```

[Federal Register Volume 79, Number 42 (Tuesday, March 4, 2014)]
[Proposed Rules]
[Pages 12301-12351]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-04407]

[[Page 12301]]

Vol. 79

Tuesday,

No. 42

March 4, 2014

Part III

Department of Energy

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10 CFR Part 431

Energy Conservation Program: Energy Conservation Standards for 
Commercial Clothes Washers; Proposed Rule

Federal Register / Vol. 79, No. 42 / Tuesday, March 4, 2014 / 
Proposed Rules

[[Page 12302]]

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket No. EERE-2012-STD-0020]
RIN 1904-AC77

Energy Conservation Program: Energy Conservation Standards for 
Commercial Clothes Washers

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

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

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

SUMMARY: The Energy Policy and Conservation Act of 1975 (EPCA), as 
amended, prescribes energy conservation standards for various consumer 
products and certain commercial and industrial equipment, including 
commercial clothes washers. EPCA also requires the U.S. Department of 
Energy (DOE) to determine whether amended standards would be 
technologically feasible and economically justified, and would save a 
significant amount of energy. In this notice, DOE proposes to amend the 
energy conservation standards for commercial clothes washers. The 
notice also announces a public meeting to receive comment on these 
proposed standards and associated analyses and results.

DATES: DOE will hold a public meeting on Monday, April 21, 2014 from 9 
a.m. to 4 p.m., in Washington, DC. The meeting will also be broadcast 
as a webinar. See section VII Public Participation for webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants.
    DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than May 5, 2014. See section VII Public 
Participation for details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-086, 1000 Independence Avenue SW., 
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at 
(202) 586-2945. Please note that foreign nationals visiting DOE 
Headquarters are subject to advance security screening procedures. Any 
foreign national wishing to participate in the meeting should advise 
DOE as soon as possible by contacting Ms. Edwards to initiate the 
necessary procedures. Please also note that those wishing to bring 
laptops into the Forrestal Building will be required to obtain a 
property pass. Visitors should avoid bringing laptops, or allow an 
extra 45 minutes. Persons can attend the public meeting via webinar. 
For more information, refer to the Public Participation section near 
the end of this notice.
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for commercial clothes washers, and provide 
docket number EERE-2012-STD-0020 and/or regulatory information number 
(RIN) number 1904-AC77. Comments may be submitted using any of the 
following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: CommClothesWashers-2012-STD-0020@ee.doe.gov. Include the 
docket number and/or RIN in the subject line of the message.
    3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building 
Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., 
Washington, DC 20585-0121. If possible, please submit all items on a 
CD. It is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Office, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
Chad_S_Whiteman@omb.eop.gov.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII of this document 
(Public Participation).
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at regulations.gov. The 
docket for this rulemaking can be accessed by searching for the docket 
at http://www.regulations.gov/#!docketDetail;D=EERE-2012-BT-STD-0020 
and/or Docket No. EERE-2012-BT-STD-0020 at the regulations.gov Web 
site. All documents in the docket are listed in the regulations.gov 
index. However, some documents listed in the index, such as those 
containing information that is exempt from public disclosure, may not 
be publicly available. The regulations.gov Web page contains simple 
instructions on how to access all documents, including public comments, 
in the docket.
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT:
Mr. John Cymbalsky, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202)-586-2192. Email: commercial_clothes_washers@ee.doe.gov.
Ms. Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, Mailstop GC-71, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 586-7796. Email: 
Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Commercial Clothes 
Washers
III. General Discussion
    A. General Rulemaking Issues
    B. Product Classes and Scope of Coverage
    1. Product Classes
    C. Test Procedures
    1. Appendix J2
    2. Energy Metric
    3. Water Metric
    D. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    E. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    F. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    b. Savings in Operating Costs Compared to Increase in Price
    c. Energy Savings
    d. Lessening of Utility 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 of Related Comments
    A. Market and Technology Assessment
    1. Market Assessment

[[Page 12303]]

    2. Technology Assessment
    B. Screening Analysis
    C. Engineering Analysis
    1. General Approach
    2. Appendix J2 Efficiency Level Translations
    3. Baseline Efficiency Levels
    4. Front-Loading Higher Efficiency Levels
    5. Top-Loading Higher Efficiency Levels
    6. Impacts on Cleaning Performance
    D. Markups Analysis
    E. Energy and Water Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Equipment Costs
    2. Installation Costs
    3. Unit Energy Consumption
    4. Energy and Water Prices
    5. Repair and Maintenance Costs
    6. Lifetime
    7. Discount Rate
    8. Base Case Efficiency Distribution
    9. Compliance Date
    10. Payback Period Inputs
    11. Rebuttable-Presumption Payback Period
    G. Shipments Analysis
    1. Shipments by Market Segment
    H. National Impact Analysis
    1. Efficiency Trends
    2. National Energy and Water Savings
    3. Net Present Value of Customer Benefit
    a. Total Annual Installed Cost
    b. Total Annual Operating Cost Savings
    I. Customer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Discussion of Comments
    4. Manufacturer Interviews
    a. Impacts to Cleaning Performance
    b. Consumer Behavior
    c. Disproportionate Impacts
    d. Market Model Challenges
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    2. Valuation of Other Emissions Reductions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Customers
    a. Life-Cycle Cost and Payback Period
    b. Customer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Customer Costs and Benefits
    c. Indirect Impacts on Employment
    4. Impact on Utility
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Summary of National Economic Impacts
    8. Other Factors
    C. Proposed Standards
    1. Benefits and Burdens of Trial Standard Levels Considered for 
Front-Loading and Top-Loading Commercial Clothes Washers
    2. Summary of Benefits and Costs (Annualized) of the Proposed 
Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 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
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements For 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    Title III of the Energy Policy and Conservation Act of 1975 (42 
U.S.C. 6291, et seq; ``EPCA''), Public Law 94-163, sets forth a variety 
of provisions designed to improve energy efficiency. (All references to 
EPCA refer to the statute as amended through the American Energy 
Manufacturing Technical Corrections Act (AEMTCA), Public Law 112-210 
(Dec. 18, 2012)). Part C of title III, which for editorial reasons was 
re-designated as Part A-1 upon incorporation into the U.S. Code (42 
U.S.C. 6311-6317, as codified), establishes the ``Energy Conservation 
Program for Certain Industrial Equipment.'' These include commercial 
clothes washers (CCW), the subject of today's notice. (42 U.S.C. 
6311(1)(H)).
    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A) and 6316(a)). Furthermore, the new or amended 
standard must result in a significant conservation of energy. (42 
U.S.C. 6295(o)(3)(B) and 6316(a)). In accordance with these and other 
statutory provisions discussed in this notice, DOE proposes amended 
energy conservation standards for commercial clothes washers. The 
proposed standards, which are expressed for each product class in terms 
of a minimum modified energy factor (MEFJ2) \1\ and a 
maximum integrated water factor (IWF), are shown in Table I.1. These 
proposed standards, if adopted, would apply to all products listed in 
Table I.1 and manufactured in, or imported into, the United States on 
or after the date three years after the publication of the final rule 
for this rulemaking.
---------------------------------------------------------------------------

    \1\ DOE proposes to use the ``MEFJ2'' metric to 
distinguish these new standards from the MEF metric on which the 
current energy conservation standards are based. MEF is calculated 
according to the test procedures at 10 CFR part 430, subpart B, 
appendix J1; whereas MEFJ2 is defined in 10 CFR 
431.154(b)(1) and is equivalent to the MEF calculation in 10 CFR 
part 430, subpart B, appendix J2. See Section III.C for a comparison 
of the current standards, measured using appendix J1, with these 
proposed standards measured using the same appendix. The proposed 
standards comply with 42 U.S.C. 6295(o)(1).

Table I.1--Proposed Energy Conservation Standards for Commercial Clothes
                                 Washers
------------------------------------------------------------------------
                                                    Minimum    Maximum
                  Product class                     MEFJ2*   IWF[dagger]
------------------------------------------------------------------------
Top-Loading......................................      1.35         8.8
Front-Loading....................................      2.00         4.1
------------------------------------------------------------------------
* MEFJ2 (appendix J2 modified energy factor) is calculated as the
  clothes container capacity in cubic feet divided by the sum, expressed
  in kilowatt-hours (kWh), of: (1) the total weighted per-cycle hot
  water energy consumption; (2) the total weighted per-cycle machine
  electrical energy consumption; and (3) the per-cycle energy
  consumption for removing moisture from a test load.
[dagger] IWF (integrated water factor) is calculated as the sum,
  expressed in gallons per cycle, of the total weighted per-cycle water
  consumption for all wash cycles divided by the clothes container
  capacity in cubic feet.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of commercial clothes washers, as 
measured by the average life-cycle cost (LCC) savings and the median 
payback period. The average LCC savings are positive for all product 
classes for which consumers are impacted by the proposed standards. The 
PBPs reflect the very small incremental cost necessary to achieve the 
proposed standards.

[[Page 12304]]

   Table I.2--Impacts of Proposed Standards on Consumers of Commercial
                Clothes Washers: Multi-Family Application
------------------------------------------------------------------------
                                                                Median
                                                Average LCC    payback
                 Product class                     savings      period
                                                  (2012$)      (years)
------------------------------------------------------------------------
Front-Loading.................................         $285         0.02
Top-Loading...................................         $259         0.00
------------------------------------------------------------------------

   Table I.3--Impacts of Proposed Standards on Consumers of Commercial
                 Clothes Washers: Laundromat Application
------------------------------------------------------------------------
                                                                Median
                                                Average LCC    payback
                 Product class                     savings      period
                                                  (2012$)      (years)
------------------------------------------------------------------------
Front-Loading.................................         $235         0.01
Top-Loading...................................         $145         0.00
------------------------------------------------------------------------

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2014 to 2047). Using a real discount rate of 8.6 
percent, DOE estimates that the industry net present value (INPV) for 
manufacturers of commercial clothes washers is $124.2 million in 2012$. 
Under the proposed standards, DOE expects that manufacturers may lose 
up to 4.9 percent of their INPV, which is approximately $6.0 million in 
2012$. Additionally, based on DOE's interviews with the manufacturers 
of commercial clothes washers, DOE does not expect any plant closings 
or significant loss of employment as a result of today's standards.

C. National Benefits \2\
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    \2\ All monetary values in this section are expressed in 2012 
dollars and are discounted to 2013.
---------------------------------------------------------------------------

    DOE's analyses indicate that the proposed standards would save a 
significant amount of energy. The lifetime savings for front-loading 
and top-loading commercial clothes washers purchased in the 30-year 
period that begins in the year of compliance with amended standards 
(2018-2047) amount to 0.11 quads. This is equivalent to 0.6% percent of 
total U.S. commercial energy use in 2012.
    The cumulative net present value (NPV) of total consumer costs and 
savings of the proposed standards for front-loading and top-loading 
commercial clothes washers ranges from $405 million (at a 7-percent 
discount rate) to $938 million (at a 3-percent discount rate). This NPV 
expresses the estimated total value of future operating-cost savings 
minus the estimated increased product costs for products purchased in 
2018-2047.
    In addition, the proposed standards would have significant 
environmental benefits. The energy savings would result in cumulative 
emission reductions of 5.9 million metric tons (Mt)\3\ of carbon 
dioxide (CO2), 50.1 thousand tons of methane, 4.4 thousand 
tons of sulfur dioxide (SO2), 9.1 thousand tons of nitrogen 
oxides (NOX) and 0.01 tons of mercury (Hg).\4\
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    \3\ A metric ton is equivalent to 1.1 short tons. Results for 
NOX and Hg are presented in short tons.
    \4\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook (AEO) 2013 Reference case, which generally represents 
current legislation and environmental regulations for which 
implementing regulations were available as of December 31, 2012.
---------------------------------------------------------------------------

    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 an interagency process. 
The derivation of the SCC values is discussed in section IV.M. Using 
discount rates appropriate for each set of SCC values, DOE estimates 
the present monetary value of the CO2 emissions reduction is 
between $0.04 billion and $0.56 billion. DOE also estimates the present 
monetary value of the NOX emissions reduction, is $4.9 
million at a 7-percent discount rate and $11.4 million at a 3-percent 
discount rate.\5\
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    \5\ DOE is currently investigating valuation of avoided Hg and 
SO2 emissions.
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    Table I.4 summarizes the national economic costs and benefits 
expected to result from the proposed standards for commercial clothes 
washers.

