of the 
proposed energy conservation standards on small residential 
refrigeration product manufacturers. Id. at 59572 and 59575. DOE 
received no information regarding these issues. DOE received comments 
from Whirlpool and Sub Zero that supported its initial classification 
of the number of small business manufacturers of residential 
refrigeration products. (Whirlpool No. 74, at p. 6; Sub Zero, No. 69 at 
p. 3) Therefore, the final rule continues to refrain from treating 
small business manufacturers as a manufacturer subgroup but also 
maintains the separate analysis and presentation of results for built-
in products.
---------------------------------------------------------------------------

    \34\ See http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf for a list of SBA size standards.
---------------------------------------------------------------------------

    Sub Zero also commented that the proposed standards would have 
implications for their company. At the proposed built-in standard 
levels, it asserted that the company will be pressed to meet the 
necessary efficiency levels, remain a viable business, and achieve 
profitability. Sub Zero also argued that the new standards could also 
impact the number of products that meet high visibility programs such 
as ENERGY STAR and indicated that these challenges are in addition to 
attempting to recover from a difficult business environment. Sub Zero 
added that different regulations in other areas of the world, notably 
Canada and Europe, that involve more than energy and are not harmonized 
with U.S. requirements, pose significant challenges and noted that this 
regulatory burden is the biggest challenge for the future. (Sub Zero, 
No. 69 at p. 3) Sub Zero agreed that DOE's analysis presented in the 
NOPR confirms that new standards will impact built-in designs more 
stringently than conventional free-standing products to meet any given 
efficiency level. Sub Zero stated it was also concerned that built-ins 
be separated as distinct product classes with different efficiency 
levels from conventional product classes, in order to continue to offer 
consumers the utility they desire at reasonable added costs. (Sub Zero, 
No. 69 at pp. 1-2)
    DOE agrees that manufacturers such as Sub Zero face challenges. For 
example, because Sub Zero holds a large market share of the premium, 
built-in market, DOE expects that a significant portion of the $65 
million in product conversion costs and $55 million in capital 
conversion costs calculated for built-in product classes will be borne 
by Sub Zero. However, DOE believes that the INPV impacts calculated in 
the MIA analyze the potential impacts on built-in manufacturers due to 
amended energy conservation standards. This adjustment, along with 
providing separate product classes for built-in products to help 
preserve the utility that these products offer, will help mitigate the 
potential adverse financial impact that would result from this rule.
    DOE also received a number of comments about possible refrigerant 
and blowing agent changes. Whirlpool, GE, and AHAM all noted possible 
changes to the regulatory landscape for the refrigerants available in 
residential refrigeration products. (Whirlpool, No. 74 at p. 4; GE, No. 
76 at p. 2; AHAM, No. 73 at pp. 7-8) Sub Zero also highlighted the 
current uncertainty about potential future regulation of HFC 
refrigerants and blowing agents. It suggested that the industry could 
potentially be faced with enforced conversion to other substances by 
2014, which would require significant additional capital investment. 
(Sub Zero, No. 69 at p. 4)
    These comments are addressed above in section 0. Because these 
comments also relate to the cumulative regulatory burden, DOE 
reiterates that it concluded isobutane products may soon become 
available. However, DOE did not consider the switch to isobutane 
refrigerant as a design option to reduce energy use because sufficient 
information regarding the energy savings characteristics and the costs 
of the new designs was not available. DOE did not consider the possible 
capital investment needed by conversions to other substances by 2014 
because DOE believes that basing energy conservation standards on the 
uncertain prospect of pending regulations or legislation would be 
speculative.
2. GRIM Key Inputs
    The GRIM inputs are data characterizing the industry cost 
structure, investments, shipments, and markups. DOE updates the MIA to 
reflect changes in the outputs of two other key DOE analyses that feed 
into the GRIM: The engineering analysis and the NIA. For the final 
rule, DOE did not receive any relevant comments that would necessitate 
such changes to the engineering analysis. Similarly, DOE did not 
receive comments from interested parties that would change assumptions 
or shipments in the NIA. DOE did not request specific comment

[[Page 57557]]

on the inputs to the MIA in the NOPR and is maintaining the same 
methodology for the final rule.
    For the final rule, DOE incorporated trends in prices over time 
into the analysis. These prices trends in every year also impact the 
MIA results. DOE used the same price trends in the NIA from the base 
year of the analysis through the end of the analysis period. DOE also 
assumed that manufacturer product costs (MPCs) and MSPs were similarly 
impacted by the price trends in both the base case and standards cases. 
See section 0 for a description of how DOE implemented price trends 
into the analysis. The other major GRIM assumptions and inputs that are 
not part of the engineering analysis or NIA are outlined below.
a. Product and Capital Conversion Costs
    Amended energy conservation standards will cause manufacturers to 
incur one-time conversion costs to bring their production facilities 
and product designs into compliance. For the MIA, DOE classified these 
one-time conversion costs into two major groups: (1) Product conversion 
costs and (2) capital conversion costs. Product conversion costs are 
one-time investments in research, development, testing, marketing, and 
other non-capitalized costs focused on making product designs comply 
with the amended energy conservation standard. Capital conversion costs 
are one-time investments in property, plant, and equipment to adapt or 
change existing production facilities so that new product designs can 
be fabricated and assembled.
    DOE based its estimates of the product conversion costs that would 
be required to meet each TSL on information obtained from manufacturer 
interviews, the design pathways analyzed in the engineering analysis, 
and market information about the number of platform and product 
families for each manufacturer. DOE based its capital conversion cost 
estimates on manufacturer interviews and assumptions from the 
engineering analysis. 75 FR at 59521 (September 27, 2010). DOE's 
estimates of the product and capital conversion costs for all of the 
refrigeration products addressed in this rulemaking can be found in 
section 0, of today's final rule and in chapter 12 of the final rule 
TSD.
b. Markup Scenarios
    For the MIA, DOE modeled two standards-case markup scenarios to 
represent the uncertainty regarding the potential impacts on prices and 
profitability for manufacturers following the implementation of amended 
energy conservation standards: (1) A flat markup scenario, and (2) a 
preservation of operation profit scenario. These scenarios lead to 
different markup values, which, when applied to the inputted MPCs, 
result in varying revenue and cash flow impacts.
    The flat markup scenario assumes that the cost of goods sold for 
each product is marked up by a flat percentage to cover standard SG&A 
expenses, R&D expenses, and profit. This scenario represents the upper 
bound of industry profitability in the standards case because 
manufacturers are able to fully pass through to their customers the 
additional costs due to compliance with applicable standards. DOE also 
modeled the preservation of operating profit markup scenario. In this 
scenario, the manufacturer markups are lowered such that, in the 
standards case, manufacturers are only able to maintain the base-case 
total operating profit in absolute dollars, despite higher product 
costs and investment. DOE implemented this scenario in GRIM by lowering 
the manufacturer markups at each TSL to yield approximately the same 
earnings before interest and taxes in the standards case in the year 
after the compliance date of the amended standards as in the base case. 
This scenario represents the lower bound of industry profitability 
following amended energy conservation standards because higher MPCs and 
the investments required to comply with the amended energy conservation 
standard do not yield additional operating profit. 75 FR at 59522 
(September 27, 2010).
3. Manufacturer Interviews
    DOE interviewed manufacturers representing more than 95 percent of 
standard-size refrigerator-freezer sales, approximately 95 percent of 
standard-size freezer sales, about 75 percent of compact refrigerator 
and freezer sales, and more than 95 percent of built-in refrigeration 
products. These interviews were in addition to those DOE conducted as 
part of the engineering analysis. DOE outlined the key issues in the 
rulemaking for manufacturers in the NOPR. 75 FR at 59524-59526 
(September 27, 2010).

J. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting an amended standard. Employment impacts consist of 
direct and indirect impacts. Direct employment impacts are any changes 
in the number of employees of manufacturers of the appliance products 
that are the subject of this rulemaking, their suppliers, and related 
service firms. Indirect employment impacts are changes in national 
employment that occur due to the shift in expenditures and capital 
investment caused by the purchase and operation of more-efficient 
appliances. The MIA addresses the direct employment impacts that 
concern manufacturers of refrigeration products. The employment impact 
analysis addresses the indirect employment impacts.
    Indirect employment impacts from standards consist of the net jobs 
created or eliminated in the national economy, other than in the 
manufacturing sector being regulated, due to: (1) Reduced spending by 
end users on energy; (2) reduced spending on new energy supplies by the 
utility industry; (3) increased spending on new products to which the 
new standards apply; and (4) the effects of those three factors 
throughout the economy. DOE expects the net monetary savings from 
standards to be redirected to other forms of economic activity. DOE 
also expects these shifts in spending and economic activity to affect 
the demand for labor in the short term, as explained below.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sectoral 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\35\ 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. 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.\36\
---------------------------------------------------------------------------

    \35\ 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 e-mail to dipsweb@bls.gov. Available at: http://www.bls.gov/news.release/prin1.nr0.htm.
    \36\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

    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

[[Page 57558]]

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 refrigeration products.
    For the standards considered in today's final rule, DOE estimated 
indirect national employment impacts using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies (ImSET). ImSET 
is a spreadsheet model of the U.S. economy that focuses on 187 sectors 
most relevant to industrial, commercial, and residential building 
energy use.\37\ ImSET is a special purpose version of the ``U.S. 
Benchmark National Input-Output'' (I-O) model, which has been designed 
to estimate the national employment and income effects of energy-saving 
technologies. The ImSET software includes a computer-based I-O model 
with structural coefficients to characterize economic flows among the 
187 sectors. ImSET's national economic I-O structure is based on a 2002 
U.S. benchmark table, specially aggregated to the 187 sectors. DOE 
estimated changes in expenditures using the NIA spreadsheet. Using 
ImSET, DOE then estimated the net national, indirect employment impacts 
by sector of potential amended efficiency standards for refrigeration 
products.
---------------------------------------------------------------------------

    \37\ 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: http://www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf.
---------------------------------------------------------------------------

    For more details on the employment impact analysis, see the final 
rule TSD, chapter 13.

K. Utility Impact Analysis

    The utility impact analysis estimates several important effects on 
the utility industry that would result from the adoption of new or 
amended standards. For both the NOPR final rule analyses, DOE used the 
NEMS-BT model to generate forecasts of electricity consumption, 
electricity generation by plant type, and electric generating capacity 
by plant type, that would result from each TSL. DOE obtained the energy 
savings inputs associated with efficiency improvements to considered 
products from the NIA. DOE conducts the utility impact analysis as a 
scenario that departs from the latest AEO2010 Reference case. In other 
words, the estimated impacts of an amended standard are the differences 
between values forecasted by NEMS-BT and the values in the AEO2010 
Reference case.
    As part of the utility impact analysis, DOE used NEMS-BT to assess 
the impacts on electricity prices of the reduced need for new electric 
power plants and infrastructure projected to result from the considered 
standards. In NEMS-BT, changes in power generation infrastructure 
affect utility revenue requirements, which in turn affect electricity 
prices. DOE estimated the change in electricity prices projected to 
result over time from each TSL.
    Chapter 14 of the final rule TSD presents more information on the 
utility impact analysis.

L. Environmental Assessment

    Pursuant to the National Environmental Policy Act and the 
requirements of 42 U.S.C. 6295(o)(2)(B)(i)(VI), DOE has prepared an 
environmental assessment (EA) of the impacts of the standards for 
refrigeration products in today's final rule, which it has included as 
chapter 15 of the TSD. DOE found that the environmental effects 
associated with the standards for refrigeration products were not 
significant. Therefore, DOE is issuing a Finding of No Significant 
Impact (FONSI), pursuant to NEPA, the regulations of the Council on 
Environmental Quality (40 CFR parts 1500-1508), and DOE's regulations 
for compliance with NEPA (10 CFR part 1021). The FONSI is available in 
the docket for this rulemaking.
    In the EA, DOE estimated the reduction in power sector emissions of 
CO2, NOX, and Hg using the NEMS-BT computer 
model. In the EA, NEMS-BT is run similarly to the AEO NEMS, except that 
refrigeration product energy use is reduced by the amount of energy 
saved (by fuel type) due to each TSL. The inputs of national energy 
savings come from the NIA spreadsheet model, while the output is the 
forecasted physical emissions. The net benefit of each TSL in today's 
final rule is the difference between the forecasted emissions estimated 
by NEMS-BT at each TSL and the AEO 2010 Reference Case. NEMS-BT tracks 
CO2 emissions using a detailed module that provides results 
with broad coverage of all sectors and inclusion of interactive 
effects.
    DOE has determined that SO2 emissions from affected 
fossil fuel fired combustion devices (also known as Electric Generating 
Units (EGUs)) are subject to nationwide and regional emissions cap and 
trading programs that create uncertainty about the standards' impact on 
SO2 emissions. Title IV of the Clean Air Act, 42 U.S.C. 
7401-7671q, sets an annual emissions cap on SO2 for affected 
EGUs in the 48 contiguous states and the District of Columbia (D.C.). 
SO2 emissions from 28 eastern states and DC are also limited 
under the Clean Air Interstate Rule (CAIR, 70 FR 25162 (May 12, 2005)), 
which created an allowance-based trading program. Although CAIR has 
been remanded to EPA by the U.S. Court of Appeals for the District of 
Columbia Circuit (D.C. Circuit), see North Carolina v. EPA, 550 F.3d 
1176 (D.C. Cir. 2008), it remains in effect temporarily, consistent 
with the D.C. Circuit's earlier opinion in North Carolina v. EPA, 531 
F.3d 896 (D.C. Cir. 2008). On August 2, 2010, EPA issued the Transport 
Rule proposal, a replacement for CAIR, which would limit emissions from 
EGUs in 32 states, and may allow some amount of interstate trading. 75 
FR 45210. EPA issued the final transport rule, entitled the Cross-State 
Air Pollution Rule, on July 6, 2011.\38\ See http://www.epa.gov/crossstaterule/.
---------------------------------------------------------------------------

    \38\ DOE notes that future iterations of the NEMS-BT model will 
incorporate any changes necessitated by issuance of the Cross-State 
Air Pollution Rule.
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the imposition of an efficiency standard could be used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
However, if the standard resulted in a permanent increase in the 
quantity of unused emissions allowances, there would be an overall 
reduction in SO2 emissions from the standards. While there 
remains some uncertainty about the ultimate effects of efficiency 
standards on SO2 emissions covered by the existing cap and 
trade system, the NEMS-BT modeling system that DOE uses to forecast 
emissions reductions currently indicates that no physical reductions in 
power sector emissions would occur for SO2. Because the 
Transport Rule has not been finalized, there is no way to predict the 
effect of this rulemaking on SO2 emissions after the 
Transport Rule goes into effect.
    A cap on NOX emissions, affecting electric generating 
units in the CAIR region, means that standards on refrigeration 
products may have little or no physical effect on NOX 
emissions in the 28 eastern States and the District of Columbia covered 
by CAIR. Again, as noted above, because the Transport Rule has not been 
finalized, there is no way to predict the effect of this rulemaking

[[Page 57559]]

on NOx emissions after the Transport Rule goes into effect.
    Today's standards would, however, reduce NOX emissions 
in those 22 States not affected by the CAIR. As a result, DOE used 
NEMS-BT to forecast emission reductions from the standards that are 
considered in today's final rule.
    Similar to emissions of SO2 and NOX, future 
emissions of Hg would have been subject to emissions caps. In May 2005, 
EPA issued the Clean Air Mercury Rule (CAMR). 70 FR 28606 (May 18, 
2005). CAMR would have permanently capped emissions of mercury for new 
and existing coal-fired power plants in all States by 2010. However, on 
February 8, 2008, the DC Circuit issued a decision in New Jersey v. 
Environmental Protection Agency, in which it vacated CAMR. 517 F.3d 574 
(D.C. Cir. 2008). EPA has decided to develop emissions standards for 
power plants under the Clean Air Act (Section 112), consistent with the 
DC Circuit's opinion on CAMR. See http://www.epa.gov/air/mercuryrule/pdfs/certpetition_withdrawal.pdf. Pending EPA's forthcoming revisions 
to the rule, DOE is excluding CAMR from its Environmental Analysis. In 
the absence of CAMR, a DOE standard would likely reduce Hg emissions 
and DOE plans to use NEMS-BT to estimate these emission reductions. 
However, DOE continues to review the impact of rules that reduce energy 
consumption on Hg emissions, and may revise its assessment of Hg 
emission reductions in future rulemakings.

M. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this final rule, DOE considered the 
estimated monetary benefits likely to result from the reduced emissions 
of CO2 and NOX that are expected to result from 
each of the TSLs considered. In order to make this calculation similar 
to the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of products 
shipped in the forecast period for each TSL. This section summarizes 
the basis for the monetary values used for each of these emissions and 
presents the benefits estimates considered.
    For today's final rule, DOE is relying on a set of values for the 
social cost of carbon (SCC) that were developed by an interagency 
process. A summary of the basis for these new values is provided below, 
and a more detailed description of the methodologies used is provided 
in appendix 16-A of the final rule TSD.
1. Social Cost of Carbon
    Under Executive Order 12866, agencies must, to the extent permitted 
by law, ``assess both the costs and the benefits of the intended 
regulation and, recognizing that some costs and benefits are difficult 
to quantify, propose or adopt a regulation only upon a reasoned 
determination that the benefits of the intended regulation justify its 
costs.'' The purpose of the SCC estimates presented here is to allow 
agencies to incorporate the monetized social benefits of reducing 
CO2 emissions into cost-benefit analyses of regulatory 
actions that have small, or ``marginal,'' impacts on cumulative global 
emissions. The estimates are presented with an acknowledgement of the 
many uncertainties involved and with a clear understanding that they 
should be updated over time to reflect increasing knowledge of the 
science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the social cost of 
carbon are provided in dollars per metric ton of carbon dioxide.
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of serious 
challenges. A recent report from the National Research Council \39\ 
points out that any assessment will suffer from uncertainty, 
speculation, and lack of information about (1) Future emissions of 
greenhouse gases, (2) the effects of past and future emissions on the 
climate system, (3) the impact of changes in climate on the physical 
and biological environment, and (4) the translation of these 
environmental impacts into economic damages. As a result, any effort to 
quantify and monetize the harms associated with climate change will 
raise serious questions of science, economics, and ethics and should be 
viewed as provisional.
---------------------------------------------------------------------------

    \39\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. National Academies Press: 
Washington, DC. 2009.
---------------------------------------------------------------------------

    Despite the serious limits of both quantification and monetization, 
SCC estimates can be useful in estimating the social benefits of 
reducing carbon dioxide emissions. Consistent with the directive quoted 
above, the purpose of the SCC estimates presented here is to make it 
possible for agencies to incorporate the social benefits from reducing 
carbon dioxide emissions into cost-benefit analyses of regulatory 
actions that have small, or ``marginal,'' impacts on cumulative global 
emissions. Most Federal regulatory actions can be expected to have 
marginal impacts on global emissions.
    For such policies, the agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC value 
appropriate for that year. The net present value of the benefits can 
then be calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years. This 
approach assumes that the marginal damages from increased emissions are 
constant for small departures from the baseline emissions path, an 
approximation that is reasonable for policies that have effects on 
emissions that are small relative to cumulative global carbon dioxide 
emissions. For policies that have a large (non-marginal) impact on 
global cumulative emissions, there is a separate question of whether 
the SCC is an appropriate tool for calculating the benefits of reduced 
emissions. DOE does not attempt to answer that question here.
    At the time of the preparation of the notice, the most recent 
interagency estimates of the potential global benefits resulting from 
reduced CO2 emissions in 2010, expressed in 2009$, were 
$4.9, $22.1, $36.3, and $67.1 per metric ton avoided. For emission 
reductions that occur in later years, these values grow in real terms 
over time. Additionally, the interagency group determined that a range 
of values from 7 percent to 23 percent should be used to adjust the 
global SCC to calculate domestic

[[Page 57560]]

effects,\40\ although preference is given to consideration of the 
global benefits of reducing CO2 emissions.
---------------------------------------------------------------------------

    \40\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
---------------------------------------------------------------------------

    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. Specifically, the interagency group has set a preliminary 
goal of revisiting the SCC values within two years or at such time as 
substantially updated models become available, and to continue to 
support research in this area. In the meantime, the interagency group 
will continue to explore the issues raised by this analysis and 
consider public comments as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    To date, economic analyses for Federal regulations have used a wide 
range of values to estimate the benefits associated with reducing 
carbon dioxide emissions. In the final model year 2011 CAFE rule, the 
Department of Transportation (DOT) used both a ``domestic'' SCC value 
of $2 per ton of CO2 and a ``global'' SCC value of $33 per 
ton of CO2 for 2007 emission reductions (in 2007 dollars), 
increasing both values at 2.4 percent per year.\41\ See Average Fuel 
Economy Standards Passenger Cars and Light Trucks Model Year 2011, 74 
FR 14196 (March 30, 2009); Final Environmental Impact Statement 
Corporate Average Fuel Economy Standards, Passenger Cars and Light 
Trucks, Model Years 2011-2015 at 3-90 (Oct. 2008) (Available at: http://www.nhtsa.gov/fuel-economy). It also included a sensitivity analysis 
at $80 per 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 carbon dioxide emissions, while a global SCC value is meant 
to reflect the value of damages worldwide.
---------------------------------------------------------------------------

    \41\ Values per ton of CO2 given in this section 
refer to metric tons.
---------------------------------------------------------------------------

    A 2008 regulation proposed by DOT assumed a domestic SCC value of 
$7 per ton of CO2 (in 2006 dollars) for 2011 emission 
reductions (with a range of $0-$14 for sensitivity analysis), also 
increasing at 2.4 percent per year. See Average Fuel Economy Standards, 
Passenger Cars and Light Trucks, Model Years 2011-2015, 73 FR 24352 
(May 2, 2008); Draft Environmental Impact Statement Corporate Average 
Fuel Economy Standards, Passenger Cars and Light Trucks, Model Years 
2011-2015 at 3-58 (June 2008) (Available at: http://www.nhtsa.gov/fuel-economy). A regulation for packaged terminal air conditioners and 
packaged terminal heat pumps finalized by DOE in October of 2008 used a 
domestic SCC range of $0 to $20 per ton CO2 for 2007 
emission reductions (in 2007 dollars). 73 FR 58772, 58814 (Oct. 7, 
2008) In addition, EPA's 2008 Advance Notice of Proposed Rulemaking for 
Greenhouse Gases identified what it described as ``very preliminary'' 
SCC estimates subject to revision. See Regulating Greenhouse Gas 
Emissions Under the Clean Air Act, 73 FR 44354 (July 30, 2008). EPA's 
global mean values were $68 and $40 per ton CO2 for discount 
rates of approximately 2 percent and 3 percent, respectively (in 2006 
dollars for 2007 emissions).
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across agencies, the Administration sought to 
develop a transparent and defensible method, specifically designed for 
the rulemaking process, to quantify avoided climate change damages from 
reduced CO2 emissions. The interagency group did not 
undertake any original analysis. Instead, it combined SCC estimates 
from the existing literature to use as interim values until a more 
comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: Global SCC estimates for 2007 (in 2006 dollars) of $55, 
$33, $19, $10, and $5 per ton of CO2.
    These interim values represent the first sustained interagency 
effort within the U.S. government to develop an SCC for use in 
regulatory analysis. The results of this preliminary effort were 
presented in several proposed and final rules and were offered for 
public comment in connection with proposed rules, including the joint 
EPA-DOT fuel economy and CO2 tailpipe emission proposed 
rules. See CAFE Rule for Passenger Cars and Light Trucks Draft EIS and 
Final EIS, cited above.
c. Current Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates 
considered for this amended rule. Specifically, the group considered 
public comments and further explored the technical literature in 
relevant fields.
    The interagency group relied on three integrated assessment models 
(IAMs) commonly used to estimate the SCC: The FUND, DICE, and PAGE 
models.\42\ These models are frequently cited in the peer-reviewed 
literature and were used in the last assessment of the 
Intergovernmental Panel on Climate Change. Each model was given equal 
weight in the SCC values that were developed.
---------------------------------------------------------------------------

    \42\ The models are described in appendix 16-A of the final rule 
TSD.
---------------------------------------------------------------------------

    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: Climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four SCC values for use in 
regulatory analyses. Three values are based on the average SCC from the 
three IAMs, at discount rates of 2.5, 3, and 5 percent. The fourth 
value, which represents the 95th percentile SCC estimate across all 
three models at a 3 percent discount rate, is included to represent 
higher-than-expected impacts from temperature change further out in the 
tails of the SCC distribution. For emissions (or emission reductions) 
that occur in later years, the SCC values grow in real terms over time, 
as depicted in Table IV.7.

[[Page 57561]]

                           Table IV.7--SCC Values From Interagency Process, 2010-2050
                                          [2007 Dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
                                                  Discount rate
-----------------------------------------------------------------------------------------------------------------
                                                5% Avg            3% Avg           2.5% Avg          3% 95th
----------------------------------------------------------------------------------------------------------------
2010....................................               4.7              21.4              35.1              64.9
2015....................................               5.7              23.8              38.4              72.8
2020....................................               6.8              26.3              41.7              80.7
2025....................................               8.2              29.6              45.9              90.4
2030....................................               9.7              32.8              50.0             100.0
2035....................................              11.2              36.0              54.2             109.7
2040....................................              12.7              39.2              58.4             119.3
2045....................................              14.2              42.1              61.7             127.8
2050....................................              15.7              44.9              65.0             136.2
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable since they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The National Research 
Council report mentioned above points out that there is tension between 
the goal of producing quantified estimates of the economic damages from 
an incremental ton of carbon and the limits of existing efforts to 
model these effects. There are a number of concerns and problems that 
should be addressed by the research community, including research 
programs housed in many of the agencies participating in the 
interagency process to estimate the SCC.
    The U.S. Government intends to periodically review and reconsider 
estimates of the SCC used for cost-benefit analyses to reflect 
increasing knowledge of the science and economics of climate impacts, 
as well as improvements in modeling. In this context, statements 
recognizing the limitations of the analysis and calling for further 
research take on exceptional significance. The interagency group offers 
the new SCC values with all due humility about the uncertainties 
embedded in them and with a sincere promise to continue work to improve 
them.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the most recent values 
identified by the interagency process, adjusted to 2009$ using the GDP 
price deflator values for 2008 and 2009. For each of the four cases 
specified, the values used for emissions in 2010 were $4.9, $22.1, 
$36.3, and $67.1 per metric ton avoided (values expressed in 2009$). To 
monetize the CO2 emissions reductions expected to result 
from amended standards for refrigeration products in 2014-2043, DOE 
used the values identified in Table A1 of the ``Social Cost of Carbon 
for Regulatory Impact Analysis Under Executive Order 12866,'' which is 
reprinted in appendix 15-A of the final rule TSD, appropriately 
escalated to 2009$.\43\ 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.
---------------------------------------------------------------------------

    \43\ Table A1 presents SCC values through 2050. For DOE's 
calculation, it derived values after 2050 using the 3-percent per 
year escalation rate used by the interagency group.
---------------------------------------------------------------------------

2. Valuation of Other Emissions Reductions
    DOE investigated the potential monetary benefit of reduced 
NOX emissions from the TSLs it considered. As noted above, 
new or amended energy conservation standards would reduce 
NOX emissions in those 22 States that are not affected by 
the CAIR. DOE estimated the monetized value of NOX emissions 
reductions resulting from each of the TSLs considered for today's NOPR 
based on environmental damage estimates from the literature. Available 
estimates suggest a very wide range of monetary values, ranging from 
$370 per ton to $3,800 per ton of NOX from stationary 
sources, measured in 2001$ (equivalent to a range of $447 to $4,591 per 
ton in 2009$).\44\ In accordance with OMB guidance, DOE conducted two 
calculations of the monetary benefits derived using each of the 
economic values used for NOX, one using a real discount rate 
of 3 percent and another using a real discount rate of 7 percent.\45\
---------------------------------------------------------------------------

    \44\ For additional information, refer to U.S. Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
``2006 Report to Congress on the Costs and Benefits of Federal 
Regulations and Unfunded Mandates on State, Local, and Tribal 
Entities,'' Washington, DC.
    \45\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

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

V. Discussion of Other Comments

    The following section discusses comments received by DOE related to 
other issues. In general, these issues involved subjects that generally 
fell outside of the framework described in detail above.

A. Demand Response

    This section discusses comments received regarding demand response 
or smart grid controls. These are controls that can react to signals 
from utilities or other external organizations and alter the product's 
operation. This capability might be used to allow utilities to reduce 
energy use during peak demand hours by reducing the power input of many 
connected appliances.
    DOE received comments on this topic during the preliminary analysis 
phase from LG, the U.S. Navy, and the IOUs. (LG, No. 44 at p. 5; USN, 
No. 35 at p. 2; IOUs, No. 39 at p. 13). DOE explained in the NOPR that 
it did not consider a demand response feature, in part because of the 
uncertainty of overall benefits and the limitations of the legal 
framework under which DOE would be able to pursue such a design 
requirement approach. 75 FR at 59530 (September 27, 2010).
    AHAM disagreed with DOE's conclusion that demand response would not 
contribute significantly to energy use. (AHAM, No. 73 at p. 9) However, 
AHAM's comments did not provide any information quantifying the 
potential energy savings associated with implementation of demand 
response in refrigeration products. The highlighted conclusions of the 
Electric Power

[[Page 57562]]

Research Institute study cited by AHAM do not even explicitly indicate 
that refrigeration product demand response contributed to energy 
savings. (Id.) AHAM further indicates that demand response applied to 
appliances including refrigeration products would help to enable use of 
renewable energy sources. (AHAM, No. 73 at pp. 9-10)
    DOE notes that this rulemaking involves the amending of an energy 
conservation standard for refrigeration products. The term ``energy 
conservation standard'' is defined as either a performance standard 
that prescribes a minimum level of energy efficiency or maximum amount 
of energy use or a design standard for certain specified products. As 
DOE stated previously, creating a design standard as an energy 
conservation standard is limited to specific enumerated consumer 
products under 42 U.S.C. 6291(6). See 75 FR at 59530 (September 27, 
2010). Since setting a demand response feature requirement would be the 
same as setting a design standard, DOE must look to those products for 
which it has the authority to set design standards. As DOE also pointed 
out, refrigeration products are not within this list. Commenters made 
no effort to challenge the validity of this view, citing instead to 
policy-related initiatives that highlighted the potential benefits 
associated with smart grid approaches. While the issues cited by 
commenters are clearly important issues, they do not obviate the 
requirement that DOE act within the boundaries of its authority within 
the context of this rulemaking. Accordingly, DOE did not incorporate a 
demand response feature requirement as part of today's final rule.\46\
---------------------------------------------------------------------------

    \46\ The inclusion of a demand response feature within these 
products would also require considerable analysis for which DOE has 
no data.
---------------------------------------------------------------------------

B. Energy Standard Round-Off

    The NOPR discussed the adoption of a round-off when reporting 
energy test results. This approach, explained in greater detail in the 
test procedure NOPR, would require manufacturers to report the measured 
energy consumption to the nearest kWh/year based on consideration of 
achievable measurement accuracy. 75 FR at 29849 (May 27, 2010). The 
energy standard NOPR explained that similar round-off was necessary to 
avoid meaningless indications of non-compliance. DOE also requested 
comment on the implementation of energy standard round-off. 75 FR at 
59570 (September 27, 2010).
    AHAM supported using a round-off when calculating the energy 
standard using the energy standard equations for refrigeration 
products. (AHAM, Public Meeting Transcript, No. 67 at p. 94; AHAM, No. 
73 at p. 10) Whirlpool concurred with this approach. (Whirlpool, No. 74 
at p. 6) No commenter objected to the round-off approach.
    DOE has implemented the energy use round-off approach as part of 
the test procedure final rule. As a result, manufacturers must follow 
this approach when reporting the energy consumption of its 
refrigeration products. The test procedure rule includes a round-off 
for the calculation of the energy standard when using the appropriate 
energy standard equations. See 75 FR at 78831-78832 (December 16, 
2010).