 Table I.4--Summary of National Economic Benefits and Costs of Proposed
  Energy Conservation Standards for Front-Loading and Top-Loading CCW *
------------------------------------------------------------------------
                                      Present value      Discount rate
             Category                 billion 2012$        (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings............              0.405                  7
                                                0.938                  3
CO2 Reduction Monetized Value                    0.04                  5
 ($11.8/t case) **................
CO2 Reduction Monetized Value                    0.18                  3
 ($39.7/t case) **................
CO2 Reduction Monetized Value                    0.29                2.5
 ($61.2/t case) **................
CO2 Reduction Monetized Value                    0.56                  3
 ($117/t case) **.................
NOX Reduction Monetized Value (at              0.0049                  7
 $2,639/ton) **...................
                                               0.0114                  3
    Total benefits [dagger].......               0.59                  7
                                                 1.13                  3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Incremental Installed Costs.......                0.0                  7
                                                  0.0                  3
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
Including Emissions Reduction                    0.59                  7
 Monetized Value[dagger]..........
                                                 1.13                  3
------------------------------------------------------------------------
* This table presents the costs and benefits associated with front-
  loading and top-loading CCW units shipped in 2018-2047. These results
  include benefits to consumers which accrue after 2047 from the
  products purchased in 2018-2047. The results account for the
  incremental variable and fixed costs incurred by manufacturers due to
  the standard, some of which may be incurred in preparation for the
  rule.

[[Page 12305]]

 
** The CO2 values represent global monetized values of the SCC, in
  2012$, in 2018 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series used by DOE incorporate
  an escalation factor. The value for NOX 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 series corresponding to average SCC with 3-percent discount rate.

    The benefits and costs of today's proposed standards, for products 
sold in 2018-2047, can also be expressed in terms of annualized values. 
The annualized monetary values are the sum of (1) the annualized 
national economic value of the benefits from consumer operation of 
products that meet the proposed standards (consisting primarily of 
operating cost savings from using less energy, 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 2013, 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.4. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2018 through 2047) 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 emission reductions provides a useful perspective, two 
issues should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions 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 different time frames for analysis. The national operating 
cost savings is measured for the lifetime of commercial clothes washers 
shipped in 2018-2047. The SCC values, on the other hand, reflect the 
present value of some 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 the proposed 
standards are shown in Table I.5. The results under the primary 
estimate are as follows. Using a 7-percent discount rate for benefits 
and costs other than CO2 reduction, for which DOE used a 3-
percent discount rate along with the average SCC series that uses a 3-
percent discount rate, the cost of the standards proposed in today's 
rule is $0.02 million per year in increased equipment costs, while the 
benefits are $31 million per year in reduced equipment operating costs, 
$9 million in CO2 reductions, and $0.37 million in reduced 
NOX emissions. In this case, the net benefit amounts to $40 
million per year. Using a 3-percent discount rate for all benefits and 
costs and the average SCC series, the cost of the standards proposed in 
today's rule is $0.02 million per year in increased equipment costs, 
while the benefits are $46 million per year in reduced operating costs, 
$9 million in CO2 reductions, and $0.57 million in reduced 
NOX emissions. In this case, the net benefit amounts to $56 
million per year.

    Table I.5--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Commercial Clothes
                                                     Washers
----------------------------------------------------------------------------------------------------------------
                                                       Primary  estimate   Low net benefits    High net benefits
                                     Discount rate             *              estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                                          million 2012$/year
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings..........  7%................  31................  27................  38.
                                  3%................  46................  40................  60.
CO2 Reduction Monetized Value     5%................  2.................  2.................  3.
 ($11.8/t case)*.
CO2 Reduction Monetized Value     3%................  9.................  8.................  11.
 ($39.7/t case)*.
CO2 Reduction Monetized Value     2.5%..............  13................  12................  17.
 ($61.2/t case) *.
CO2 Reduction Monetized Value     3%................  28................  25................  34.
 ($117/t case) *.
NOX Reduction Monetized Value     7%................  0.37..............  0.33..............  0.45.
 (at $2,639/ton) **.
                                  3%................  0.57..............  0.51..............  0.70.
Total Benefits [dagger].........  7% plus CO2 range.  33 to 58..........  29 to 52..........  42 to 73.
                                  7%................  40................  35................  50.
                                  3% plus CO2 range.  49 to 75..........  43 to 66..........  64 to 95.
                                  3%................  56................  49................  72.
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs.......  7%................  0.02..............  0.02..............  0.02
                                  3%................  0.02..............  0.03..............  0.02
----------------------------------------------------------------------------------------------------------------
                                                  Net Benefits
----------------------------------------------------------------------------------------------------------------
Total[dagger]...................  7% plus CO2 range.  33 to 58..........  29 to 52..........  42 to 73.
                                  7%................  40................  35................  50.
                                  3% plus CO2 range.  49 to 75..........  43 to 66..........  64 to 95.

[[Page 12306]]

 
                                  3%................  56................  49................  72.
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with commercial clothes washer equipment
  shipped in 2018-2047. These results include benefits to consumers which accrue after 2047 from the products
  purchased in 2018-2047. The results account for the incremental variable and fixed costs incurred by
  manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low
  Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case,
  Low Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a flat rate for
  projected product price trends in the Primary Estimate, a low decline rate for projected product price trends
  in the Low Benefits Estimate, and a high decline rate for projected product price trends in the High Benefits
  Estimate. The methods used to derive projected price trends are explained in section IV.
** The CO2 values represent global monetized values of the SCC, in 2012$, in 2015 under several scenarios of the
  updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and
  2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution
  calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The
  value for NOX is the average of the low and high values used in DOE's analysis.
[dagger] Total Ben efits for both the 3-percent and 7-percent cases are derived using the series corresponding
  to average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2
  range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
  are added to the full range of CO2 values.

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that products 
achieving these standard levels are already commercially available for 
the product classes covered by today's proposal. Based on the analyses 
described above, DOE has tentatively concluded that the benefits of the 
proposed standards to the nation (energy savings, positive NPV of 
consumer benefits, consumer LCC savings, and emission reductions) would 
outweigh the burdens (loss of INPV for manufacturers and LCC increases 
for some consumers).
    DOE also considered higher energy efficiency levels as a trial 
standard level, and is still considering them in this rulemaking. 
However, DOE has tentatively concluded that the potential burdens of 
the higher energy efficiency levels would outweigh the projected 
benefits. Based on consideration of the public comments DOE receives in 
response to this notice and related information collected and analyzed 
during the course of this rulemaking effort, DOE may adopt energy 
efficiency levels presented in this notice that are either higher or 
lower than the proposed standards, or some combination of level(s) that 
incorporate the proposed standards in part.

II. Introduction

    The following section discusses the statutory authority underlying 
today's proposal, as well as some of the relevant historical background 
related to the establishment of standards for commercial clothes 
washers.

A. Authority

    As noted in section I, Title III of EPCA establishes the ``Energy 
Conservation Program for Certain Industrial Equipment.'' This equipment 
includes commercial clothes washers, the subject of this rulemaking. 
(42 U.S.C. 6311(1)(H)).
    EPCA established energy conservation standards for commercial 
clothes washers and directed DOE to conduct two rulemakings to 
determine whether the established standards should be amended. (42 
U.S.C. 6313(e)) DOE published its first final rule amending commercial 
clothes washer standards on January 8, 2010 (``January 2010 final 
rule''), which apply to commercial clothes washers manufactured on or 
after January 8, 2013. The second final rule determining whether 
standards should be amended must be published by January 1, 2015. Any 
amended standards would apply to commercial clothes washers 
manufactured three years after the date on which the final amended 
standard is published. (42 U.S.C. 6313(e)(2)(B)) This current 
rulemaking will satisfy the requirement to publish the second final 
rule by January 1, 2015.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. Subject to certain criteria 
and conditions, DOE is required to develop test procedures to measure 
the energy efficiency, energy use, or estimated annual operating cost 
of each covered product. (42 U.S.C. 6314(a)(2)) 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. 6314(d)) Similarly, DOE must 
use these test procedures to determine whether the products comply with 
standards adopted pursuant to EPCA.
    The DOE test procedures for commercial clothes washers is codified 
at title 10 of the Code of Federal Regulations (CFR) part 430, subpart 
B, appendix J1 (hereafter, ``appendix J1''). On March 7, 2012, DOE 
published a final rule amending its test procedures for clothes washers 
(``March 2012 final rule''). (77 FR 13888) The March 2012 final rule 
included minor amendments to appendix J1 and also established a new 
test procedure at appendix J2 (hereafter, ``appendix J2''). Beginning 
March 7, 2015, manufacturers of commercial clothes washers may use 
either appendix J1 or appendix J2 to demonstrate compliance with the 
current standards established by the January 2010 final rule. 
Manufacturers using appendix J2 would be required to use conversion 
equations to translate the measured efficiency metrics into equivalent 
appendix J1 values, as proposed in a separate commercial clothes washer 
test procedure NOPR published February 11, 2014. (79 FR 8112) \7\ The 
use of appendix J2 would be required to demonstrate compliance with any 
amended energy conservation standards established as a result of this 
rulemaking, and the conversion

[[Page 12307]]

equations would no longer be used at that time.
---------------------------------------------------------------------------

    \7\ Additional details regarding the commercial clothes washer 
test procedure NOPR are available at DOE's rulemaking Web page: 
http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=86. All rulemaking documents are also 
available at www.regulations.gov, under Docket  EERE-2013-
BT-TP-0002.
---------------------------------------------------------------------------

    DOE must follow specific statutory criteria for prescribing amended 
standards for covered products. As indicated above, any amended 
standard for a covered product must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(a)) 
Furthermore, DOE may not adopt any standard that would not result in 
the significant conservation of energy. (42 U.S.C. 6295(o)(3) and 
6316(a)) Moreover, DOE may not prescribe a standard: (1) for certain 
products, including commercial clothes washers, if no test procedure 
has been established for the product, or (2) if DOE determines by rule 
that the proposed standard is not technologically feasible or 
economically justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 6316(a)) In 
deciding whether a proposed standard is economically justified, DOE 
must determine whether the benefits of the standard exceed its burdens. 
(42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) DOE must make this 
determination after receiving comments on the proposed standard, and by 
considering, to the greatest extent practicable, the following seven 
factors:
    1. The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
products likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy and water conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 6316(a))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1) and 6316(a)) Also, the Secretary may not 
prescribe an amended or new standard if interested persons have 
established by a preponderance of the evidence that the standard is 
likely to result in the unavailability in the United States of any 
covered product type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4) and 6316(a))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(a)). DOE conducts the analysis required by 6295(o) to determine 
economic justification and confirm the results of the rebuttable 
presumption analysis.
    Additionally, EPCA specifies requirements when promulgating a 
standard for a type or class of covered product that has two or more 
subcategories. DOE must specify a different standard level than that 
which applies generally to such type or class of products for any group 
of covered products that have the same function or intended use if DOE 
determines that products within such group (A) consume a different kind 
of energy from that consumed by other covered products within such type 
(or class); or (B) have a capacity or other performance-related feature 
which other products within such type (or class) do not have and such 
feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1) and 
6316(a)). 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 the feature and 
other factors DOE deems appropriate. 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) and 6316(a)).
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c) and 6316(a)) DOE may, however, 
grant waivers of Federal preemption for particular State laws or 
regulations, in accordance with the procedures and other provisions set 
forth under 42 U.S.C. 6297(d) and 6316(a)).

B. Background

1. Current Standards
    In a final rule published on January 8, 2010 (``January 2010 final 
rule''), DOE prescribed the current energy conservation standards for 
commercial clothes washers manufactured on or after January 8, 2013. 
The current standards are set forth in Table II.1.

 Table II.1--Current Federal Energy Efficiency Standards for Commercial
                             Clothes Washers
------------------------------------------------------------------------
                                                                 Maximum
                                                       Minimum     WF
                                                        MEF*    [dagger]
                    Product class                      cu.ft/     gal/
                                                        kWh/     cu.ft./
                                                        cycle     cycle
------------------------------------------------------------------------
Top-Loading.........................................      1.60       8.5
Front-Loading.......................................      2.00       5.5
------------------------------------------------------------------------
*MEF (appendix J1 modified energy factor) is calculated as the clothes
  container capacity in cubic feet divided by the sum, expressed in
  kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot water
  energy consumption; (2) the total weighted per-cycle machine
  electrical energy consumption; and (3) the per-cycle energy
  consumption for removing moisture from a test load.
[dagger] WF (water factor) is calculated as the weighted per-cycle water
  consumption for the cold wash/cold rinse cycle, expressed in gallons
  per cycle, divided by the clothes container capacity in cubic feet.

2. History of Standards Rulemaking for Commercial Clothes Washers
    As described in Section II.A, EPCA established energy conservation 
standards for commercial clothes washers and directed DOE to conduct 
two rulemakings to determine whether the established standards should 
be amended. (42 U.S.C. 6313(e)) DOE published its first final rule 
amending commercial clothes washer standards on January 8, 2010 
(``January 2010 final rule'').
    This current rulemaking will satisfy the requirement to publish the 
second final rule determining whether the standards should be amended 
by January 1, 2015. DOE published a notice of public meeting and 
availability of the framework document for this rulemaking, available 
at http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0020-
0001 (``August 2012 notice''). DOE also requested public comment on the 
document. 77 FR 48108 (August 13, 2012). The framework document is

[[Page 12308]]

available at http://www.regulations.gov/#!documentDetail;D=EERE-2012-
BT-STD-0020-0002. The framework document described the procedural and 
analytical approaches that DOE anticipated using to evaluate energy 
conservation standards for commercial clothes washers and identified 
various issues to resolve during the rulemaking.
    On September 24, 2012, 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: Rulemaking 
schedule; test procedure revisions; product classes; technology 
options; efficiency levels; and approaches for each of the analyses 
performed by DOE as part of the rulemaking process. DOE considered the 
comments received since publication of the August 2012 notice, 
including those received at the September 2012 framework public 
meeting, in developing today's proposed standards for commercial 
clothes washers.
    Following the framework meeting, DOE gathered additional 
information, held discussions with manufacturers, performed product 
testing and teardowns, and performed the various analyses described in 
the framework document, including the engineering, life-cycle cost, 
payback period, manufacturer impact, and national impact analyses. The 
results of these analyses are presented in this NOPR.

III. General Discussion

A. General Rulemaking Issues

    In the framework document and framework public meeting, DOE 
discussed using the analyses performed during the previous commercial 
clothes washer rulemaking in the development of the proposed rule.
    The Association of Home Appliances Manufacturers (AHAM) commented 
that the publishing of the framework document on August 13, 2012 was 
premature given that the amended standards from the January 2010 final 
rule would not become mandatory until January 8, 2013. AHAM stated that 
neither DOE nor stakeholders know what the market will look like once 
compliance with the new standards is required. AHAM further commented 
that DOE should issue an advance notice of proposed rulemaking (ANOPR) 
to seek comments after the new standards effective date of January 8, 
2013. AHAM believes doing so would allow stakeholders to meaningfully 
comment on DOE's proposed analysis prior to the notice of proposed 
rulemaking. AHAM does not feel it is appropriate for DOE to streamline 
the rulemaking process by not publishing an ANOPR in this case. (AHAM, 
No. 6 at pp. 1-3; Whirlpool, No. 7 at p. 1) 8 9 Alliance 
Laundry Systems (ALS) commented that it understands the EPCA statutory 
requirements for the timeframe that DOE must follow for this 
rulemaking, but that this rulemaking is premature in asking for 
information regarding the market assessment before the January 8, 2013 
standards take effect. (ALS, No. 16 at p. 2; ALS, Public Meeting 
Transcript, No. 12 at p. 41) The National Resources Defense Council and 
Appliance Standards Awareness Project (NRDC and ASAP) commented that 
DOE should specify the portions of the 2010 rulemaking analysis that 
will be reused in the current rulemaking, and to what extent data and 
methodology will be updated. (NRDC and ASAP, No. 11 at p. 2)
---------------------------------------------------------------------------

    \8\ A notation in this form provides a reference for information 
that is in the docket for DOE's rulemaking to develop energy 
conservation standards for commercial clothes washers (Docket No. 
EERE-2012-BT-STD-0020), which is maintained at www.regulations.gov. 
This notation indicates that AHAM's statement preceding the 
reference can be found in document number 6 in the docket, and 
appears at pages 1-3 of that document.
    \9\ Whirlpool Corporation submitted a written comment stating 
that it worked closely with AHAM in the development of AHAM's 
submitted comments, and that Whirlpool supports and echoes the 
positions taken by AHAM. Throughout this NOPR, reference to AHAM's 
written comments (document number 6 in the docket) should be 
considered reflective of Whirlpool's position as well.
---------------------------------------------------------------------------

    DOE conducted the market and technology assessment, engineering 
analysis, and manufacturer impact analysis for today's proposal 
subsequent to the January 8, 2013 effective date of the current 
commercial clothes washer standards. The information DOE has gathered 
through product testing, teardowns, and confidential manufacturer 
interviews since the framework meeting accurately reflect the state of 
the commercial clothes washer market following the January 2013 product 
transitions.

B. Product Classes and Scope of Coverage

1. Product Classes
    EPCA defines a ``commercial clothes washer'' as a soft-mount front-
loading or soft-mount top-loading clothes washer that:
    (A) Has a clothes container compartment that:
    (i) for horizontal-axis clothes washers, is not more than 3.5 cubic 
feet; and
    (ii) for vertical-axis clothes washers, is not more than 4.0 cubic 
feet; and
    (B) is designed for use in:
    (i) applications in which the occupants of more than one household 
will be using the clothes washer, such as multi-family housing common 
areas and coin laundries; or
    (ii) other commercial applications.

(42 U.S.C. 6311(21))

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that 
justifies a different standard. In making a determination whether a 
performance-related feature justifies a different standard, DOE must 
consider such factors as the utility to the consumer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q) and 
6316(a)).
    Existing energy conservation standards divide commercial clothes 
washers into two product classes based on the axis of loading: Top-
loading and front-loading. For the reasons explained below, DOE 
maintained these product class distinctions in the framework document 
and today's proposal.
    AHAM commented that it supports DOE's proposal to retain the two 
product classes based on the location of access. AHAM agrees that the 
longer cycle times of front-loading commercial clothes washers versus 
cycle times for top-loading commercial clothes washers significantly 
impact consumer utility. (AHAM, No. 6 at p. 4; AHAM, Public Meeting 
Transcript, No. 12 at p. 46) ALS commented that it also supports 
continuing with two separate product classes, top-loading and front-
loading. (ALS, No. 16 at p. 2)
    Pacific Gas and Electric Company, Southern California Gas Company, 
and San Diego Gas and Electric Company (collectively, the ``California 
Utilities'') commented that DOE should establish one standard that 
applies to both top-loading and front-loading commercial clothes 
washers. The California Utilities believe that the method of loading no 
longer provides unique utility, and thus should not continue to be 
treated as a unique ``feature'' warranting separate product classes. 
Specifically, the California Utilities stated that front-loading 
clothes washers are now available with cycle times equivalent to top-
loading clothes washers, and provided a table listing example cycle 
times for a selection of top-loading and

[[Page 12309]]

front-loading residential clothes washer models. In addition, the 
California Utilities believe that even with a single standard, top-
loading commercial clothes washers would still be able to meet such a 
standard using technologically feasible design considerations. The 
submitted comment includes a table comparing the top-loading efficiency 
levels considered by DOE during the most recent energy conservation 
standards rulemaking for residential clothes washers to the front-
loading efficiency levels proposed for consideration in this 
rulemaking. Furthermore, the California Utilities believe that the 
technologies, design, and operating characteristics of the residential 
clothes washer market are transferrable to the commercial clothes 
washer market. They believe that the split incentive between the 
purchaser of the equipment (e.g., route operator) and those paying the 
utility bill (e.g., coin-operated laundry owner) creates a split 
incentive that has created a barrier for motivating the manufacture and 
sale of higher-efficiency top-loaders, and that a single standard would 
correct this market inefficiency. (California Utilities, No. 8 at pp. 
2-3)
    NEEA commented that DOE should reconsider defining a single product 
class for commercial clothes washers. NEEA stated that in the current 
market, cycle times are similar for both top-loading and front-loading 
clothes washers, and as a result, cycle time is no longer a unique 
utility associated with one method of loading. NEEA also stated that 
technology to improve the efficiency of top-loading clothes washers has 
advanced. (NEEA, No. 10 p. 1)
    NRDC and ASAP commented that DOE should reconsider the division of 
commercial clothes washers into separate product classes for top-
loading and front-loading machines. NRDC stated that the prior 
determination of cycle times was based largely on a Consumer Reports 
article on residential clothes washers that contrasted cycle times of 
50 to 115 minutes for front-loading clothes washers to 30-85 minutes 
for top-loading clothes washers. NRDC and ASAP stated that commercial 
clothes washer manufacturers now offer cycle times on front-loading 
machines comparable to cycle times on top-loading machines, and 
provided examples from multiple commercial clothes washer 
manufacturers. NRDC and ASAP believe that the similarity in cycle times 
obviates the need for separate product classes. (NRDC and ASAP, No. 11 
at pp. 2-3; NRDC, Public Meeting Transcript, No. 12 at pp. 44-46).
    In response to these comments, DOE notes that in prior rulemakings 
for residential clothes washers, DOE has concluded that the axis of 
loading represents a distinct consumer utility-related feature, and, 
consequently, established separate product classes for top-loading and 
front-loading residential clothes washers. 56 FR 22263 (May 14, 1991) 
and 77 FR 32319 (May 31, 2012). DOE has concluded that the same 
justification applies to commercial clothes washers.
    As noted by commenters, DOE also determined during the previous 
energy conservation standards rulemaking for commercial clothes washers 
that the longer cycle times of front-loading commercial clothes washers 
versus top-loading clothes washers was likely to significantly impact 
consumer utility and thereby constituted a performance-related utility 
under the meaning of 42 U.S.C. 6295(q), which warranted separate 
product classes. 75 FR 1122, 1130-34. As part of the engineering 
analysis conducted for the current rulemaking, DOE measured total cycle 
times on a representative sample of top-loading and front-loading 
commercial clothes washers during appendix J2 testing, as described 
fully in chapter 5 of the TSD. Top-loading cycle times for the maximum 
load size ranged from 29-31 minutes, with an average of 30 minutes.\10\ 
Front-loading cycle times for the maximum load size ranged from 30-37 
minutes, with an average of 34 minutes. The longer average cycle time 
of front-loading machines results in fewer possible ``turns'' per day 
compared to top-loading machines, which is more significant in a 
laundromat or multi-family laundry setting for consumers waiting on the 
machine to finish its cycle, as well as laundromat owners and multi-
family laundry route operators looking to maximize daily laundry 
throughput. Therefore, although the magnitude of the difference in 
cycle times for CCWs is smaller than for residential clothes washers, 
DOE has determined that the longer average cycle time of front-loading 
machines warrants consideration of separate product classes.
---------------------------------------------------------------------------

    \10\ This excludes one outlier top-loading model with a cycle 
time of 50 minutes.
---------------------------------------------------------------------------

    In addition, DOE research indicates that the technologies, designs, 
and operating characteristics of the maximum efficiency top-loading 
residential clothes washers are not transferrable to commercial clothes 
washers. The standard level proposed for front-loading commercial 
clothes washers in this NOPR corresponds closely to the max-tech top-
loading level considered by DOE during the residential clothes washer 
rulemaking. Achieving that level of efficiency in a top-loading machine 
requires design features such as extra-large capacity, a non-agitator 
``impeller'' wash plate, spin speed greater than 1,000 rpm, and water 
recirculation. With regards to capacity, DOE notes that a larger 
clothes container capacity is considered a detriment to commercial 
clothes washer buyers because a larger capacity tub may result in fewer 
wash cycles performed by the end-user customer. In competitive markets, 
coin-operated laundries may not be able to sustain higher vend fares to 
compensate for the lower number of ``turns'' per day. In addition, 
based on discussions with manufacturers, larger tub capacities 
encourage the over-loading of machines by end-user customers. Regarding 
the use of non-agitator impeller wash plates, DOE research indicates 
that this feature also encourages machine overloading in a coin laundry 
environment, and that this technology is more susceptible to producing 
poorer wash performance when overloaded compared to a traditional 
agitator design. Spin speeds greater than 1,000 rpm and water 
recirculation are also not features that currently exist in the 
commercial clothes washer market, and DOE research indicates that these 
features are unlikely to be suitable for commercial clothes washers 
because of concerns regarding potential impacts on machine reliability 
as a result of machine overloading or other extreme usage scenarios 
experienced in a coin-operated laundry environment. Chapter 3 and 4 of 
the TSD provide a detailed discussion of design options considered for 
this rulemaking.