C. Trial Standard Levels and Proposed Standards

1. Efficiency Levels
    Many stakeholders supported DOE's selection of efficiency levels 
that mirrored the levels of the negotiated agreement. (AHAM, No. 73 at 
p. 1; IOUs, No. 77 at p. 1; PGEC, No. 68 at p. 1; JAC, No. 75 at p. 1) 
Sub Zero supported the selection of efficiency levels for built-ins 
that mirrored the negotiated agreement while indicating that the 
analyses suggest that less stringent levels would also have been 
appropriate. (Sub Zero, No. 69 at p. 5) Whirlpool supported the 
selection of efficiency levels for built-in products, subject to DOE's 
adoption of the built-in product definition developed for the consensus 
agreement. (Whirlpool, No. 74 at p. 6)
    However, concerns about the negotiated levels for numerous products 
were expressed by other stakeholders, primarily utilities and 
organizations representing utilities. EEI and APPA expressed concern 
about the standard levels chosen for bottom-mount refrigerator-
freezers, built-in bottom-mount refrigerator-freezers, and compact 
refrigerators and did not endorse the standard levels chosen for top-
mount refrigerator-freezers, side-by-side refrigerator-freezers, built-
in all-refrigerators, built-in side-by-side refrigerators, and built-in 
upright freezers. (EEI, No. 71 at pp. 3-4; APPA, No. 72 at pp. 2-3) SC 
expressed concern about selection of any standard levels above the 
levels of reasonable life cycle costs . (SC, No. 70 at p. 2) These 
concerns are based on (1) the percentage of consumers determined to 
experience life cycle cost benefits being uncertain or too high, and 
(2) the implication that DOE used the social cost of carbon dioxide 
emissions combined with consumer economics to justify the chosen 
standard levels. (EEI, No. 71 at p. 2; APPA, No. 72 at pp. 1-2; SC, No. 
70 at p. 2) Moreover, SC argued that replacement of an older 
refrigerator with one meeting the current 2001 standard would save 23 
times more energy. (SC, No. 70 at p. 2)
    Responding to the concern about the percentage of consumers 
determined to experience a net life cycle cost, DOE must consider a 
range of factors in setting efficiency levels (see section II.A), and 
for almost all product classes, the net savings per consumer is 
positive.
    Regarding the implication that DOE used the societal cost of carbon 
dioxide emissions to help justify the chosen standard levels, DOE did 
not, in fact, combine the societal cost of carbon with consumer 
economics in any of its calculations, but rather considered the 
positive benefit of reducing the societal cost of carbon, as part of a 
general assessment of environmental benefits, in making its final 
determination. Environmental benefits are an important rationale for 
national energy conservation, especially because the energy prices paid 
by consumers do not include some of the environmental costs associated 
with their use of energy. Energy savings from energy conservation 
standards often result in environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases associated with energy 
production. DOE analyzed the environmental effects from the amended 
standards for refrigeration products, and from each TSL it considered, 
in the environmental assessment, which is described in section IV.L of 
this notice and in chapter 15 of the TSD. As a companion to the 
quantitative analysis in the environmental assessment, DOE also 
estimated a range of the economic value of emissions reductions 
resulting from the considered TSLs, as described in section IV.M of 
this notice.
    With respect to the replacement of old refrigerators in lieu of a 
more stringent standard, this case was considered as an alternative 
regulatory policy in chapter 16 of the TSD. DOE found that the impact 
of such a policy would be, in all cases, much less effective than a new 
standard.
    The PRC commented that the maximum energy use of the proposed 
standards was lower than the current ENERGY STAR levels for product 
classes 8, 9, 10, 10A, and 13A, suggested that the current ENERGY STAR 
levels reflect current advanced technologies and achieve the purpose of 
``protection of the environment and consumers'',

[[Page 57563]]

and recommended that the maximum allowable energy use be no lower than 
the current ENERGY STAR levels. (PRC, No. 87 at p. 3) In response, DOE 
first notes that ENERGY STAR is a voluntary program. As such, 
manufacturers do not need to meet these levels unless they wish to 
produce ENERGY STAR-qualified products. Second, DOE is required by EPCA 
to consider all feasible technology levels, regardless of whether they 
represent less energy use than current ENERGY STAR levels, and to set a 
standard at the most efficient and feasible level that is economically 
justified. (42 U.S.C. 6295(o)(2)(A)) Accordingly, the non-mandatory 
nature of ENERGY STAR, coupled with the mandatory nature of EPCA's 
statutory requirement to promulgate new standards cut in favor of 
today's action.
    The PRC also commented that the standard levels proposed for 
product classes 5A, 6, 7, and 7-BI were not very stringent, being very 
close to their current standard levels expressed in kWh/year, even 
though the ENERGY STAR efficiency level has been set at a level 
representing 20 percent less energy consumption. The PRC provided an 
example of a product class 7 product with 500 liter adjusted volume, 
for which the proposed energy standard is 581.1 kWh/year, while the 
current standard is only slightly higher at 283.7 kWh/year. (PRC, No. 
87 at p. 4) DOE believes that the PRC's 283.7 kWh/year value is in 
error and should have been 583.7 kWh/year. DOE notes that these values 
cannot be directly compared, because the new energy standard is based 
on the new test procedure, for which both measured energy use and the 
calculated adjusted volume are altered.
    SMUD made two comments regarding the selection of standard levels. 
First, SMUD noted that DOE indicated that it was considering either 
increasing or decreasing the stringency of the proposed levels based on 
stakeholder comments. It recommended that DOE not consider any 
decreased stringency. (SMUD, No. 88 at pp. 1, 2) DOE has not altered 
the standards from those proposed in the NOPR. Second, SMUD noted that 
the NOPR stated that products of the efficiency levels of the proposed 
standards are already commercially available for some, if not most, of 
the product classes. (See 75 FR at 59474 (September 27, 2010)) SMUD 
recommended moving the standards to efficiency levels more stringent 
than those of commercially available products, since these higher 
levels should be viable. (Id. at p. 2) As described above, DOE is 
required by EPCA to consider all feasible technology levels and that it 
must set the standard at the most efficient of these feasible levels 
that is economically justified. (42 U.S.C. 6295(o)(2)(A)) The 
commercial availability of products at a specific efficiency level, 
alone, is not sufficient justification for setting the standard at a 
more stringent efficiency level, since the more stringent level may not 
be economically justified.
2. Maximum Energy Use Equations
    Several stakeholders indicated that they could not comment on the 
specific values represented by the maximum energy use equations because 
they did not have sufficient time after the issuance of the test 
procedure final/interim final rule to conduct tests to evaluate the 
equation levels. (AHAM, No. 73 at pp. 1-2 ; Whirlpool, No. 74 at p. ; 
GE, No. 76 at pp. 1-2) This is discussed in greater detail in section 
0.

VI. Analytical Results

    The following section addresses the results from DOE's analyses 
with respect to potential energy efficiency standards for the various 
product classes examined as part of this rulemaking. Issues discussed 
include the trial standard levels examined by DOE, the projected 
impacts of each of these levels if adopted as energy efficiency 
standards for refrigeration products, and the standards levels that DOE 
is adopting in today's final rule. Additional details regarding the 
analyses conducted by the agency are contained in the publicly 
available TSD supporting this rulemaking.

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of a number of TSLs for the 
refrigeration products that are the subject of today's final rule. A 
description of each TSL DOE analyzed is provided below. DOE attempted 
to limit the number of TSLs considered for today's final rule by 
excluding efficiency levels that do not exhibit significantly different 
economic and/or engineering characteristics from the efficiency levels 
already selected as a TSL. While DOE only presents the results for 
those efficiency levels in TSL combinations in today's final rule, DOE 
presents the results for all efficiency levels that it analyzed in the 
final rule TSD.
    Table VI.1 presents the TSLs and the corresponding product class 
efficiencies for standard-size refrigerator-freezers. TSL 1 consists of 
those efficiency levels that meet current ENERGY STAR criteria. TSL 2 
consists of incrementally higher efficiency levels than the preceding 
TSL. TSL 3 consists of the highest efficiency levels for which the 
consumer NPV is positive, using a 7-percent discount rate, as well as 
the levels recommended in the Joint Comments. TSL 4 consists of those 
efficiency levels that yield energy use 30 percent below the baseline 
products, as well as the highest efficiency levels for which the 
consumer NPV is positive, using a 3-percent discount rate. TSL 5 
consists of the max-tech efficiency levels.

                    Table VI.1--Trial Standard Levels for Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
                                                             Efficiency level (% less than baseline energy use)
                                                           -----------------------------------------------------
                                                                Top-mount       Bottom-mount      Side-by-side
                                                              refrigerator-     refrigerator-     refrigerator-
                                                            freezers and all-     freezers          freezers
                   Trial standard level                       refrigerators  -----------------------------------
                                                           ------------------
                                                             Product classes   Product classes   Product classes
                                                            1, 1A, 2, 3, 3A,    5, 5A, and 5I     4, 4I, and 7
                                                                3I and 6
----------------------------------------------------------------------------------------------------------------
1.........................................................            3 (20)            3 (20)            3 (20)
2.........................................................             3(20)            3 (20)            4 (25)
3.........................................................          * 4 (25)            3 (20)            4 (25)
4.........................................................            5 (30)            5 (30)            5 (30)
5.........................................................            6 (36)            6 (36)            6 (33)
----------------------------------------------------------------------------------------------------------------
* Level for product classes 1, 1A, and 2 is 20%.

[[Page 57564]]

    Table VI.2 presents the TSLs and the corresponding product class 
efficiencies for standard-size freezers. TSL 1 consists of those 
efficiency levels that yield energy use 20 percent below the baseline 
products. TSL 2 consists of the levels recommended in the Joint 
Comments. TSL 3 consists of incrementally higher efficiency levels than 
the preceding TSL. TSL 4 consists of incrementally higher efficiency 
levels than the preceding TSL. TSL 5 consists of the max-tech 
efficiency levels, which are also the highest efficiency levels for 
which the consumer NPV is positive, using both a 3-percent and a 7-
percent discount rate.

                          Table VI.2--Trial Standard Levels for Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
                                                             Efficiency level (% less than baseline energy use)
                                                           -----------------------------------------------------
                                                                     Upright freezers            Chest freezers
                   Trial standard level                    -----------------------------------------------------
                                                             Product classes                     Product classes
                                                                9 and 9I       Product class 8     10 and 10A
----------------------------------------------------------------------------------------------------------------
1.........................................................            3 (20)            3 (20)            3 (20)
2.........................................................            5 (30)            4 (25)          * 4 (25)
3.........................................................            6 (35)            5 (30)            5 (30)
4.........................................................            7 (40)            6 (35)            6 (35)
5.........................................................            8 (44)            7 (41)            7 (41)
----------------------------------------------------------------------------------------------------------------
* Level for product class 10A is 30%.

    Table VI.3 presents the TSLs and the corresponding product class 
efficiencies for compact refrigeration products. TSL 1 consists of 
efficiency levels that meet current ENERGY STAR criteria for some 
compact refrigerators (product classes 11, 11A, and 12), and efficiency 
levels that are 10 percent below the baseline energy use for other 
compact refrigerators (product classes 13, 13I, 13A, 14, 14I, 15 and 
15I) and compact freezers (product classes 16, 17, and 18). TSL 2 
consists of the levels recommended in the Joint Comments. TSL 3 
consists of incrementally higher efficiency levels than the previous 
TSL. TSL 4 consists of the highest efficiency levels for which the 
consumer NPV is positive, using both a 3-percent and a 7-percent 
discount rate. TSL 5 consists of the max-tech efficiency levels.

                      Table VI.3--Trial Standard Levels for Compact Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                             Efficiency level (% less than baseline energy use)
                                                           -----------------------------------------------------
                                                                 Compact refrigerators and      Compact freezers
                                                                   refrigerator-freezers       -----------------
                   Trial standard level                    ------------------------------------
                                                                               Product classes   Product classes
                                                             Product classes    13, 13I, 13A,      16, 17, 18
                                                               11, 11A, 12    14, 14I, 15, 15I
----------------------------------------------------------------------------------------------------------------
1.........................................................            3 (20)            1 (10)            1 (10)
2.........................................................            4 (25)          * 2 (15)            1 (10)
3.........................................................            5 (30)            2 (15)            2 (15)
4.........................................................            7 (40)            4 (25)            4 (25)
5.........................................................           10 (59)            7 (42)            7 (42)
----------------------------------------------------------------------------------------------------------------
* Level for product class 13A is 25 percent, and for product classes 14 and 14I is 20 percent.

    Table VI.4 presents the TSLs and the corresponding product class 
efficiencies for built-in refrigeration products. TSL 1 consists of the 
efficiency levels that are 10 percent better than the current standard. 
TSL 2 consists of the highest efficiency levels for which the consumer 
NPV is positive, using both a 3-percent and a 7-percent discount rate. 
TSL 3 consists of the levels recommended in the Joint Comments. TSL 4 
consists of incrementally higher efficiency levels than TSL 3. TSL 5 
consists of the max-tech efficiency levels.

                      Table VI.4--Trial Standard Levels for Built-in Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                    Efficiency level (% less than baseline energy use)
                                         -----------------------------------------------------------------------
                                            Built-in top-   Built-in bottom-  Built-in side-by- Built-in upright
                                                mount             mount             side            freezers
                                            refrigerator-     refrigerator-     refrigerator-  -----------------
          Trial standard level            freezers and all-     freezers          freezers
                                            refrigerators  ------------------------------------
                                         ------------------                                      Product classes
                                           Product classes   Product classes   Product classes   9-BI and 9I-BI
                                          3-BI, 3I-BI, and  5-BI, 5I-BI, and   4-BI, 4I-BI and
                                                3A-BI             5A-BI             7-BI
----------------------------------------------------------------------------------------------------------------
1.......................................            1 (10)            1 (10)            1 (10)            1 (10)
2.......................................            2 (15)            2 (15)            1 (10)            3 (20)
3.......................................            3 (20)            2 (15)            3 (20)            4 (25)
4.......................................            4 (25)            4 (25)            3 (20)            4 (25)

[[Page 57565]]

 
5.......................................            5 (29)            5 (27)            4 (22)            5 (27)
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
a. Life-Cycle Cost and Payback Period
    Consumers affected by new or amended standards usually experience 
higher purchase prices and lower operating costs. DOE evaluates these 
impacts on individual consumers by calculating changes in LCC and the 
PBP associated with potential standard levels. Using the approach 
described in section IV.F, DOE calculated the LCC impacts and PBPs for 
the efficiency levels considered in this rulemaking. For each 
representative product class, DOE's analysis provided several outputs 
for each TSL, which are reported in Table VI.5 through Table VI.15. 
Each table includes the average total LCC and the average LCC savings, 
as well as the fraction of product consumers for which the LCC will 
either decrease (net benefit), increase (net cost), or exhibit no 
change (no impact) relative to the product purchased in the base case. 
The last output in the tables is the median PBP for the consumer 
purchasing a design that complies with a given TSL. The results for 
each TSL are relative to the energy efficiency distribution in the base 
case (no amended standards). DOE based the LCC and PBP analyses on 
energy consumption under conditions of actual product use, whereas it 
based the rebuttable presumption PBPs on energy consumption under 
conditions prescribed by the DOE test procedure, as required by EPCA. 
(42 U.S.C. 6295(o)(2)(B)(iii))

                                    Table VI.5--Product Class 3, Top-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $491        $787      $1,278  ..........  ...........  ...........  ..........  ..........
                                   1 (10).............         501         730       1,231          46         0.28        21.9         77.8         2.3
                                   2 (15).............         508         701       1,209          69         0.60        17.6         81.8         2.6
1, 2.............................  3 (20).............         564         671       1,235          44        34.0          8.31        57.7         8.0
3................................  4 (25).............         602         634       1,236          42        45.7          0.0         54.3         9.5
4................................  5 (30).............         686         598       1,284          -6        65.1          0.0         34.9        13.3
5................................  6 (36).............         806         560       1,365         -87        79.7          0.0         20.3        17.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                  Table VI.6--Product Class 5, Bottom-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $858        $970      $1,828  ..........  ...........  ...........  ..........  ..........
                                   1 (10).............         860         961       1,820           9         0.02        86.9         13.1         2.1
                                   2 (15).............         861         956       1,817          14         0.05        86.9         13.1         2.3
1, 2, 3..........................  3 (20).............         867         943       1,809          22         2.53        67.8         29.7         4.2
                                   4 (25).............         926         901       1,827           5        67.9          0.03        32.0        14.9
4................................  5 (30).............       1,023         862       1,885         -53        82.8          0.03        17.2        21.0
5................................  6 (36).............       1,157         810       1,968        -136        89.0          0.00        11.1        24.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

                 Table VI.7--Product Class 7, Side-by-Side Refrigerator-Freezers With Through-the-Door Ice Service: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........      $1,040      $1,252      $2,292  ..........  ...........  ...........  ..........  ..........

[[Page 57566]]

 
                                   1 (10).............       1,043       1,228       2,271          22         0.00        78.1         21.9         1.3
                                   2 (15).............       1,048       1,202       2,249          44         0.06        51.7         48.3         2.1
1................................  3 (20).............       1,064       1,167       2,232          62         4.27        36.9         58.8         4.0
2, 3.............................  4 (25).............       1,123       1,114       2,237          57        41.5          0.00        58.6         9.2
4................................  5 (30).............       1,251       1,061       2,312         -18        69.7          0.00        30.3        15.6
5................................  6 (33).............       1,351       1,026       2,377         -83        79.5          0.00        20.5        19.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                           Table VI.8--Product Class 9, Upright Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   Period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $505      $1,098      $1,603  ..........  ...........  ...........  ..........  ..........
                                   1 (10).............         516       1,015       1,530          73         0.25        19.9         79.9         1.9
                                   2 (15).............         535         964       1,499         105         5.02         1.67        93.3         3.6
1................................  3 (20).............         552         912       1,464         140         6.03         0.59        93.4         4.0
                                   4 (25).............         578         859       1,437         166         9.58         0.41        90.0         4.9
2................................  5 (30).............         602         806       1,408         195        11.5          0.22        88.2         5.3
3................................  6 (35).............         656         758       1,414         189        21.9          0.00        78.1         7.1
4................................  7 (40).............         731         711       1,442         161        34.6          0.00        65.4         9.3
5................................  8 (44).............         898         673       1,570          33        59.7          0.00        40.3        14.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                            Table VI.9--Product Class 10, Chest Freezer: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $367        $623        $990  ..........  ...........  ...........  ..........  ..........
                                   1 (10).............         373         573         947          43         0.20        16.2         83.6         2.0
                                   2 (15).............         383         544         927          63         3.01         1.18        95.8         3.2
1................................  3 (20).............         393         515         908          82         5.14         0.22        94.6         3.9
2................................  4 (25).............         436         485         921          69        27.3          0.22        72.5         8.1
3................................  5 (30).............         456         455         911          79        29.1          0.22        70.6         8.5
4................................  6 (35).............         510         433         943          47        48.7          0.00        51.4        12.1
5................................  7 (41).............         620         395       1,015         -25        69.1          0.00        31.0        17.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                        Table VI.10--Product Class 11, Compact Refrigerators: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $131        $167        $298  ..........  ...........  ...........  ..........  ..........
                                   1 (10).............         137         151         287          11         9.01         1.60        89.4         1.8
                                   2 (15).............         141         143         284          14        13.6          1.39        85.0         2.1
1................................  3 (20).............         146         135         281          17        19.7          1.39        79.0         2.5
2................................  4 (25).............         157         127         284          14        36.8          1.00        62.3         3.5
3................................  5 (30).............         166         119         285          13        43.4          0.92        55.6         3.9
                                   6 (35).............         192         112         304          -6        71.3          0.00        28.7         6.0
4................................  7 (40).............         199         104         303          -5        69.8          0.00        30.2         5.8
                                   8 (45).............         230          97         327         -29        83.5          0.00        16.5         7.7
                                   9 (50).............         247          89         336         -38        85.4          0.00        14.6         8.0
5................................  10 (59)............         308          75         383         -85        92.2          0.00        7.85        10.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57567]]

                                          Table VI.11--Product Class 18, Compact Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........        $182        $200        $382  ..........  ...........  ...........  ..........  ..........
1, 2.............................  1 (10).............         189         182         370          12         7.98         4.66        87.4         2.2
3................................  2 (15).............         201         172         373           9        33.9          0.00        66.1         4.2
                                   3 (20).............         242         163         404         -22        87.4          0.00        12.6         9.8
4................................  4 (25).............         252         153         405         -23        84.5          0.00        15.5         9.1
                                   5 (30).............         282         146         428         -46        92.4          0.00         7.6        11.4
                                   6 (35).............         289         137         426         -44        89.6          0.00        10.4        10.4
5................................  7 (42).............         360         124         484        -102        96.7          0.00         3.3        14.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                    Table VI.12--Product Class 3A-BI, Built-In All-Refrigerators: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Life-cycle cost 2009$                     Life-cycle cost savings                Payback
                                                       --------------------------------------------------------------------------------------   period
                                   Efficiency level (%                                                     % of households that experience      (years)
       Trial standard level         less than baseline   Installed  Discounted                Average  -------------------------------------------------
                                       energy use)         cost      operating      LCC       savings                                 Net
                                                                       cost                    2009$      Net cost    No impact     benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                   Baseline...........      $4,316        $828      $5,144  ..........  ...........  ...........  ..........  ..........
1................................  1 (10).............       4,323         769       5,091          52         0.02        22.6         77.4         1.4
2................................  2 (15).............       4,334         739       5,073          71         0.94        18.4         80.7         2.6
3................................  3 (20).............       4,452         703       5,155         -11        61.5          9.10        29.4        13.7
4................................  4 (25).............       4,625         670       5,295        -151        91.0          0.00        9.02        25.5
5................................  5 (29).............       4,756         646       5,402        -258        95.0          0.00        5.01        31.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

                            Table VI.13--Product Class 5-BI, Built-In Bottom-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Life-cycle cost 2009$                     Life-cycle cost savings                 Payback
                                    Efficiency level  ---------------------------------------------------------------------------------------   period
      Trial standard level            (% less than                 Discounted                Average      % of households that experience       (years)
                                    baseline energy     Installed   operating      LCC       savings  --------------------------------------------------
                                          use)            cost        cost                    2009$      Net cost    No impact   Net benefit    Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Baseline...........      $4,968        $960      $5,928  ..........  ...........  ...........  ...........  ..........
1...............................  1 (10).............       4,972         951       5,923          $8         0.60        87.1         12.3          3.8
2, 3............................  2 (15).............       4,982         957       5,939           2         7.03        87.0          5.94        11.1
                                  3 (20).............       5,013         943       5,955         -14        27.4         67.5          5.09        22.3
4...............................  4 (25).............       5,168         911       6,079        -138        98.0          0.00         2.03        52.8
5...............................  5 (27).............       5,257         891       6,148        -207        98.5          0.00         1.50        52.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

           Table VI.14--Product Class 7-BI, Built-In Side-by-Side Refrigerator-Freezers With Through-the-Door Ice Service: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Life-cycle cost 2009$                     Life-cycle cost savings                 Payback
                                    Efficiency level  ---------------------------------------------------------------------------------------   period
      Trial standard level            (% less than                 Discounted                Average      % of households that experience       (years)
                                    baseline energy     Installed   operating      LCC       savings  --------------------------------------------------
                                          use)            cost        cost                    2009$      Net cost    No impact   Net benefit    Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Baseline...........      $7,134      $1,494      $8,628  ..........  ...........  ...........  ...........  ..........
1, 2............................  1 (10).............       7,147       1,476       8,623         $10         5.77        78.5         15.7          7.5
                                  2 (15).............       7,188       1,459       8,647          -9        36.4         52.4         11.2         17.6
3, 4............................  3 (20).............       7,307       1,423       8,729         -91        58.5         37.2          4.28        31.0
5...............................  4 (22).............       7,414       1,405       8,820        -182        97.6          0.00         2.40        50.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                     Table VI.15--Product Class 9-BI, Built-In Upright Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Life-cycle cost 2009$                     Life-cycle cost savings                 Payback
                                    Efficiency level  ---------------------------------------------------------------------------------------   period
      Trial standard level            (% less than                 Discounted                Average      % of households that experience       (years)
                                    baseline energy     Installed   operating      LCC       savings  --------------------------------------------------
                                          use)            cost        cost                    2009$      Net cost    No impact   Net benefit    Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                  Baseline...........      $3,928      $1,071      $4,999  ..........  ...........  ...........  ...........  ..........
1...............................  1 (10).............       3,943         990       4,933         $66         1.53        19.9         78.6          2.9
                                  2 (15).............       3,956         942       4,898         101         3.99         1.70        94.3          3.6
2...............................  3 (20).............       4,042         898       4,940          59        42.9          0.57        56.5         10.7

[[Page 57568]]

 
3, 4............................  4 (25).............       4,176         847       5,023         -23        68.8          0.49        30.7         17.8
5...............................  5 (27).............       4,278         822       5,100        -101        79.8          0.27        20.0         22.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

b. Consumer Subgroup Analysis
    As described in section IV.H, DOE determined the impact of the 
considered TSLs on low-income households and senior-only households. 
DOE did not estimate impacts for compact refrigeration products because 
the household sample sizes were not large enough to yield meaningful 
results.
    Table VI.16 through Table VI.18 compare the average LCC savings at 
each efficiency level for the two consumer subgroups with the average 
LCC savings for the entire sample for each representative product 
class. In general, the average LCC savings for low-income households 
and senior-only households at the considered efficiency levels are not 
substantially different from the average for all households. Chapter 11 
of the final rule TSD presents the complete LCC and PBP results for the 
two subgroups.

              Table VI.16--Standard-Size Refrigerator-Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                Top-mount refrigerator-freezers   Bottom-mount refrigerator-freezers  Side-by-side refrigerator-freezers
                                             -----------------------------------------------------------------------------------------------------------
   Efficiency level (% less than baseline               Product class 3                     Product class 5                     Product class 7
                 energy use)                 -----------------------------------------------------------------------------------------------------------
                                                             Low-                                Low-                                Low-
                                                Senior      income        All       Senior      income        All       Senior      income        All
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 (10)......................................         $43         $49         $46          $9         $10          $9         $22         $23         $22
2 (15)......................................          64          73          69          13          15          14          42          46          44
3 (20)......................................          36          48          43          21          24          22          59          64          62
4 (25)......................................          31          47          41          -1           6           5          48          56          57
5 (30)......................................         -20           0          -7         -63         -52         -54         -31         -23         -18
6 (36/36/33)................................        -105         -81         -89        -151        -136        -137        -100         -91         -85
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table VI.17--Standard-Size Freezers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
----------------------------------------------------------------------------------------------------------------
                                                   Upright freezers                     Chest freezers
                                         -----------------------------------------------------------------------
 Efficiency level (% less than baseline             Product class 9                    Product class 10
               energy use)               -----------------------------------------------------------------------
                                                         Low-                                Low-
                                            Senior      income        All       Senior      income        All
----------------------------------------------------------------------------------------------------------------
1 (10)..................................         $69         $69         $73         $45         $42         $43
2 (15)..................................          98          98         105          66          61          63
3 (20)..................................         130         129         139          86          79          82
4 (25)..................................         153         153         166          74          65          68
5 (30)..................................         179         179         195         $85         $75          79
6 (35)..................................         170         170         189          54          42          47
7 (40/41)...............................         139         139         160         -18         -32         -26
8 (44)..................................           8           8          32  ..........  ..........  ..........
----------------------------------------------------------------------------------------------------------------

                Table VI.18--Built-In Refrigeration Products: Comparison of Average LCC Savings for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Built-in all          Built-in bottom-mount      Built-in side-by-side    Built-in upright freezers
                                                    refrigerators          refrigerator-freezers      refrigerator-freezers   --------------------------
                                             ---------------------------------------------------------------------------------     Product class 9-BI
   Efficiency level (% less than baseline        Product class 3A-BI         Product class 5-BI         Product class 7-BI    --------------------------
                 energy use)                 ---------------------------------------------------------------------------------
                                                         Low-                       Low-                       Low-             Senior    Low-     All
                                               Senior   income    All     Senior   income    All     Senior   income    All              income
--------------------------------------------------------------------------------------------------------------------------------------------------------
1 (10)......................................      $48      $54      $52       $7       $8       $8       $8       $9      $10      $61      $61      $66
2 (15)......................................       65       74       71        0        2        2      -15      -14       -9       93       92      101
3 (20)......................................      -25      -14      -12      -19      -17      -15     -107     -109      -92       47       46       58
4 (25/25/22/25).............................     -170     -155     -152     -148     -141     -139     -199     -201     -183      -39      -41      -24
5 (29/27/-/27)..............................     -280     -263     -260     -219     -210     -208  .......  .......  .......     -119     -121     -102
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57569]]

c. Rebuttable Presumption Payback
    As discussed in section III.D.2, EPCA provides a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for a product that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. In calculating a rebuttable 
presumption payback period for the considered standard levels, DOE used 
discrete values rather than distributions for input values, and, as 
required by EPCA, based the energy use calculation on the DOE test 
procedures for refrigeration products. As a result, DOE calculated a 
single rebuttable presumption payback value, and not a distribution of 
payback periods, for each efficiency level. Table VI.19 through Table 
VI.22 present the average rebuttable presumption payback periods for 
those efficiency levels where the increased purchase cost for a product 
that meets a standard at that level is less than three times the value 
of the first-year energy savings resulting from the standard.

  Table VI.19--Standard-Size Refrigerator-Freezers: Efficiency Levels With Rebuttable Payback Period Less Than
                                                   Three Years
----------------------------------------------------------------------------------------------------------------
     Product class 3: Top-mount           Product class 5: Bottom-mount         Product class 7: Side-by-side
        refrigerator-freezer                  refrigerator-freezer             refrigerator-freezer with TTD *
----------------------------------------------------------------------------------------------------------------
 Efficiency level                      Efficiency level                      Efficiency level
   (% less than                          (% less than                          (% less than
 baseline energy       PBP Years       baseline energy       PBP Years       baseline energy       PBP Years
       use)                                  use)                                  use)
----------------------------------------------------------------------------------------------------------------
         1 (10)                2.4             1 (10)                2.1             1 (10)                1.4
         2 (15)                2.6             2 (15)                2.4             2 (15)                1.7
                   .................  .................  .................           3 (20)                2.9
----------------------------------------------------------------------------------------------------------------
* Through-the-door ice service.

   Table VI.20--Standard-Size Freezers: Efficiency Levels With Rebuttable Payback Period Less Than Three Years
----------------------------------------------------------------------------------------------------------------
        Product class 9: Upright freezer                 Product class 10: Chest freezer
-----------------------------------------------------------------------------------------------
  Efficiency level (%                              Efficiency level (%
   less than baseline           PBP Years          less than baseline           PBP Years
      energy use)                                      energy use)
-----------------------------------------------------------------------------------------------
             1 (10)                      1.9                  1 (10)                     1.8
                         ......................               2 (15)                     2.7
----------------------------------------------------------------------------------------------------------------

  Table VI.21--Compact Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three
                                                      Years
----------------------------------------------------------------------------------------------------------------
     Product class 11: Compact refrigerator             Product class 18: Compact freezer
-----------------------------------------------------------------------------------------------
  Efficiency level (%                              Efficiency level (%
   less than baseline           PBP Years          less than baseline           PBP Years
      energy use)                                      energy use)
-----------------------------------------------------------------------------------------------
             1 (10)                      1.8                  1 (10)                     2.0
             2 (15)                      2.1     ......................  ......................
             3 (20)                      2.7     ......................  ......................
----------------------------------------------------------------------------------------------------------------

 Table VI.22--Built-In Refrigeration Products: Efficiency Levels With Rebuttable Payback Period Less Than Three
                                                      Years
----------------------------------------------------------------------------------------------------------------
 Product class 3A-BI: Built-  Product class 5-BI: Built-  Product class 7-BI: Built-  Product class 9-BI: Built-
     in all-refrigerator            in bottom-mount             in side-by-side           in upright freezer
-----------------------------    refrigerator-freezer      refrigerator-freezer with ---------------------------
                             ----------------------------            TTD *
                                                         ----------------------------  Efficiency
  Efficiency                   Efficiency                  Efficiency                   level (%
level (% less    PBP Years      level (%                    level (%                    less than     PBP Years
than baseline                   less than     PBP Years     less than     PBP Years     baseline
 energy use)                    baseline                    baseline                   energy use)
                               energy use)                 energy use)
----------------------------------------------------------------------------------------------------------------
      1 (10)            1.5        1 (10)   ............       1 (10)   ............       1 (10)           2.7
      2 (15)            2.6   ............  ............  ............  ............  ............  ............
----------------------------------------------------------------------------------------------------------------
* Through-the-door ice service.