    For these reasons, DOE concludes that separate product classes are 
justified for top-loading and front-loading commercial clothes washers 
based on the criteria established in EPCA. (42 U.S.C. 6295(o)(4) and 
(q)(1), 6316(a)). Today's proposal thus maintains separate standards 
for top-loading and front-loading product classes.

C. Test Procedures

1. Appendix J2
    The amended standards proposed in this rulemaking are based on 
energy and water metrics as measured using appendix J2 of 10 CFR part 
430. DOE published a test procedure NOPR on February 11, 2014 
(``February 2014 TP NOPR'') proposing to amend its test procedures for 
commercial clothes washers to add equations for translating MEF and 
water factor (WF) values as

[[Page 12310]]

measured using appendix J2 into their equivalent values as measured 
using appendix J1. 79 FR 8112. These translation equations would be 
codified at 10 CFR 429.46 and would be used when using the appendix J2 
test procedure to demonstrate compliance with the current commercial 
clothes washer standards established by the January 2010 final rule, 
which were based on MEF and WF as measured using Appendix J1. These 
crosswalk equations would not be used to demonstrate compliance with 
the proposed amended standards in today's NOPR because the proposed 
amended standard levels are based metrics as measured using the 
appendix J2 test procedure.
    Table III.1 shows the equivalent appendix J1 and appendix J2 values 
for the current energy conservation standards for commercial clothes as 
set forth at 10 CFR 431.156, and the proposed amended energy 
conservation standards. As required by section 6295(o) of EPCA, the 
proposed standards do not increase the maximum allowable energy or 
water use, or decrease the minimum required energy efficiency, of 
commercial clothes washers.

          Table III.1--Current and Proposed Energy Conservation Standards for Commercial Clothes Washers, Equivalent Appendix J1 and J2 Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           Minimum energy standards                     Maximum water standards
                                                                 ---------------------------------------------------------------------------------------
                                                                       Appendix J1           Appendix J2           Appendix J1           Appendix J2
                          Product class                          ---------------------------------------------------------------------------------------
                                                                                                               Current    Proposed   Current    Proposed
                                                                   Current    Proposed   Current    Proposed      WF         WF        IWF        IWF
                                                                    MEF *      MEF *     MEF J2*    MEF J2*    [dagger]   [dagger]   [Dagger]   [Dagger]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Top-Loading.....................................................       1.60       1.70       1.15       1.35        8.5        8.4        8.9        8.8
Front-Loading...................................................       2.00       2.40       1.65       2.00        5.5        4.0        5.2        4.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
* MEF (appendix J1 modified energy factor) and MEFJ2 (appendix J2 modified energy factor) are calculated as the clothes container capacity in cubic feet
  divided by the sum, expressed in kilowatt-hours (kWh), of: (1) the total weighted per-cycle hot water energy consumption; (2) the total weighted per-
  cycle machine electrical energy consumption; and (3) the per-cycle energy consumption for removing moisture from a test load.
[dagger] WF (water factor) is calculated as the weighted per-cycle water consumption for the cold wash/cold rinse cycle, expressed in gallons per cycle,
  divided by the clothes container capacity in cubic feet.
[Dagger] IWF (integrated water factor) is calculated as the weighted per-cycle water consumption for all wash cycles, expressed in gallons per cycle,
  divided by the clothes container capacity in cubic feet.

    During the framework meeting and through subsequent written 
comments, interested parties submitted comments regarding these 
crosswalk equations and other issues including:

 Dryer energy calculations
 Water heating calculations
 Load size usage factors
 Temperature usage factors

DOE has addressed these comments related to the test procedure in the 
February 2014 TP NOPR. (79 FR 8112)
2. Energy Metric
    The amended energy efficiency standards proposed in this rulemaking 
are based on the MEFJ2 metric. In the framework document, 
DOE stated it would consider establishing amended energy efficiency 
standards for commercial clothes washers on the IMEF metric, which 
would incorporate standby and off mode power.
    AHAM and ALS commented that they do not oppose new standards for 
commercial clothes washers based on IMEF; however, DOE should not use 
the same analysis it used for standby and off mode for residential 
clothes washers. AHAM and ALS stated that residential and commercial 
clothes washers have different use patterns, and encouraged DOE to 
conduct studies on consumer usage to determine the appropriate usage 
patterns for commercial clothes washers, such as time spent in active 
mode versus standby mode. AHAM and ALS added that commercial clothes 
washers are used on a more continuous basis than residential clothes 
washers, and thus, spend more time in active mode and less time in 
standby mode compared to residential clothes washers. In addition, AHAM 
stated that the displays on commercial clothes washers must remain 
activated longer than residential clothes washer displays so that users 
know that the commercial machine is available for use. Finally, AHAM 
suggested that the definition of standby mode should be different for 
commercial clothes washers than for residential clothes washers. (AHAM, 
No. 6, at p. 3; AHAM, Public Meeting Transcript, No. 12 at pp. 29-30; 
ALS, No. 16 at p. 1)
    The California Utilities support DOE's proposal to develop new 
standards that take into account standby and off-mode power, stating 
that they believe such standards would more accurately reflect the 
total energy consumed by commercial clothes washers. (California 
Utilities, No. 8 at p. 2) NRDC and ASAP also support establishing new 
efficiency standards based on the IMEF metric to capture standby and 
off-mode power. (NRDC and ASAP, No. 11 at p. 2)
    As part of its market assessment and engineering analysis for this 
rulemaking, DOE evaluated the standby and off mode power 
characteristics of a representative sample of commercial clothes washer 
spanning a wide range of display types, payment systems, and 
communication features. Although interested parties generally supported 
establishing new energy standards based on the IMEF metric, DOE is not 
proposing amended standards for commercial clothes washers based on an 
integrated energy metric in today's rule.
3. Water Metric
    The amended water efficiency standards proposed in this rulemaking 
are based on the IWF metric contained in appendix J2. In the framework 
document, DOE stated it would consider establishing amended water 
efficiency standards for commercial clothes washers based on the IWF 
metric, which incorporates water consumption from all the temperature 
cycles included as part of the energy test cycle in appendix J2. DOE 
believes that the IWF metric provides a more representative measure of 
water consumption than the WF metric.
    AHAM and ALS stated that they do not oppose DOE's proposal to 
establish amended water standards based on the IWF metric. ALS added 
that they already record all the water used by a commercial clothes 
washer during their DOE tests. (AHAM, No. 6 at p. 3; ALS, No. 16 at p. 
1)
    The Northwest Energy Efficiency Alliance (NEEA) and NRDC and ASAP 
support establishing new water efficiency standards based on the IWF 
metric to capture water consumption from all temperature cycles to 
reflect typical usage patterns by consumers.

[[Page 12311]]

(NEEA, No. 10 at p. 2; NRDC and ASAP, No. 11 at p. 2)
    DOE received no comments objecting to the use of the IWF metric. 
Therefore, for the reasons stated above, the amended water efficiency 
standards proposed in this rulemaking are based on the IWF metric.

D. Technological Feasibility

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

E. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the products that 
are the subject of this rulemaking purchased in the 30-year period that 
begins in the year of compliance with amended standards (2018-2047). 
The savings are measured over the entire lifetime of products purchased 
in the 30-year period.\11\ DOE quantified the energy savings 
attributable to each TSL as the difference in energy consumption 
between each standards case and the base case. The base case represents 
a projection of energy consumption in the absence of amended efficiency 
standards, and considers market forces and policies that affect demand 
for more efficient products.
---------------------------------------------------------------------------

    \11\ In previous rulemakings, DOE presented energy savings 
results for only the 30-year period that begins in the year of 
compliance. In the calculation of economic impacts, however, DOE 
considered operating cost savings measured over the entire lifetime 
of products purchased in the 30-year period. DOE has modified its 
presentation of national energy savings consistent with the approach 
used for its national economic analysis.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from amended standards for the products that 
are the subject of this rulemaking. The NIA spreadsheet model 
(described in section IV of this notice) calculates energy savings in 
site energy, which is the energy directly consumed by products at the 
locations where they are used. For electricity, DOE reports national 
energy savings in terms of the savings in the energy that is used to 
generate and transmit the site electricity. To calculate this quantity, 
DOE derives annual conversion factors from the model used to prepare 
the Energy Information Administration's (EIA) Annual Energy Outlook 
(AEO).
    DOE also estimates full-fuel-cycle energy savings in its energy 
conservation standards rulemakings. 76 FR 51282 (Aug. 18, 2011), as 
amended at 77 FR 49701 (August 17, 2012). The full-fuel-cycle (FFC) 
metric includes the energy consumed in extracting, processing, and 
transporting primary fuels (i.e., coal, natural gas, petroleum fuels), 
and thus presents a more complete picture of the impacts of energy 
efficiency standards. DOE's approach is based on calculation of an FFC 
multiplier for each of the energy types used by covered products. For 
more information on FFC energy savings, see section IV.H.2.
2. Significance of Savings
    As noted above, 42 U.S.C. 6295(o)(3)(B) prevents DOE from adopting 
a standard for a covered product unless such standard would result in 
``significant'' energy savings. Although the term ``significant'' is 
not defined in the Act, the U.S. Court of Appeals, in Natural Resources 
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), 
indicated that Congress intended ``significant'' energy savings in this 
context to be savings that were not ``genuinely trivial.'' The energy 
savings for all of the TSLs considered in this rulemaking (presented in 
section V.C) are nontrivial, and, therefore, DOE considers them 
``significant'' within the meaning of section 325 of EPCA.

F. Economic Justification

1. Specific Criteria
    EPCA provides seven factors to be evaluated in determining whether 
a potential energy conservation standard is economically justified. (42 
U.S.C. 6295(o)(2)(B)(i) and 6316(a)) The following sections discuss how 
DOE has addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of an amended energy conservation 
standard on manufacturers, DOE first uses an annual cash-flow approach 
to determine the quantitative impacts. This step includes both a short-
term assessment--based on the cost and capital requirements during the 
period between when a regulation is issued and when entities must 
comply with the regulation--and a long-term assessment over a 30-year 
period. The industry-wide impacts analyzed include industry net present 
value (INPV), which values the industry on the basis of expected future 
cash flows; cash flows by year; changes in revenue and income; and 
other measures of impact, as appropriate. Second, DOE analyzes and 
reports the impacts on different types of manufacturers, including 
impacts on small manufacturers. Third, DOE considers the impact of 
standards on domestic manufacturer employment and manufacturing 
capacity, as well as the potential for standards to result in plant 
closures and loss of capital investment. Finally, DOE takes into 
account cumulative impacts of various DOE

[[Page 12312]]

regulations and other regulatory requirements on manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and payback period (PBP) associated with new or amended 
standards. These measures are discussed further in the following 
section. For consumers in the aggregate, DOE also calculates the 
national net present value of the economic impacts applicable to a 
particular rulemaking. DOE also evaluates the LCC impacts of potential 
standards on identifiable subgroups of consumers that may be affected 
disproportionately by a national standard.
b. Savings in Operating Costs Compared to Increase in Price
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product compared 
to any increase in the price of the covered product that are likely to 
result from the imposition of the standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II) and 6316(a)) DOE conducts this comparison in its 
LCC and PBP analysis. The LCC is the sum of the purchase price of a 
product (including its installation) and the operating expense 
(including energy, maintenance, and repair expenditures) discounted 
over the lifetime of the product. To account for uncertainty and 
variability in specific inputs, such as product lifetime and discount 
rate, DOE uses a distribution of values, with probabilities attached to 
each value. For its analysis, DOE assumes that consumers will purchase 
the covered products in the first year of compliance with amended 
standards.
    The LCC savings and the PBP for the considered efficiency levels 
are calculated relative to a base case that reflects projected market 
trends in the absence of amended standards. DOE identifies the 
percentage of consumers estimated to receive LCC savings or experience 
an LCC increase, in addition to the average LCC savings associated with 
a particular standard level.
c. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 
6316(a)) As discussed in section IV, DOE uses the NIA spreadsheet to 
project national energy savings.
d. Lessening of Utility of Products
    In establishing classes of products, and in evaluating design 
options and the impact of potential standard levels, DOE evaluates 
standards that would not lessen the utility of the considered products. 
(42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(a)) The standards proposed in 
today's notice will not reduce the utility of the products under 
consideration in this rulemaking.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, which is 
likely to result from the imposition of a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V) It also directs the Attorney General to determine 
the impact, if any, of any lessening of competition likely to result 
from a proposed standard and to transmit such determination to the 
Secretary within 60 days of the publication of a proposed rule, 
together with an analysis of the nature and extent of the impact. (42 
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of today's proposed 
rule to the Attorney General with a request that the Department of 
Justice (DOJ) provide its determination on this issue. DOE will address 
the Attorney General's determination in the final rule.
f. Need for National Energy Conservation
    The energy savings from the proposed standards are likely to 
provide improvements to the security and reliability of the nation's 
energy system. Reductions in the demand for electricity also may result 
in reduced costs for maintaining the reliability of the nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the nation's needed power generation capacity.
    The proposed standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production. DOE reports the 
emissions impacts from today's standards, and from each TSL it 
considered, in section V of this notice. DOE also reports estimates of 
the economic value of emissions reductions resulting from the 
considered TSLs.
g. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII)) 
DOE did not consider any other factors for today's NOPR.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a), EPCA 
creates a rebuttable presumption that an energy conservation standard 
is economically justified if the additional cost to the consumer of a 
product that meets the standard is less than three times the value of 
the first year's energy savings resulting from the standard, as 
calculated under the applicable DOE test procedure. DOE's LCC and PBP 
analyses generate values used to calculate the effects that proposed 
energy conservation standards would have on the payback period for 
consumers. These analyses include, but are not limited to, the 3-year 
payback period contemplated under the rebuttable-presumption test. In 
addition, DOE routinely conducts an economic analysis that considers 
the full range of impacts to consumers, manufacturers, the nation, and 
the environment, as required under 42 U.S.C. 6295(o)(2)(B)(i). The 
results of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section IV of this NOPR.

IV. Methodology and Discussion of Related Comments

    DOE used four analytical tools to estimate the impact of today's 
proposed standards. The first tool is a spreadsheet that calculates 
LCCs and PBPs of potential new energy conservation standards. The 
second tool includes a model that provides shipments forecasts, and a 
framework in a spreadsheet that calculates national energy savings and 
net present value resulting from potential amended energy conservation 
standards. DOE uses the third spreadsheet tool, the Government 
Regulatory Impact Model (GRIM), to assess manufacturer impacts.
    Additionally, DOE estimated the impacts of energy conservation 
standards for CCW on utilities and the environment. 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 
(AEO), a widely known energy forecast for the United States. The 
version of

[[Page 12313]]

NEMS used for appliance standards analysis is called NEMS-BT \12\ and 
is based on the AEO version with minor modifications.\13\ The NEMS-BT 
model accounts for the interactions between the various energy supply 
and demand sectors and the economy as a whole.
---------------------------------------------------------------------------

    \12\ BT stands for DOE's Building Technologies Program.
    \13\ 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

1. Market Assessment
    In the framework document, DOE requested information that would 
contribute to the market assessment for the commercial clothes washers 
covered in this rulemaking (e.g., current product features and 
efficiencies, product feature and efficiency trends, and historical 
product shipments and prices).
    AHAM provided commercial clothes washer shipment data and shipment-
weighted average efficiency data for 2010 and 2011, disaggregated by 
product class. AHAM also provided market share efficiency data for 2010 
and 2011, disaggregated by product class. (AHAM, No. 13 at pp. 2-4) 
AHAM commented that the timing of its data submittal was too early to 
be able to provide shipment data for products complying with the new 
standards that became effective January 8, 2013. (AHAM, No. 8 at pp. 3-
4).
    DOE requests information on historical product shipments and market 
share efficiency data, disaggregated by product class, for 2012 and 
2013 as those data become available.
    NRDC and ASAP commented that DOE should confirm the split between 
the coin laundry and multi-family housing sectors of the market, noting 
that the different operating characteristics of these sub-sectors have 
significant influence on the life-cycle costs and payback period 
analysis. (NRDC and ASAP, No. 11 at p. 2)
    DOE has incorporated the shipments data from AHAM throughout the 
NOPR analysis. DOE confirmed through discussions with manufacturers 
that the split between coin laundry and multi-family housing used for 
the last rulemaking (15 percent and 85 percent, respectively) remains 
valid for this rulemaking. The NOPR analysis reflects this breakdown.
2. Technology Assessment
    In the framework document, DOE presented a table of design options 
it believes represent the most viable options for commercial clothes 
washers to achieve higher efficiencies. DOE requested comment on 
whether any of the technologies should be removed from consideration, 
or whether any other technologies not listed in the table should be 
considered as technology options.
    ALS recommended that DOE remove ``ozonated laundering'' from 
consideration, because testing ALS has performed on ozone laundering 
indicates it does not replace the need for heated water and detergent 
to clean clothes. Therefore, ALS believes ozonated laundry does not 
improve energy efficiency. (ALS, No. 16 at p. 2) As described in 
greater detail in Chapter 3 and chapter 4 of the TSD, DOE retained 
ozonated laundering as a design option because it may improve energy 
efficiency, but eliminated it from consideration as a result of the 
screening analysis.
    The California Utilities recommended that DOE consider all of the 
design options evaluated in the most recent residential clothes washer 
standards rulemaking. The commenters believe that all such design 
options are likely to be applicable and transferrable to commercial 
clothes washers. (California Utilities, No. 8 at p. 4) As described in 
the framework document, DOE eliminated from consideration those design 
options from the prior commercial clothes washer and residential 
clothes washer rulemakings that DOE has determined would provide 
negligible, if any, energy savings. DOE also eliminated technologies 
that it determined were not relevant to the commercial clothes washer 
market. Chapter 3 and chapter 4 of the TSD provide detailed information 
regarding DOE's analysis of each design option.
    NRDC and ASAP suggested that DOE add temperature-differentiated 
pricing controls to the list of technology options that manufacturers 
can use to reduce energy consumption in machine operation. The 
commenters noted that this feature is already being offered by 
Whirlpool and Alliance Laundry Systems. NRDC and ASAP stated that 
temperature-differentiated pricing offers launderers the incentive to 
opt for lower temperature settings than they might otherwise select 
under undifferentiated pricing. Such controls would allow a machine's 
owner to pass through a share of the resulting hot water energy savings 
to the end user, thus incentivizing energy savings. NRDC and ASAP 
suggested that the test procedure for commercial clothes washers could 
allow credit for inclusion of such a feature without altering the 
mechanics of the test procedure itself. (NRDC, Public Meeting 
Transcript, No. 12 at p. 47-48; NRDC and ASAP, No. 11 at p. 3)
    Temperature-differentiated pricing offers the potential to 
incentive energy savings by providing favorable vend pricing for lower-
temperature settings. DOE's market analysis confirmed the availability 
of this feature on multiple clothes washer models from multiple 
manufacturers. DOE has therefore added temperature-differentiated 
pricing controls to the list of technology options for consideration. 
DOE does not have any information, however, regarding the degree to 
which this feature changes the temperature selection frequencies of end 
users. Therefore, as described in further detail in Chapter 5 of the 
TSD, DOE was not able to consider this technology for further 
evaluation in its engineering analysis.

B. Screening Analysis

    Following the development of the initial list of design options, 
DOE conducts a screening analysis of each design option based on the 
following factors: (1) Technological feasibility; (2) practicability to 
manufacture, install and service; (3) adverse impacts on product 
utility or product availability; and (4) adverse impacts on health or 
safety. (10 CFR part 430, subpart C, appendix A, section 4(a)(3) and 
(4).)
    DOE did not receive any comments objecting to the proposed design 
options based on these screening criteria. DOE did, however, receive 
general comments regarding the impacts of higher efficiency levels on 
product utility, which DOE addressed as part of its engineering 
analysis.

C. Engineering Analysis

1. General Approach
    The purpose of the engineering analysis is to characterize the 
relationship between the incremental manufacturing cost and efficiency 
improvements of commercial clothes washers. DOE used this cost-
efficiency relationship as input to the PBP, LCC, and NES analyses. As 
proposed in the framework document, DOE conducted the engineering 
analysis for this rulemaking using the efficiency-level approach 
supplemented with a design-option approach. Using the efficiency-level 
approach, DOE examined the aggregated incremental increases in 
manufacturer selling price at each of the

[[Page 12314]]

efficiency levels analyzed. DOE also conducted a reverse-engineering 
analysis, including testing and teardowns of models at each efficiency 
level, to identify the incremental cost and efficiency improvement 
associated with each design option or design option combination, 
supplementing the efficiency-level approach with a design-option 
approach as needed. Chapter 5 of the TSD contains a detailed discussion 
of the engineering analysis methodology.
    ALS commented that it supports DOE's proposal to use an efficiency 
level approach supplemented by a design option approach as needed. 
(ALS, No. 16 at p. 4)
    AHAM commented that it believes DOE erroneously stated in the 
framework document that it would measure the energy and water 
consumption of representative units at each efficiency level under 
consideration using DOE's test procedure at appendix J1. (AHAM, No. 6 
at p. 6; AHAM, Public Meeting Transcript, No. 12 at p. 52) DOE intended 
to reference both appendix J1 and appendix J2 in this instance. DOE 
performed energy and water consumption testing using both test 
procedures, which enabled DOE to translate the appendix J1-based 
efficiency levels into equivalent levels based on appendix J2. DOE used 
the appendix J2 energy and water consumption data for its engineering 
analysis and all ``downstream'' analyses, including the LCC, PBP, and 
NES.
2. Appendix J2 Efficiency Level Translations
    In the framework document, DOE proposed baseline and higher 
efficiency levels based on the current metrics MEF and WF, which are 
determined according to the appendix J1 test procedure. As discussed in 
prior sections, DOE has proposed amended standards for commercial 
clothes washers in terms of MEFJ2 and IWF as measured using 
appendix J2. DOE performed testing on a representative sample of 
commercial clothes washer models to determine, for each baseline and 
higher efficiency level considered in the analysis, the equivalent 
appendix J2 efficiency levels corresponding to each appendix J1 
efficiency level. Chapter 5 of the TSD describes the methodology DOE 
used to perform the translations between appendix J1 MEF/WF values and 
appendix J2 MEF/IWF values.
3. Baseline Efficiency Levels
    DOE proposed in the framework document to use the amended energy 
conservation standards effective January 8, 2013 to characterize the 
baseline models for both the top-loading and front-loading product 
classes.
    ALS commented that it supports using the 2013 minimum efficiency 
levels as the baseline levels for this rulemaking. (ALS, No. 16 at p. 
2) DOE did not receive any comments objecting to the proposed baseline 
efficiency levels. Therefore, as proposed, DOE used the January 8, 2013 
amended energy conservation standards as the baseline efficiency levels 
for this rulemaking.
4. Front-Loading Higher Efficiency Levels
    In the framework document, DOE proposed analyzing the higher 
efficiency levels shown in Table IV.1 for the front-loading product 
class. The efficiency levels presented in the framework document were 
based on MEF and WF as measured using appendix J1. Table IV.1 also 
provides the equivalent levels based on MEFJ2 and IWF as 
measured using appendix J2 test procedure. DOE invited comment on the 
appropriateness of these front-loading efficiency levels.

                                   Table IV.1--Front-Loading Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                        Appendix J1 metrics             Appendix J2 metrics
             Level              Efficiency level ---------------------------------------------------------------
                                     source             MEF             WF             MEFJ2            IWF
----------------------------------------------------------------------------------------------------------------
Baseline......................  DOE Standard....            2.00             5.5            1.65             5.2
1.............................  CEE Tier 2......            2.20             4.5            1.80             4.5
2.............................  CEE Tier 3......            2.40             4.0            2.00             4.1
3.............................  Maximum                     2.60             3.7            2.20             3.9
                                 Available.
----------------------------------------------------------------------------------------------------------------

    AHAM commented that rinsing performance could become a concern at 
some of the levels DOE has proposed, noting that every manufacturer 
would have its own opinion at which level, if any, this would occur. 
AHAM stated that measuring the impact of the proposed levels on 
cleaning and rinsing performance may be difficult because currently no 
test procedures are available to link cleaning and rinsing performance 
with the energy performance measured in DOE's test procedure. (AHAM, 
No. 6 at pp. 4-5)
    ALS commented that it strongly opposes any consideration of higher 
efficiency levels for front-loading commercial clothes washers. ALS 
stated that its tests on competitive front-loading products with more 
stringent efficiency levels have shown that with large load sizes, the 
clothing in the center of the load does not get wetted by water during 
the wash portion of the cycle. ALS believes it would not be appropriate 
for DOE to propose stricter standards that would create this kind of 
result in a front-loading commercial clothes washer. (ALS, No. 16 at p. 
3)
    The California Utilities suggested that DOE include two additional 
front-loading efficiency levels corresponding to the top two efficiency 
levels considered during the most recent residential clothes washer 
rulemaking: 2.60 MEF/3.8 WF and 2.89 MEF/3.7 WF, as measured using 
appendix J1.