    While DOE examined the rebuttable-presumption criterion, it 
considered whether the standard levels considered for today's rule are 
economically justified through a more detailed analysis of the economic 
impacts of these levels pursuant to 42 U.S.C. 6295(o)(2)(B)(i). The 
results of this analysis serve as the basis for DOE to definitively 
evaluate the economic justification for a potential standard level 
(thereby supporting or rebutting the results of any preliminary 
determination of economic justification).

[[Page 57570]]

2. Economic Impacts on Manufacturers
    The NOPR MIA used changes in INPV to compare the financial impacts 
of different TSLs on manufacturers. 75 FR at 59537-59546 (September 27, 
2010) (describing the MIA used by DOE in its analysis). DOE presented 
the industry impacts by the major product types (i.e., standard size 
refrigerator-freezers, standard size freezers, compact refrigerators 
and freezers, and built-in refrigeration products). DOE used the GRIM 
to compare the INPV of the base case (no new energy conservation 
standards) to that of each TSL for each product grouping. The INPV is 
the sum of all net cash flows discounted by the industry's cost of 
capital (discount rate). The difference in INPV between the base case 
and the standards case is an estimate of the economic impacts that 
implementing that standard level would have on the entire industry. For 
today's final rule, DOE continues to use the methodology presented in 
the NOPR (75 FR at 59519-59526 (September 27, 2010)) and in section 0. 
The major methodology change DOE made for the final rule was 
incorporating long term product price trends into the analysis. Since 
the price trend for residential refrigeration products declines over 
the analysis period, the base case industry value is lower for all 
product groupings. Thus, incorporating price trends in the MIA 
increases the impacts on INPV due to standards.
a. Cash-Flow Analysis Results
    The tables below depict the financial impacts on manufacturers 
(represented by changes in INPV) and the conversion costs DOE estimates 
manufacturers would incur at each TSL. DOE shows four sets of results, 
corresponding to the four sets of TSLs considered in this rulemaking. 
Each set of TSLs reflects the impacts on manufacturers of a certain 
group of product classes.
    Each set of results below shows two tables of INPV impacts: the 
first table reflects the lower (less severe) bound of impacts and the 
second represents the upper bound. To evaluate this range of cash-flow 
impacts on the residential refrigeration products industry, DOE modeled 
two different scenarios using different markup assumptions. These 
assumptions correspond to the bounds of a range of market responses 
that DOE anticipates could occur in the standards case (i.e. where 
amended energy conservation standards apply). Each scenario results in 
a unique set of cash flows and corresponding industry value at each 
TSL.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled the flat markup scenario. The flat markup scenario 
assumes that in the standards case manufacturers would be able to pass 
the higher production costs required for more efficient products on to 
their customers. Specifically, the industry would be able to maintain 
its average base-case gross margin, as a percentage of revenue, despite 
higher product costs. In general, the larger the product price 
increases, the less likely manufacturers are able to achieve the cash 
flow from operations calculated in this scenario because manufacturers 
would be less likely to be able to fully recoup these costs through 
larger price increases.
    Through its discussions with manufacturers, DOE found that overall 
profit is driven more by the bundling of product features, such as 
stainless steel exteriors, ice dispensers, and digital displays, than 
by energy efficiency characteristics. In other words, more efficient 
products command higher prices, but these prices are driven by the many 
other features that are also bundled with increased efficiency. 
However, the overall profit margin percentage does not vary widely even 
if the dollar profit per unit increases for products with these 
additional features. Manufacturers are skeptical that customers would 
accept higher prices for increased energy efficiency because it does 
not command higher margins in the current market. Under such a 
scenario, it follows that the large retailers that compose the 
relatively concentrated customer base of the industry would not accept 
manufacturers fully passing through the additional cost of improved 
efficiency because consumers would be wary of higher prices without 
additional features. Therefore, to assess the higher (more severe) end 
of the range of potential impacts, DOE modeled the preservation of 
operating profit markup scenario in which higher energy conservation 
standards result in lower manufacturer markups. This scenario models 
manufacturers' concerns that the higher costs of more efficient 
technology would harm profitability if the full cost increases cannot 
be passed on. The scenario represents the upper end of the range of 
potential impacts on manufacturers because higher production costs 
erode profit margins and result in lower cash flows from operations.
    DOE used the main NIA shipment scenario for both the lower- and 
higher-bound MIA scenarios that were used to characterize the potential 
INPV impacts. The shipment forecast is an important driver of the INPV 
results below. The main NIA shipment scenario includes a price 
elasticity effect, meaning higher prices in the standards case result 
in lower shipments. Lower shipments also reduce industry revenue, and, 
in turn, INPV.
i. Cash-Flow Analysis Results for Standard-Size Refrigerator-Freezers
    As part of its cash-flow analysis for standard-size refrigerator-
freezers, DOE applied two different scenarios to project the impacts on 
manufacturers from standards at the various TSLs that DOE considered. 
The following tables provide those projected impacts under the flat-
markup and preservation of operating profit markup scenarios.

                         Table VI.23--Manufacturer Impact Analysis for Standard-Size Refrigerator-Freezers--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............      2,670.1      2,552.2      2,450.9      2,325.1      1,885.1      1,627.9
Change in INPV.............................  (2009$ millions).............  ...........      (117.8)      (219.2)      (345.0)      (784.9)    (1,042.2)
                                             (%)..........................  ...........        -4.4%        -8.2%       -12.9%       -29.4%       -39.0%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........          153          197          229          348          406
Capital Conversion Costs...................  (2009$ millions).............  ...........          229          393          620        1,405        2,013
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........          382          590          848        1,753        2,419
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57571]]

           Table VI.24--Manufacturer Impact Analysis for Standard-Size Refrigerator-Freezers--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............      2,670.1      2,417.5      2,274.2      2,089.4      1,360.8        828.6
Change in INPV.............................  (2009$ millions).............  ...........      (252.6)      (395.9)      (580.7)    (1,309.3)    (1,841.5)
                                             (%)..........................  ...........        -9.5%       -14.8%       -21.7%       -49.0%       -69.0%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........          153          197          229          348          406
Capital Conversion Costs...................  (2009$ millions).............  ...........          229          393          620        1,405        2,013
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........          382          590          848        1,753        2,419
--------------------------------------------------------------------------------------------------------------------------------------------------------

    TSL 1 represents the current ENERGY STAR level for standard-size 
refrigerator-freezers or a 20-percent reduction in measured energy 
consumption over the current energy conservation standards for the 
analyzed standard-size top-mount product class 3, a 20-perecent 
reduction for the analyzed standard-size bottom-mount product class 5, 
and a 20-percent reduction for the analyzed standard-size side-by-side 
product class 7. At TSL 1, DOE estimates impacts on INPV to range from 
-$117.8 million to -$252.6 million, or a change in INPV of -4.4 percent 
to -9.5 percent. At this TSL, industry free cash flow is estimated to 
decrease by approximately 71.8 percent to $51.5 million, compared to 
the base-case value of $182.8 million in the year leading up to the 
amended energy conservation standards.
    The INPV impacts at TSL 1 are relatively minor, in part because the 
vast majority of manufacturers produce ENERGY STAR units in significant 
volumes, particularly for product classes 5 and 7. Approximately 42 
percent of product class 7 shipments and 47 percent of product class 5 
shipments currently meet this TSL. By contrast, the vast majority of 
product class 3 shipments are baseline units. Additionally, most of the 
design options DOE analyzed at this TSL are one-for-one component 
swaps, including more efficient compressors and brushless DC condenser 
and evaporator fan motors, which require only modest changes to the 
manufacturing process at TSL 1. As such, DOE estimated total product 
conversion costs of $153 million and capital conversion costs of $229 
million.
    While substantial on a nominal basis, the total conversion costs 
are relatively low compared to the industry value of $2.7 billion. The 
total conversion costs at TSL 1 are mostly driven by the design options 
that manufacturers could use to improve the efficiency of the smaller-
sized units of the product classes analyzed. For example, the analyzed 
design options for the 22-cubic foot product class 7 unit included a 
VIP in the freezer door, while the 26-cubic foot product class 7 unit 
only analyzed less costly component swaps. VIP implementation would 
require significant capital and product conversion costs because 
additional production steps are required to hold and bind each panel in 
its location before the product is foamed. Each additional step 
requires more equipment to lengthen production lines and, because of 
lower throughput, more production lines for each manufacturer to 
maintain similar shipment volumes. Some manufacturers have experience 
with VIPs, but DOE expects substantial engineering and testing 
resources would be required for their use in new platforms and/or at 
higher production volumes.
    Similarly, the 16-cubic foot product class 3 unit uses a variable 
speed compressor as a design option. While not a capital intensive 
solution, variable speed compressors would require substantial 
engineering time to integrate the complex component, especially if 
electronic control systems would also be required. Because these 
changes are more complex than the other analyzed design options, more 
than three-quarters of the conversion costs for TSL 1 are attributable 
to the use of the VIPs and variable speed compressors in the smaller-
volume product class 7 and product class 3 units, respectively.
    The flat markup scenario shows slightly negative impacts at TSL 1, 
indicating that the outlays for conversion costs marginally outweigh 
any additional profit earned on incrementally higher variable costs. On 
a shipment-weighted basis, the average MPC for standard-size 
refrigerator-freezers increases by 10 percent at TSL 1 after standards. 
These small component cost changes are not significant enough to fully 
recoup these investments even if manufacturers earn additional profit 
on these costs, as the flat markup scenario assumes. Hence, there is a 
slight negative impact, even in the upper-bound scenario, at TSL 1.
    The efficiency requirements for product class 3 and product class 5 
refrigerator-freezers are the same at TSL 2 as TSL 1. However, the 
efficiency requirements for product class 7 increase to a 25-percent 
reduction in measured energy consumption from current energy 
conservation standards. DOE estimates the INPV impacts at TSL 2 range 
from -$219.2 million to -$395.9 million, or a change in INPV of -8.2 
percent to -14.8 percent. At this TSL, the industry cash flow is 
estimated to decrease by approximately 113.9 percent to -$25.4 million, 
compared to the base-case value of $182.8 million in the year leading 
up to the amended energy conservation standard.
    The additional impacts at TSL 2 relative to TSL 1 result from the 
further improvements manufacturers must make to product class 7 
refrigerator-freezers to achieve a 25-percent energy reduction, as very 
few shipments of product class 7 currently exceed the ENERGY STAR 
level. Specifically, for the 22-cubic foot products, the design options 
DOE analyzed include a variable speed compressor and a VIP in the 
freezer cabinet, instead of the door as in TSL 1. For the 26-cubic foot 
product class 7 unit, the design options analyzed include a VIP in the 
freezer door in addition to additional component swaps and the 
component swaps needed to meet TSL 1. Total conversion costs increase 
by $208 million compared to TSL 1, which is largely driven by the 
initial use of VIPs in the 26-cubic foot product class 7 unit. Besides 
these specific changes to side-by-side units, at TSL 2 most production 
lines of standard-size refrigerator-freezers do not use VIPs or other 
very costly components, which mitigates some of the disruption to 
current facilities. Consequently, the INPV impacts, while greater than 
at TSL 1, are

[[Page 57572]]

still relatively moderate compared to the value of the industry as a 
whole.
    At TSL 2, the INPV in the flat markup is lower than at TSL 1, which 
means the additional conversion costs to add more VIPs leaves 
manufacturers worse off even if they can earn additional profit on 
these costly components. In the preservation of operating profit markup 
scenario, the industry earns no additional profit on this greater 
investment, lowering cash flow from operations in the standards case 
and resulting in greater INPV impacts.
    The efficiency requirements for product class 5 and product class 7 
refrigerator-freezers are the same at TSL 3 as TSL 2. However, the 
efficiency requirements for product class 3 increase to a 25-percent 
reduction in measured energy consumption from current energy 
conservation standards. TSL 3 represents a 25-percent reduction in 
measured energy consumption over the current energy conservation 
standards for both product class 3 and product class 7. In addition, 
TSL 3 represents a 20-percent reduction in measured energy consumption 
for product classes 1, 1A, and 2. DOE estimates the INPV impacts at TSL 
3 to range from -$345.0 million to -$580.7 million, or a change in INPV 
of -12.9 percent to -21.7 percent. At this TSL, the industry cash flow 
is estimated to decrease by approximately 168.0 percent to -$124.3 
million, compared to the base-case value of $182.8 million in the year 
leading up to the standards.
    The additional negative impacts on industry cash flow result from 
the changes to product class 3 refrigerator-freezers to reach a 25-
percent reduction in energy use (side-by-side products met this 
efficiency level at TSL 2). Specifically, the design options DOE 
analyzed at TSL 3 for 16-cubic foot top-mount refrigerator-freezers 
included the use of VIPs for the first time (in the freezer cabinet), 
in addition to the component swaps discussed above. In total, DOE 
estimates product conversion costs of $229 million and capital 
conversion costs of $620 million at TSL 3. The high cost to purchase 
new production equipment and the large engineering effort to 
manufacture new platforms for these smaller-sized product class 3 units 
drive the vast majority of this additional $258 million in conversion 
costs that DOE estimates manufacturers would incur at TSL 3. Because 
the smaller size top-mounted units account for a large percentage of 
total shipments, the production equipment necessary to implement new 
platforms for these products is costly.
    While production of units meeting TSL 3 is fairly limited, several 
manufacturers have introduced products that meet these efficiency 
levels in response to Federal production tax credits. This experience 
mitigates some of the product conversion costs by giving manufacturers 
some experience with the newer technologies. However, the more severe 
impacts at TSL 3, relative to TSL 2, are due to the incremental outlays 
for conversion costs to make the changes described above. In 
particular, any experience with VIPs on some products does not lower 
the substantial capital conversion necessary to purchase production 
equipment necessary to manufacture products that are substantially 
different from existing products.
    As mentioned above, the preservation of operating profit markup 
scenario assumes no additional profit is earned on the higher 
production costs. This assumption lowers profit margins as a percentage 
of revenue and leads to worse impacts on INPV. In the flat markup 
scenario, the impact of the investments is mitigated by the assumption 
that manufacturers can earn a similar profit margin as a percentage of 
revenues on their higher variable costs. At TSL 3, MPCs increase by an 
average of 16 percent after standards, leading to additional per-unit 
profit in this scenario. However, the magnitude of the conversion 
investments still leads to negative INPV impacts even if additional 
profit is earned on the incremental manufacturing costs. The lower 
industry shipments driven by the relative price elasticity assumption 
account for approximately $45 million of the impact in the flat markup 
scenario.
    TSL 4 represents a 30-percent reduction in measured energy 
consumption over the current energy conservation standards for product 
class 3, product class 5, and product class 7. DOE estimates the INPV 
impacts at TSL 4 to range from -$784.9 million to -$1,309.3 million, or 
a change in INPV of -29.4 percent to -49.0 percent. At this TSL, the 
industry cash flow is estimated to decrease by approximately a factor 
of 3.6 to -$469.3 million, compared to the base-case value of $182.8 
million in the year leading up to the amended energy conservation 
standards.
    At TSL 4, significant changes to the manufacturing process are 
necessary for all refrigerator-freezers. A 30-percent reduction in 
energy consumption is the maximum-efficiency top-mounted products 
available on the market; \47\ the maximum available side-by-side and 
bottom-mount only slightly exceed a 30-percent reduction. The design 
options DOE analyzed for all standard-size products--with the exception 
of the 25-cubic foot product class 5 unit--use multiple VIPs in the 
fresh food compartment, freezer doors, and cabinets to reach the 30-
percent efficiency level. The design options also include the use of 
variable speed compressors for all units analyzed except the 21-cubic 
foot product class 3 unit. These product changes substantially increase 
the variable costs across nearly all platforms at this TSL.
---------------------------------------------------------------------------

    \47\ Throughout the document, the terms ``max available'' or 
``max-tech available'' are intended to mean the maximum efficiency 
level of available products.
---------------------------------------------------------------------------

    While products that meet the efficiency requirements of TSL 4 are 
not in widespread production, several manufacturers produce units at 
these efficiencies due to tax credit incentives. However, at TSL 4, 
most manufacturers expect to completely redesign existing production 
lines if the amended energy conservation standards were set at levels 
that necessitated these changes across most or all of their products. 
Manufacturers would need to purchase injection molding equipment, 
cabinet bending equipment, and other equipment for interior tooling as 
they would need to create new molds for these production lines. These 
changes drive DOE's estimate of the large product and capital 
conversion costs at TSL 4 ($348 million and $1,405 million, 
respectively). The significant incremental investment relative to TSL 3 
results, in large part, from the design option of adding VIPs to the 
21-cubic foot analyzed product class 3 unit. This top-mounted 
refrigerator-freezer represents a substantial portion of the market and 
manufacturers would have to completely redesign these platforms.
    As a result of the large investment necessary to meet this TSL, 
some manufacturers could move production to lower-labor-costs countries 
to achieve cost savings for labor expenditures. (More information on 
employment impacts is provided in section 0.) In addition to the large 
capital conversion costs, the shipment-weighted average MPC increases 
by approximately 36 percent at TSL 4 after standards compared to the 
base case. However, the magnitude of the conversion costs at TSL 4 are 
so large that even if manufacturers can reap additional profit from 
these higher product costs (as in the flat markup scenario), they would 
still be substantially impacted, as shown by the negative INPV results 
in the flat markup scenario. Additionally, the 36-percent increase in 
MPC drives

[[Page 57573]]

shipments lower due to the price elasticity. Lower industry volume from 
the decline in shipments accounts for a change in industry value of 
approximately 16 percent in the flat markup scenario. The large, 
negative impact on INPV is even greater under the preservation of 
operating profit markup scenario due to the inability to pass on the 
higher costs of expensive design options such as variable speed 
compressors and VIPs.
    TSL 5 represents max tech for all standard-size refrigerator-
freezers. The max-tech level corresponds to reductions in measured 
energy consumption compared to the current energy conservation 
standards for product class 3 (36 percent), product class 5 (36 
percent), and product class 7 (33 percent), respectively. DOE estimates 
the INPV impacts at TSL 5 to range from -$1,042.2 million to -$1,841.5 
million, or a change in INPV of -39.0 percent to -69.0 percent. At this 
TSL, the industry cash flow is estimated to decrease by a factor of 
approximately 5.0 to -$727.5 million, compared to the base-case value 
of $182.8 million in the year leading up to the amended energy 
conservation standards.
    No products that meet TSL 5 are currently offered on the U.S. 
market. At TSL 5, the changes required to meet this TSL are similar to 
those at TSL 4, as complete redesigns of all platforms would be 
required. TSL 5 requires much more extensive use of VIPs, however. The 
higher conversion costs at TSL 5 are primarily due to the use of VIPs 
in additional locations in the door, cabinet and freezer, whereas at 
TSL 4 some of the analyzed design options of the larger-sized units 
included limited or no VIP use. This level would require manufacturers 
to further lengthen assembly lines and even modify or move their 
facilities outside of the United States. These factors drive the 
projected $2,419 million conversion cost estimate at this TSL. As with 
TSL 4, at TSL 5 some manufacturers could elect to move production out 
of the U.S. to offset some of the additional product costs. At TSL 5, 
DOE estimates MPCs increase by approximately 58 percent after standards 
compared to the base case. Similar to TSL 4, this substantially reduces 
shipments due to the price elasticity effect and exacerbates the 
industry impacts in both markup scenarios.
    As with other TSLs, the impact on INPV is mitigated under the flat 
markup scenario because manufacturers are able to fully pass on the 
large increase in MPC to consumers, thereby increasing manufacturers' 
gross profit in absolute terms. However, even assuming manufacturers 
could earn the same gross margin percentage per unit on those higher 
costs, the capital and product conversion costs cause negative INPV 
impacts, as shown by the 39 percent decline in INPV in the flat markup 
scenario. This large impact even in the lower bound scenario 
demonstrates that the large conversion costs to redesign all existing 
platforms results in substantial harm. The result is predicted even if 
manufacturers earn a historical margin on these additional costs. Due 
to the extremely large cost increases at the max-tech level, it is less 
likely at TSL 5 than at other examined levels that manufacturers could 
fully pass through the increase in production costs. If margins are 
impacted, TSL 5 would result in a substantial INPV loss under this 
scenario.
ii. Cash-Flow Analysis Results for Standard-Size Freezers
    As part of its cash-flow analysis for standard-size freezers, DOE 
applied two different scenarios to project the impacts on manufacturers 
from standards at the various TSLs that DOE considered. The following 
tables provide those projected impacts under the flat-markup and 
preservation of operating profit markup scenarios.

                               Table VI.25--Manufacturer Impact Analysis for Standard-Size Freezers--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        337.8        308.0        214.1        225.3        252.4        192.7
Change in INPV.............................  (2009$ millions).............  ...........       (29.8)      (123.7)      (112.5)       (85.4)      (145.0)
                                             (%)..........................  ...........        -8.8%       -36.6%       -33.3%       -25.3%       -42.9%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           22           51           55           63           70
Capital Conversion Costs...................  (2009$ millions).............  ...........           50          175          182          183          320
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           72          226          237          247          390
--------------------------------------------------------------------------------------------------------------------------------------------------------

                 Table VI.26--Manufacturer Impact Analysis for Standard-Size Freezers--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        337.8        287.7        167.3        159.6        155.3         39.0
Change in INPV.............................  (2009$ millions).............  ...........       (50.0)      (170.5)      (178.1)      (182.4)      (298.8)
                                             (%)..........................  ...........       -14.8%       -50.5%       -52.7%       -54.0%       -88.5%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           22           51           55           63           70
Capital Conversion Costs...................  (2009$ millions).............  ...........           50          175          182          183          320
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           72          226          237          247          390
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57574]]

    TSL 1 represents a 20-percent reduction in measured energy use over 
the current energy conservation standards for the analyzed standard-
size upright freezer product class 9 and a 20-percent reduction for the 
analyzed standard-size chest freezer product class 10. DOE estimates 
the INPV impacts at TSL 1 to range from -$29.8 million to -$50.0 
million, or a change in INPV of -8.8 percent to -14.8 percent. At this 
TSL, the industry cash flow is estimated to decrease by approximately 
111.2 percent to -$2.6 million, compared to the base-case value of 
$23.2 million in the year leading up to the amended energy conservation 
standards.
    While products meeting TSL 1 are currently produced only in limited 
volumes, the changes in the manufacturing process would not require 
completely new platforms to meet the energy requirements at this TSL. 
For most standard-size freezer platforms, the design options DOE 
analyzed include the use of brushless direct current (DC) evaporator 
fan motors and compressors with higher EERs. However, the design 
options to meet this efficiency level also include increasing door 
insulation thickness for all analyzed products except the 20-cubic foot 
product class 10 unit. Increasing door insulation thickness drives the 
majority of the conversion cost outlay DOE estimates manufacturers 
would incur at TSL 1. To increase door insulation thickness, 
manufacturers would need to purchase new tooling for their door 
assemblies. DOE estimates that these changes would result in product 
conversion costs of $22 million and capital conversion costs of $50 
million at TSL 1. However, the conversion costs are somewhat mitigated 
at TSL 1 because the design options analyzed would not change the 
production equipment for the cabinet.
    At TSL 1, variable costs increase by approximately 10 percent after 
standards relative to base case MPCs. The flat markup scenario shows 
less severe impacts because it assumes manufacturers can pass on these 
substantially higher product costs and maintain gross margin 
percentages. Additionally, the reduction in shipments due to the price 
elasticity has only a marginally negative effect at this TSL. The 
relatively large conversion costs decrease industry value under both 
markup scenarios and account for a substantial portion of the INPV 
impacts. This is especially the case if manufacturers are unable to 
earn any additional profit on the higher production costs (the 
preservation of operating profit scenario).
    TSL 2 represents a reduction in measured energy consumption over 
the current standards of 30 percent for product class 9 and 25 percent 
for product class 10. TSL 2 also represents reductions for the other 
product classes as well--product class 8 (upright freezers with manual 
defrost, 25 percent) and product class 10A (chest freezers with 
automatic defrost, 30 percent). DOE estimates the INPV impacts at TSL 2 
to range from -$123.7 million to -$170.5 million, or a change in INPV 
of -36.6 percent to -50.5 percent. At this TSL, the industry cash flow 
is estimated to decrease by approximately a factor of 3.6 to -$60.0 
million, compared to the base-case value of $23.2 million in the year 
leading up to the amended energy conservation standards.
    The vast majority of the standard-size freezer market does not 
currently meet the efficiency requirements at TSL 2. DOE's design 
options assume that, in addition to the component swaps noted above, 
manufacturers would increase the insulation thickness of both the door 
and cabinet. As a result, product redesigns are expected across most 
platforms, which could substantially disrupt current manufacturing 
processes. These changes account for the majority of DOE's estimates 
for total product conversion costs of $51 million and capital 
conversion costs of $175 million, an increase over TSL 1 of $29 million 
and $125 million, respectively. The magnitude of the investments, 
relative to the industry value, results in severe INPV impacts. Even if 
manufacturers are able to pass on the estimated 24-percent increase in 
product costs onto their customers after standards, the large product 
and capital conversion costs resulting from increased insulation 
thickness decrease INPV. If manufacturers are not able to pass on these 
costs, as shown by the preservation of operating profit scenario, INPV 
impacts are projected to be severe.
    TSL 3 represents a 35-percent reduction in measured energy use over 
the current energy conservation standards for product class 9 and a 30-
percent reduction for product class 10. DOE estimates the INPV impacts 
at TSL 3 to range from -$112.5 million to -$178.1 million, or a change 
in INPV of -33.3 percent to -52.7 percent. At this TSL, the industry 
cash flow is estimated to decrease by a factor of approximately 3.7 to 
-$63.8 million, compared to the base-case value of $23.2 million in the 
year leading up to the amended energy conservation standards.
    The efficiency requirements at TSL 3 are more stringent than the 
max available products in the market for product class 9 and product 
class 10. The impacts at TSL 3 are similar to those at TSL 2 because 
the design options analyzed by DOE already required platform redesigns 
at TSL 2. However, the additional design options analyzed at TSL 3 also 
include a variable speed compressor in the 14-cubic foot product class 
9 unit and VIPs in the bottom wall of the 20-cubic foot product class 
10 unit. These design options substantially increase the variable costs 
associated with these products but do not greatly change the product 
and capital conversion costs. DOE estimates that under TSL 3, the 
average MPC of a standard-size freezer is roughly 34 percent higher 
after standards than in the base case, leading to a 9-percent drop in 
shipments from the price elasticity assumption for 2014 alone.
    The impacts at TSL 3 under the flat markup scenario become less 
severe than at TSL 2 because the scenario assumes manufacturers can 
fully pass on the added cost to consumers, while investments do not 
significantly increase from TSL 2 to TSL 3. However, under the 
preservation of operating profit markup scenario, manufacturers do not 
receive any extra profit on units of higher cost, resulting in worse 
INPV impacts at TSL 3 than at TSL 2.
    TSL 4 represents a 40-percent reduction in measured energy use over 
the current energy conservation standards for product class 9 and a 35-
percent reduction for product class 10. DOE estimates the INPV impacts 
at TSL 4 to range from -$85.4 million to -$182.4 million, or a change 
in INPV of -25.3 percent to -54.0 percent. At this TSL, the industry 
cash flow is estimated to decrease by a factor of approximately 3.9 to 
-$66.5 million, compared to the base-case value of $23.2 million in the 
year leading up to the amended energy conservation standards.
    At TSL 4, the design options DOE analyzed include the addition of a 
variable speed compressor for the 20-cubic foot product class 9 unit, 
the 15-cubic foot product class 10 unit, and the 20-cubic foot product 
class 10 unit. For the 14-cubic foot product class 9 unit, the design 
options analyzed were even thicker wall cabinet insulation and the 
implementation of VIPs.
    The relative impacts at TSL 4 are also caused by the incremental 
MPCs compared to the conversion costs to implement these design 
options. Outlays for conversion costs increase only slightly at TSL 4 
(by 4 percent,

[[Page 57575]]

compared to TSL 3) while variable costs increase substantially (by 
approximately 52 percent after standards compared to the baseline) due 
to the addition of variable speed compressors and VIPs. Because 
manufacturers earn incrementally more profit on each unit at TSL 4 
compared to TSL 3 in the flat markup scenario--without substantial 
changes to conversion costs--further declines in industry value, though 
still substantial, are mitigated in this scenario. However, 
manufacturers expressed skepticism that such large cost increases could 
be passed on. This view is reflected by the severely negative results 
in the preservation of operating profit scenario.
    TSL 5 represents max tech for the standard-size freezer product 
classes. This TSL reflects a 44-percent reduction in measured energy 
use for product class 9 and a 41-percent reduction for product class 
10. DOE estimates the INPV impacts at TSL 5 to range from -$145.0 
million to -$298.8 million, or a change in INPV of -42.9 percent to -
88.5 percent. At this TSL, the industry cash flow is estimated to 
decrease by a factor of approximately 6.3 to -$122.8 million, compared 
to the base-case value of $23.2 million in the year leading up to the 
amended energy conservation standards.
    To achieve the max-tech level at TSL 5, DOE analyzed design options 
that include the widespread implementation of multiple VIPs on all 
standard-size freezers, in addition to the use of more efficient 
components and thicker insulation already necessary to achieve the 
efficiency requirements at TSL 4. DOE estimated that TSL 5 would 
require product and capital conversion costs of $70 million and $320 
million, respectively. These large conversion costs result from the 
changes associated with multiple VIP implementation and wall thickness 
increases. In addition, DOE estimates that product costs would almost 
double base-case MPCs after standards, driven by the use of variable 
speed compressors and VIPs in the doors and cabinet of all product 
lines. As a result, INPV decreases substantially from TSL 4 to TSL 5.
iii. Cash-Flow Analysis Results for Compact Refrigeration Products
    As part of its cash-flow analysis for compact refrigeration 
products, DOE applied two different scenarios to project the impacts on 
manufacturers from standards at the various TSLs that DOE considered. 
The following tables provide those projected impacts under the flat-
markup and preservation of operating profit markup scenarios.

                           Table VI.27--Manufacturer Impact Analysis for Compact Refrigeration Products--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        169.4        152.8        133.3        106.5        127.9         14.5
Change in INPV.............................  (2009$ millions).............  ...........       (16.6)       (36.2)       (62.9)       (41.5)      (154.9)
                                             (%)..........................  ...........        -9.8%       -21.4%       -37.1%       -24.5%       -91.4%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           15           35           41           48           67
Capital Conversion Costs...................  (2009$ millions).............  ...........           24           46           76           71          220
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           39           80          118          119          287
--------------------------------------------------------------------------------------------------------------------------------------------------------

             Table VI.28--Manufacturer Impact Analysis for Compact Refrigeration Products--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        169.4        141.6        110.8         80.1         76.6       (73.2)
Change in INPV.............................  (2009$ millions).............  ...........       (27.8)       (58.7)       (89.3)       (92.8)      (242.6)
                                             (%)..........................  ...........       -16.4%       -34.6%       -52.7%       -54.8%      -143.2%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           15           35           41           48           67
Capital Conversion Costs...................  (2009$ millions).............  ...........           24           46           76           71          220
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           39           80          118          119          287
--------------------------------------------------------------------------------------------------------------------------------------------------------

    TSL 1 represents a 20-percent reduction in measured energy use over 
the current energy conservation standards for compact refrigerators and 
refrigerator-freezers (product class 11) and a 10-percent reduction for 
compact freezers (product class 18) analyzed by DOE. DOE estimates the 
INPV impacts at TSL 1 to range from -$16.6 million to -$27.8 million, 
or a change in INPV of -9.8 percent to -16.4 percent. At this TSL, 
industry cash flow is estimated to decrease by approximately 125.1 
percent to -$2.7 million, compared to the base-case value of $10.7 
million in the year leading up to the amended energy conservation 
standards. A small percentage of product class 18 shipments currently 
meet this TSL, but most product class 11 shipments are baseline units.
    The design options analyzed by DOE at TSL 1 assumed that more 
significant changes in the manufacturing process would be required for 
product class 11, while product class 18 would only require increased 
compressor efficiency. For product class 11, DOE analyzed several 
design options that represent component changes, such as a more 
efficient compressor and increased heat exchanger area, which do not 
have a significant impact on consumer prices or conversion costs. 
However, DOE also analyzed increasing door insulation thickness for 
product class 11, which drives the bulk of the estimated $15 million 
and $24 million outlays for product conversion and capital

[[Page 57576]]

conversion costs, respectively. As described for standard-size 
refrigerator-freezers and standard-size freezers, increasing insulation 
thickness requires manufacturers to invest in injection molding 
equipment and other equipment for interior tooling to manufacture 
products with different door dimensions. The overall impacts at TSL 1 
are relatively moderate because the conversion costs are still small 
compared to the industry value of $169.4 million.
    The higher production costs at TSL 1 do not have a substantial 
impact on INPV at TSL 1. The MPC of compact refrigeration products on a 
shipment-weighted basis increases 11 percent over the base case at TSL 
1 after standards. The combined INPV impacts are greater under the 
preservation of operating profit scenario since manufacturers cannot 
pass on any of the added cost to consumers under that scenario, 
resulting in lower cash flows from operations. However, because 
production costs do not greatly increase at TSL 1, the impacts on INPV 
are relatively low under this scenario as well.
    TSL 2 represents a 25-percent reduction in measured energy use over 
the current energy conservation standards for product class 11 and a 
10-percent reduction for product class 18. TSL 2 also represents a 15-
percent reduction in measured energy consumption for the analyzed 
product classes 13, 13I, 15, and 15I, and a 20-percent reduction for 
the unanalyzed product classes 14 and 14I. DOE estimates the INPV 
impacts at TSL 2 to range from -$36.2 million to -$58.7 million, or a 
change in INPV of -21.4 percent to -34.6 percent. At this TSL, the 
industry cash flow is estimated to decrease by approximately 254.9 
percent to -$16.6 million, compared to the base-case value of $10.7 
million in the year leading up to the amended energy conservation 
standards.
    At TSL 2, further changes are required for product class 11. In 
addition to component swaps, the design options analyzed by DOE include 
thicker cabinet insulation. As discussed for TSL 1, increasing 
insulation thickness significantly impacts product and capital 
conversion costs, but much more so when adding insulation to the 
cabinet (as opposed to the door). To increase the insulation thickness 
of the cabinet, manufacturers must replace virtually all stamping 
equipment, which greatly increases the capital conversion costs. 
Additionally, DOE analyzed the use of isobutane refrigerant as a design 
option for the 4-cubic foot product class 11 unit. At TSL 2, a 
substantial portion of the investment to reach TSL 2 would likely be 
for training service technicians to handle this volatile refrigerant. 
As a result of thicker cabinet insulation and conversion to isobutane, 
product conversion and capital conversion costs roughly double at TSL 2 
(to $35 million for product conversion costs and $46 million for 
capital conversion costs). The shipment-weighted MPC increased 22 
percent at TSL 2 after standards compared to baseline costs, which also 
contributed to the more severe impacts projected under the preservation 
of operation profit scenario if manufacturers do not earn additional 
profit on these higher costs.
    TSL 3 represents a 30-percent reduction in measured energy 
consumption over the current energy conservation standards for product 
class 11 and a 15-percent reduction for product class 18. DOE estimates 
the INPV impacts at TSL 3 to range from -$62.9 million to -$89.3 
million, or a change in INPV of -37.1 percent to -52.7 percent. At this 
TSL, the industry cash flow is estimated to decrease by a factor of 
approximately 3.9 to -$30.6 million, compared to the base-case value of 
$10.7 million in the year leading up to the amended energy conservation 
standards.
    At TSL 3, the design options analyzed for both product class 18 
units include thicker door insulation, which further increases the 
capital conversion costs over TSL 1 and TSL 2, where this was not 
analyzed as a design option. The additional impacts at TSL 3 are also 
due to more stringent requirements for product class 11. A 30-percent 
reduction for product class 11 is greater than the most efficient units 
on the market today. For both analyzed sizes of product class 11, DOE 
analyzed the design option of thicker insulation in the cabinet for 
both units analyzed. The net effect is a large increase in conversion 
costs due to the much higher cost of the equipment necessary to 
manufacture the cabinet. At TSL 3, DOE estimated total product 
conversion costs of $41 million and capital conversion costs of $76 
million, a 46 percent total increase in conversion costs over TSL 2. 
The effect of the design changes at TSL 3 on shipment-weighted unit 
cost is a 27-percent increase over the average baseline MPC after 
standards. The magnitude of the investments relative to the industry 
value leads to significant impacts, although they are moderated 
somewhat in the flat markup because manufacturers earn additional 
profit on the investments.
    TSL 4 represents a 40-percent reduction in measured energy use over 
the current energy conservation standards for product class 11 and a 
25-percent reduction for product class 18. DOE estimates the INPV 
impacts at TSL 4 to range from -$41.5 million to -$92.8 million, or a 
change in INPV of -24.5 percent to -54.8 percent. At this TSL, the 
industry cash flow is estimated to decrease by a factor of 
approximately 3.9 to -$30.5 million, compared to the base-case value of 
$10.7 million in the year leading up to the amended energy conservation 
standards.
    The design options analyzed at TSL 4 would also severely disrupt 
current manufacturing processes. For the 1.7-cubic foot product class 
11 unit, DOE analyzed a variable speed compressor and isobutane 
refrigerant as design options. For the 4-cubic foot product class 11 
unit and the 7-cubic foot product class 18 unit, DOE analyzed thicker 
insulation in the cabinets. For 3.4-cubic foot product class 18 unit, 
DOE analyzed both an increase to cabinet insulation thickness and VIPs 
in the bottom wall as design options. Although increasing insulation 
thickness, converting to isobutane, and implementing VIPs all would 
necessitate large conversion costs, capital conversion costs decrease 
slightly from TSL 3 to TSL 4 because of the removal of all previous 
design options in the 1.7-cubic foot unit. In other words, the design 
options analyzed for this unit cause less substantial changes to 
existing production equipment, but would also require a large 
investment by manufacturers to train service technicians to deal with 
the refrigerant. Because this task would require a large outlay for 
product conversion costs, total conversion costs are roughly the same 
at TSL 3 and TSL 4. Adding a variable speed compressor in the smaller 
product class 11 unit analyzed also has a substantial impact on unit 
price because of its high component cost. At TSL 4, the shipment-
weighted MPC is 60-percent higher than the baseline MPC after 
standards. These cost increases are projected to cause a 16-percent 
decrease in shipments at TSL 4 in 2014 alone. Over time, this decline 
significantly contributes to the negative impacts on INPV in both 
markup scenarios.
    The large conversion costs and higher prices leading to lower 
shipments cause a decrease in INPV from TSL 3 to TSL 4 under the 
preservation of operating profit markup scenario (since this scenario 
assumes higher production costs are not passed on to consumers). 
However, under the flat markup scenario, manufacturers are able to earn 
additional profit on the new high-cost components such as variable 
speed

[[Page 57577]]

compressors, resulting in an increase in INPV from TSL 3 to TSL 4.
    TSL 5 represents max tech for both product classes 11 and 18. The 
max-tech level corresponds to a 59-percent and 42-percent reduction in 
measured energy use for product class 11 and product class 18, 
respectively. DOE estimates the INPV impacts at TSL 5 to range from -
$154.9 million to -$242.6 million, or a change in INPV of -91.4 percent 
to -143.2 percent. At this TSL, the industry cash flow is estimated to 
decrease approximately ten-fold to -$97.6 million, compared to the 
base-case value of $10.7 million in the year leading up to the amended 
energy conservation standards.
    The design options DOE analyzed include the use of VIPs for all 
analyzed product class 11 and 18 units to reach max-tech efficiency 
levels. Additionally, the design options analyzed for some products 
also included other costly changes. For the 1.7-cubic foot product 
class 11 unit, the design options analyzed included multiple VIPs, a 
larger heat exchanger, and thicker insulation. The design options 
analyzed for the 4-cubic foot product class 11 unit also included a 
variable speed compressor and thicker insulation. For product class 18, 
DOE assumed that manufacturers would remove the design options 
necessary to meet TSLs 1 through 4 and add a variable speed compressor 
and thicker insulation for both analyzed products. These significant 
changes greatly increase the investment required to manufacture 
standards-compliant products. DOE estimated that product conversion 
costs would be $67 million at TSL 5, an increase of almost 40 percent 
over TSL 4. DOE also estimated that capital conversion costs would be 
$220 million, a more than three-fold increase over TSL 4. This drastic 
increase in conversion costs demonstrates the significant investments 
required by implementing widespread use of VIPs and increasing wall 
thickness.
    At TSL 5, the shipment-weighted MPC increases by over 150 percent 
over the baseline after standards due to the high material costs of 
VIPs and variable speed compressors. These large jumps cause shipments 
to decrease by 42 percent due to the price elasticity in 2014 alone. As 
a result of lower industry shipments and extremely high conversion 
costs, INPV decreases substantially from TSL 4 to TSL 5 and becomes 
negative under the preservation of operating profit scenario, which 
indicates the industry loses more than its base-case value in the 
standards case under this scenario.
iv. Cash-Flow Analysis Results for Built-In Refrigeration Products
    As part of its cash-flow analysis for built-in refrigeration 
products, DOE applied two different scenarios to project the impacts on 
manufacturers from standards at the various TSLs that DOE considered. 
The following tables provide those projected impacts under the flat-
markup and preservation of operating profit markup scenarios.

                           Table VI.29--Manufacturer Impact Analysis for Built-In Refrigeration Products--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        554.1        502.2        499.0        486.1        471.2        464.2
Change in INPV.............................  (2009$ millions).............  ...........       (51.9)       (55.1)       (68.0)       (82.9)       (89.9)
                                             (%)..........................  ...........        -9.4%        -9.9%       -12.3%       -15.0%       -16.2%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           41           51           65           75           87
Capital Conversion Costs...................  (2009$ millions).............  ...........           40           38           55           74           84
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           81           89          119          149          171
--------------------------------------------------------------------------------------------------------------------------------------------------------

             Table VI.30--Manufacturer Impact Analysis for Built-In Refrigeration Products--Preservation of Operating Profit Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              1            2            3            4            5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV.......................................  (2009$ millions).............        554.1        501.5        497.6        477.0        456.5        442.0
Change in INPV.............................  (2009$ millions).............  ...........       (52.6)       (56.5)       (77.2)       (97.6)      (112.1)
                                             (%)..........................  ...........        -9.5%       -10.2%       -13.9%       -17.6%       -20.2%
                                                                                        ================================================================
Product Conversion Costs...................  (2009$ millions).............  ...........           41           51           65           75           87
Capital Conversion Costs...................  (2009$ millions).............  ...........           40           38           55           74           84
                                                                                        ----------------------------------------------------------------
    Total Conversion Costs.................  (2009$ millions).............  ...........           81           89          119          149          171
--------------------------------------------------------------------------------------------------------------------------------------------------------

    TSL 1 represents a 10-percent reduction in measured energy use over 
the current energy conservation standards for the analyzed built-in 
all-refrigerator product class 3A-BI, the analyzed built-in bottom-
mount product class 5-BI, the analyzed built-in side-by-side product 
class 7-BI, and for the analyzed built-in freezer product class 9-BI. 
DOE estimates the INPV impacts at TSL 1 to range from -$51.9 million to 
-$52.6 million, or a change in INPV of -9.4 percent to -9.5 percent. At 
this TSL, the industry cash flow is estimated to decrease by 
approximately 70.7 percent to $11.0 million, compared to the base-case 
value of $37.5 million in the year leading up to the amended energy 
conservation standards.
    At TSL 1, the design options that DOE analyzed result in moderate 
changes in the manufacturing process for built-in refrigeration 
products. For product classes 3A-BI and 9-BI, the design options that 
DOE analyzed to reach TSL 1 included the use of more efficient

[[Page 57578]]

components that do not require significant changes to the manufacturing 
process. However, for product class 5-BI and product class 7-BI, the 
design options DOE analyzed also include the use of VIPs in the freezer 
door. While these components add to the overall costs of production, 
the added costs represent a small percentage of the total cost of a 
built-in refrigeration product. These cost deltas are low compared to 
the overall cost of the products and result in small impacts even if no 
additional profit is earned on the incremental MPCs. The estimated 
product conversion costs for all built-in refrigeration products at TSL 
1 are $41 million and the estimated capital conversion costs are $40 
million. The implementation of VIPs represents a substantial part of 
the conversion costs, but several built-in refrigeration manufacturers 
have products that use similar technology, which helps to mitigate some 
of the product conversion costs that would be required to design 
products from the ground up.
    TSL 2 represents a 15-percent reduction in measured energy use for 
product class 3A-BI and product class 5-BI. For product classes 7-BI 
and 9-BI, TSL 2 represents a reduction of 10 percent and 20 percent, 
respectively. DOE estimates the INPV impacts at TSL 2 to range from -
$55.1 million to -$56.5 million, or a change in INPV of -9.9 percent to 
-10.2 percent. At this TSL, the industry cash flow is estimated to 
decrease by approximately 75.2 percent to $9.3 million, compared to the 
base-case value of $37.5 million in the year leading up to the amended 
energy conservation standards.
    The efficiency requirements for product class 7-BI refrigerator-
freezers do not change from TSL 1 to TSL 2, but the efficiency 
requirements for all other analyzed built-in product classes increase. 
The design options that DOE analyzes at TSL 2 for product classes 3A-BI 
and 7-BI still only include component swaps to reach a 15-percent 
efficiency improvement. Product class 5-BI uses a variable speed 
compressor in the freezer with a brushless DC condenser fan motor, but 
no longer use the VIPs used to reach TSL 1. The design options analyzed 
for product class 9-BI include a brushless DC evaporator and condenser 
fan motor, a larger condenser, a variable speed compressor, and a VIP 
in the upper door. Because product class 5-BI no longer uses VIPs and 
fewer changes to existing products are necessary, the overall impact is 
a slight decrease in capital conversion costs from $40 million at TSL 1 
to $38 million at TSL 2. Product conversion costs increase to $51 
million at TSL 2 because additional engineering time would be required 
to implement the additional component changes. However, because the 
complexity of the changes to the products and production facilities are 
similar at TSL 1 and TSL 2, there is only a small decrease in INPV from 
TSL 1 to TSL 2.
    TSL 3 represents a 20-percent reduction in measured energy use for 
product class 3A-BI and product class 7-BI. For product classes 5-BI 
and 9-BI, TSL 3 represents a reduction of 15 percent and 25 percent, 
respectively. DOE estimates the INPV impacts at TSL 3 to range from -
$68.0 million to -$77.2 million, or a change in INPV of -12.3 percent 
to -13.9 percent. At this TSL, the industry cash flow is estimated to 
decrease by approximately 102.9 percent to -$1.1 million, compared to 
the base-case value of $37.5 million in the year leading up to the 
amended energy conservation standards.
    The efficiency requirements for product class 5-BI do not change 
from TSL 2 to TSL 3. However, the design options for all other built-in 
refrigeration products at TSL 3 include the implementation of VIPs. The 
widespread implementation of VIPs increases product and capital 
conversion costs, which are estimated to be $65 million and $55 million 
at TSL 3, respectively. Substantial changes to existing production 
facilities would be required to manufacture products that meet the 
required efficiencies at TSL 3. Most of the capital conversion costs 
involve purchasing new production equipment and would result in high 
stranded assets. The extensive changes that manufacturers would be 
required to make to existing facilities and the projected erosion of 
profitability if the additional production cost of implementing VIPs 
does not yield additional profit result in a projected decrease in INPV 
from TSL 3 to TSL 4. However, the industry value is high relative to 
the required capital conversion costs and the cost of the additional 
VIP panels is relatively small compared to the overall cost of the 
products, which helps to mitigate some of the negative impacts caused 
by these changes.
    TSL 4 represents a 25-percent reduction in measured energy use over 
the current energy conservation standards for the following product 
classes: 3A-BI, 5-BI, and 9-BI. For product class 7-BI, TSL 4 
represents a 20-percent reduction in measured energy use from current 
energy conservation standards. DOE estimates the INPV impacts at TSL 4 
to range from -$82.9 million to -$97.6 million, or a change in INPV of 
-15.0 percent to -17.6 percent. At this TSL, the industry cash flow is 
estimated to decrease by approximately 130.3 percent to -$11.4 million, 
compared to the base-case value of $37.5 million in the year leading up 
to the amended energy conservation standards.
    The efficiency requirements for product class 7-BI do not change 
from TSL 3 to TSL 4. The design options for the other built-in 
refrigeration products all include the addition of more VIPs to reach 
TSL 4. The design options analyzed for product classes 3A-BI and 5-BI 
also include using a variable speed compressor. The complexity of 
implementing multiple component swaps and the additional production 
equipment necessary to use additional VIPs increases both the product 
and capital conversion costs. These costs are estimated to be $75 
million and $74 million at TSL 4, respectively, and result in a 
decrease in INPV from TSL 3 to TSL 4.
    TSL 5 represents max tech for the four built-in product classes. 
This TSL represents a reduction in measured energy use of 29 percent, 
27 percent, 22 percent, and 27 percent, respectively, for product 
classes 3A-BI, 5-BI, 7-BI, and 9-BI. DOE estimates the INPV impacts at 
TSL 5 to range from -$89.9 million to -$112.1 million, or a change in 
INPV of -16.2 percent to -20.2 percent. At this TSL, the industry cash 
flow is estimated to decrease by approximately 149.5 percent to -$18.6 
million, compared to the base-case value of $37.5 million in the year 
leading up to the amended energy conservation standards.
    The design options analyzed by DOE include the widespread use of 
VIPs to achieve the max-tech efficiency levels at TSL 5. Additionally, 
product class 3A-BI uses multiple variable speed compressors. Since the 
implementation of VIPs is both research and capital intensive, product 
and capital conversion costs increase to $87 million and $84 million, 
respectively. The complexity of implementing multiple component swaps 
and the additional production equipment necessary to use additional 
VIPs increases both the product and capital costs.
b. Impacts on Employment
    DOE quantitatively assessed the impacts of potential amended energy 
conservation standards on employment. DOE used the GRIM to estimate the 
domestic labor expenditures and number of domestic production workers 
in the base case and at each TSL from 2010 to 2043. DOE used 
statistical data from the most recent U.S. Census

[[Page 57579]]

Bureau's 2007 Economic Census, the results of the engineering analysis, 
and interviews with manufacturers to determine the inputs necessary to 
calculate industry-wide labor expenditures and domestic employment 
levels. Labor expenditures involved with the manufacture of the product 
are a function of the labor intensity of the product, the sales volume, 
and an assumption that wages remain fixed in real terms over time.
    In each GRIM, DOE used the labor content of each product and the 
manufacturing production costs from the engineering analysis to 
estimate the annual labor expenditures in the residential refrigeration 
product industry. DOE used Census data and interviews with 
manufacturers to estimate the portion of the total labor expenditures 
that is attributable to U.S. (i.e., domestic) labor.
    The production worker estimates in this section only cover workers 
up to the line-supervisor level who are directly involved in 
fabricating and assembling a product within an Original Equipment 
Manufacturer (OEM) facility. Workers performing services that are 
closely associated with production operations, such as material handing 
with a forklift, are also included as production labor. DOE's estimates 
only account for production workers who manufacture the specific 
products covered by this rulemaking. For example, a worker on a wine 
cooler line would not be included with the estimate of the number of 
residential refrigeration workers.
    The employment impacts shown in Table VI.31 through Table VI.33 
represent the potential production employment that could result 
following amended energy conservation standards. The upper end of the 
results in these tables estimates the maximum change in the number of 
production workers after amended energy conservation standards must be 
met. The upper end of the results assumes manufacturers would continue 
to produce the same scope of covered products in the same production 
facilities. The upper end of the range also assumes that domestic 
production does not shift to lower-labor-cost countries. Because there 
is a real risk of manufacturers evaluating sourcing decisions in 
response to amended energy conservation standards, the lower end of the 
range of employment results in Table VI.31 through Table VI.33 includes 
the estimated total number of U.S. production workers in the industry 
who could lose their jobs if all existing production were moved outside 
of the U.S. While the results present a range of employment impacts 
following the compliance date of amended energy conservation standards, 
the discussion below also includes a qualitative discussion of the 
likelihood of negative employment impacts at the various TSLs. Finally, 
the employment impacts shown are independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 13, 
Employment Impact Analysis, of the final rule TSD.
i. Standard-Size Refrigerator-Freezer Employment Impacts
    Using the GRIM, DOE estimates that, in the absence of amended 
energy conservation standards, there would be 7,351 domestic production 
workers involved in manufacturing standard-size refrigerator-freezers 
in 2014. Using 2007 Census Bureau data and interviews with 
manufacturers, DOE estimates that approximately 42 percent of standard-
size refrigerator-freezers sold in the United States are manufactured 
domestically. Table VI.31 shows the range of the impacts of potential 
amended energy conservation standards on U.S. production workers in the 
standard-size refrigerator-freezer market.

              Table VI.31--Potential Changes in the Total Number of Domestic Standard-Size Refrigerator-Freezer Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Trial standard level
                                                   -----------------------------------------------------------------------------------------------------
                                                       Base case            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in                7,351            7,164            7,127            7,172            7,109            6,981
 2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers    ...............    (187)-(7,351)    (224)-(7,351)    (179)-(7,351)    (242)-(7,351)    (307)-(7,351)
 in 2014 *........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

    All examined TSLs show relatively minor impacts on domestic 
employment levels at the lower end of the range. Most of the design 
options used in the engineering analysis involve the swapping of 
components in baseline units with more efficient parts for top-mounted, 
side-by-side, and bottom-mounted refrigerator-freezers. These component 
swaps for these design options add primarily material costs and do not 
greatly impact the labor content of the baseline products. The 
relatively small decreases in domestic production employment for the 
lower end of the range of the employment impacts arise from higher 
product prices lowering shipments the year the standard becomes 
effective. At these higher TSLs, the effects of lower shipments more 
than offset the additional product labor that is required to 
manufacture products that use VIP panels.
    During interviews, manufacturers indicated that their domestic 
employment levels could be impacted under two scenarios: (1) The 
widespread adoption of VIPs or (2) significant capital conversion costs 
that would force them to consider non-domestic manufacturing locations 
once the compliance date for the amended energy conservation standards 
arrive. The widespread adoption of VIPs would increase the labor 
content of today's products. The labor content of products with VIPs 
increases because of the extra handling steps that would be required to 
ensure that VIPs are not damaged during production. Because of the 
competitive nature of the industry, manufacturers believed the extra 
labor costs could force them to move their remaining domestic 
production to lower labor cost countries to take advantage of the 
cheaper labor they offer.
    Manufacturers also indicated that large conversion costs would 
likely force them to consider investing in lower-labor-cost countries. 
For most product categories, there is a range of efficiency levels that 
can be met with relatively low-cost components (as analyzed in the 
engineering analysis).

[[Page 57580]]

Beyond these levels, manufacturers would need to decide to follow the 
MPC design options analyzed in the engineering analysis for each 
product category. Manufacturers indicated the analyzed design options 
that use multiple VIPs would involve significant capital conversion 
costs and add very large material costs to their products that would 
likely result in the relocation of their production facilities abroad. 
However, manufacturers indicated they would face even larger capital 
conversion costs at lower efficiencies if they redesigned their 
products with thicker walls. While not analyzed as a design option for 
standard-size refrigerator-freezers, increasing wall thickness would 
likely result in moving domestic production outside of the U.S. at 
lower efficiency levels.
ii. Standard-Size Freezer Employment Impacts
    Using the GRIM, DOE estimates that, in the absence of amended 
energy conservation standards, there would be 1,643 standard-size 
freezer production workers in the U.S. in 2014. Using the 2007 Census 
data and interviews with manufacturers, DOE estimates that 
approximately 80 percent of standard-size freezers sold in the United 
States are manufactured domestically. Table VI.32 shows the impacts of 
amended energy conservation standards on U.S. production workers in the 
standard-size freezer market.

                     Table VI.32--Potential Changes in the Total Number of Domestic Standard-Size Freezer Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Trial standard level
                                                   -----------------------------------------------------------------------------------------------------
                                                       Base case            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in                1,643            1,597            1,537            1,497            1,410            1,303
 2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers    ...............     (46)-(1,643)    (106)-(1,643)    (146)-(1,643)    (233)-(1,643)    (340)-(1,643)
 in 2014*.........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

    Similar to standard-size refrigerator-freezers, there are 
relatively small decreases in employment at the lower end of the range 
of employment impacts. These slight declines are caused by higher 
prices that drive lower shipments once manufacturers must meet the 
amended energy conservation standard. Standard-size freezer 
manufacturers also indicated that domestic production could be shifted 
abroad with any efficiency level that required large capital conversion 
costs. At TSL 1, DOE does not expect substantial changes to domestic 
employment in the standard-size freezer market if manufacturers use the 
design options listed in the engineering analysis to reach the 
efficiency requirements at this TSL.
    However, at TSL 2 through TSL 5, manufacturers indicated that there 
could be domestic employment impacts depending on the design pathway 
used to reach the required efficiencies. At TSL 2 and above, the 
engineering analysis assumes that manufacturers would have to change 
wall thicknesses to reach the required efficiencies. Manufacturers 
indicated that because these products are typically low-end, they would 
likely follow the design pathways in the engineering analysis and 
increase the wall insulation thickness to reach higher efficiencies in 
order to avoid having to pass large price increases on to consumers. 
While this approach would result in extremely large conversion costs 
and would be more likely lead to manufacturers moving production 
abroad, manufacturers believed this strategy would help to maintain 
sales volumes.
iii. Compact Refrigeration Product Employment Impacts
    DOE's research suggests that a limited percentage of compact 
refrigerators and refrigerator-freezers are made domestically (see 
Table VI.33). The overwhelming majority of products are imported. 
Manufacturers with domestic manufacturing facilities tend to source or 
import their compact products. The small employment numbers are mostly 
from remaining domestic production of compact chest freezers. As a 
result, amended energy conservation standards for compact refrigerators 
or refrigerator-freezers are unlikely to noticeably alter domestic 
employment levels.

                 Table VI.33--Potential Changes in the Total Number of Domestic Compact Refrigeration Product Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Trial standard level
                                                   -----------------------------------------------------------------------------------------------------
                                                       Base case            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in                   27               26               26               25               24               40
 2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers    ...............         (1)-(27)         (1)-(27)         (2)-(27)         (3)-(27)          13-(27)
 in 2014*.........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

[[Page 57581]]

iv. Built-In Refrigeration Product Employment Impacts
    Using the GRIM, DOE estimates that, in the absence of amended 
energy conservation standards, there would be 1,139 U.S. works 
manufacturing built-in refrigeration products in 2014. Using the 2007 
Census data and interviews with manufacturers, DOE estimates that 
approximately 94 percent of the built-in refrigeration products sold in 
the United States are manufactured domestically. Table VI.34 shows the 
impacts of amended energy conservation standards on U.S. production 
workers in the built-in refrigeration market.

                     Table VI.34--Potential Changes in the Total Number of Built-In Refrigeration Product Production Workers in 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Trial standard level
                                                   -----------------------------------------------------------------------------------------------------
                                                       Base case            1                2                3                4                5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in                1,139            1,139            1,138            1,145            1,148            1,171
 2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers    ...............        0-(1,139)      (1)-(1,139)        6-(1,139)        9-(1,139)       32-(1,139)
 in 2014*.........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers.

    Employment in the built-in refrigeration market follows a pattern 
similar to that seen in the market for standard-size refrigerator-
freezers and standard-size freezers at lower TSLs. At TSL 1 and TSL 2, 
higher prices result in fewer shipments, and a consequent reduction in 
labor expenditures that more than offsets the additional labor required 
to manufacture products with VIPs. However, at TSL 3 and above, the use 
of additional VIPs in built-in refrigeration products requires enough 
additional labor to cause a slight increase in the number of domestic 
production workers. Because built-in products are high-end products 
with far fewer shipments, it is less likely that manufacturers would 
choose to move all production facilities in response to amended energy 
conservation standards. The higher margins and profit earned in this 
market also make it more likely that manufacturers could earn a return 
on the investments required to reach the amended energy conservation 
standards and invest in existing facilities rather than move production 
abroad.
c. Impacts on Manufacturing Capacity
    Manufacturers indicated that design changes involving thicker walls 
or multiple VIP panels would require substantial changes to their 
current manufacturing process. While these technologies would require 
the purchase of millions of dollars of production equipment, most 
manufacturers indicated they would likely be able to make even these 
substantial changes in between the announcement of the final rule and 
compliance date of an amended energy conservation standard. 
Manufacturers have had experience with the design options involving 
VIPs (even if not at the scale that would be required if the higher 
efficiency levels were adopted) and thickening walls. In addition, the 
design changes and investments analyzed at the levels required by the 
amended energy conservation standards for most product classes are more 
similar in magnitude to the introduction of a new product line--rather 
than complete redesigning of all products. Therefore, a larger capacity 
concern of manufacturers is the ability of their suppliers, 
particularly manufacturers of VIPs and more efficient compressors, to 
ramp up production in time to meet the amended energy conservation 
standard.
d. Impacts on Sub-Group(s) of Manufacturers
    For this rulemaking, DOE used the results of the industry 
characterization to identify any subgroups of refrigerator 
manufacturers that exhibit similar characteristics different from the 
industry as a whole. The only such subgroup DOE identified was built-in 
manufacturers. DOE is establishing separate product classes for built-
in products and is presenting separate analytical results for those 
products classes. Therefore, the MIA results DOE presents for those 
product classes already allow DOE to examine the MIA impacts on these 
manufacturers. Section 0 presents a more detailed discussion of the 
results for built-in product classes.
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 health. Multiple regulations affecting 
the same manufacturer can strain profits and can lead companies to 
abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    During previous stages of this rulemaking DOE identified a number 
of requirements with which manufacturers of these refrigeration 
products must comply and which take effect within three years of the 
anticipated effective date of the amended standards. DOE discusses 
these and other requirements, and includes the full details of the 
cumulative regulatory burden, in chapter 12 of the final rule's TSD. In 
chapter 12, DOE shows that many of the same products produced by 
residential refrigeration product manufacturers are also regulated by 
DOE and have a compliance date within 3 years of the compliance date of 
this rulemaking.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the national energy savings attributable to potential 
standards for refrigeration products, DOE compared the energy 
consumption of these products under the base case to their anticipated 
energy consumption under each TSL. Table VI-35 through Table VI-38 
present DOE's forecasts of the national energy savings for each TSL, 
which were calculated using the approach described in section IV.G. 
Chapter 10 of the final rule TSD

[[Page 57582]]

presents tables that also show the magnitude of the energy savings if 
the savings are discounted at rates of seven and three percent. 
Discounted energy savings represent a policy perspective in which 
energy savings realized farther in the future are less significant than 
energy savings realized in the nearer term.