    NRDC commented that while DOE proposed the ``maximum available'' 
efficiency level in the framework document, DOE did not indicate the 
maximum efficiency level that is technologically feasible (i.e., the 
``max tech'' level). (NRDC, Public Meeting Transcript, No. 12 at p. 55)
    DOE notes that it developed its list of front-loading efficiency 
levels based on a review of commercial clothes washer products 
currently on the market. DOE confirmed through its market assessment 
that products are available for purchase at each of the identified 
efficiency levels. DOE performed appendix J1 and appendix J2 testing on 
a representative sample of commercial clothes washer models at each 
proposed efficiency level. To investigate concerns regarding potential 
impacts on cleaning performance, rinsing performance, and solid 
particle removal, DOE performed additional testing on each model using 
AHAM's HLW-1-2010 test method: Performance Evaluation Procedures for 
Household Clothes Washers (hereafter, ``AHAM HLW-1-2010''). 
Specifically,

[[Page 12315]]

DOE performed the soil/stain removal, rinsing effectiveness, and sand 
removal tests provided in HLW-1-2010. DOE's testing indicated that 
front-loading commercial clothes washers are available on the market at 
the proposed amended standard level that provide equivalent washing, 
rinsing, and solid particle removal as current baseline units. Chapter 
5 of the TSD describes these test results in greater detail.
    Regarding the higher efficiency levels considered in the 
residential clothes washer rulemaking, DOE notes that the 2.60 MEF/3.8 
WF efficiency level suggested by the commenter corresponds closely with 
the maximum level proposed by DOE, 2.60 MEF/3.7 WF. DOE does not 
believe that the more stringent level of 2.89 MEF/3.7 WF would be 
appropriate for consideration in this commercial clothes washer 
rulemaking. First, no commercial clothes washer models are currently 
available on the market at that efficiency level. Second, some of the 
design options that would be required to achieve that efficiency level 
could negatively wash basket size and cycle time. Most notably, 
achieving the highest efficiency levels in the front-loading 
residential clothes washer market requires large-capacity wash baskets 
greater than 3.9 cubic feet and cycle times of 50 minutes or longer. 
DOE notes that EPCA's product coverage definition of a front-loading 
commercial clothes washer specifies a maximum capacity of 3.5 cubic 
feet, so machines with the larger capacity wash baskets would not be 
considered covered equipment subject to DOE's energy conservation 
standards. (42 U.S.C. 6311(21)) In addition, as noted previously, a 
larger clothes container capacity is considered a detriment to 
commercial clothes washer owners because a larger capacity wash tub may 
result in fewer wash cycles performed by the end-user customer. In 
competitive markets, coin-operated laundries may not be able to sustain 
higher vend fares to compensate for the lower number of turns per day. 
Furthermore, cycle times of 50 minutes would constitute a substantial 
increase over the current 34 minute average cycle time as measured by 
DOE. Longer cycle times decrease the number of possible turns per day 
on a given clothes washer, which is more significant in a laundromat or 
multi-family laundry setting for consumers waiting on the machine to 
finish its cycle, as well as laundromat owners and multi-family laundry 
route operators looking to maximize daily laundry throughput.
    Based on the results of its market and technology assessment and 
engineering analysis, DOE has tentatively determined that the maximum 
available efficiency level identified in the framework document 
represents the maximum efficiency level that is technologically 
feasible for front-loading commercial clothes washers.
5. Top-Loading Higher Efficiency Levels
    In the framework document, DOE stated that it was unaware at the 
time of any top-loading commercial clothes washers that exceeded the 
January 8, 2013 baseline efficiency level of 1.60 MEF/8.5 WF. 
Therefore, DOE did not specify any higher efficiency levels for top-
loading commercial clothes washers in the framework document. DOE also 
stated, however, that should manufacturers develop models above the 
baseline efficiency level, or should working prototypes above the 
baseline efficiency level become available, DOE would consider 
incorporating additional efficiency levels in its analysis.
    Since the publishing of the framework document, DOE has become 
aware of multiple top-loading clothes washers on the market, from 
multiple manufacturers, at higher efficiency levels than the baseline 
level represented by the January 8, 2013 amended standards. 
Accordingly, DOE analyzed the higher efficiency levels shown in Table 
IV.2 for the top-loading product class. Table IV.2 shows the efficiency 
levels in terms of MEF and WF as measured using appendix J1, as well as 
MEFJ2 and IWF as measured using appendix J2.

                                    Table IV.2--Top-Loading Efficiency Levels
----------------------------------------------------------------------------------------------------------------
                                                        Appendix J1 metrics             Appendix J2 metrics
             Level              Efficiency level ---------------------------------------------------------------
                                     source             MEF             WF             MEFJ2            IWF
----------------------------------------------------------------------------------------------------------------
Baseline......................  DOE Standard....            1.60             8.5            1.15             8.9
1.............................  Gap Fill........            1.70             8.4            1.35             8.8
3.............................  Maximum                     1.85             6.9            1.55             6.9
                                 Available.
----------------------------------------------------------------------------------------------------------------

    AHAM commented that more efficient standard levels for top-loading 
commercial clothes washers are not justified, believing that standards 
more stringent than the current level could create performance 
concerns. AHAM stated that as hot water and water levels are reduced, 
cleaning and rinse performance will suffer and may no longer meet 
consumer expectations at standard levels beyond the January 2013 
levels. AHAM also expressed concern that amended standards could 
require changes in the spin speed, heavier lids, and door locks, and 
that such changes could negatively impact consumer and end-user 
utility. AHAM noted, for example, that consumers may find it more 
difficult to use a clothes washer with a heavier lid or may not be able 
to add clothing mid-cycle due to door locking. (AHAM, No. 6 at pp. 4-5)
    ALS opposes any consideration of higher efficiency levels for top-
loading commercial clothes washers. At the time of its comment 
submittal, ALS was not aware of any top-loading products that exceed 
the January 2013 standard level. ALS stated that not enough time has 
elapsed to evaluate consumer response or acceptability resulting from 
deploying new top-loading models at the January 2013 standard level. 
Accordingly, ALS believes the appropriate max-tech level for top-
loading commercial clothes washers is the 2013 DOE minimum standard. 
ALS stated that it had opposed DOE's decision during the prior 
rulemaking to establish the amended standard level at the max-tech 
level, and that it had commented that removing hot water from the wash 
cycle to achieve the proposed max-tech level would reduce cleaning 
performance and negatively impact utility. ALS further commented that 
``hot'' water is commonly recognized as 120 degrees Fahrenheit and 
above; yet, according to ALS, the max-tech model from the prior 
rulemaking provides 112 degrees wash water, which is commonly 
recognized as ``warm''. ALS believes that further increasing the top-
loading standard level would further decrease consumer utility. (ALS, 
No. 16 at pp. 3-4)
    The California Utilities suggested that DOE analyze higher 
efficiency levels for top-loading commercial clothes washers 
corresponding to the higher efficiency

[[Page 12316]]

levels that DOE had analyzed during the most recent residential clothes 
washer rulemaking. The California Utilities recommended levels ranging 
from 1.72MEF/8.0WF to 2.47MEF/3.6WF at the max-tech level, as measured 
using appendix J1. (California Utilities, No. 8 at p. 4)
    NEEA commented that top-loading clothes washer technology has 
advanced, but that it is not clear that the marketplace has 
incorporated the newest technologies. NEEA recommended that DOE review 
the max-tech level for top-loading commercial clothes washers. (NEEA, 
No. 10 at p. 2)
    NRDC and ASAP commented that the absence of products on the market 
at a particular efficiency level above the baseline level does not 
necessarily mean that efficiency levels above the baseline are not 
technologically feasible. NRDC and ASAP added that should DOE retain 
separate product classes for top-loading and front-loading commercial 
clothes washers, DOE must identify a max-tech level for the top-loading 
product class, noting that technology options may exist for improving 
efficiency that have not yet been incorporated into current products. 
(NRDC and ASAP, No. 11 at p. 4)
    DOE developed its list of top-loading efficiency levels based on a 
review of commercial clothes washer products currently on the market. 
DOE gathered information through product testing and teardowns since 
the framework meeting that reflect the state of the commercial clothes 
washer market following the January 2013 product transitions.
    DOE confirmed through its market assessment that products are 
available for purchase at each of the identified efficiency levels. DOE 
performed appendix J1 and appendix J2 testing on a representative 
sample of top-loading commercial clothes washer models at each proposed 
efficiency level. To investigate concerns regarding potential impacts 
on cleaning performance, rinsing performance, and solid particle 
removal, DOE performed additional testing on each model using AHAM's 
HLW-1-2010 test method. DOE testing indicated that top-loading 
commercial clothes washers are available on the market at the proposed 
amended standard level that provide equivalent washing performance, 
rinsing performance, and solid particle removal as current baseline 
units. Chapter 5 of the TSD describes these test results in greater 
detail. Regarding potential consumer utility impacts associated with 
door locks, DOE's market analysis indicates that top-loading models 
without door locks are currently available on the market at the 
proposed amended standard level.
    Regarding the higher efficiency levels considered in the 
residential clothes washer rulemaking, DOE does not believe that the 
more stringent levels above the identified maximum available level 
would be appropriate for consideration in this commercial clothes 
washer rulemaking, for many of the same reasons described previously 
for the front-loading efficiency levels. First, no commercial clothes 
washer models are currently available on the market above 1.85MEF/
6.9WF, as measured using appendix J1. Second, some of the design 
options that would be required to achieve those higher efficiency 
levels could be perceived by the machine owners and/or end users as 
negatively impacting wash basket size. Most notably, achieving the 
highest efficiency levels in the residential clothes washer market 
requires implementing large-capacity wash baskets greater than 4.3 
cubic feet. DOE notes that EPCA's product coverage definition of a top-
loading commercial clothes washer specifies a maximum capacity of 4.0 
cubic feet, so units with the larger-capacity wash baskets would not be 
covered equipment subject to DOE's energy conservation standards. (42 
U.S.C. 6311(21)) In addition, as noted previously, a larger clothes 
container capacity is considered a detriment to commercial clothes 
washer owners because a larger-capacity tub may result in fewer wash 
cycles performed by the end-user customer. Furthermore, the max-tech 
residential clothes washers lack an agitator and instead use a circular 
wash plate that requires different loading instructions than clothes 
washers with traditional agitators. Manufacturers typically instruct 
users not to load garments directly over the center of the wash plate, 
so that the center of the wash plate remains visible when loaded. It is 
unlikely that such specialized loading instructions would be 
implementable in a commercial laundry environment such that the wash 
performance of the unit would be maintained.
    Based on the results of its market and technology assessment and 
engineering analysis, DOE has determined that the maximum available 
efficiency level identified in Table IV.2 represents the maximum 
efficiency level that is technologically feasible for top-loading 
commercial clothes washers.
6. Impacts on Cleaning Performance
    As mentioned in the discussion of front-loading and top-loading 
higher efficiency levels, DOE conducted performance testing to 
quantitatively evaluate potential impacts on cleaning performance, 
rinsing performance, and solid particle removal as a result of higher 
standard levels. As described in greater detail in Chapter 5 of the 
TSD, DOE tested a representative sample of commercial clothes washers 
at each efficiency level using AHAM's HLW-1-2010 test procedure. For 
each clothes washer, DOE tested the maximum load size specified in 
appendix J2, rounded to the nearest pound, using the warm wash/cold 
rinse cycle. Manufacturers indicated that the maximum load size is 
particularly relevant to commercial clothes washer owners and operators 
because end-users often overload the machines in order to limit their 
total laundry cost. DOE notes that the warm wash/cold rinse temperature 
selection has the highest usage factor in appendix J2. The test results 
indicate that units meeting the proposed new standard levels are 
capable of providing washing performance, rinsing performance, and 
solid particle removal results equivalent to current baseline products.
    ALS commented that no industry test method currently exists for 
measuring the cleaning performance of commercial clothes washers, nor 
has the industry agreed upon an acceptable range of performance 
characteristics. ALS acknowledged AHAM's HLW-1 Performance Evaluation 
Procedures for Household Clothes Washers, but stated that it may not be 
fully appropriate for measuring the performance of commercial clothes 
washers. (ALS, No. 16 at p. 4)
    DOE consulted with a number of manufacturers who indicated that 
AHAM HLW-1-2010 would be the most appropriate test method to determine 
relative cleaning performance across different commercial clothes 
washer models. DOE recognizes that AHAM HLW-1-2010 is typically used to 
measure the performance of residential clothes washers, but given the 
similarities in physical construction, DOE believes the test procedure 
is appropriate for commercial clothes washers. DOE also acknowledges 
that the commercial clothes washer industry has not agreed upon 
acceptable ranges of performance characteristics; therefore, DOE's test 
results should be used for relative comparison purposes only.