          Table VI.35--Standard-Size Refrigerator-Freezers: Cumulative National Energy Savings in Quads
----------------------------------------------------------------------------------------------------------------
                                                           Top-mount         Bottom-mount        Side-by-side
                                                         refrigerator-       refrigerator-       refrigerator-
                                                       freezers and all-       freezers            freezers
                                                         refrigerators   ---------------------------------------
                Trial standard level                 --------------------
                                                      Product classes 1,  Product classes 5,  Product classes 4,
                                                       1A, 2, 3, 3A, 3I       5A, and 5I           4I, and 7
                                                             and 6
----------------------------------------------------------------------------------------------------------------
1...................................................                1.73                0.10                0.58
2...................................................                1.73                0.10                0.95
3...................................................                2.22                0.10                0.95
4...................................................                2.67                0.48                1.30
5...................................................                3.11                0.70                1.50
----------------------------------------------------------------------------------------------------------------

                Table VI.36--Standard-Size Freezers: Cumulative National Energy Savings in Quads
----------------------------------------------------------------------------------------------------------------
                                                                    Upright freezers          Chest freezers
                                                               -------------------------------------------------
                     Trial standard level                         Product classes 8, 9    Product classes 10 and
                                                                         and 9I                    10A
----------------------------------------------------------------------------------------------------------------
1.............................................................                     0.49                     0.31
2.............................................................                     0.75                     0.38
3.............................................................                     0.87                     0.46
4.............................................................                     0.98                     0.53
5.............................................................                     1.01                     0.60
----------------------------------------------------------------------------------------------------------------

            Table VI.37--Compact Refrigeration Products: Cumulative National Energy Savings in Quads
----------------------------------------------------------------------------------------------------------------
                                                                 Compact refrigerators       Compact freezers
                                                               -------------------------------------------------
                     Trial standard level                         Product classes 11,
                                                                 11A, 12, 13, 13I, 13A,  Product classes 16, 17,
                                                                  14, 14I, 15 and 15I               18
----------------------------------------------------------------------------------------------------------------
1.............................................................                     0.28                     0.03
2.............................................................                     0.35                     0.03
3.............................................................                     0.39                     0.04
4.............................................................                     0.48                     0.07
5.............................................................                     0.51                     0.09
----------------------------------------------------------------------------------------------------------------

            Table VI.38--Built-In Refrigeration Products: Cumulative National Energy Savings in Quads
----------------------------------------------------------------------------------------------------------------
                                     Built-in all      Built-in bottom-    Built-in side-by-   Built-in upright
                                     refrigerators    mount refrigerator- side refrigerator-       freezers
                                 --------------------      freezers            freezers      -------------------
      Trial standard level                           ----------------------------------------
                                   Product class 3A-                      Product classes 4-  Product classes 9-
                                          BI          Product classes 5-  BI, 4I-BI and 7-BI     BI and 9I-BI
                                                         BI and 5I-BI
----------------------------------------------------------------------------------------------------------------
1...............................                0.00                0.00                0.01                0.00
2...............................                0.01                0.00                0.01                0.01
3...............................                0.01                0.00                0.03                0.01
4...............................                0.01                0.02                0.03                0.01
5...............................                0.01                0.02                0.04                0.02
----------------------------------------------------------------------------------------------------------------

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 refrigeration products. In accordance with the OMB's 
guidelines on regulatory analysis (OMB Circular A-4, section E, 
September 17, 2003), DOE calculated NPV using both a 7-percent and a 3-
percent real discount rate. The 7-percent rate is an estimate of the 
average before-tax rate of return on private capital in the U.S. 
economy and reflects the returns on real estate and small business 
capital as well as corporate capital. DOE used this discount rate to 
approximate the opportunity cost of capital in the private sector, 
since a recent OMB analysis has found the average rate of return on 
capital to be near this rate. See http://www.whitehouse.gov/omb/circulars_a004_a-4/. In addition, DOE used the 3-percent rate to 
capture the potential effects of standards on private

[[Page 57583]]

consumption (e.g., through higher prices for products and the purchase 
of reduced amounts of energy). This rate represents the rate at which 
society discounts future consumption flows to their present value. It 
can be approximated by the real rate of return on long-term government 
debt (i.e. yield on Treasury notes minus annual rate of change in the 
Consumer Price Index), which has averaged about 3 percent on a pre-tax 
basis for the last 30 years.
    Table VI-39 through Table VI-46 show the default consumer NPV 
results for each TSL DOE considered for refrigeration products, using 
both a 7-percent and a 3-percent discount rate. In each case, the 
impacts cover the lifetime of products purchased in 2014-2043. See 
chapter 10 of the final rule TSD for more detailed NPV results.

   Table VI.39--Cumulative Net Present Value of Consumer Benefits for Standard-Size Refrigerator-Freezers, 3-
                                              Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                         Billion 2009 dollars
                                                     -----------------------------------------------------------
                                                           Top-mount         Bottom-mount        Side-by-side
                                                         refrigerator-       refrigerator-       refrigerator-
                                                       freezers and all-       freezers            freezers
                Trial standard level                     refrigerators   ---------------------------------------
                                                     --------------------
                                                      Product classes 1,  Product classes 5,  Product classes 4,
                                                       1A, 2, 3, 3A, 3I       5A, and 5I           4I, and 7
                                                             and 6
----------------------------------------------------------------------------------------------------------------
1...................................................               11.45                0.94                5.43
2...................................................               11.45                0.94                6.34
3...................................................               12.91                0.94                6.34
4...................................................                9.11              (0.47)                3.52
5...................................................                1.87              (2.52)                0.83
----------------------------------------------------------------------------------------------------------------

   Table VI.40--Cumulative Net Present Value of Consumer Benefits for Standard-Size Refrigerator-Freezers, 7-
                                              Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                         Billion 2009 dollars
                                                     -----------------------------------------------------------
                                                           Top-mount         Bottom-mount        Side-by-side
                                                         refrigerator-       refrigerator-       refrigerator-
                                                       freezers and all-       freezers            freezers
                Trial standard level                     refrigerators   ---------------------------------------
                                                     --------------------
                                                      Product classes 1,  Product classes 5,  Product classes 4,
                                                       1A, 2, 3, 3A, 3I       5A, and 5I           4I, and 7
                                                             and 6
----------------------------------------------------------------------------------------------------------------
1...................................................                2.99                0.34                1.88
2...................................................                2.99                0.34                1.67
3...................................................                2.81                0.34                1.67
4...................................................              (0.31)              (1.17)              (0.60)
5...................................................              (5.28)              (2.74)              (2.53)
----------------------------------------------------------------------------------------------------------------

  Table VI.41--Cumulative Net Present Value of Consumer Benefits for Standard-Size Freezers, 3-Percent Discount
                                                      Rate
----------------------------------------------------------------------------------------------------------------
                                                                              Billion 2009 dollars
                                                               -------------------------------------------------
                                                                    Upright freezers          Chest freezers
                     Trial standard level                      -------------------------------------------------
                                                                  Product classes 8, 9    Product classes 10 and
                                                                         and 9I                    10A
----------------------------------------------------------------------------------------------------------------
1.............................................................                     5.03                     3.25
2.............................................................                     7.37                     3.33
3.............................................................                     7.69                     3.94
4.............................................................                     7.51                     3.52
5.............................................................                     5.17                     2.42
----------------------------------------------------------------------------------------------------------------

  Table VI.42--Cumulative Net Present Value of Consumer Benefits for Standard-Size Freezers, 7-Percent Discount
                                                      Rate
----------------------------------------------------------------------------------------------------------------
                                                                              Billion 2009 dollars
                                                               -------------------------------------------------
                                                                    Upright freezers          Chest freezers
                     Trial standard level                      -------------------------------------------------
                                                                  Product classes 8, 9    Product classes 10 and
                                                                         and 9I                    10A
----------------------------------------------------------------------------------------------------------------
1.............................................................                     1.70                     1.11
2.............................................................                     2.38                     0.96

[[Page 57584]]

 
3.............................................................                     2.30                     1.12
4.............................................................                     1.96                     0.75
5.............................................................                     0.56                   (0.04)
----------------------------------------------------------------------------------------------------------------

  Table VI.43--Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 3-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                              Billion 2009 dollars
                                                               -------------------------------------------------
                                                                 Compact refrigerators       Compact freezers
                     Trial standard level                      -------------------------------------------------
                                                                  Product classes 11,
                                                                 11A, 12, 13, 13I, 13A,  Product classes 16, 17,
                                                                  14, 14I, 15 and 15I               18
----------------------------------------------------------------------------------------------------------------
1.............................................................                     1.61                     0.20
2.............................................................                     1.42                     0.20
3.............................................................                     1.62                     0.21
4.............................................................                     0.81                   (0.01)
5.............................................................                   (1.86)                   (0.48)
----------------------------------------------------------------------------------------------------------------

  Table VI.44--Cumulative Net Present Value of Consumer Benefits for Compact Refrigeration Products, 7-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                              Billion 2009 dollars
                                                               -------------------------------------------------
                                                                 Compact refrigerators       Compact freezers
                     Trial standard level                      -------------------------------------------------
                                                                  Product classes 11,
                                                                 11A, 12, 13, 13I, 13A,  Product classes 16, 17,
                                                                  14, 14I, 15 and 15I               18
----------------------------------------------------------------------------------------------------------------
1.............................................................                     0.67                     0.09
2.............................................................                     0.51                     0.09
3.............................................................                     0.59                     0.08
4.............................................................                     0.08                   (0.07)
5.............................................................                   (1.44)                   (0.36)
----------------------------------------------------------------------------------------------------------------

  Table VI.45--Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 3-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                               Billion 2009 dollars
                                 -------------------------------------------------------------------------------
                                     Built-in all      Built-in bottom-    Built-in side-by-   Built-in upright
                                     refrigerators    mount refrigerator- side refrigerator-       freezers
      Trial standard level       --------------------      freezers            freezers      -------------------
                                                     ----------------------------------------
                                   Product class 3A-                      Product classes 4-  Product classes 9-
                                          BI          Product classes 5-  BI, 4I-BI and 7-BI     BI and 9I-BI
                                                         BI and 5I-BI
----------------------------------------------------------------------------------------------------------------
1...............................                0.04                0.02                0.06                0.05
2...............................                0.05                0.01                0.06                0.07
3...............................                0.02                0.01              (0.17)                0.05
4...............................              (0.04)              (0.20)              (0.17)                0.05
5...............................              (0.08)              (0.31)              (0.43)                0.02
----------------------------------------------------------------------------------------------------------------

[[Page 57585]]

  Table VI.46--Cumulative Net Present Value of Consumer Benefits for Built-In Refrigeration Products, 7-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                               Billion 2009 dollars
                                 -------------------------------------------------------------------------------
                                     Built-in all      Built-in bottom-    Built-in side-by-   Built-in upright
                                     refrigerators    mount refrigerator- side refrigerator-       freezers
      Trial standard level       --------------------      freezers            freezers      -------------------
                                                     ----------------------------------------
                                   Product class 3A-                      Product classes 4-  Product classes 9-
                                          BI          Product classes 5-  BI, 4I-BI and 7-BI     BI and 9I-BI
                                                         BI and 5I-BI
----------------------------------------------------------------------------------------------------------------
1...............................               0.01                0.01                0.02                0.02
2...............................               0.02                0.00                0.02                0.02
3...............................               0.00                0.00               (0.16)               0.00
4...............................              (0.04)              (0.14)              (0.16)               0.00
5...............................              (0.07)              (0.21)              (0.32)              (0.02)
----------------------------------------------------------------------------------------------------------------

    The NPV results presented above are based on a product price trend 
that reflects the default price trend. As discussed in section IV.G.3, 
DOE investigated the impact of different price trends on the NPV for 
the considered TSLs. DOE selected a high price decline case and a low 
price decline case from among a number of price trends that it 
analyzed. Table VI.47 through Table VI.54 provide the annualized NPV of 
consumer benefits at 7-percent and 3-percent discount rates, combined 
with the annualized present value of monetized benefits from 
CO2 and NOX emissions reductions, for each of the 
considered TSLs for the default price trend and the two sensitivity 
cases. (DOE's method for annualization is described in section VI.C.5 
of this notice. Section VI.B.6 provides a complete description and 
summary of the monetized benefits from CO2 and 
NOX emissions reductions.) For details on the combined NPV 
results, see appendix 10-C of the final rule TSD.

 Table VI.47--Standard-Size Refrigerator-Freezers: Annualized Net Present Value of Consumer Benefits (7-Percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................              0.825               0.902               0.726
2...................................................              0.845               0.948               0.715
3...................................................              0.881               1.017               0.708
4...................................................              0.288               0.593              (0.100)
5...................................................             (0.507)             (0.029)             (1.114)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 7-percent discount rate.

 Table VI.48--Standard-Size Refrigerator-Freezers: Annualized Net Present Value of Consumer Benefits (3-Percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................               1.302               1.389              1.195
2...................................................               1.397               1.513              1.255
3...................................................               1.537               1.691              1.349
4...................................................               1.213               1.560              0.791
5...................................................               0.626               1.171             (0.036)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 3-percent discount rate.

[[Page 57586]]

Table VI.49--Standard-Size Freezers: Annualized Net Present Value of Consumer Benefits (7-Percent Discount Rate)
 and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for Products Shipped
                                                  in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................               0.387               0.398               0.372
2...................................................               0.482               0.508               0.448
3...................................................               0.513               0.550               0.465
4...................................................               0.459               0.516               0.387
5...................................................               0.239               0.333               0.118
----------------------------------------------------------------------------------------------------------------
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 7-percent discount rate.

Table VI.50--Standard-Size Freezers: Annualized Net Present Value of Consumer Benefits (3-Percent Discount Rate)
 and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for Products Shipped
                                                  in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................               0.566               0.579               0.551
2...................................................               0.745               0.775               0.708
3...................................................               0.822               0.865               0.770
4...................................................               0.808               0.873               0.729
5...................................................               0.623               0.730               0.492
----------------------------------------------------------------------------------------------------------------
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 3-percent discount rate.

    Table VI.51--Compact Refrigeration Products: Annualized Net Present Value of Consumer Benefits (7-Percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................              0.105               0.112               0.096
2...................................................              0.094               0.107               0.077
3...................................................              0.106               0.122               0.086
4...................................................              0.045               0.077               0.006
5...................................................             (0.142)             (0.083)             (0.216)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 7-percent discount rate.

    Table VI.52--Compact Refrigeration Products: Annualized Net Present Value of Consumer Benefits (3-Percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................              0.129               0.137               0.119
2...................................................              0.124               0.139               0.105
3...................................................              0.141               0.159               0.119
4...................................................              0.091               0.127               0.047
5...................................................             (0.085)             (0.018)             (0.166)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 3-percent discount rate.

[[Page 57587]]

   Table VI.53--Built-in Refrigeration Products: Annualized Net Present Value of Consumer Benefits (7-Percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................              0.008               0.009               0.008
2...................................................              0.009               0.010               0.008
3...................................................             (0.011)             (0.005)             (0.018)
4...................................................             (0.028)             (0.019)             (0.040)
5...................................................             (0.056)             (0.043)             (0.074)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 7-percent discount rate.

   Table VI.54--Built-In Refrigeration Products: Annualized Net Present Value of Consumer Benefits (3-percent
  Discount Rate) and Annualized Present Value of Monetized Benefits From CO2 and NOX Emissions Reductions * for
                                          Products Shipped in 2014-2043
----------------------------------------------------------------------------------------------------------------
                                                                             Billion 2009$
                                                     -----------------------------------------------------------
                Trial standard level                     Medium price
                                                       decline (default)  High price decline   Low price decline
----------------------------------------------------------------------------------------------------------------
1...................................................              0.012               0.013               0.012
2...................................................              0.015               0.016               0.014
3...................................................              0.002               0.008              (0.006)
4...................................................             (0.013)             (0.002)             (0.025)
5...................................................             (0.036)             (0.021)             (0.056)
----------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* The economic benefits from reduced CO2 emissions were calculated using a SCC value of $22.1/metric ton in 2010
  (in 2009$) for CO2, increasing at 3% per year, and a discount rate of 3%. The economic benefits from reduced
  NOX emissions were calculated using a value of $2,519/ton (in 2009$), which is the average of the low and high
  values used in DOE's analysis, and a 3-percent discount rate.

c. Indirect Impacts on Employment
    DOE develops estimates of the indirect employment impacts of 
potential standards on the economy in general. As discussed above, DOE 
expects amended energy conservation standards for refrigeration 
products to reduce energy bills for consumers and the resulting net 
savings to be redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.J, above, to estimate 
these effects, DOE used an input/output model of the U.S. economy. 
Table VI.55 presents the estimated net indirect employment impacts in 
2020 and 2043 for the TSLs that DOE considered in this rulemaking. 
Chapter 13 of the final rule TSD presents more detailed results.

       Table VI.55--Net Increase in Jobs From Indirect Employment Effects Under Refrigeration Product TSLs
----------------------------------------------------------------------------------------------------------------
                                                                     Thousands
                                 -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-
 Freezers:
    2020........................            2.35            2.34            2.33           -0.06           -3.18
    2043........................           16.24           18.45           21.33           26.31           28.85
Standard-Size Freezers:
    2020........................            0.93            1.06            1.06            0.82           -0.05
    2043........................            5.18            7.24            8.38            9.19            9.12
Compact Refrigeration Products:
    2020........................            0.51            0.52            0.60            0.50           -0.04
    2043........................            1.44            1.64            1.88            2.02            1.53
Built-In Refrigeration Products:
    2020........................            0.02            0.02           -0.05           -0.11           -0.21
    2043........................            0.14            0.19            0.29            0.31           -0.30
----------------------------------------------------------------------------------------------------------------

    The input/output model suggests that today's amended standards are 
likely to increase the net demand for labor in the economy. However, 
the model suggests that the projected gains are very small relative to 
total national employment (currently approximately 120 million). 
Moreover, neither the BLS data nor the input/output model DOE uses 
includes the quality or wage level of the jobs. Therefore, because the 
analysis indicates an increased demand for labor would likely result 
from the amended energy conservation standards in this rulemaking, DOE 
has concluded that the

[[Page 57588]]

amended standards are likely to produce employment benefits sufficient 
to offset fully any adverse impacts on employment in the manufacturing 
industry for the refrigeration products that are the subject of this 
rulemaking.
4. Impact on Utility or Performance of Products
    As presented in section III.D.1.d of this notice, DOE concluded 
that none of the TSLs considered in this notice would substantially 
reduce the utility or performance of the products under consideration 
in this rulemaking. However, the availability of features that increase 
energy use, such as multiple drawers, might shift to higher-price 
products because the cost premium for implementing such features will 
likely increase. Manufacturers currently offer refrigeration products 
that meet or exceed the amended standards for most of the product 
classes. (42 U.S.C. 6295(o)(2)(B)(i)(IV))
5. Impact of Any Lessening of Competition
    DOE has also considered any lessening of competition that is likely 
to result from amended standards. The Attorney General determines the 
impact, if any, of any lessening of competition likely to result from 
an amended standard, and transmits such determination to the Secretary, 
together with an analysis of the nature and extent of such impact. (42 
U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
    To assist the Attorney General in making such determination, DOE 
has provided DOJ with copies of this final rule and the TSD for review. 
As indicated earlier, DOE did not receive comments from DOJ. 
Accordingly, DOE does not believe that there is likely to be any 
lessening of competition as a result of today's final rule.
6. Need of the Nation To Conserve Energy
    An improvement in the energy efficiency of the products subject to 
today's rule is likely to improve the security of the Nation's energy 
system by reducing overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. As a 
measure of this reduced demand, Table VI-56 presents the estimated 
reduction in generating capacity in 2043 for the TSLs that DOE 
considered in this rulemaking.

         Table VI.56--Reduction in Electric Generating Capacity in 2043 Under Refrigeration Product TSLs
----------------------------------------------------------------------------------------------------------------
                                                                     Gigawatts
                                 -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-                2.62            3.03            3.56            4.86            5.82
 Freezers.......................
Standard-Size Freezers..........           0.83            0.83            1.40            1.59            1.71
Compact Refrigeration Products..           0.273           0.335           0.386           0.480           0.511
Built-In Refrigeration Products.           0.021           0.031           0.062           0.077           0.092
----------------------------------------------------------------------------------------------------------------

    DOE used NEMS-BT to assess the impacts on electricity prices of the 
reduced need for new electric power plants and infrastructure projected 
to result from standards. The projected impacts on prices, and their 
value to electricity consumers, are presented in chapter 14 and chapter 
10, respectively, of the final rule TSD. Although the aggregate 
benefits for all electricity users are potentially large, there may be 
negative effects on the actors involved in electricity supply. Because 
there is uncertainty about the extent to which the calculated impacts 
from reduced electricity prices would be a transfer from the actors 
involved in electricity supply to electricity consumers, DOE has 
concluded that, at present, it should not assign a heavy weight to this 
factor in considering the economic justification of standards on 
refrigeration products.
    Energy savings from amended standards for refrigeration products 
could also produce environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases associated with 
electricity production. Table VI.57 provides DOE's estimate of 
cumulative CO2, NOX, and Hg emissions reductions 
projected to result from the TSLs considered in this rulemaking. DOE 
reports annual CO2, NOX, and Hg emissions 
reductions for each TSL in chapter 15 of the final rule TSD.
    As discussed in section V.M, DOE did not report SO2 
emissions reductions from power plants because there is uncertainty 
about the effect of energy conservation standards on the overall level 
of SO2 emissions in the United States due to SO2 
emissions caps. DOE also did not include NOX emissions 
reduction from power plants in States subject to CAIR because an energy 
conservation standard would not affect the overall level of 
NOX emissions in those States due to the emissions caps 
mandated by CAIR.

              Table VI.57--Summary of Emissions Reduction Estimated for Refrigeration Product TSLs
                                       [Cumulative for 2014 through 2043]
----------------------------------------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-
 Freezers:
    CO2 (Mt)....................          175             202             238             323             386
    NOX (1000 tons).............          141             162             191             260             310
    Hg (tons)...................            0.79            0.91            1.07            1.45            1.73
Standard-Size Freezers:
    CO2 (Mt)....................           54              77              91             103             110
    NOX (1000 tons).............           43              62              73              83              89
    Hg (tons)...................            0.24            0.34            0.41            0.47            0.50
Compact Refrigeration Products:
    CO2 (Mt)....................           20              24              28              35              39
    NOX (1000 tons).............           16              20              23              29              32
    Hg (tons)...................            0.10            0.12            0.15            0.19            0.21
Built-In Refrigeration Products:
    CO2 (Mt)....................            1.41            2.05            4.10            5.09            6.09

[[Page 57589]]

 
    NOX (1000 tons).............            1.14            1.65            3.30            4.09            4.90
    Hg (tons)...................            0.01            0.01            0.02            0.02            0.03
----------------------------------------------------------------------------------------------------------------

    As part the analysis for this final 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. 
As discussed in section IV.M, DOE used values for the SCC developed by 
an interagency process. The four values for CO2 emissions 
reductions resulting from that process (expressed in 2009$) are $4.9/
ton (the average value from a distribution that uses a 5-percent 
discount rate), $22.1/ton (the average value from a distribution that 
uses a 3-percent discount rate), $36.3/ton (the average value from a 
distribution that uses a 2.5-percent discount rate), and $67.1/ton (the 
95th-percentile value from a distribution that uses a 3-percent 
discount rate). These values correspond to the value of emission 
reductions in 2010; the values for later years are higher due to 
increasing damages as the magnitude of climate change increases.
    Table VI-58 through Table VI-61 present the global values 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 Table VI-62 through Table VI-65.

 Table VI.58--Standard-Size Refrigerator-Freezers: Estimates of Global Present Value of CO2 Emissions Reduction
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                       Billion 2009$
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% discount
                                             5% discount       3% discount      2.5% discount      rate, 95th
                                           rate, average *   rate, average *   rate, average *    percentile *
----------------------------------------------------------------------------------------------------------------
1.......................................              1.45              4.60              6.90              14.0
2.......................................              1.67              5.31              7.96             16.16
3.......................................              1.96              6.24              9.36             19.00
4.......................................              2.68              8.51             12.76             25.90
5.......................................              3.20             10.18             15.26             30.98
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC
  over time.

  Table VI.59--Standard-Size Freezers: Estimates of Global Present Value of CO2 Emissions Reduction Under Trial
                                                 Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                       Billion 2009$
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% discount
                                             5% discount       3% discount      2.5% discount      rate, 95th
                                           rate, average *   rate, average *   rate, average *    percentile *
----------------------------------------------------------------------------------------------------------------
1.......................................              0.48              1.51              2.25              4.58
2.......................................              0.69              2.16              3.24              6.59
3.......................................              0.81              2.55              3.81              7.76
4.......................................              0.92              2.89              4.32              8.80
5.......................................              0.98              3.09              4.62              9.41
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC
  over time.

 Table VI.60--Compact Refrigeration Products: Estimates of Global Present Value of CO2 Emissions Reduction Under
                                              Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                       Billion 2009$
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% discount
                                             5% discount       3% discount      2.5% discount      rate, 95th
                                           rate, average *   rate, average *   rate, average *    percentile *
----------------------------------------------------------------------------------------------------------------
1.......................................              0.12              0.41              0.63              1.26
2.......................................              0.15              0.51              0.77              1.54
3.......................................              0.18              0.59              0.89              1.79
4.......................................              0.22              0.74              1.12              2.25
5.......................................              0.24              0.81              1.23              2.47
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC
  over time.

[[Page 57590]]

Table VI.61--Built-In Refrigeration Products: Estimates of Global Present Value of CO2 Emissions Reduction Under
                                              Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                      Billion 2009$
                                       -------------------------------------------------------------------------
                  TSL                                                                              3% discount
                                           5% discount    3% discount rate,    2.5% discount       rate, 95th
                                         rate, average *      average *       rate, average *     percentile *
----------------------------------------------------------------------------------------------------------------
1.....................................             0.012              0.038              0.057              0.12
2.....................................             0.017              0.055              0.083              0.17
3.....................................             0.035              0.11               0.17               0.34
4.....................................             0.043              0.014              0.20               0.41
5.....................................             0.051              0.16               0.24               0.50
----------------------------------------------------------------------------------------------------------------
* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn
  from a different part of the distribution. Values presented in the table incorporate the escalation of the SCC
  over time.

Table VI.62--Standard-Size Refrigerator-Freezers: Estimates of Domestic Present Value of CO2 Emissions Reduction
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Billion 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate, average **   95th percentile **
----------------------------------------------------------------------------------------------------------------
1...............................  0.10 to 0.33......  0.32 to 1.06......  0.48 to 1.59......  0.98 to 3.22.
2...............................  0.12 to 0.38......  0.37 to 1.22......  0.56 to 1.83......  1.13 to 3.72.
3...............................  0.14 to 0.45......  0.44 to 1.44......  0.66 to 2.15......  1.33 to 4.37.
4...............................  0.19 to 0.62......  0.60 to 1.96......  0.89 to 2.93......  1.81 to 5.96.
5...............................  0.22 to 0.74......  0.71 to 2.34......  1.07 to 3.51......  2.17 to 7.13.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
  drawn from a different part of the distribution. Values presented in the table incorporate the escalation of
  the SCC over time.

 Table VI.63--Standard-Size Freezers: Estimates of Domestic Present Value of CO2 Emissions Reduction Under Trial
                                                 Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Billion 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate, average **   95th percentile **
----------------------------------------------------------------------------------------------------------------
1...............................  0.033 to 0.11.....  0.11 to 0.35......  0.16 to 0.52......  0.32 to 1.05.
2...............................  0.048 to 0.16.....  0.15 to 0.50......  0.23 to 0.74......  0.46 to 1.51.
3...............................  0.057 to 0.19.....  0.057 to 0.19.....  0.057 to 0.19.....  0.057 to 0.19.
4...............................  0.064 to 0.21.....  0.20 to 0.67......  0.30 to 0.99......  0.62 to 2.02.
5...............................  0.069 to 0.23.....  0.22 to 0.71......  0.32 to 1.06......  0.069 to 0.23.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
  drawn from a different part of the distribution. Values presented in the table incorporate the escalation of
  the SCC over time.

   Table VI.64--Compact Refrigeration Products: Estimates of Domestic Present Value of CO2 Emissions Reduction
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Billion 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate, average **   95th percentile **
----------------------------------------------------------------------------------------------------------------
1...............................  0.0087 to 0.029...  0.029 to 0.095....  0.044 to 0.14.....  0.09 to 0.29.
2...............................  0.011 to 0.035....  0.035 to 0.12.....  0.054 to 0.18.....  0.11 to 0.36.
3...............................  0.012 to 0.041....  0.041 to 0.14.....  0.062 to 0.21.....  0.13 to 0.41.
4...............................  0.016 to 0.051....  0.052 to 0.17.....  0.078 to 0.26.....  0.16 to 0.52.
5...............................  0.017 to 0.056....  0.057 to 0.19.....  0.086 to 0.28.....  0.17 to 0.57.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
  drawn from a different part of the distribution. Values presented in the table incorporate the escalation of
  the SCC over time.

[[Page 57591]]

  Table VI.65--Built-In Refrigeration Products: Estimates of Domestic Present Value of CO2 Emissions Reduction
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Billion 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate, average **   95th percentile **
----------------------------------------------------------------------------------------------------------------
1...............................  0.00083 to 0.0027.  0.0026 to 0.0087..  0.0040 to 0.013...  0.0081 to 0.026.
2...............................  0.0012 to 0.0040..  0.0039 to 0.013...  0.0058 to 0.019...  0.012 to 0.039.
3...............................  0.0024 to 0.0080..  0.0077 to 0.025...  0.012 to 0.038....  0.023 to 0.077.
4...............................  0.0030 to 0.010...  0.010 to 0.031....  0.014 to 0.047....  0.029 to 0.10.
5...............................  0.0036 to 0.012...  0.011 to 0.037....  0.017 to 0.056....  0.035 to 0.11.
----------------------------------------------------------------------------------------------------------------
* Domestic values are presented as a range between 7% and 23% of the global values.
** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or
  drawn from a different part of the distribution. Values presented in the table incorporate the escalation of
  the SCC over time.

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed in 
this rulemaking on reducing CO2 emissions is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the 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 final rule the 
most recent values and analyses resulting from the ongoing interagency 
review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emissions reductions 
anticipated to result from amended standards for refrigeration 
products. The dollar-per-ton values that DOE used are discussed in 
section IV.M. Table VI.66 presents the cumulative present values for 
each TSL calculated using seven-percent and three-percent discount 
rates.

                                      Table VI.66--Estimates of Present Value of NOX Emissions Reduction Under Refrigeration Product Trial Standard Levels
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                            Billion 2009$
                                   -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 TSL 1                           TSL 2                           TSL 3                          TSL 4                          TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Standard-Size Refrigerator-
 Freezers:
    7% discount rate..............  0.018 to 0.18.................  0.020 to 0.21.................  0.024 to 0.25.................  0.033 to 0.34................  0.039 to 0.40.
    3% discount rate..............  0.044 to 0.45.................  0.051 to 0.52.................  0.060 to 0.62.................  0.082 to 0.84................  0.097 to 1.00.
Standard-Size Freezers:
    7% discount rate..............  0.0055 to 0.056...............  0.008 to 0.081................  0.009 to 0.095................  0.011 to 0.107...............  0.011 to 0.12.
    3% discount rate..............  0.014 to 0.15.................  0.020 to 0.21.................  0.024 to 0.25.................  0.027 to 0.28................  0.029 to 0.30.
Compact Refrigeration Products:
    7% discount rate..............  0.002 to 0.021................  0.003 to 0.026................  0.003 to 0.030................  0.004 to 0.038...............  0.004 to 0.042.
    3% discount rate..............  0.004 to 0.044................  0.005 to 0.054................  0.006 to 0.063................  0.008 to 0.079...............  0.009 to 0.088.
Built-In Refrigeration Products:
    7% discount rate..............  0.000 to 0.002................  0.001 to 0.002................  0.000 to 0.004................  0.001 to 0.005...............  0.001 to 0.006.
    3% discount rate..............  0.000 to 0.004................  0.001 to 0.005................  0.001 to 0.018................  0.001 to 0.013...............  0.002 to 0.016.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    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 
VI.67 shows an example of the calculation of the combined NPV including 
benefits from emissions reductions for the case of TSL 3 for standard-
size refrigerator-freezers. Table VI.68 and Table VI.69 present the NPV 
values that would result if DOE were to add 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 seven-percent and three-percent discount rate. 
The CO2 values used in the columns of each table correspond 
to the four scenarios for the valuation of CO2 emission 
reductions presented in section IV.M.

  Table VI.67--Adding Net Present Value of Consumer Savings to Present
Value of Monetized Benefits From CO2 and NOX Emissions Reductions at TSL
                3 for Standard-Size Refrigerator-Freezers
------------------------------------------------------------------------
                                         Present value    Discount rate
               Category                  billion 2009$      (percent)
------------------------------------------------------------------------
Benefits:
    Operating Cost Savings............          14.65                7
                                                37.41                3

[[Page 57592]]

 
    CO2 Reduction Monetized Value (at            1.96                5
     $4.9/t) *........................
    CO2 Reduction Monetized Value (at            6.24                3
     $22.1/t) *.......................
    CO2 Reduction Monetized Value (at            9.36                2.5
     $36.3/t) *.......................
    CO2 Reduction Monetized Value (at           19.0                 3
     $67.1/t) *.......................
    NOX Reduction Monetized Value (at            0.136               7
     $2,519/ton) *....................
                                                 0.338               3
    Total Monetary Benefits **........          21.02                7
                                                43.99                3
Costs:
    Total Incremental Installed Costs.           9.83                7
                                                17.22                3
Net Benefits:
    Including CO2 and NOX**...........          11.19                7
                                                26.77                3
------------------------------------------------------------------------
* These values represent global values (in 2009$) of the social cost of
  CO2 emissions in 2010 under several scenarios. The values of $4.9,
  $22.1, and $36.3 per metric ton (t) are the averages of SCC
  distributions calculated using 5%, 3%, and 2.5% discount rates,
  respectively. The value of $67.1/t represents the 95th percentile of
  the SCC distribution calculated using a 3% discount rate. See section
  IV.M for details. The value for NOX (in 2009$) is the average of the
  low and high values used in DOE's analysis.
** Total Monetary Benefits for both the 3% and 7% cases utilize the
  central estimate of social cost of CO2 emissions calculated at a 3%
  discount rate, which is equal to $22.1/t in 2010 (in 2009$).

  Table VI.68--Adding Net Present Value of Consumer Savings (at 7% Discount Rate) to Present Value of Monetized
       Benefits From CO2 and NOX Emissions Reductions at Trial Standard Levels for Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                        Consumer NPV at 7% discount rate added with
                                         -----------------------------------------------------------------------
                                            SCC Value of      SCC Value of      SCC Value of      SCC Value of
                   TSL                     $4.9/metric ton  $22.1/metric ton  $36.3/metric ton  $67.1/metric ton
                                            CO2* and low     CO2* and medium   CO2* and medium    CO2* and high
                                           value for NOX**   value for NOX**   value for NOX**   value for NOX**
                                            billion 2009$     billion 2009$     billion 2009$     billion 2009$
----------------------------------------------------------------------------------------------------------------
1.......................................            10.92              15.53             18.81             29.06
2.......................................            11.55              17.20             21.22             33.77
3.......................................            11.75              18.42             23.17             37.99
4.......................................             4.20              12.83             18.97             38.14
5.......................................            (7.93)              2.08              9.20             31.45
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2009$. Their present values have been
  calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of
  these values.
** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX
  emissions. High Value corresponds to $4,591 per ton of NOX emissions.

  Table VI.69--Adding Net Present Value of Consumer Savings (at 3% Discount Rate) to Present Value of Monetized
       Benefits From CO2 and NOX Emissions Reductions at Trial Standard Levels for Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                        Consumer NPV at 3% discount rate added with
                                         -----------------------------------------------------------------------
                                                                                SCC Value of
                                            SCC Value of      SCC Value of      $36.31/metric     SCC Value of
                   TSL                     $4.9/metric ton  $22.1/metric ton    ton CO2* and    $67.1/metric ton
                                            CO2* and low     CO2* and medium  medium value for    CO2* and high
                                           value for NOX**   value for NOX**   NOX**  billion    value for NOX**
                                            billion 2009$     billion 2009$         2009$         billion 2009$
----------------------------------------------------------------------------------------------------------------
1.......................................             30.20             34.99             38.27             48.69
2.......................................             33.85             39.71             43.73             56.50
3.......................................             36.64             43.57             48.31             63.39
4.......................................             27.59             36.56             42.69             62.19
5.......................................              9.25             19.65             26.76             49.39
----------------------------------------------------------------------------------------------------------------
* These label values represent the global SCC of CO2 in 2010, in 2009$. Their present values have been
  calculated with scenario-consistent discount rates. See section IV.M for a discussion of the derivation of
  these values.
** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX
  emissions. High Value corresponds to $4,591 per ton of NOX emissions.

[[Page 57593]]

    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 savings are domestic U.S. 
consumer monetary savings that occur as a result of market transactions 
while the value of CO2 reductions is based on a global 
value. Second, the assessments of operating cost savings and 
CO2 savings are performed with different methods that use 
quite different time frames for analysis. The national operating cost 
savings is measured for the lifetime of refrigeration products shipped 
in 2014-2043. The SCC values, on the other hand, reflect the present 
value of future climate-related impacts resulting from the emission of 
one ton of carbon dioxide in each year. These impacts continue well 
beyond 2100.
7. Other Factors
    The Secretary, in determining whether a standard is economically 
justified, may consider any other factors that he deems to be relevant. 
(42 U.S.C. 6295(o)(2)(B)(i)(VI))) DOE is aware of pending legislation 
that proposes to phase out substances with significant GWP and that 
HFCs are included in the list of substances to be phased out. DOE 
recognizes the significance that such legislation would have to the 
refrigeration products industry and the impact it would have on the 
ability of manufacturers to meet energy conservation standards. Given 
the uncertainty regarding such legislation, however, DOE did not factor 
the impact of potential HFC limitations in developing the standard 
levels presented in today's final rule.
    DOE has also considered the Joint Comments submitted to DOE 
containing the various recommended standard levels for refrigeration 
products. DOE recognizes the value of consensus agreements submitted by 
parties in accordance with 42 U.S.C. 6295(p)(4) and has weighed the 
value of such consensus in establishing the standards set forth in 
today's final rule.

C. Conclusion

    When prescribing new or amended standards, the standard that DOE 
adopts for any type (or class) of covered product shall be designed to 
achieve the maximum improvement in energy efficiency that the Secretary 
determines is technologically feasible and economically justified. (42 
U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically 
justified, the Secretary must determine whether the benefits of the 
standard exceed its burdens to the greatest extent practicable, in 
light of the seven statutory factors discussed previously. (42 U.S.C. 
6295(o)(2)(B)(i)) The new or amended standard must also ``result in 
significant conservation of energy.'' (42 U.S.C. 6295(o)(3)(B))
    For today's final rule, DOE considered the impacts of standards at 
each trial standard level, beginning with the 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 most efficient level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    For ease of presentation, DOE separately discusses the benefits 
and/or burdens of each trial standard level for standard-size 
refrigerator-freezers, standard-size freezers, compact refrigeration 
products, and built-in refrigeration products. Tables that present a 
summary of the results of DOE's quantitative analysis for each TSL have 
been provided to aid the reader as DOE discusses the benefits and/or 
burdens of each trial standard level.
    In addition to the quantitative results presented in the tables, 
DOE also considers other burdens and benefits that affect economic 
justification. These include the impacts on identifiable subgroups of 
consumers, such as low-income households and seniors, who may be 
disproportionately affected by a national standard. Section VI.B.1.b 
presents the estimated impacts of each TSL for these subgroups.
    DOE notes that the proposed standards set forth in the Joint 
Comments were also carefully considered by the agency. These suggested 
standards, along with the comments from all interested parties and the 
agency's analytical work developed in preparation of today's final 
rule, were considered during the development of the standards being 
adopted today.
    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. This undervaluation suggests that 
regulation that promotes energy efficiency can produce significant net 
private gains (as well as producing social gains by, for example, 
reducing pollution). There is evidence that consumers undervalue future 
energy savings as a result of (1) A lack of information, (2) a lack of 
sufficient salience of the long-term or aggregate benefits, (3) a lack 
of sufficient savings to warrant delaying or altering purchases (e.g. 
an inefficient ventilation fan in a new building or the delayed 
replacement of a water pump), (4) excessive focus on the short term, in 
the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments, (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs, and (6) a divergence in incentives (e.g., renter versus 
building owner; builder vs. home buyer). Other literature indicates 
that with less than perfect foresight and a high degree of uncertainty 
about the future, consumers may trade off these types of investments at 
a higher than expected rate between current consumption and uncertain 
future energy cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways. First, if consumers forego a 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the cost to manufacturers is included in the 
MIA. Second, DOE accounts for energy savings attributable only to 
products actually used by consumers in the standards case; if a 
regulatory option decreases the number of products used by consumers, 
this decreases the potential energy savings from an energy conservation 
standard. DOE provides detailed estimates of shipments and changes in 
the volume of product purchases in chapter 9 of the final rule TSD. 
However, DOE's current analysis does not explicitly control for 
heterogeneity in consumer preferences, preferences across subcategories 
of products or specific features, or consumer price sensitivity 
variation according to household income.
    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE has posted a paper that discusses the issue of consumer welfare 
impacts of appliance energy efficiency standards, and potential 
enhancements to the methodology by which these impacts are defined and 
estimated in the

[[Page 57594]]

regulatory process.\48\ DOE is committed to developing a framework that 
can support empirical quantitative tools for improved assessment of the 
consumer welfare impacts of appliance standards. DOE welcomes comments 
on how to more fully assess the potential impact of energy conservation 
standards on consumer choice and how to quantify this impact in its 
regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

    \48\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory. 2010. http://www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

1. Standard-Size Refrigerator-Freezers
    Table VI-70 presents a summary of the quantitative impacts 
estimated for each TSL for standard-size refrigerator-freezers. The 
efficiency levels contained in each TSL are described in section VI.A. 
The range of results for NPV of consumer benefits reflects the range of 
product price forecasts discussed in section IV.G.3.

                                         Table VI.70--Summary of Results for Standard-Size Refrigerator-Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                     TSL 1                   TSL 2                   TSL 3                   TSL 4                    TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings        2.41..................  2.78..................  3.27..................  4.45..................  5.30.
 (quads).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2009$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate.............  15.96 to 19.35........  16.26 to 20.76........  16.92 to 22.88........  4.800 to 18.20........  (11.4) to 9.67.
7% discount rate.............  4.272 to 5.940........  3.764 to 5.973........  3.173 to 6.104........  (5.756) to 0.804......  (16.30) to (6.03).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Industry Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2009$ million).  (117.8) to (252.6)....  (219.2) to (395.9)....  (345.0) to (580.7)....  (784.9) to (1,309.3)..  (1,042.2) to (1,841.5).
Industry NPV (% change)......  (4.4) to (9.5)........  (8.2) to (14.8).......  (12.9) to (21.7)......  (29.4) to (49.0)......  (39.0) to (69.0).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt).....................  175...................  202...................  238...................  323...................  386.
NOX (1000 tons)..............  141...................  162...................  191...................  260...................  310.
Hg (tons)....................  0.79..................  0.91..................  1.07..................  1.45..................  1.73.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Value of Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2009$ billion) *........  1.45 to 14.0..........  1.67 to 16.2..........  1.96 to 19.0..........  2.68 to 25.9..........  3.20 to 31.0.
NOX--3% discount rate (2009$   0.044 to 0.45.........  0.051 to 0.52.........  0.060 to 0.62.........  0.082 to 0.84.........  0.097 to 1.00.
 billion).
NOX--7% discount rate (2009$   0.018 to 0.18.........  0.020 to 0.21.........  0.024 to 0.25.........  0.033 to 0.34.........  0.039 to 0.40.
 billion).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Mean LCC Savings ** (2009$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Mount Refrigerator-        44....................  44....................  42....................  (6)...................  (87).
 Freezers.
Bottom-Mount Refrigerator-     22....................  22....................  22....................  (53)..................  (136).
 Freezers.
Side-by-Side Refrigerator-     62....................  57....................  57....................  (18)..................  (83).
 Freezers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Median PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Mount Refrigerator-        8.0...................  8.0...................  9.5...................  13.3..................  17.8.
 Freezers.
Bottom-Mount Refrigerator-     4.2...................  4.2...................  4.2...................  21.0..................  24.7.
 Freezers.
Side-by-Side Refrigerator-     4.0...................  9.2...................  9.2...................  15.6..................  19.1.
 Freezers.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Distribution of Consumer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Mount Refrigerator-
 Freezers:
    Net Cost (%).............  34....................  34....................  46....................  65....................  80.
    No Impact (%)............  8.3...................  8.3...................  0.0...................  0.0...................  0.0.
    Net Benefit (%)..........  58....................  58....................  54....................  35....................  20.
Bottom-Mount Refrigerator-
 Freezers:
    Net Cost (%).............  2.5...................  2.5...................  2.5...................  83....................  89.
    No Impact (%)............  68....................  68....................  68....................  0.0...................  0.0.
    Net Benefit (%)..........  30....................  30....................  30....................  17....................  11.
Side-by-Side Refrigerator-
 Freezers:
    Net Cost (%).............  4.3...................  42....................  42....................  70....................  80.
    No Impact (%)............  37....................  0.0...................  0.0...................  0.0...................  0.0.
    Net Benefit (%)..........  59....................  59....................  59....................  30....................  21.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Generation Capacity Reduction  2.62..................  3.03..................  3.56..................  4.86..................  5.82.
 (GW) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Potential Changes in     (0.19) to (7.35)......  (0.22) to (7.35)......  (0.18) to (7.35)......  (0.24) to (7.35)......  (0.37) to (7.35).
 Domestic Production Workers
 in 2014 (thousands).

[[Page 57595]]

 
Indirect Domestic Jobs         16.24.................  18.45.................  21.33.................  26.31.................  28.85.
 (thousands) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save 5.30 quads of energy, an amount DOE 
considers significant. Under TSL 5, the NPV of consumer benefit would 
be -$6.03 billion to -$16.3 billion, using a discount rate of 7 
percent, and -$11.4 to $9.67 billion, using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 5 are 386 Mt of 
CO2, 310,000 tons of NOX, and 1.73 tons of Hg. 
The estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 5 ranges from $3.20 billion to $30.98 billion. Total 
generating capacity in 2043 is estimated to decrease by 5.82 GW under 
TSL 5.
    At TSL 5, the average LCC impact is a cost (LCC increase) of $87 
for top-mount refrigerator-freezers, a cost of $136 for bottom-mount 
refrigerator-freezers, and a cost of $83 for side-by-side refrigerator-
freezers. The median payback period is 17.8 years for top-mount 
refrigerator-freezers, 24.7 years for bottom-mount refrigerator-
freezers, and 19.1 years for side-by-side refrigerator-freezers. The 
fraction of consumers experiencing an LCC benefit is 20 percent for 
top-mount refrigerator-freezers, 11 percent for bottom-mount 
refrigerator-freezers, and 21 percent for side-by-side refrigerator-
freezers. The fraction of consumers experiencing an LCC cost is 80 
percent for top-mount refrigerator-freezers, 89 percent for bottom-
mount refrigerator-freezers, and 80 percent for side-by-side 
refrigerator-freezers.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$1,042.2 million to a decrease of $1,841.5 million. At TSL 5, DOE 
recognizes the risk of very large negative impacts if manufacturers' 
expectations concerning reduced profit margins are realized. If the 
high end of the range of impacts is reached as DOE expects, TSL 5 could 
result in a net loss of 69.0 percent in INPV to standard-size 
refrigerator-freezer manufacturers.
    The Secretary has concluded that at TSL 5 for standard-size 
refrigerator-freezers, the benefits of energy savings, generating 
capacity reductions, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the negative NPV of consumer benefits, the economic burden on a 
significant fraction of consumers due to the large increases in product 
cost, and the capital conversion costs and profit margin impacts that 
could result in a very large reduction in INPV for manufacturers. 
Consequently, the Secretary has concluded that TSL 5 is not 
economically justified.
    DOE then considered TSL 4. TSL 4 would save 4.45 quads of energy, 
an amount DOE considers significant. Under TSL 4, the NPV of consumer 
benefit would be -$5.76 billion to $0.80 billion, using a discount rate 
of 7 percent, and $4.80 billion to $18.2 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 4 are 323 Mt of 
CO2, 260,000 tons of NOX, and 1.45 tons of Hg. 
The estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 4 ranges from $2.68 billion to $25.9 billion. Total 
generating capacity in 2043 is estimated to decrease by 4.86 GW under 
TSL 4.
    At TSL 4, DOE projects that the average LCC impact is a cost (LCC 
increase) of $6 for top-mount refrigerator-freezers, a cost of $53 for 
bottom-mount refrigerator-freezers, and a cost of $18 for side-by-side 
refrigerator-freezers. The median payback period is 13.3 years for top-
mount refrigerator-freezers, 21.0 years for bottom-mount refrigerator-
freezers, and 15.6 years for side-by-side refrigerator-freezers. The 
fraction of consumers experiencing an LCC benefit is 35 percent for 
top-mount refrigerator-freezers, 17 percent for bottom-mount 
refrigerator-freezers, and 30 percent for side-by-side refrigerator-
freezers. The fraction of consumers experiencing an LCC cost is 65 
percent for top-mount refrigerator-freezers, 83 percent for bottom-
mount refrigerator-freezers, and 70 percent for side-by-side 
refrigerator-freezers.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$784.9 million to a decrease of $1,309.3 million. DOE recognizes the 
risk of large negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. If the high end of the 
range of impacts is reached as DOE expects, TSL 4 could result in a net 
loss of 49.0 percent in INPV to standard-size refrigerator-freezer 
manufacturers.
    The Secretary has concluded that at TSL 4 for standard-size 
refrigerator-freezers, the benefits of energy savings, positive NPV of 
consumer benefits at 3-percent discount rate, generating capacity 
reductions, and emission reductions and the estimated monetary value of 
the CO2 emissions reductions would be outweighed by the 
negative NPV of consumer benefits at 7-percent discount rate, the 
economic burden on a significant fraction of consumers due to the large 
increases in product cost, and the capital conversion costs and profit 
margin impacts that could result in a substantial reduction in INPV for 
the manufacturers. Consequently, the Secretary has concluded that TSL 4 
is not economically justified.
    DOE then considered TSL 3. TSL 3 would save 3.27 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be $3.17 billion to $6.10 billion, using a discount rate 
of 7 percent, and $16.9 billion to $22.9 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 3 are 238 Mt of 
CO2, 191,000 tons of NOX, and 1.07 tons of Hg. 
The estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 3 ranges from $1.96 billion to $19.0 billion. Total 
generating capacity in 2043 is estimated to decrease by 3.56 GW under 
TSL 3.
    At TSL 3, the average LCC impact is a gain (consumer savings) of 
$42 for top-mount refrigerator-freezers, a gain of $22 for bottom-mount 
refrigerator-freezers, and a gain of $57 for side-by-side refrigerator-
freezers. The median payback period is 9.5 years for top-mount 
refrigerator-freezers, 4.2 years for bottom-mount refrigerator-
freezers, and 9.2 years for side-by-side refrigerator-freezers. The 
fraction of consumers experiencing an LCC benefit is 54 percent for 
top-mount refrigerator-freezers, 30 percent for bottom-mount 
refrigerator-freezers, and 59 percent for

[[Page 57596]]

side-by-side refrigerator-freezers. The fraction of consumers 
experiencing an LCC cost is 46 percent for top-mount refrigerator-
freezers, 2.5 percent for bottom-mount refrigerator-freezers, and 42 
percent for side-by-side refrigerator-freezers.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$345.0 million to a decrease of $580.7 million. DOE recognizes the risk 
of negative impacts if manufacturers' expectations concerning reduced 
profit margins are realized. If the high end of the range of impacts is 
reached as DOE expects, TSL 3 could result in a net loss of 21.7 
percent in INPV to standard-size refrigerator-freezer manufacturers.
    The Secretary has concluded that at TSL 3 for standard-size 
refrigerator-freezers, the benefits of energy savings, positive NPV of 
consumer benefits, generating capacity reductions, emission reductions, 
and the estimated monetary value of the CO2 emissions 
reductions outweigh the economic burden on a significant fraction of 
consumers due to the increases in product cost, and the capital 
conversion costs and profit margin impacts that could result in a 
reduction in INPV for the manufacturers. In addition to the 
aforementioned benefits of the amended standards, DOE notes that the 
efficiency levels in TSL 3 correspond to the recommended levels 
presented in the Joint Comments and, as stated previously, DOE 
recognizes the value of consensus agreements submitted in accordance 
with 42 U.S.C. 6295(p)(4).
    After considering the analysis, comments responding to the 
September 2010 NOPR, and the benefits and burdens of TSL 3, the 
Secretary has concluded that this trial standard level will offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and will result in the significant conservation 
of energy. Therefore, DOE is adopting TSL 3 for standard-size 
refrigerator-freezers. The amended energy conservation standards for 
standard-size refrigerator-freezers, expressed as equations for maximum 
energy use, are shown in Table VI.71.

            Table VI.71--Amended Standards for Standard-Size Refrigerators and Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class              -----------------------------------------------------------------------
                                                 Based on AV (ft \3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerator-freezers and              7.99AV + 225.0....................  0.282av + 225.0
 refrigerators other than all-
 refrigerators with manual defrost.
1A. All-refrigerators--manual defrost...  6.79AV + 193.6....................  0.240av + 193.6
2. Refrigerator-freezers--partial         7.99AV + 225.0....................  0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic       8.07AV + 233.7....................  0.285av + 233.7
 defrost with top-mounted freezer
 without an automatic icemaker.
3I. Refrigerator-freezers--automatic      8.07AV + 317.7....................  0.285av + 317.7
 defrost with top-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
3A. All-refrigerators--automatic defrost  7.07AV + 201.6....................  0.250av + 201.6
4. Refrigerator-freezers--automatic       8.51AV + 297.8....................  0.301av + 297.8
 defrost with side-mounted freezer
 without an automatic icemaker.
4I. Refrigerator-freezers--automatic      8.51AV + 381.8....................  0.301av + 381.8
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
5. Refrigerator-freezers--automatic       8.85AV + 317.0....................  0.312av + 317.0
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5I. Refrigerator-freezers--automatic      8.85AV + 401.0....................  0.312av + 401.0
 defrost with bottom-mounted freezer
 with an automatic icemaker without
 through-the-door ice service.
5A. Refrigerator-freezer--automatic       9.25AV + 475.4....................  0.327av + 475.4
 defrost with bottom-mounted freezer
 with through-the-door ice service.
6. Refrigerator-freezers--automatic       8.40AV + 385.4....................  0.297av + 385.4
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic       8.54AV + 432.8....................  0.302av + 432.8
 defrost with side-mounted freezer with
 through-the-door ice service.
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters.

2. Standard-Size Freezers
    Table VI.72 presents a summary of the quantitative impacts 
estimated for each TSL for standard-size freezers. The efficiency 
levels contained in each TSL are described in section VI.A. The range 
of results for NPV of consumer benefits reflects the range of product 
price forecasts discussed in section IV.G.3.

                                               Table VI.72--Summary of Results for Standard-Size Freezers
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                      TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings         0.79...................  1.14...................  1.34..................  1.52..................  1.62.
 (quads).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2009$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate..............  8.00 to 8.50...........  10.1 to 11.2...........  10.7 to 12.4..........  9.66 to 12.2..........  5.32 to 9.46.
7% discount rate..............  2.67 to 2.92...........  3.02 to 3.59...........  2.96 to 3.77..........  2.03 to 3.25..........  (0.63) to 1.41.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Industry Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2009$ million)..  (29.8) to (50.0).......  (123.7) to (170.5).....  (112.5) to (178.1)....  (85.4) to (182.4).....  (145.0) to (298.8).
Industry NPV (% change).......  (8.8) to (14.8)........  (36.6) to (50.5).......  (33.3) to (52.7)......  (25.3) to (54.0)......  (42.9) to (88.5).
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57597]]

 
                                                             Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)......................  54.....................  77.....................  91....................  103...................  110.
NOX (1000 tons)...............  43.....................  62.....................  73....................  83....................  89.
Hg (tons).....................  0.24...................  0.34...................  0.41..................  0.47..................  0.50.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Value of Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2009$ billion) *.........  0.48 to 4.58...........  0.69 to 6.59...........  0.81 to 7.76..........  0.92 to 8.80..........  0.98 to 9.41.
NOX--3% discount rate (2009$    0.014 to 0.15..........  0.020 to 0.21..........  0.024 to 0.25.........  0.027 to 0.28.........  0.029 to 0.30.
 billion).
NOX--7% discount rate (2009$    0.006 to 0.056.........  0.008 to 0.081.........  0.009 to 0.095........  0.011 to 0.107........  0.011 to 0.115.
 billion).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Mean LCC Savings** (2009$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upright Freezers..............  140....................  195....................  189...................  161...................  33.
Chest Freezers................  82.....................  69.....................  79....................  47....................  (25).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Median PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upright Freezers..............  4.0....................  5.3....................  7.1...................  9.3...................  14.7.
Chest Freezers................  3.9....................  8.1....................  8.5...................  12.1..................  17.8.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Distribution of Consumer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Upright Freezers:
    Net Cost (%)..............  6.0....................  12.....................  22....................  35....................  60.
    No Impact (%).............  0.6....................  0.2....................  0.0...................  0.0...................  0.0.
    Net Benefit (%)...........  93.....................  88.....................  78....................  65....................  40.
Chest Freezers:
    Net Cost (%)..............  5......................  27.....................  29....................  49....................  69.
    No Impact (%).............  0.2....................  0.2....................  0.2...................  0.0...................  0.0.
    Net Benefit (%)...........  95.....................  73.....................  71....................  51....................  31.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Generation Capacity Reduction   0.83...................  0.83...................  1.40..................  1.59..................  1.71.
 (GW) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Potential Changes in      (0.05) to (1.64).......  (0.11) to (1.64).......  (0.15) to (1.64)......  (0.23) to (1.64)......  (0.34) to (1.64).
 Domestic Production Workers
 in 2014 (thousands).
Indirect Domestic Jobs          5.18...................  7.24...................  8.38..................  9.19..................  9.12.
 (thousands) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save 1.62 quads of energy, an amount DOE 
considers significant. Under TSL 5, the NPV of consumer benefit would 
be -$0.63 billion to $1.41 billion, using a discount rate of 7 percent, 
and $5.32 billion to $9.46 billion, using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 5 are 110 Mt of 
CO2, 89,000 tons of NOX, and 0.50 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 5 ranges from $0.98 billion to $9.41 billion. Total 
generating capacity in 2043 is estimated to decrease by 1.71 GW under 
TSL 5.
    At TSL 5, the average LCC impact is a gain (LCC decrease) of $33 
for upright freezers, and a cost of $25 for chest freezers. The median 
payback period is 14.7 years for upright freezers and 17.8 years for 
chest freezers. The fraction of consumers experiencing an LCC benefit 
is 40 percent for upright freezers and 31 percent for chest freezers. 
The fraction of consumers experiencing an LCC cost is 60 percent for 
upright freezers and 69 percent for chest freezers.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$145.0 million to a decrease of $298.8 million. DOE recognizes the risk 
of very large negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. Standards at TSL 5 
would require efficiency levels that are far higher than the most 
efficient products currently available on the market. Manufacturing 
products to meet standards at TSL 5 would require large investments in 
product redesign and conversion of facilities. Because standard-size 
freezers are currently low-cost, low-margin products, there is a 
limited ability to pass on to consumers the required conversion costs 
and added product costs associated with efficiency-improving 
technologies for freezers. If the high end of the range of impacts is 
reached as DOE expects, TSL 5 could result in a net loss of 88.5 
percent in INPV to standard-size freezer manufacturers.
    The Secretary has concluded that at TSL 5 for standard-size 
freezers, the benefits of energy savings, positive NPV of consumer 
benefits, generating capacity reductions, emission reductions, and the 
estimated monetary value of the CO2 emissions reductions 
would be outweighed by the economic burden on a significant fraction of 
consumers due to the large increases in product cost, and the capital 
conversion costs and profit margin impacts that could result in a very 
large reduction in

[[Page 57598]]

INPV for manufacturers. Consequently, the Secretary has concluded that 
TSL 5 is not economically justified.
    DOE then considered TSL 4. TSL 4 would save 1.52 quads of energy, 
an amount DOE considers significant. Under TSL 4, the NPV of consumer 
benefit would be $2.03 billion to $3.25 billion, using a discount rate 
of 7 percent, and $9.66 billion to $12.2 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 4 are 103 Mt of 
CO2, 83,000 tons of NOX, and 0.47 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 4 ranges from $0.92 billion to $8.80 billion. Total 
generating capacity in 2043 is estimated to decrease by 1.59 GW under 
TSL 4.
    At TSL 4, the average LCC impact is a gain (consumer savings) of 
$161 for upright freezers and a gain of $47 for chest freezers. The 
median payback period is 9.3 years for upright freezers and 12.1 years 
for chest freezers. The fraction of consumers experiencing an LCC 
benefit is 65 percent for upright freezers and 51 percent for chest 
freezers. The fraction of consumers experiencing an LCC cost is 35 
percent for upright freezers and 49 percent for chest freezers.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$85.4 million to a decrease of $182.4 million. DOE recognizes the risk 
of very large negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. Standards at TSL 4 
would require efficiency levels that are substantially higher than the 
most efficient products currently available on the market. 
Manufacturing products to meet standards at TSL 4 would require large 
investments in product redesign and conversion of facilities. Because 
standard-size freezers are currently low-cost, low-margin products, 
there is a limited ability to pass on to consumers the required 
conversion costs and added product costs associated with efficiency-
improving technologies for freezers. If the high end of the range of 
impacts is reached as DOE expects, TSL 4 could result in a net loss of 
54.0 percent in INPV to standard-size freezer manufacturers.
    The Secretary has concluded that at TSL 4 for standard-size 
freezers, the benefits of energy savings, positive NPV of consumer 
benefits, generating capacity reductions, emission reductions, the 
estimated monetary value of the cumulative CO2 emissions 
reductions, and the economic benefit on a significant fraction of 
upright freezer consumers would be outweighed by the economic burden on 
a significant fraction of chest freezer consumers due to the increase 
in product cost, and the large capital conversion costs and margin 
impacts that could result in a large reduction in INPV for 
manufacturers.
    DOE then considered TSL 3. TSL 3 would save 1.34 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be $2.96 billion to $3.77 billion, using a discount rate 
of 7 percent, and $10.7 billion to $12.4 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 3 are 91 Mt of 
CO2, 73,000 tons of NOX, and 0.41 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 3 ranges from $0.81 billion to $7.76 billion. Total 
generating capacity in 2043 is estimated to decrease by 1.40 GW under 
TSL 3.
    At TSL 3, the average LCC impact is a gain (consumer savings) of 
$189 for upright freezers and a gain of $79 for chest freezers. The 
median payback period is 7.1 years for upright freezers and 8.5 years 
for chest freezers. The fraction of consumers experiencing an LCC 
benefit is 78 percent for upright freezers and 71 percent for chest 
freezers. The fraction of consumers experiencing an LCC cost is 22 
percent for upright freezers and 29 percent for chest freezers.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$112.5 million to a decrease of $178.1 million. DOE recognizes the risk 
of very large negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. Standards at TSL 3 
would require efficiency levels that are substantially higher than the 
most efficient products currently available on the market. Similar to 
the case of TSL 4, manufacturing products to meet standards at TSL 3 
would require large investments in product redesign and conversion of 
facilities. Because standard-size freezers are currently low-cost, low-
margin products, there is a limited ability to pass on to consumers the 
required conversion costs and added product costs associated with more 
energy efficient technologies for freezers. If the high end of the 
range of impacts is reached, as DOE expects, TSL 3 could result in a 
net loss of 52.7 percent in INPV to standard-size freezer 
manufacturers.
    DOE notes that TSL 3 is not at the level recommended in the 
consensus agreement. DOE also notes that the TSL 3 efficiency levels 
are significantly higher than the maximum-efficiency products on the 
market: From 8% higher for product class 9 (upright freezers with 
automatic defrost) to 15% higher for product class 10 (chest freezers). 
Hence, DOE believes that there may be other factors, including 
additional burdens, that the parties to that agreement may have 
considered that are not reflected in DOE's analysis. Given this 
possibility, the strong support expressed by commenters in favor of the 
consensus agreement levels, and the lack of product on the market that 
is close to meeting the requirements of this level, DOE is declining to 
adopt TSL 3 as part of today's final rule. It may, however, reconsider 
this level as part of a future review of the standards set by today's 
rulemaking as part of the agency's required review under 42 U.S.C. 
6295(m).
    Accordingly, the Secretary has concluded that at TSL 3 for 
standard-size freezers, the benefits of energy savings, positive NPV of 
consumer benefits, generating capacity reductions, emission reductions, 
the estimated monetary value of the cumulative CO2 emissions 
reductions, and the economic benefit for a significant fraction of 
freezer consumers would be outweighed by the large capital conversion 
costs and profit margin impacts and other burdens that manufacturers 
would bear in order to produce freezers that meet efficiency 
requirements substantially more stringent than what products on the 
market presently can satisfy.
    DOE then considered TSL 2. TSL 2 would save 1.14 quads of energy, 
an amount DOE considers significant. Under TSL 2, the NPV of consumer 
benefit would be $3.02 billion to $3.59 billion, using a discount rate 
of 7 percent, and $10.1 billion to $11.2 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 2 are 77 Mt of 
CO2, 62,000 tons of NOX, and 0.34 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 2 ranges from $0.69 billion to $6.59 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.83 GW under 
TSL 2.
    At TSL 2, the average LCC impact is a gain (consumer savings) of 
$195 for upright freezers and a gain of $69 for chest freezers. The 
median payback period is 5.3 years for upright freezers and 8.1 years 
for chest freezers. The fraction of consumers experiencing an LCC 
benefit is 88 percent for upright freezers and 73 percent for chest 
freezers. The fraction of consumers experiencing an LCC cost is 12 
percent for upright freezers and 27 percent for chest freezers.