D. Markups Analysis

    The markups analysis develops appropriate markups in the 
distribution chain to convert the estimates of manufacturer selling 
price derived in the engineering analysis to customer prices. 
(``Customer'' refers to purchasers of the equipment being regulated.) 
DOE

[[Page 12317]]

calculates overall baseline and incremental markups based on the 
equipment markups at each step in the distribution chain. The 
incremental markup relates the change in the manufacturer sales price 
of higher efficiency models (the incremental cost increase) to the 
change in the customer price.
    For the three key CCW market segments--laundromats, private multi-
family housing, and large institutions--data indicate that an 
overwhelming majority of commercial clothes washers are sold through 
either distributors or route operators. For today's NOPR, DOE used two 
distribution channels used in the 2010 Final Rule--manufacturer to 
distributor to owner/lessee, and manufacturer to route operator to 
owner/lessee. For purposes of developing the markups for commercial 
clothes washers, DOE estimated that the markups and the resulting 
consumer equipment prices determined for the distribution channel 
involving distributors would be representative of the prices paid by 
customers acquiring their equipment from route operators.
    DOE based the distributor markups for commercial clothes washers on 
financial data for the sector Machinery, Equipment and Supplies 
Merchant Wholesalers from the 2007 U.S. Census Business Expenses Survey 
(BES), which is the most recent available survey.\14\ This sector 
includes the subsector Laundry Machinery, Equipment, and Supplies, 
Commercial, Merchant Wholesalers, which specifically sells commercial 
clothes washers. DOE calculated overall baseline and incremental 
markups based on the equipment markups at the intermediate step in the 
distribution chain. The incremental markup relates the change in the 
manufacturer sales price of higher efficiency models (the incremental 
cost increase) to the change in the customer price. Chapter 6 of the 
NOPR TSD provides further detail on the estimation of markups.
---------------------------------------------------------------------------

    \14\ U.S. Census Bureau, Economic Census, Business Expenses 
Survey, Wholesale Trade, Machinery, Equipment and Supplies Merchant 
Wholesalers, 2007. (Last accessed February, 2013.)
---------------------------------------------------------------------------

E. Energy and Water Use Analysis

    The energy and water use analysis provides estimates of the annual 
energy and water consumption of commercial clothes washer units at the 
considered efficiency levels. DOE uses these values in the LCC and PBP 
analyses and in the NIA. DOE developed energy and water consumption 
estimates for all equipment classes analyzed in the engineering 
analysis. The analysis seeks to capture the range of CCW use in the 
field.
    The framework document outlined DOE's intention to base the energy 
and water use analysis on the energy and water use per cycle and the 
number of cycles per year.
    The test procedure uses a single value for number of cycles, which 
is based on residential use. For the energy and water use analysis, DOE 
established an appropriate range of usage specific to CCW in the field. 
Because the predominant applications of CCWs are in multi-family 
buildings and laundromats, DOE focused on these two building 
applications to determine appropriate values for number of CCW cycles 
per year.
    NRDC and ASAP commented that DOE should include all major product 
categories in its analysis for this rulemaking. The commenters noted 
that ``other commercial applications'' in the statutory definition of 
commercial clothes washers include washers used for on-premise laundry. 
Further, the commenters stated that the on-premise laundry category 
(such as in the hospitality industry) was largely ignored in the 
technical analysis for the January 2010 final rule. The commenters 
added that while the total unit count may be smaller than coin 
laundries and multi-housing laundry, this subgroup may have distinctive 
usage factors that will influence total energy and water use for 
covered commercial clothes washers. (NRDC and ASAP, No. 11 at p. 1)
    DOE acknowledges that the ``other commercial applications'' 
category in the statutory definition would include applications other 
than coin-operated laundry and multi-family housing laundry. However, 
DOE is not aware of any data indicating the prevalence of covered 
products in other applications such on-premise laundries or the 
hospitality industry. Furthermore, DOE is not aware of any data 
indicating how the usage patterns of such products would compare to the 
usage patterns of coin-operated and multi-housing laundries. Therefore, 
DOE has no information on which to base a separate analysis for on-
premise laundry usage. Further, discussions with manufacturers have 
supported DOE's understanding that applications other than coin-
operated laundries and multi-family housing laundries constitute a 
small minority of installations of covered commercial clothes washers. 
For these reasons, DOE's analysis for this NOPR focuses on the coin-
operated laundry and multi-housing laundry applications, which 
represent the large majority of commercial clothes washer usage.
    ALS suggested that DOE seek stakeholder input on new sources for 
data that can assist in characterizing the cycles per year for CCWs. 
(ALS, No. 97 at p. 5) DOE included all available studies on CCW usage 
to establish representative usage. DOE welcomes information on data 
sources other than those mentioned in today's NOPR.
    For the NOPR analysis, DOE relied on several research studies to 
arrive at a range of annual use cycles. The average values are 1,074 
and 1,483 for multi-family and laundromat applications, respectively. 
The data sources that informed these usage numbers include Multi-
Housing Laundry Association (MLA) and the Coin Laundry Association 
(CLA), Southern California Edison, and San Diego Gas and Electric, as 
well as research sponsored by the MLA and the CLA. Chapter 7 of the 
NOPR TSD describes these sources in detail.\15\
---------------------------------------------------------------------------

    \15\ DOE did not rely on the Commercial Building Energy 
Consumption Survey (CBECS) conducted by DOE's Energy Information 
Administration (EIA) because energy and water consumption is not 
specified for buildings identified with laundry facilities in the 
CBECS dataset.
---------------------------------------------------------------------------

    To calculate the energy and water use per cycle, DOE used the new 
Appendix J2 test procedure, as described in the paragraphs that follow. 
(77 FR 13888, Mar. 7, 2012). Based on the known MEFJ2, IWF, 
and remaining moisture content (RMC) of the washer, the test procedure 
provides algorithms to derive energy and water use per cycle. The 
energy use analysis for today's NOPR consists of three related parts--
the machine energy use, the dryer energy use and the water heating 
energy use.
    DOE determined the per-cycle machine energy use from the tests 
results of the considered models, performed using the current DOE test 
procedure (77 FR 13888, Mar. 7, 2012).
    DOE determined the per-cycle clothes drying energy use by using 
remaining moisture content (RMC) values contained in the cost/
efficiency data set developed in the engineering analysis. The energy 
required to remove moisture from clothes, i.e., the dryer energy, is a 
significant component of total clothes washer energy consumption. The 
equation used to determine this energy component is as described in the 
current DOE test procedure.
    DOE determined the per-cycle water-heating energy use by first 
determining the total per-cycle energy use (the clothes container 
volume divided by the MEFJ2) and then subtracting from it 
the per-cycle clothes-drying and machine energy.
    Southern Company noted the importance of water heating energy and

[[Page 12318]]

dryer energy in the consideration of CCW energy use, and raised 
concerns about the validity of the parameters specified in the test 
procedure. Regarding water heating energy, Southern Company stated that 
the assumed efficiency in the 2010 final rule DOE of 100% for electric 
water heaters and 75% for gas water heaters was reasonable, but the 
values should be updated as the weighted average efficiency of 
installed water heaters changes over time. (Southern, No. 9 at p. 1) 
DOE research indicates that the efficiency of the stock of commercial 
water heaters is changing very slowly, so for today's NOPR it used the 
same efficiencies as in the 2010 final rule.
    Regarding dryer energy, Southern Company stated that energy use for 
drying clothes is highly dependent on consumer behavior, and noted that 
commercial dryers are usually equipped with a timer and do not have 
moisture sensors. Southern also questioned the value used for variable 
DEF, the nominal energy required for a clothes dryer to remove moisture 
from clothes. It stated that the currently used DEF of 0.5 kWh per 
pound appears to assume perfect operation and efficiency of drying. 
They recommend DOE consider adjustments to the assumed benefits of 
reduced clothing moisture for dryer operation. (Southern, No. 9 at p. 
2)
    DOE's current approach for quantifying reduction in dryer energy 
use from an increase in CCW efficiency is based on the existing test 
procedure for residential clothes washers. DOE acknowledges that 
operating conditions for commercial dryers may differ from the 
conditions of residential dryers, but DOE did not find any data to 
support changing the dryer energy use calculation. However, in response 
to comments received, DOE considered a sensitivity in the LCC and PBP 
analysis in which the reduction in dryer energy use is half of what is 
assumed in the test procedure.
    Southern Company also stated that it is aware of a small soon-to-
be-completed study conducted by the Electric Power Research Institute 
that found no measurable savings for high efficiency equipment for 
direct energy use by residential washers and dryers. (Southern, No. 9 
at p. 2) DOE attempted to obtain the study on observed energy savings 
from washers in the field, but EPRI indicated that the study was 
available only to EPRI members. Thus, DOE was not able to evaluate the 
findings. In addition, DOE has concerns regarding both the sample size 
and the applicability of a study of residential equipment to the 
commercial equipment that is the subject of this analysis.

F. Life-Cycle Cost and Payback Period Analysis

    The purpose of the LCC and PBP analysis is to analyze the effects 
of potential amended energy conservation standards on customers of 
commercial clothes washers by determining how a potential amended 
standard affects their operating expenses (usually decreased) and their 
total installed costs (usually increased).
    The LCC is the total customer expense over the life of the 
equipment, consisting of equipment and installation costs plus 
operating costs over the lifetime of the equipment (expenses for energy 
use, maintenance, and repair). DOE discounts future operating costs to 
the time of purchase using customer discount rates. The PBP is the 
estimated amount of time (in years) it takes customers to recover the 
increased total installed cost (including equipment and installation 
costs) of a more efficient type of equipment through lower operating 
costs. DOE calculates the PBP by dividing the change in total installed 
cost (normally higher) due to a standard by the change in 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 efficiency 
distribution. The base-case estimate reflects the market in the absence 
of amended energy conservation standards, including the market for 
equipment that exceeds the current energy conservation standards.
    DOE typically develops a consumer sample for determining PBPs and 
LCC impacts. Because EIA's Commercial Building Energy Consumption 
Survey (CBECS) does not provide the necessary data to develop one for 
CCWs, DOE established the variability and uncertainty in energy and 
water use by defining the uncertainty and variability in the use 
(cycles per day) of the equipment. The variability in energy and water 
pricing was characterized by regional differences in energy and water 
prices.
    DOE expresses the LCC and PBP results as the number of units 
experiencing economic impacts of different magnitudes. DOE models both 
the uncertainty and the variability in the inputs to the LCC and PBP 
analysis using Monte Carlo simulation and probability 
distributions.\16\ As a result, the LCC and PBP results are displayed 
as distributions of impacts compared to the base case conditions.
---------------------------------------------------------------------------

    \16\ The Monte Carlo process statistically captures input 
variability and distribution without testing all possible input 
combinations. Therefore, while some atypical situations may not be 
captured in the analysis, DOE believes the analysis captures an 
adequate range of situations in which small, large, and very large 
air-cooled commercial package air conditioning and heating equipment 
operate.
---------------------------------------------------------------------------

    DOE conducted LCC and PBP analysis separately for two applications 
in each of the equipment classes: Laundromats and multi-family 
buildings. These applications have different usage characteristics.
    Inputs to the LCC and PBP analysis are categorized as: (1) Inputs 
for establishing the total installed cost and (2) inputs for 
calculating the operating expense. The following sections contain brief 
discussions of comments on the inputs and key assumptions of DOE's LCC 
and PBP analysis and explain how DOE took these comments into 
consideration.
1. Equipment Costs
    To calculate the equipment prices faced by CCW purchasers, DOE 
multiplied the manufacturing costs developed from the engineering 
analysis by the supply chain markups it developed (along with sales 
taxes).
    For projecting future CCW prices, AHAM stated that DOE should not 
rely on experience curves for the same reasons that it expressed in 
comments for the microwave oven rulemaking. (AHAM, No. 19 at p. 5) To 
develop an equipment price trend for the NOPR, DOE examined the 
commercial laundry and dry-cleaning machinery PPI for the period 1993-
2012. This index, adjusted for inflation, shows a rising trend. 
However, the inflation adjusted trend for household laundry equipment 
(which more closely matches CCW units because the considered products 
in this rulemaking are mostly residential-style units and exclude the 
larger commercial laundry equipment) shows a long-term declining 
trend.\17\ Given the uncertainty, DOE decided to use a constant price 
for the default case for CCW units. For the NIA, DOE also analyzed the 
sensitivity of results to alternative price forecasts. (See section 
IV.X)
---------------------------------------------------------------------------

    \17\ 2012-04 Direct Final Rule Technical Support Document--
Appendix 8-E. Estimation of Equipment Price Trends for Residential 
Clothes Washers. http://www.regulations.gov/#!documentDetail;D=EERE-
2008-BT-STD-0019-0047.