[[Page 57599]]

    DOE estimated the projected change in INPV ranges from a decrease 
of $123.7 million to a decrease of $170.5 million. At TSL 2, DOE 
recognizes the risk of negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. Standards at TSL 2 
would pose many of the same issues as discussed above for TSL3, but the 
projected negative impacts are somewhat less. If the high end of the 
range of impacts is reached as DOE expects, TSL 2 could result in a net 
loss of 50.5 percent in INPV to standard-size freezer manufacturers.
    The Secretary has concluded that at TSL 2 for standard-size 
freezers, the benefits of energy savings, positive NPV of consumer 
benefits, generating capacity reductions, emission reductions, the 
estimated monetary value of the cumulative CO2 emissions 
reductions, and the economic benefit for a significant fraction of 
freezer consumers would outweigh the capital conversion costs and 
profit margin impacts that could result in a reduction in INPV for the 
manufacturers. In addition to the aforementioned benefits, DOE notes 
that the efficiency levels in TSL 2 correspond to the recommended 
levels in the Joint Comments and, as stated previously, DOE recognizes 
the value of consensus agreements submitted in accordance with 42 
U.S.C. 6295(p)(4).
    After considering the analysis, comments responding to the 
September 2010 NOPR, and the benefits and burdens of TSL 2, the 
Secretary has concluded that this trial standard level will offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and will result in the significant conservation 
of energy. Therefore, DOE today is adopting TSL 2 for standard-size 
freezers. The amended energy conservation standards for standard-size 
freezers, expressed as equations for maximum energy use, are shown in 
Table VI.73.

                            Table VI.73--Amended Standards for Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class              -----------------------------------------------------------------------
                                                 Based on AV (ft \3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
8. Upright freezers with manual defrost.  5.57AV + 193.7....................  0.197av + 193.7
9. Upright freezers with automatic        8.62AV + 228.3....................  0.305av + 228.3
 defrost without an automatic icemaker.
9I. Upright freezers with automatic       8.62AV + 312.3....................  0.305av + 312.3
 defrost with an automatic icemaker.
10. Chest freezers and all other          7.29AV + 107.8....................  0.257av + 107.8
 freezers except compact freezers.
10A. Chest freezers with automatic        10.24AV + 148.1...................  0.362av + 148.1
 defrost.
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters.

3. Compact Refrigeration Products
    Table VI.74 presents a summary of the quantitative impacts 
estimated for each TSL for compact refrigeration products. The 
efficiency levels contained in each TSL are described in section VI.A. 
The range of results for NPV of consumer benefits reflects the range of 
product price forecasts discussed in section IV.G.3.

                                           Table VI.74--Summary of Results for Compact Refrigeration Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                      TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings         0.30...................  0.37...................  0.43..................  0.54..................  0.59.
 (quads).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2009$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate..............  1.64 to 1.95...........  1.29 to 1.89...........  1.45 to 2.15..........  0.046 to 1.43.........  (3.75) to (1.17).
7% discount rate..............  0.675 to 0.821.........  0.439 to 0.724.........  0.482 to 0.819........  (0.363) to 0.304......  (2.51) to (1.25).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Industry Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compact Refrigeration
 Products:
    Industry NPV (2009$         (16.6) to (27.8).......  (36.2) to (58.7).......  (62.9) to (89.3)......  (41.5) to (92.8)......  (154.9) to (242.6).
     million).
    Industry NPV (% change)...  (9.8) to (16.4)........  (21.4) to (34.6).......  (37.1) to (52.7)......  (24.5) to (54.8)......  (91.4) to (143.2).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)......................  20.....................  24.....................  28....................  35....................  39.
NOX (1000 tons)...............  16.....................  20.....................  23....................  29....................  31.
Hg (tons).....................  0.10...................  0.12...................  0.15..................  0.19..................  0.21.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Value of Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2009$ billion)*..........  0.12 to 1.26...........  0.15 to 1.54...........  0.18 to 1.79..........  0.22 to 2.25..........  0.24 to 2.47.
NOX--3% discount rate (2009$    0.004 to 0.044.........  0.005 to 0.054.........  0.006 to 0.063........  0.008 to 0.079........  0.009 to 0.088.
 billion).
NOX--7% discount rate (2009$    0.002 to 0.021.........  0.003 to 0.026.........  0.003 to 0.030........  0.004 to 0.038........  0.004 to 0.042.
 billion).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Mean LCC Savings ** (2009$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compact Refrigerators.........  17.....................  14.....................  13....................  (5)...................  (85).
Compact Freezers..............  12.....................  12.....................  9.....................  (23)..................  (102).
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57600]]

 
                                                                   Median PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compact Refrigerators.........  2.5....................  3.5....................  3.9...................  5.8...................  10.4.
Compact Freezers..............  2.2....................  2.2....................  4.2...................  9.1...................  14.4.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Distribution of Consumer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Compact Refrigerators:
    Net Cost (%)..............  20.....................  37.....................  44....................  70....................  92.
    No Impact (%).............  1.4....................  1.0....................  0.9...................  0.0...................  0.0.
    Net Benefit (%)...........  79.....................  62.....................  56....................  30....................  7.9.
Compact Freezers:
    Net Cost (%)..............  8......................  8......................  34....................  85....................  97.
    No Impact (%).............  5......................  5......................  0.0...................  0.0...................  0.0.
    Net Benefit (%)...........  87.....................  87.....................  66....................  16....................  3.3.
Generation Capacity Reduction   0.27...................  0.34...................  0.39..................  0.48..................  0.51.
 (GW) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Potential Changes in      (0.00) to (0.03).......  (0.00) to (0.03).......  (0.00) to (0.03)......  (0.00) to (0.03)......  (0.01) to (0.03).
 Domestic Production Workers
 in 2014 (thousands).
Indirect Domestic Jobs          1.44...................  1.64...................  1.88..................  2.02..................  1.53.
 (thousands) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save 0.59 quads of energy, an amount DOE 
considers significant. Under TSL 5, the NPV of consumer benefit would 
be -$2.51 billion to -$1.25 billion, using a discount rate of 7 
percent, and -$3.75 billion to -$1.17 billion, using a discount rate of 
3 percent.
    The cumulative emissions reductions at TSL 5 are 39 Mt of 
CO2, 31,000 tons of NOX, and 0.21 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 5 ranges from $0.24 billion to $2.47 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.51 GW under 
TSL 5.
    At TSL 5, the average LCC impact is a cost (LCC increase) of $85 
for compact refrigerators and a cost of $102 for compact freezers. The 
median payback period is 10.4 years for compact refrigerators and 14.4 
years for compact freezers. The fraction of consumers experiencing an 
LCC benefit is 7.9 percent for compact refrigerators and 3.3 percent 
for compact freezers. The fraction of consumers experiencing an LCC 
cost is 92 percent for compact refrigerators and 97 percent for compact 
freezers.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$154.9 million to a decrease of $242.6 million. DOE recognizes the risk 
of very large negative impacts if manufacturers' expectations 
concerning reduced profit margins are realized. Manufacturing products 
to meet standards at TSL 5 would require large investments in product 
redesign and conversion of facilities. Because compact refrigeration 
products are currently low-cost, low-margin products, there is a 
limited ability to pass on to consumers the required conversion costs 
and added product costs associated with efficiency-improving 
technologies. If the high end of the range of impacts is reached as DOE 
expects, TSL 5 could result in a net loss of 143.2 percent in INPV to 
compact refrigeration product manufacturers.
    The Secretary has concluded that at TSL 5 for compact refrigeration 
products, the benefits of energy savings, generating capacity 
reductions, emission reductions, and the estimated monetary value of 
the CO2 emissions reductions would be outweighed by the 
negative NPV of consumer benefits, the economic burden on a significant 
fraction of consumers due to the increases in product cost, the capital 
conversion costs and profit margin impacts that could result in a large 
reduction in INPV for manufacturers. Consequently, the Secretary has 
concluded that TSL 5 is not economically justified.
    DOE then considered TSL 4. TSL 4 would save 0.54 quads of energy, 
an amount DOE considers significant. Under TSL 4, the NPV of consumer 
benefit would be -$0.363 billion to $0.304 billion, using a discount 
rate of 7 percent, and $0.46 billion to $1.43 billion, using a discount 
rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 35 Mt of 
CO2, 29,000 tons of NOX, and 0.19 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 4 ranges from $0.22 billion to $2.25 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.48 GW under 
TSL 4.
    At TSL 4, the average LCC impact is a cost (LCC increase) of $5 for 
compact refrigerators and a cost of $23 for compact freezers. The 
median payback period is 5.8 years for compact refrigerators and 9.1 
years for compact freezers. The fraction of consumers experiencing an 
LCC benefit is 30 percent for compact refrigerators and 16 percent for 
compact freezers. The fraction of consumers experiencing an LCC cost is 
70 percent for compact refrigerators and 85 percent for compact 
freezers.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$41.5 million to a decrease of $92.8 million. DOE recognizes the risk 
of very large negative impacts if manufacturers' expectations about 
reduced profit margins are realized. Manufacturing products to meet 
standards at TSL 4 would require large investments in product redesign 
and conversion of facilities. Because compact refrigeration products 
are currently low-cost, low-margin products, there is a limited

[[Page 57601]]

ability to pass on to consumers the required conversion costs and added 
product costs associated with efficiency-improving technologies. If the 
high end of the range of impacts is reached as DOE expects, TSL 4 could 
result in a net loss of 54.8 percent in INPV to compact refrigeration 
product manufacturers.
    The Secretary has concluded that at TSL 4 for compact refrigeration 
products, the benefits of energy savings, generating capacity 
reductions, emission reductions, and the estimated monetary value of 
the CO2 emissions reductions would be outweighed by the 
negative NPV of consumer benefits, the economic burden on a significant 
fraction of consumers due to the increases in product costs, and the 
capital conversion costs and profit margin impacts that could result in 
a large reduction in INPV for manufacturers. Consequently, the 
Secretary has concluded that TSL 4 is not economically justified.
    DOE then considered TSL 3. TSL 3 would save 0.43 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be $0.482 billion to $0.819 billion, using a discount 
rate of 7 percent, and $1.45 to $2.15 billion, using a discount rate of 
3 percent.
    The cumulative emissions reductions at TSL 3 are 28 Mt of 
CO2, 23,000 tons of NOX, and 0.15 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 3 ranges from $0.18 billion to $1.79 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.39 GW under 
TSL 3.
    At TSL 3, the average LCC impact is a gain (consumer savings) of 
$13 for compact refrigerators and a gain of $9 for compact freezers. 
The median payback period is 3.9 years for compact refrigerators and 
4.2 years for compact freezers. The fraction of consumers experiencing 
an LCC benefit is 56 percent for compact refrigerators and 66 percent 
for compact freezers. The fraction of consumers experiencing an LCC 
cost is 44 percent for compact refrigerators and 34 percent for compact 
freezers.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$62.9 million to a decrease of $89.3 million. DOE recognizes the risk 
of large negative impacts if manufacturers' expectations about reduced 
profit margins are realized. Manufacturing products to meet standards 
at TSL 3 would require large investments in product redesign and 
conversion of facilities. Because compact refrigeration products are 
currently low-cost, low-margin products, there is a limited ability to 
pass on to consumers the required conversion costs and added product 
costs associated with efficiency-improving technologies. If the high 
end of the range of impacts is reached as DOE expects, TSL 3 could 
result in a net loss of 52.7 percent in INPV to compact refrigeration 
product manufacturers.
    The Secretary has concluded that at TSL 3 for compact refrigeration 
products, the benefits of energy savings, positive NPV of consumer 
benefits, generating capacity reductions, emission reductions, and the 
estimated monetary value of the cumulative CO2 emissions 
reductions would be outweighed by the economic burden on a significant 
fraction of consumers due to the increases in product costs, and by the 
capital conversion costs and profit margin impacts that could result in 
a large reduction in INPV for manufacturers. Consequently, the 
Secretary has concluded that TSL 3 is not economically justified.
    DOE then considered TSL 2. TSL 2 would save 0.37 quads of energy, 
an amount DOE considers significant. Under TSL 2, the NPV of consumer 
benefit would be $0.439 billion to $0.724 billion, using a discount 
rate of 7 percent, and $1.29 billion to $1.89 billion, using a discount 
rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 24 Mt of 
CO2, 20,000 tons of NOX, and 0.12 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 2 ranges from $0.15 billion to $1.54 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.34 GW under 
TSL 2.
    At TSL 2, the average LCC impact is a gain (consumer savings) of 
$14 for compact refrigerators and a gain of $12 for compact freezers. 
The median payback period is 3.5 years for compact refrigerators and 
2.2 years for compact freezers. The fraction of consumers experiencing 
an LCC benefit is 62 percent for compact refrigerators and 87 percent 
for compact freezers. The fraction of consumers experiencing an LCC 
cost is 37 percent for compact refrigerators and 8 percent for compact 
freezers.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$36.2 million to a decrease of $58.7 million. DOE recognizes the risk 
of negative impacts if manufacturers' expectations about reduced profit 
margins are realized. Manufacturing products to meet standards at TSL 2 
would require investments in product redesign and conversion of 
facilities. Because compact refrigeration products are currently low-
cost, low-margin products, there is a limited ability to pass on to 
consumers the required conversion costs and added product costs 
associated with efficiency-improving technologies. If the high end of 
the range of impacts is reached as DOE expects, TSL 2 could result in a 
net loss of 34.6 percent in INPV to compact refrigeration product 
manufacturers.
    The Secretary has concluded that at TSL 2 for compact refrigeration 
products, the benefits of energy savings, positive NPV of consumer 
benefits, generating capacity reductions, emission reductions, the 
estimated monetary value of the cumulative CO2 emissions 
reductions, and the economic benefit to a significant fraction of 
consumers would outweigh the capital conversion costs that could result 
in a reduction in INPV for manufacturers. In addition to the 
aforementioned benefits of the amended standards, DOE notes that the 
efficiency levels in TSL 2 correspond to the recommended levels in the 
Joint Comments
    AHAM and ASAP both commented that the proposed standard energy 
efficiency equation for product class 15 (compact refrigerator-
freezers--automatic defrost with bottom-mounted freezer) was 
inconsistent with the consensus agreement, which had recommended that 
both product class 15 and product class 13 (compact refrigerator-
freezers--automatic defrost with top-mounted freezer) should have 
identical standards. (ASAP, Public Meeting Transcript, No. 67 at p. 91; 
AHAM, Public Meeting Transcript, No. 67 at p. 92) DOE agrees that the 
standards of these two product classes should be the same, based on the 
similarities between these classes. Commenters favored this approach 
and none offered any information suggesting an alternative approach. As 
stated previously, DOE recognizes the value of consensus agreements 
submitted in accordance with 42 U.S.C. 6295(p)(4).
    After considering the analysis, comments responding to the 
September 2010 NOPR, and the benefits and burdens of TSL 2, the 
Secretary has concluded that this trial standard level will offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and will result in the significant conservation 
of energy. Therefore, DOE today is adopting TSL 2 for compact 
refrigeration products. The amended energy conservation standards for 
compact refrigeration products, expressed as equations for maximum 
energy use, are shown in Table VI-75.

[[Page 57602]]

                        Table VI.75--Amended Standards for Compact Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class              -----------------------------------------------------------------------
                                                 Based on AV (ft \3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
11. Compact refrigerators and             9.03AV + 252.3....................  0.319av + 252.3
 refrigerator-freezers with manual
 defrost.
11A. Compact all-refrigerators--manual    7.84AV + 219.1....................  0.277av + 219.1
 defrost.
12. Compact refrigerator-freezers--       5.91AV + 335.8....................  0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--       11.80AV + 339.2...................  0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13I. Compact refrigerator-freezers--      11.80AV + 423.2...................  0.417av + 423.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker.
13A. Compact all-refrigerators--          9.17AV + 259.3....................  0.324av + 259.3
 automatic defrost.
14. Compact refrigerator-freezers--       6.82AV + 456.9....................  0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
14I. Compact refrigerator-freezers--      6.82AV + 540.9....................  0.241av + 540.9
 automatic defrost with side-mounted
 freezer with an automatic icemaker.
15. Compact refrigerator-freezers--       11.80AV + 339.2...................  0.417av + 339.2
 automatic defrost with bottom-mounted
 freezer.
15I. Compact refrigerator-freezers--      11.80AV + 423.2...................  0.417av + 423.2
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker.
16. Compact upright freezers with manual  8.65AV + 225.7....................  0.306av + 225.7
 defrost.
17. Compact upright freezers with         10.17AV + 351.9...................  0.359av + 351.9
 automatic defrost.
18. Compact chest freezers..............  9.25AV + 136.8....................  0.327av + 136.8
----------------------------------------------------------------------------------------------------------------
 AV = adjusted volume in cubic feet; av = adjusted volume in liters.

4. Built-In Refrigeration Products
    Table V-76 presents a summary of the quantitative impacts estimated 
for each TSL for built-in refrigeration products. The efficiency levels 
contained in each TSL are described in section VI.A. The range of 
results for NPV of consumer benefits reflects the range of product 
price forecasts discussed in section IV.G.3.

                                           Table VI.76--Summary of Results for Built-in Refrigeration Products
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Category                      TSL 1                    TSL 2                    TSL 3                   TSL 4                   TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
National Energy Savings         0.02...................  0.03...................  0.058.................  0.071.................  0.085.
 (quads).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        NPV of Consumer Benefits (2009$ billion)
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate..............  0.166 to 0.184.........  0.183 to 0.226.........  (0.228) to 0.029......  (0.580) to (0.185)....  (1.14) to (0.531).
7% discount rate..............  0.053 to 0.062.........  0.045 to 0.066.........  (0.237) to (0.111)....  (0.455) to (0.261)....  (0.791) to (0.495).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Industry Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Industry NPV (2009$ million)..  (51.9) to (52.6).......  (55.1) to (56.5).......  (68.0) to (77.2)......  (82.9) to (97.6)......  (89.9) to (112.1).
Industry NPV (% change).......  (9.4) to (9.5).........  (9.9) to (10.2)........  (12.3) to (13.9)......  (15.0) to (17.6)......  (16.2) to (20.2).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (Mt)......................  1.41...................  2.05...................  4.1...................  5.09..................  6.09.
NOX (1000 tons)...............  1.14...................  1.65...................  3.3...................  4.09..................  4.9.
Hg (tons).....................  0.01...................  0.01...................  0.02..................  0.02..................  0.03.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Value of Cumulative Emissions Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2009$ billion) *.........  0.012 to 0.12..........  0.017 to 0.17..........  0.035 to 0.34.........  0.043 to 0.41.........  0.051 to 0.50.
NOX--3% discount rate (2009$    0.000 to 0.004.........  0.001 to 0.005.........  0.001 to 0.011........  0.001 to 0.013........  0.002 to 0.016.
 billion).
NOX--7% discount rate (2009$    0.000 to 0.002.........  0.000 to 0.002.........  0.000 to 0.004........  0.001 to 0.005........  0.001 to 0.006.
 billion).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Mean LCC Savings ** (2009$)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in All-Refrigerators....  52.....................  71.....................  (11)..................  (151).................  (258).
Built-in Bottom-Mount           8......................  2......................  2.....................  (138).................  (207).
 Refrigerator-Freezers.
Built-in Side-by-Side           10.....................  10.....................  (91)..................  (91)..................  (182).
 Refrigerator-Freezers.
Built-in Upright Freezers.....  66.....................  59.....................  (23)..................  (23)..................  (101).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Median PBP (years)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in All-Refrigerators....  1.4....................  2.6....................  13.7..................  25.5..................  31.4.
Built-in Bottom-Mount           3.8....................  11.1...................  11.1..................  52.8..................  52.2.
 Refrigerator-Freezers.
Built-in Side-by-Side           7.5....................  7.5....................  31.0..................  31.0..................  50.4.
 Refrigerator-Freezers.
Built-in Upright Freezers.....  2.9....................  10.7...................  17.8..................  17.8..................  22.6.
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 57603]]

 
                                                          Distribution of Consumer LCC Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Built-in All-Refrigerators:
    Net Cost (%)..............  0.0....................  0.9....................  62....................  91....................  95.
    No Impact (%).............  23.....................  18.....................  9.1...................  0.0...................  0.0.
    Net Benefit (%)...........  77.....................  81.....................  29....................  9.0...................  5.0.
Built-in Bottom-Mount
 Refrigerator-Freezers:
    Net Cost (%)..............  0.6....................  7.0....................  7.0...................  98....................  99.
    No Impact (%).............  87.....................  87.....................  87....................  0.0...................  0.0.
    Net Benefit (%)...........  12.....................  5.9....................  5.9...................  2.0...................  1.5.
Built-in Side-by-Side
 Refrigerator-Freezers:
    Net Cost (%)..............  5.8....................  5.8....................  59....................  59....................  98.
    No Impact (%).............  79.....................  79.....................  37....................  37....................  0.0.
    Net Benefit (%)...........  16.....................  16.....................  4.3...................  4.3...................  2.4.
Built-in Upright Freezers:
    Net Cost (%)..............  1.5....................  43.....................  69....................  69....................  80.
    No Impact (%).............  20.....................  0.6....................  0.5...................  0.5...................  0.3.
    Net Benefit (%)...........  79.....................  57.....................  31....................  31....................  20.
Generation Capacity Reduction   0.02...................  0.03...................  0.06..................  0.08..................  0.09.
 (GW) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Potential Changes in      0.00 to (1.14).........  (0.00) to (1.14).......  0.01 to (1.14)........  0.01 to (1.14)........  0.03 to (1.14).
 Domestic Production Workers
 in 2014 (thousands).
Indirect Domestic Jobs          0.14...................  0.19...................  0.29..................  0.31..................  0.30.
 (thousands) [dagger].
--------------------------------------------------------------------------------------------------------------------------------------------------------
Parentheses indicate negative (-) values.
Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.
** For LCCs, a negative value means an increase in LCC by the amount indicated.
[dagger] Changes in 2043.

    DOE first considered TSL 5, which represents the max-tech 
efficiency levels. TSL 5 would save 0.085 quads of energy, an amount 
DOE considers significant. Under TSL 5, the NPV of consumer benefit 
would be -$0.791 billion to -$0.495 billion, using a discount rate of 7 
percent, and -$1.14 billion to -$0.531 billion, using a discount rate 
of 3 percent.
    The cumulative emissions reductions at TSL 5 are 6.09 Mt of 
CO2, 4,900 tons of NOX, and 0.03 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 5 ranges from $0.051 billion to $0.50 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.09 GW under 
TSL 5.
    At TSL 5, the average LCC impact is a cost (LCC increase) of $258 
for built-in all-refrigerators, a cost of $207 for built-in bottom-
mount refrigerator-freezers, a cost of $182 for built-in side-by-side 
refrigerator-freezers, and a cost of $101 for built-in upright 
freezers. The median payback period is 31.4 years for built-in all-
refrigerators, 52.2 years for built-in bottom-mount refrigerator-
freezers, 50.4 years for built-in side-by-side refrigerator-freezers, 
and 22.6 years for built-in upright freezers. The fraction of consumers 
experiencing an LCC benefit is 5 percent for built-in all-
refrigerators, 1.5 percent for built-in bottom-mount refrigerator-
freezers, 2.4 percent for built-in side-by-side refrigerator-freezers, 
and 20 percent for built-in upright freezers. The fraction of consumers 
experiencing an LCC cost is 95 percent for built-in all-refrigerators, 
99 percent for built-in bottom-mount refrigerator-freezers, 98 percent 
for built-in side-by-side refrigerator-freezers, and 80 percent for 
built-in upright freezers.
    At TSL 5, the projected change in INPV ranges from a decrease of 
$89.9 million to a decrease of $112.1 million. If the high end of the 
range of impacts is reached as DOE expects, TSL 5 could result in a net 
loss of 20.2 percent in INPV to built-in refrigeration product 
manufacturers.
    The Secretary has concluded that at TSL 5 for built-in 
refrigeration products, the benefits of energy savings, generating 
capacity reductions, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the negative NPV of consumer benefits, the economic burden on a 
significant fraction of consumers due to the large increases in product 
cost, and the capital conversion costs and profit margin impacts that 
could result in a reduction in INPV for the manufacturers. 
Consequently, the Secretary has concluded that TSL 5 is not 
economically justified.
    DOE then considered TSL 4. TSL 4 would save 0.071 quads of energy, 
an amount DOE considers significant. Under TSL 4, the NPV of consumer 
benefit would be -$0.455 billion to -$0.261 billion, using a discount 
rate of 7 percent, and -$0.580 billion to -$0.185 billion, using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 4 are 5.09 Mt of 
CO2, 4,090 tons of NOX, and 0.02 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reductions at TSL 4 ranges from $0.043 billion to $0.41 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.08 GW under 
TSL 4.
    At TSL 4, DOE projects that the average LCC impact is a cost (LCC 
increase) of $151 for built-in all-refrigerators, a cost of $138 for 
built-in bottom-mount refrigerator-freezers, a cost of $91 for built-in 
side-by-side refrigerator-freezers, and a cost of $23 for built-in 
upright freezers. The median payback period is 25.5 years for built-in 
all-refrigerators, 52.8 years for built-in bottom-mount refrigerator-
freezers, 31.0 years for built-in side-by-side refrigerator-freezers, 
and 17.8 years for built-in upright freezers. The fraction of consumers 
experiencing an LCC benefit is 9 percent for built-in all-
refrigerators, 2 percent for built-in bottom-mount refrigerator-
freezers, 4.3 percent for

[[Page 57604]]

built-in side-by-side refrigerator-freezers, and 31 percent for built-
in upright freezers. The fraction of consumers experiencing an LCC cost 
is 91 percent for built-in all-refrigerators, 98 percent for built-in 
bottom-mount refrigerator-freezers, 59 percent for built-in side-by-
side refrigerator-freezers, and 69 percent for built-in upright 
freezers.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$82.9 million to a decrease of $97.6 million. If the high end of the 
range of impacts is reached as DOE expects, TSL 4 could result in a net 
loss of 17.6 percent in INPV to built-in refrigeration product 
manufacturers.
    The Secretary has concluded that at TSL 4 for built-in 
refrigeration products, the benefits of energy savings, generating 
capacity reductions, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the negative NPV of consumer benefits, the economic burden on a 
significant fraction of consumers due to the increases in product cost, 
and the capital conversion costs and profit margin impacts that could 
result in a reduction in INPV for the manufacturers. Consequently, the 
Secretary has concluded that TSL 4 is not economically justified.
    DOE then considered TSL 3. TSL 3 would save 0.058 quads of energy, 
an amount DOE considers significant. Under TSL 3, the NPV of consumer 
benefit would be -0.237 billion to -$0.111 billion, using a discount 
rate of 7 percent, and -$0.228 billion to $0.029 billion, using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 4.1 Mt of 
CO2, 3,300 tons of NOX, and 0.02 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reduction at TSL 3 ranges from $0.035 billion to $0.34 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.06 GW under 
TSL 3.
    At TSL 3, the average LCC impact is a cost (LCC increase) of $11 
for built-in all-refrigerators, a gain of $2 for built-in bottom-mount 
refrigerator-freezers, a cost of $91 for built-in side-by-side 
refrigerator-freezers, and a cost of $23 for built-in upright freezers. 
The median payback period is 13.7 years for built-in all-refrigerators, 
11.1 years for built-in bottom-mount refrigerator-freezers, 31.0 years 
for built-in side-by-side refrigerator-freezers, and 17.8 years for 
built-in upright freezers. The fraction of consumers experiencing an 
LCC benefit is 29 percent for built-in all-refrigerators, 5.9 percent 
for built-in bottom-mount refrigerator-freezers, 4.3 percent for built-
in side-by-side refrigerator-freezers, and 31 percent for built-in 
upright freezers. The fraction of consumers experiencing an LCC cost is 
62 percent for built-in all-refrigerators, 7 percent for built-in 
bottom-mount refrigerator-freezers, 59 percent for built-in side-by-
side refrigerator-freezers, and 69 percent for built-in upright 
freezers.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$68.0 million to a decrease of $77.2 million. If the high end of the 
range of impacts is reached as DOE expects, TSL 3 could result in a net 
loss of 13.9 percent in INPV to built-in refrigeration product 
manufacturers.
    The Secretary has concluded that at TSL 3 for built-in 
refrigeration products, the benefits of energy savings, generating 
capacity reductions, emission reductions, and the estimated monetary 
value of the CO2 emissions reductions would be outweighed by 
the negative NPV of of consumer benefits, the slight economic burden on 
a significant fraction of consumers due to the increases in product 
cost, and the capital conversion costs and profit margin impacts that 
could result in a reduction in INPV for the manufacturers. 
Consequently, the Secretary has concluded that TSL 3 is not 
economically justified.
    DOE then considered TSL 2. TSL 2 would save 0.03 quads of energy, 
an amount DOE considers significant. Under TSL 2, the NPV of consumer 
benefit would be $0.045 billion to $0.066 billion, using a discount 
rate of 7 percent, and $0.183 billion to $0.226 billion, using a 
discount rate of 3 percent.
    The cumulative emissions reductions at TSL 2 are 2.05 Mt of 
CO2, 1,650 tons of NOX, and 0.01 tons of Hg. The 
estimated monetary value of the cumulative CO2 emissions 
reduction at TSL 2 ranges from $0.017 billion to $0.17 billion. Total 
generating capacity in 2043 is estimated to decrease by 0.03 GW under 
TSL 2.
    At TSL 2, the average LCC impact is a gain (LCC decrease) of $71 
for built-in all-refrigerators, a gain of $2 for built-in bottom-mount 
refrigerator-freezers, a gain of $10 for built-in side-by-side 
refrigerator-freezers, and a gain of $59 for built-in upright freezers. 
The median payback period is 2.6 years for built-in all-refrigerators, 
11.1 years for built-in bottom-mount refrigerator-freezers, 7.5 years 
for built-in side-by-side refrigerator-freezers, and 10.7 years for 
built-in upright freezers. The fraction of consumers experiencing an 
LCC benefit is 81 percent for built-in all-refrigerators, 5.9 percent 
for built-in bottom-mount refrigerator-freezers, 16 percent for built-
in side-by-side refrigerator-freezers, and 57 percent for built-in 
upright freezers. The fraction of consumers experiencing an LCC cost is 
0.9 percent for built-in all-refrigerators, 7 percent for built-in 
bottom-mount refrigerator-freezers, 5.8 percent for built-in side-by-
side refrigerator-freezers, and 43 percent for built-in upright 
freezers.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$55.1 million to a decrease of $56.5 million. If the high end of the 
range of impacts is reached as DOE expects, TSL 2 could result in a net 
loss of 10.2 percent in INPV to built-in refrigeration product 
manufacturers.
    The Secretary has concluded that at TSL 2 for built-in 
refrigeration products, the benefits of energy savings, positive NPV of 
consumer benefits, generating capacity reductions, emission reductions, 
and the estimated monetary value of the CO2 emissions 
reductions would outweigh the slight economic burden on a small 
fraction of consumers due to the increases in product cost, and the 
capital conversion costs and profit margin impacts that could result in 
a reduction in INPV for the manufacturers.
    After considering the analysis, comments responding to the 
September 2010 NOPR, and the benefits and burdens of TSL 2, the 
Secretary has concluded that this trial standard level will offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and will result in significant conservation of 
energy. Therefore, DOE today is adopting TSL 2 for built-in 
refrigeration products. The amended energy conservation standards for 
built-in refrigeration products, expressed as equations for maximum 
energy use, are shown in Table VI.77.

[[Page 57605]]

                       Table VI.77--Amended Standards for Built-In Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class              -----------------------------------------------------------------------
                                                  Based on AV (ft\3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
3-BI. Built-in Refrigerator-freezer--     9.15AV + 264.9....................  0.323av + 264.9
 automatic defrost with top-mounted
 freezer without an automatic icemaker.
3I-BI. Built-in Refrigerator-freezers--   9.15AV + 348.9....................  0.323av + 348.9
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A-BI. Built-in All-refrigerators--       8.02AV + 228.5....................  0.283av + 228.5
 automatic defrost.
4-BI. Built-In Refrigerator-freezers--    10.22AV + 357.4...................  0.361av + 357.4
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I-BI. Built-In Refrigerator-freezers--   10.22AV + 441.4...................  0.361av + 441.4
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5-BI. Built-In Refrigerator-freezers--    9.40AV + 336.9....................  0.332av + 336.9
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I-BI. Built-In Refrigerator-freezers--   9.40AV + 420.9....................  0.332av + 420.9
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A-BI. Built-in Refrigerator-freezer--    9.83AV + 499.9....................  0.347av + 499.9
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
7-BI. Built-In Refrigerator-freezers--    10.25AV + 502.6...................  0.362av + 502.6
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
9-BI. Built-In Upright freezers with      9.86AV + 260.9....................  0.348av + 260.9
 automatic defrost without an automatic
 icemaker.
9I-BI. Built-in Upright freezers with     9.86AV + 344.9....................  0.348av + 344.9
 automatic defrost with an automatic
 icemaker.
----------------------------------------------------------------------------------------------------------------
AV= adjusted volume in cubic feet; av = adjusted volume in liters.

5. Summary of Benefits and Costs (Annualized) of Amended Standards
    The benefits and costs of today's amended 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 
2009$, of the benefits from operating products that meet the amended 
standards (consisting primarily of operating cost savings from using 
less energy, minus increases in equipment purchase costs, which is 
another way of representing consumer NPV), and (2) the monetary value 
of the benefits of emission reductions, including CO2 
emission reductions.\49\ The value of the CO2 reductions 
(i.e. SCC) is calculated using a range of values per metric ton of 
CO2 developed by a recent interagency process. The monetary 
costs and benefits of cumulative emissions reductions are reported in 
2009$ to permit comparisons with the other costs and benefits in the 
same dollar units.
---------------------------------------------------------------------------

    \49\ DOE used a two-step calculation process to convert the 
time-series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2010, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of three and seven percent 
for all costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.2. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2014 through 2043) that 
yields the same present value. The fixed annual payment is the 
annualized value. Although DOE calculated annualized values, this 
does not imply that the time-series of cost and benefits from which 
the annualized values were determined is a steady stream of 
payments.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use quite 
different time frames for analysis. The national operating cost savings 
is measured for the lifetime of refrigeration products shipped in 2014-
2043. The SCC values, on the other hand, reflect the present value of 
future climate-related impacts resulting from the emission of one ton 
of carbon dioxide in each year. These impacts continue well beyond 
2100.
    Estimates of annualized values are shown in Table VI.78. The 
results under the primary estimate are as follows. Using a 7-percent 
discount rate and the SCC series having a value of $22.1/ton in 2010 
(in 2009$), the cost of the standards in today's rule is $1,167 to 
$1,569 million per year in increased equipment costs, while the 
annualized benefits are $2,275 million per year in reduced equipment 
operating costs, $515 million in CO2 reductions, and $21 
million in reduced NOX emissions. In this case, the net 
benefit amounts to $1,241 to $1,643 million per year. Using a 3-percent 
discount rate and the SCC series having a value of $22.1/ton in 2010, 
the cost of the standards in today's rule is $1,081 to $1,526 million 
per year in increased equipment costs, while the benefits are $3,160 
million per year in reduced operating costs, $515 million in 
CO2 reductions, and $28 million in reduced NOX 
emissions. In this case, the net benefit amounts to $2,176 to $2,622 
million per year.

                      Table VI-78--Annualized Benefits and Costs of Amended Standards for Refrigeration Products Sold in 2014-2043
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                             Monetized (million 2009$/year)
                                         Discount rate         -----------------------------------------------------------------------------------------
                                                                     Primary estimate *        Low net benefits estimate *  High net benefits estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Benefits:
    Operating Cost Savings.....  7%...........................  2275........................  1996........................  2560.
                                 3%...........................  3160........................  2720........................  3596.

[[Page 57606]]

 
CO2 Reduction at $4.9/t **.....  5%...........................  162.........................  162.........................  162.
CO2 Reduction at $22.1/t **....  3%...........................  515.........................  515.........................  515.
CO2 Reduction at $36.3/t **....  2.5%.........................  772.........................  772.........................  772.
CO2 Reduction at $67.1/t **....  3%...........................  1567........................  1567........................  1567.
NOX Reduction at $2,519/ton **.  7%...........................  21..........................  21..........................  21.
                                 3%...........................  28..........................  28..........................  28.
    Total [dagger].............  7% plus CO2 range............  2457 to 3863................  2178 to 3584................  2742 to 4148.
                                 7%...........................  2810........................  2531........................  3095.
                                 3%...........................  3703........................  3263........................  4139.
                                 3% plus CO2 range............  3350 to 4755................  2910 to 4315................  3786 to 5192.
Costs:
    Incremental Product Costs..  7%...........................  1167 to 1569................  1480........................  1232.
                                 3%...........................  1081 to 1526................  1430........................  1147.
Net Benefits/Costs:
    Total [dagger].............  7% plus CO2 range............  888 to 2696.................  698 to 2103.................  1511 to 2916.
                                 7%...........................  1241 to 1643................  1051........................  1863.
                                 3%...........................  2176 to 2622................  1832........................  2993.
                                 3% plus CO2 range............  1823 to 3674................  1479 to 2885................  2640 to 4045.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The Primary, Low Benefits, and High Benefits Estimates utilize forecasts of energy prices and housing starts from the AEO2010 Reference case, Low
  Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect a medium decline rate for product
  prices in the Primary Estimate, a low decline rate for product prices in the Low Benefits Estimate, and a high decline rate for product prices in the
  High Benefits Estimate. In the Primary estimate, the range of results for incremental product costs reflects the range of product price forecasts.
** The CO2 values represent global values (in 2009$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.9, $22.1, and
  $36.3 per metric ton (t) are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of $67.1/t
  represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2009$) is the average of the low and
  high values used in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $22.1/t in 2010 (in
  2009$). 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.

VII. Procedural Issues and Regulatory Review

A. Review Under Executive Order 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that today's standards address are as follows:
    (1) There is a lack of consumer information and/or information 
processing capability about energy efficiency opportunities in the home 
appliance market.
    (2) There is asymmetric information (one party to a transaction has 
more and better information than the other) and/or high transactions 
costs (costs of gathering information and effecting exchanges of goods 
and services).
    (3) There are external benefits resulting from improved energy 
efficiency of refrigeration products that are not captured by the users 
of such products. These benefits include externalities related to 
environmental protection and energy security that are not reflected in 
energy prices, such as reduced emissions of greenhouse gases.
    In addition, DOE has determined that today's regulatory action is 
an ``economically significant regulatory action'' under section 3(f)(1) 
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive 
Order requires that DOE prepare a regulatory impact analysis (RIA) on 
today's rule and that the Office of Information and Regulatory Affairs 
(OIRA) in the Office of Management and Budget (OMB) review this rule. 
DOE presented to OIRA for review the draft rule and other documents 
prepared for this rulemaking, including the RIA, and 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. They are available for public review in the 
Resource Room of DOE's Building Technologies Program, 950 L'Enfant 
Plaza, SW., Suite 600, Washington, DC 20024, (202) 586-2945, between 9 
a.m. and 4 p.m., Monday through Friday, except Federal holidays.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). EO 13563 
is supplemental to, and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in, 
Executive Order 12866. To the extent permitted by law, agencies are 
required by Executive Order 13563 to: (1) Propose or adopt a regulation 
only upon a reasoned determination that its benefits justify its costs 
(recognizing that some benefits and costs are difficult to quantify); 
(2) tailor regulations to impose the least burden on society, 
consistent with obtaining regulatory objectives, taking into 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

[[Page 57607]]

desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    We emphasize as well that Executive Order 13563 requires agencies 
``to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible.'' In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include ``identifying changing 
future compliance costs that might result from technological innovation 
or anticipated behavioral changes.''
    DOE emphasizes that Executive Order 13563 calls for ``periodic 
review of existing significant regulations,'' with close reference to 
empirical evidence. Moreover, with respect to energy conservation 
standards, EPCA mandates that DOE review its regulations, ``not later 
than 6 years after issuance of any final rule establishing or amending 
an energy efficiency standard. As part of the retrospective review, DOE 
will review its data on refrigerator prices and costs and, as part of 
that review, will consider tracking additional data on retail 
refrigerator prices and costs for the product classes identified in the 
rule as a means of comparing actual refrigerator prices and costs to 
prices and costs forecasted as a result of the standards imposed by 
today's and any future rule. Such a review will likely be a part of the 
periodic review of energy efficiency standards for refrigerators called 
for under Executive Order 13563. DOE's plan for conducting periodic 
review, which will be updated regularly, should be consulted for 
further information. See: http://energy.gov/gc/report-appliance-regulation-violation/ex-parte-communications/restrospective-regulatory-review.
    For the reasons stated in the preamble, DOE believes that today's 
final rule is consistent with these principles, including that, to the 
extent permitted by law, agencies adopt a regulation only upon a 
reasoned determination that its benefits justify its costs and select, 
in choosing among alternative regulatory approaches, those approaches 
that maximize net benefits.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of an initial regulatory flexibility analysis (IRFA) for 
any rule that by law must be proposed for public comment, and a final 
regulatory flexibility analysis (FRFA) for any such rule that an agency 
adopts as a final rule, unless the agency certifies that the rule, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. As required by Executive Order 
13272, ``Proper Consideration of Small Entities in Agency Rulemaking,'' 
67 FR 53461 (August 16, 2002), DOE published procedures and policies on 
February 19, 2003, to ensure that the potential impacts of its rules on 
small entities are properly considered during the rulemaking process. 
68 FR 7990. DOE has made its procedures and policies available on the 
Office of the General Counsel's Web site (http://www.gc.doe.gov).
    For manufacturers of residential refrigerators, refrigerator-
freezers, and freezers, 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, 30850 (May 15, 
2000), as amended at 65 FR 53533, 53545 (September 5, 2000) and 
codified at 13 CFR part 121.The size standards are listed by North 
American Industry Classification System (NAICS) code and industry 
description and are available at http://www.sba.gov/idc/groups/public/documents/sba_homepage/serv_sstd_tablepdf.pdf . Residential 
refrigeration product manufacturing is classified under NAICS 335222, 
``Household Refrigerator and Home Freezer Manufacturing.'' The SBA sets 
a threshold of 1,000 employees or less for an entity to be considered 
as a small business for this category.
    DOE reviewed its September 2010 NOPR under the provisions of the 
Regulatory Flexibility Act and the procedure and policies published on 
February 19, 2003. In the NOPR, DOE certified that the standards for 
residential refrigeration products set forth in the proposed rule, if 
promulgated, would not have a significant economic impact on a 
substantial number of small entities. DOE made this determination 
because only one small business manufacturer would potentially be 
impacted by the proposed energy conservation standards, and that 
manufacturer represents a small percentage of covered products and is a 
leader in a niche market. 75 FR at 59571-59572 (September 27, 2010).
    DOE also sought comment on the impacts of the proposed amended 
energy conservation standards on small business manufacturers of 
residential refrigeration products. DOE received no comments on the 
certification or its additional requests for comment on small business 
impacts in response to the NOPR. Thus, DOE reaffirms the certification 
and has not prepared a FRFA for this final rule.

C. Review Under the Paperwork Reduction Act

    Manufacturers of refrigeration products must certify to DOE that 
those products comply with any applicable energy conservation standard. 
In certifying compliance, manufacturers must test their refrigeration 
products according to the DOE test procedure for refrigeration 
products, including any amendments adopted for that test procedure. DOE 
has proposed regulations for the certification and recordkeeping 
requirements for all covered consumer products and commercial 
equipment, including refrigeration products (i.e. refrigerators, 
refrigerator-freezers, and freezers). 75 FR 56796 (Sept. 16, 2010). The 
information collection requirement for the certification and 
recordkeeping is subject to review and approval by OMB under the 
Paperwork Reduction Act (PRA). DOE received OMB approval for collecting 
certification, compliance, and enforcement information for all covered 
products and covered equipment on February 3, 2011 under OMB control 
number 1910-1400.
    Public reporting burden for the certification is estimated to 
average 20 hours per response, including the time for reviewing 
instructions, searching existing data sources, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. Send comments regarding this burden estimate 
or any other aspect of this collection of information, including 
suggestions for reducing this burden, to Office of the Chief 
Information Officer, Records Management Division, IM-23, Paperwork 
Reduction Project (1910-1400), U.S. Department of Energy, 1000 
Independence Ave., SW., Washington, DC 20585-1290; and to the Office of 
Management and Budget (OMB), OIRA, Paperwork Reduction Project (1910-
1400), Washington, DC 20503.
    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

    DOE has prepared an environmental assessment (EA) of the impacts of 
the amended rule pursuant to the National

[[Page 57608]]

Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.), the 
regulations of the Council on Environmental Quality (40 CFR parts 1500-
1508), and DOE's regulations for compliance with the National 
Environmental Policy Act of 1969 (10 CFR part 1021). This assessment 
includes an examination of the potential effects of emission reductions 
likely to result from the rule in the context of global climate change, 
as well as other types of environmental impacts. The final EA has been 
included as chapter 15 of the final rule TSD. Before issuing this final 
rule for refrigeration products, DOE considered public comments. A 
finding of no significant impact (FONSI) accompanies the final EA.

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; and (3) 
provide a clear legal standard for affected conduct rather than a 
general standard and promote simplification and burden reduction. 61 FR 
4729 (February 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 final rule meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, section 201 (codified at 2 U.S.C. 
1531). For an amended regulatory action likely to result in a rule that 
may cause the expenditure by State, local, and Tribal governments, in 
the aggregate, or by the private sector of $100 million or more in any 
one year (adjusted annually for inflation), section 202 of UMRA 
requires a Federal agency to publish a written statement that estimates 
the resulting costs, benefits, and other effects on the national 
economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal 
agency to develop an effective process to permit timely input by 
elected officers of State, local, and Tribal governments on a 
``significant intergovernmental mandate,'' and requires an agency plan 
for giving notice and opportunity for timely input to potentially 
affected small governments before establishing any requirements that 
might significantly or uniquely affect small governments. On March 18, 
1997, DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820; also available 
at http://www.gc.doe.gov.
    Although today's final rule does not contain a Federal 
intergovernmental mandate, it may impose expenditures of $100 million 
or more on the private sector. Specifically, the final rule will likely 
result in a final rule that could impose expenditures of $100 million 
or more. Such expenditures may include (1) investment in research and 
development and in capital expenditures by refrigeration product 
manufacturers in the years between the final rule and the compliance 
date for the new standard, and (2) incremental additional expenditures 
by consumers to purchase higher-efficiency refrigeration products, 
starting in 2014.
    Section 202 of UMRA authorizes an agency to respond to the content 
requirements of UMRA in any other statement or analysis that 
accompanies the final rule. 2 U.S.C. 1532(c). The content requirements 
of section 202(b) of UMRA relevant to a private sector mandate 
substantially overlap the economic analysis requirements that apply 
under section 325(o) of EPCA and Executive Order 12866. The 
Supplementary Information section of the notice of final rulemaking and 
the ``Regulatory Impact Analysis'' section of the TSD for this final 
rule respond to those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. 2 U.S.C. 1535(a). DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule unless DOE publishes an 
explanation for doing otherwise or the selection of such an alternative 
is inconsistent with law. As required by 42 U.S.C. 6295(h) and (o), 
6313(e), and 6316(a), today's final rule would establish energy 
conservation standards for residential refrigeration products that are 
designed to achieve the maximum improvement in energy efficiency that 
DOE has determined to be both technologically feasible and economically 
justified. A full discussion of the alternatives considered by DOE is 
presented in the ``Regulatory Impact Analysis'' section of the TSD for 
today's final rule.

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

[[Page 57609]]

prepare a Family Policymaking Assessment.

I. Review Under Executive Order 12630

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

J. Review Under the Treasury and General Government Appropriations Act, 
2001

    Section 515 of the Treasury and General Government Appropriations 
Act, 2001 (44 U.S.C. 3516, note) provides for agencies to review most 
disseminations of information to the public under guidelines 
established by each agency pursuant to general guidelines issued by 
OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), 
and DOE's guidelines were published at 67 FR 62446 (October 7, 2002). 
DOE has reviewed today's final rule under the OMB and DOE guidelines 
and has concluded that it is consistent with applicable policies in 
those guidelines.

K. Review Under Executive Order 13211

    Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' 66 FR 28355 
(May 22, 2001), requires Federal agencies to prepare and submit to OIRA 
at OMB, a Statement of Energy Effects for any significant energy 
action. A ``significant energy action'' is defined as any action by an 
agency that promulgates or is expected to lead to promulgation of a 
final rule, and that (1) Is a significant regulatory action under 
Executive Order 12866, or any successor order; and (2) is likely to 
have a significant adverse effect on the supply, distribution, or use 
of energy, or (3) is designated by the Administrator of OIRA as a 
significant energy action. For any significant energy action, the 
agency must give a detailed statement of any adverse effects on energy 
supply, distribution, or use should the proposal be implemented, and of 
reasonable alternatives to the action and their expected benefits on 
energy supply, distribution, and use.
    DOE has concluded that today's regulatory action, which sets forth 
energy conservation standards for refrigeration products, is not a 
significant energy action because the amended standards are not likely 
to have a significant adverse effect on the supply, distribution, or 
use of energy, nor has it been designated as such by the Administrator 
at OIRA. Accordingly, DOE has not prepared a Statement of Energy 
Effects on the final rule.

L. Review Under the Information Quality Bulletin for Peer Review

    On December 16, 2004, OMB, in consultation with the Office of 
Science and Technology (OSTP), issued its Final Information Quality 
Bulletin for Peer Review (the Bulletin). 70 FR 2664 (January 14, 2005). 
The Bulletin establishes that certain scientific information shall be 
peer reviewed by qualified specialists before it is disseminated by the 
Federal Government, including influential scientific information 
related to agency regulatory actions. The purpose of the bulletin is to 
enhance the quality and credibility of the Government's scientific 
information. Under the Bulletin, the energy conservation standards 
rulemaking analyses are ``influential scientific information,'' which 
the Bulletin defines as ``scientific information the agency reasonably 
can determine will have or does have a clear and substantial impact on 
important public policies or private sector decisions.'' 70 FR 2667.
    In response to OMB's Bulletin, DOE conducted formal in-progress 
peer reviews of the energy conservation standards development process 
and analyses and has prepared a Peer Review Report pertaining to the 
energy conservation standards rulemaking analyses. Generation of this 
report involved a rigorous, formal, and documented evaluation using 
objective criteria and qualified and independent reviewers to make a 
judgment as to the technical/scientific/business merit, the actual or 
anticipated results, and the productivity and management effectiveness 
of programs and/or projects. The ``Energy Conservation Standards 
Rulemaking Peer Review Report'' dated February 2007 has been 
disseminated and is available at the following Web site: http://www1.eere.energy.gov/buildings/appliance_standards/peer_review.html.

M. Congressional Notification

    As required by 5 U.S.C. 801, DOE will submit to Congress a report 
regarding the issuance of today's final rule prior to the effective 
date set forth at the outset of this notice. The report will state that 
it has been determined that the rule is a ``major rule'' as defined by 
5 U.S.C. 804(2). DOE will also submit the supporting analyses to the 
Comptroller General in the U.S. Government Accountability Office (GAO) 
and make them available to each House of Congress.

VIII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 430

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

    Issued in Washington, DC, on August 25, 2011.
Henry Kelly,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble, DOE amends chapter II, 
subchapter D, of title 10 of the Code of Federal Regulations, as set 
forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

0
1. The authority citation for Part 430 continues to read as follows:

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

0
2. In Sec.  430.2, add the definition for ``Built-in refrigerator/
refrigerator-freezer/freezer,'' in alphabetical order, and revise the 
definition for ``Compact refrigerator/refrigerator-freezer/freezer'' to 
read as follows:

Sec.  430.2  Definitions.

* * * * *
    Built-in refrigerator/refrigerator-freezer/freezer means any 
refrigerator, refrigerator-freezer or freezer with 7.75 cubic feet or 
greater total volume and 24 inches or less depth not including doors, 
handles, and custom front panels; with sides which are not finished and 
not designed to be visible after installation; and that is designed, 
intended, and marketed exclusively (1) To be installed totally encased 
by cabinetry or panels that are attached during installation, (2) to be 
securely fastened to adjacent cabinetry, walls or floor, and (3) to 
either be equipped with an integral factory-finished face or accept a 
custom front panel.
* * * * *
    Compact refrigerator/refrigerator-freezer/freezer means any 
refrigerator, refrigerator-freezer or freezer with total volume less 
than 7.75 cubic foot (220 liters) (rated volume as determined in 
appendices A1 and B1 of subpart B of this part before appendices A and 
B become mandatory and as determined

[[Page 57610]]

in appendices A and B of this subpart once appendices A and B become 
mandatory (see the notes at the beginning of appendices A and B)).
* * * * *

0
3. In Sec.  430.32 revise paragraph (a) to read as follows:

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

* * * * *
    (a) Refrigerators/refrigerator-freezers/freezers. These standards 
do not apply to refrigerators and refrigerator-freezers with total 
refrigerated volume exceeding 39 cubic feet (1104 liters) or freezers 
with total refrigerated volume exceeding 30 cubic feet (850 liters). 
The energy standards as determined by the equations of the following 
table(s) shall be rounded off to the nearest kWh per year. If the 
equation calculation is halfway between the nearest two kWh per year 
values, the standard shall be rounded up to the higher of these values.
    The following standards remain in effect from July 1, 2001 until 
September 15, 2014:

------------------------------------------------------------------------
                                          Energy standard equations for
             Product class                 maximum energy use (kWh/yr)
------------------------------------------------------------------------
1. Refrigerators and refrigerator-       8.82AV + 248.4
 freezers with manual defrost.           0.31av + 248.4
2. Refrigerator-freezers--partial        8.82AV + 248.4
 automatic defrost.                      0.31av + 248.4
3. Refrigerator-freezers--automatic      9.80AV + 276.0
 defrost with top-mounted freezer        0.35av + 276.0
 without through-the-door ice service
 and all-refrigerator--automatic
 defrost.
4. Refrigerator-freezers--automatic      4.91AV + 507.5
 defrost with side-mounted freezer       0.17av + 507.5
 without through-the-door ice service.
5. Refrigerator-freezers--automatic      4.60AV + 459.0
 defrost with bottom-mounted freezer     0.16av + 459.0
 without through-the-door ice service.
6. Refrigerator-freezers--automatic      10.20AV + 356.0
 defrost with top-mounted freezer with   0.36av + 356.0
 through-the-door ice service.
7. Refrigerator-freezers--automatic      10.10AV + 406.0
 defrost with side-mounted freezer with  0.36av + 406.0
 through-the-door ice service.
8. Upright freezers with manual defrost  7.55AV + 258.3
                                         0.27av + 258.3
9. Upright freezers with automatic       12.43AV + 326.1
 defrost.                                0.44av + 326.1
10. Chest freezers and all other         9.88AV + 143.7
 freezers except compact freezers.       0.35av + 143.7
11. Compact refrigerators and            10.70AV + 299.0
 refrigerator-freezers with manual       0.38av + 299.0
 defrost.
12. Compact refrigerator-freezer--       7.00AV + 398.0
 partial automatic defrost.              0.25av + 398.0
13. Compact refrigerator-freezers--      12.70AV + 355.0
 automatic defrost with top-mounted      0.45av + 355.0
 freezer and compact all-refrigerator--
 automatic defrost.
14. Compact refrigerator-freezers--      7.60AV + 501.0
 automatic defrost with side-mounted     0.27av + 501.0
 freezer.
15. Compact refrigerator-freezers--      13.10AV + 367.0
 automatic defrost with bottom-mounted   0.46av + 367.0
 freezer.
16. Compact upright freezers with        9.78AV + 250.8
 manual defrost.                         0.35av + 250.8
17. Compact upright freezers with        11.40AV + 391.0
 automatic defrost.                      0.40av + 391.0
18. Compact chest freezers.............  10.45AV + 152.0
                                         0.37av + 152.0
------------------------------------------------------------------------
AV: Adjusted Volume in ft\3\; av: Adjusted Volume in liters (L).

    The following standards apply to products manufactured starting on 
September 14, 2014:

----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class              -----------------------------------------------------------------------
                                                  Based on AV (ft\3\)                   Based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerator-freezers and              7.99AV + 225.0....................  0.282av + 225.0
 refrigerators other than all-
 refrigerators with manual defrost.
1A. All-refrigerators--manual defrost...  6.79AV + 193.6....................  0.240av + 193.6
2. Refrigerator-freezers--partial         7.99AV + 225.0....................  0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic       8.07AV + 233.7....................  0.285av + 233.7
 defrost with top-mounted freezer
 without an automatic icemaker.
3-BI. Built-in refrigerator-freezer--     9.15AV + 264.9....................  0.323av + 264.9
 automatic defrost with top-mounted
 freezer without an automatic icemaker.
3I. Refrigerator-freezers--automatic      8.07AV + 317.7....................  0.285av + 317.7
 defrost with top-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.

[[Page 57611]]

 
3I-BI. Built-in refrigerator-freezers--   9.15AV + 348.9....................  0.323av + 348.9
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A. All-refrigerators--automatic defrost  7.07AV + 201.6....................  0.250av + 201.6
3A-BI. Built-in All-refrigerators--       8.02AV + 228.5....................  0.283av + 228.5
 automatic defrost.
4. Refrigerator-freezers--automatic       8.51AV + 297.8....................  0.301av + 297.8
 defrost with side-mounted freezer
 without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers--    10.22AV + 357.4...................  0.361av + 357.4
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic      8.51AV + 381.8....................  0.301av + 381.8
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
4I-BI. Built-In Refrigerator-freezers--   10.22AV + 441.4...................  0.361av + 441.4
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5. Refrigerator-freezers--automatic       8.85AV + 317.0....................  0.312av + 317.0
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers--    9.40AV + 336.9....................  0.332av + 336.9
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic      8.85AV + 401.0....................  0.312av + 401.0
 defrost with bottom-mounted freezer
 with an automatic icemaker without
 through-the-door ice service.
5I-BI. Built-In Refrigerator-freezers--   9.40AV + 420.9....................  0.332av + 420.9
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A. Refrigerator-freezer--automatic       9.25AV + 475.4....................  0.327av + 475.4
 defrost with bottom-mounted freezer
 with through-the-door ice service.
5A-BI. Built-in refrigerator-freezer--    9.83AV + 499.9....................  0.347av + 499.9
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
6. Refrigerator-freezers--automatic       8.40AV + 385.4....................  0.297av + 385.4
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic       8.54AV + 432.8....................  0.302av + 432.8
 defrost with side-mounted freezer with
 through-the-door ice service.
7-BI. Built-In Refrigerator-freezers--    10.25AV + 502.6...................  0.362av + 502.6
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
8. Upright freezers with manual defrost.  5.57AV + 193.7....................  0.197av + 193.7
9. Upright freezers with automatic        8.62AV + 228.3....................  0.305av + 228.3
 defrost without an automatic icemaker.
9I. Upright freezers with automatic       8.62AV + 312.3....................  0.305av + 312.3
 defrost with an automatic icemaker.
9-BI. Built-In Upright freezers with      9.86AV + 260.9....................  0.348av + 260.9
 automatic defrost without an automatic
 icemaker.
9I-BI. Built-in upright freezers with     9.86AV + 344.9....................  0.348av + 344.9
 automatic defrost with an automatic
 icemaker.
10. Chest freezers and all other          7.29AV + 107.8....................  0.257av + 107.8
 freezers except compact freezers.
10A. Chest freezers with automatic        10.24AV + 148.1...................  0.362av + 148.1
 defrost.
11. Compact refrigerator-freezers and     9.03AV + 252.3....................  0.319av + 252.3
 refrigerators other than all-
 refrigerators with manual defrost.
11A.Compact all-refrigerators--manual     7.84AV + 219.1....................  0.277av + 219.1
 defrost.
12. Compact refrigerator-freezers--       5.91AV + 335.8....................  0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--       11.80AV + 339.2...................  0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13I. Compact refrigerator-freezers--      11.80AV + 423.2...................  0.417av + 423.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker.
13A. Compact all-refrigerators--          9.17AV + 259.3....................  0.324av + 259.3
 automatic defrost.
14. Compact refrigerator-freezers--       6.82AV + 456.9....................  0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
14I. Compact refrigerator-freezers--      6.82AV + 540.9....................  0.241av + 540.9
 automatic defrost with side-mounted
 freezer with an automatic icemaker.
15. Compact refrigerator-freezers--       11.80AV + 339.2...................  0.417av + 339.2
 automatic defrost with bottom-mounted
 freezer.
15I. Compact refrigerator-freezers--      11.80AV + 423.2...................  0.417av + 423.2
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker.
16. Compact upright freezers with manual  8.65AV + 225.7....................  0.306av + 225.7
 defrost.
17. Compact upright freezers with         10.17AV + 351.9...................  0.359av + 351.9
 automatic defrost.
18. Compact chest freezers..............  9.25AV + 136.8....................  0.327av + 136.8
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AV = Total adjusted volume, expressed in ft\3\, as determined in appendices A and B of subpart B of this part.
av = Total adjusted volume, expressed in Liters.

[[Page 57612]]

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[FR Doc. 2011-22329 Filed 9-14-11; 8:45 am]
BILLING CODE 6450-01-P
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