---------------------------------------------------------------------------

    In the previous CCW rulemaking, DOE based the LCC analysis on the 
assumption that any increase in the cost of a more efficient unit that 
is leased gets passed on to the building owners through the contracting 
arrangements between route operators and building

[[Page 12319]]

owners. NRDC recommended that DOE seek information on contracting 
arrangements between route operators and building owners. (NRDC, No. 12 
at p. 81) DOE was unable to obtain information about contracting 
arrangements between route operators and building owners. The 
assumption that any increase in the cost of a more efficient unit that 
is leased gets passed on is consistent with what one would expect in a 
competitive business environment. To the extent that costs are not 
passed on, the LCC savings for building owners from higher-efficiency 
CCWs would be larger than indicated in today's NOPR.
2. Installation Costs
    Installation costs include labor, overhead, and any miscellaneous 
materials and parts. For today's NOPR, DOE used data from the RS Means 
Mechanical Cost Data, 2013 on labor requirements to estimate 
installation costs for CCWs. DOE estimates that installation costs do 
not increase with equipment efficiency.
3. Unit Energy Consumption
    The calculation of annual per-unit energy consumption at each 
considered efficiency level is described above in section IV.E.
4. Energy and Water Prices
    DOE used commercial sector energy and water prices for both multi-
family and laundromat applications. DOE assumes that common area 
laundry facilities are mainly found in large multi-family buildings 
that receive commercial energy and water rates.
a. Energy Prices
    DOE derived average electricity and natural gas prices for 27 
geographic areas. DOE estimated commercial electricity prices for each 
of the 27 states and group of states based on 2012 data from EIA Form 
861, Annual Electric Power Industry Report.\18\ DOE first estimated an 
average commercial price for each utility, and then calculated an 
average price for each area by weighting each utility with customers in 
an area by the number of commercial customers served in that area.
---------------------------------------------------------------------------

    \18\ http://www.eia.gov/electricity/data/eia861/.
---------------------------------------------------------------------------

    DOE estimated average commercial natural gas prices in each of the 
27 geographic areas based on 2012 data from the EIA publication Natural 
Gas Monthly.\19\ DOE calculated an average natural gas price for each 
area by first calculating the average prices for each state, and then 
calculating a regional price by weighting each state in a region by its 
population.
---------------------------------------------------------------------------

    \19\ http://www.eia.gov/naturalgas/monthly/.
---------------------------------------------------------------------------

    To estimate the trends in electricity and natural gas prices, DOE 
used the price forecasts in AEO 2013. To arrive at prices in future 
years, DOE multiplied the average prices described above by the 
forecast of annual average changes in national-average commercial 
electricity and natural gas prices. Because the AEO forecasts prices 
only to 2040, DOE used the average rate of change during 2025-2040 to 
estimate the price trends beyond 2040.
    The spreadsheet tools used to conduct the LCC and PBP analysis 
allow users to select either the AEO's high-growth case or low-growth 
case price forecasts to estimate the sensitivity of the LCC and PBP to 
different energy price forecasts.
b. Water and Wastewater Prices
    DOE obtained commercial water and wastewater price data from the 
Water and Wastewater Rate Survey conducted by Raftelis Financial 
Consultants (RFC) and the American Water Works Association (AWWA).\20\ 
NRDC and ASAP suggested that DOE use the most recent AWWA/Raftelis 
survey for calculating water and wastewater prices. (NRDC, No. 11 at p. 
4) DOE obtained the water and wastewater price data from the 2012 Water 
and Wastewater Rate Survey, the most recent survey conducted by RFC and 
AWWA. The survey covers approximately 290 water utilities and 214 
wastewater utilities from 44 states and the District of Columbia, with 
water and wastewater utilities analyzed separately. The samples that 
DOE obtained of the water and waste water utilities are not large 
enough to calculate regional prices for all 27 states and group of 
states. Hence, DOE calculated average values at the Census region level 
(Northeast, South, Midwest, and West) by weighting each state in a 
region by its population.
---------------------------------------------------------------------------

    \20\ Raftelis Financial Consultants, Inc. 2012 RFC/AWWA Water 
and Wastewater Rate Survey. 2013. Charlotte, NC, Kansas City, MO, 
and Pasadena, CA. www.raftelis.com/ratessurvey.html.
---------------------------------------------------------------------------

    To estimate the future trend for water and wastewater prices, DOE 
used data on the historic trend in the national water price index (U.S. 
city average) provided by the Bureau of Labor Statistics (BLS), 
adjusted for inflation. Generally, DOE extrapolated a future trend 
based on the linear growth from 1970 to 2012. However, using the linear 
fit would have resulted in a price decline in the near-term, which does 
not seem plausible because historically, water prices have not declined 
in the country. Therefore, rather than use the extrapolated trend to 
forecast the near-term trend after 2012, DOE pinned the annual price to 
the value in 2012 until 2020. Beyond 2020, DOE used the extrapolated 
trend to forecast prices out to 2047.
5. Repair and Maintenance Costs
    Repair costs are associated with repairing or replacing components 
that have failed in the appliance; maintenance costs are associated 
with maintaining the operation of the equipment. For the January 2010 
Final Rule, DOE included increased repair costs for higher efficiency 
CCWs based on an algorithm developed by DOE for central air 
conditioners and heat. This algorithm calculates annualized repair and 
maintenance costs by dividing half of the equipment retail price over 
the equipment lifetime. DOE requested industry input to estimate 
changes in repair and maintenance costs with an increase in efficiency 
of CCW units. AHAM stated that higher efficiency levels could impact 
the maintenance and repair costs for CCW units. (AHAM, No. 6 at p. 5) 
Since DOE did not receive any new inputs from manufacturers or national 
route operators specific to repair and maintenance costs, it continued 
with the approach used in the January 2010 Final Rule for today's NOPR. 
This approach does show rising maintenance and repair costs as 
efficiency increases.
6. Lifetime
    Equipment lifetime is the age at which the equipment is retired 
from service. For the 2010 Final Rule, DOE used a variety of sources to 
establish low, average, and high estimates for equipment lifetime in 
years. DOE characterized CCW lifetime with a Weibull probability 
distribution. ALS suggested that DOE should expand its sources 
(including route operators) for determining the average lifetime of CCW 
units for multi-family and laundry applications. (ALS, No. 12 at p. 2) 
DOE utilized the contact list submitted during the 2010 Final Rule to 
reach out to national route operators to seek information on various 
inputs to the analysis, including lifetime of the units, but was unable 
to obtain information from them. For this NOPR, DOE updated its data 
sources (as described in chapter 8 of the NOPR TSD), and found the same 
average CCW lifetimes (11.3 years for multi-family building 
applications and 7.1 years for laundromat applications) as used in the 
2010 Final Rule. DOE used the same lifetime for each equipment class.

[[Page 12320]]

7. Discount Rate
    The discount rate is the rate at which future expenditures are 
discounted to estimate their present value. The cost of capital is 
commonly used to estimate the present value of cash flows to be derived 
from a typical company project or investment. Most companies use both 
debt and equity capital to fund investments, so the cost of capital is 
the weighted-average cost to the firm of equity and debt financing. DOE 
uses the capital asset pricing model (CAPM) to calculate the equity 
capital component, and financial data sources to calculate the cost of 
debt financing.
    For the 2010 Final Rule, DOE estimated the weighted-average cost of 
capital of publicly traded firms in the key sectors that purchase CCWs 
(i.e., personal services, educational services, hotels, and R.E.I.T--
building and apartment complex owners). For the current rulemaking, DOE 
updated its data sources for calculating this cost. More details 
regarding DOE's estimates of customer discount rates are provided in 
chapter 8 of the NOPR TSD.
8. Base Case Efficiency Distribution
    For the LCC and PBP analysis, DOE analyzes higher efficiency levels 
relative to a baseline efficiency level. Some consumers, however, may 
already purchase equipment with efficiencies greater than the baseline 
equipment levels. To accurately estimate the percentage of consumers 
that would be affected by a particular standard level, DOE estimates 
the distribution of equipment efficiencies that consumers are expected 
to purchase under the base case (i.e., the case without amended energy 
efficiency standards). DOE refers to this distribution of equipment 
energy efficiencies as a base-case efficiency distribution.
    For today's NOPR, DOE utilized the shipment weighted efficiency 
distributions for 2010-2011 submitted by AHAM to establish the base-
case efficiency distributions. Because the data are not sufficient to 
capture any definite trend in efficiency, DOE used the 2011 
distribution to represent the market in the compliance year (2018). 
NRDC and ASAP stated that Energy Star unit shipment data should be used 
in considering efficiency trends. (NRDC, No. 11 at p. 4) DOE found that 
the Energy Star shipments data matched closely with the data submitted 
by AHAM. Table IV.3 presents the market shares of the efficiency levels 
in the base case for CCWs. See chapter 8 of the TSD for further details 
on the development of CCW base-case market shares.

                                        Table IV.3--Commercial Clothes Washers: Base Case Efficiency Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Top-loading                                                Front-loading
                                  ----------------------------------------------------------------------------------------------------------------------
          Standard level                                             Market share                                                          Market share
                                        MEFJ2            IWF          (percent)        Standard level          MEFJ2            IWF          (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.........................            1.15             8.9            99.5   Baseline............            1.65             5.2              28
1................................            1.35             8.8             0.3   1...................            1.80             4.5              34
2................................            1.55             6.9             0.3   2...................            2.00             4.1              38
                                   ..............  ..............  ...............  3...................            2.20             3.9               0
--------------------------------------------------------------------------------------------------------------------------------------------------------

9. Compliance Date
    DOE calculated the LCC and PBP for all customers as if each were to 
purchase new equipment in the year that compliance with amended 
standards is required. EPCA, as amended, directs DOE to publish a final 
rule amending the standard for the products covered by today's NOPR by 
January 1, 2015. Any amended standards would apply to commercial 
clothes washers manufactured three years after the date on which the 
final amended standard is published. (42 U.S.C. 6313(e)(2)(B)) 
Therefore, for purposes of its analysis, DOE used 2018 as the first 
year of compliance with amended standards.
10. Payback Period Inputs
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more efficient equipment, 
compared to baseline equipment, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation are the total installed cost of 
the product to the customer for each efficiency level and the average 
annual operating expenditures for each efficiency level. The PBP 
calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
11. Rebuttable-Presumption Payback Period
    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 (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. For 
each considered efficiency level, DOE determines 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 standards would be required.

G. Shipments Analysis

    DOE uses projections of product shipments to calculate the national 
impacts of standards on energy use, NPV, and future manufacturer cash 
flows. DOE develops shipment projections based on historical data and 
an analysis of key market drivers for each product. Historical 
shipments data are used to build up an equipment stock and also to 
calibrate the shipments model.
    In projecting CCW shipments, DOE accounted for three market 
segments: (1) New construction; (2) existing buildings (i.e., replacing 
failed equipment); and (3) retired units not replaced. DOE used the 
non-replacement market segment to calibrate the shipments model to 
historical shipments data.
    Based on historical CCW price and shipments data, DOE determined 
that the considered standards would be unlikely to affect CCW 
shipments.
    Table IV.4 summarizes the approach and data DOE used to derive the 
inputs to the shipments analysis for today's NOPR. DOE projected CCW 
shipments (for both equipment classes) for the new construction and 
replacement markets,

[[Page 12321]]

and also accounted for non-replacement of retired units. DOE then 
allocated shipments to each of the two equipment classes based on the 
current market share of each class. Based on data submitted by AHAM, 
DOE estimated that top-loading washers comprise 64 percent of the 
market while front-loading washers comprise 36 percent. DOE implemented 
change in the market share for the projection period based on the 
historical trend that shows a gradual market shift towards front-
loading units, with the market stabilizing at 52 percent and 48 percent 
for top-loading and front-loading by 2047.

Table IV.4--Approach and Data Used To Derive the Inputs to the Shipments
                                Analysis
------------------------------------------------------------------------
            Inputs                              Approach
------------------------------------------------------------------------
Number of Equipment Classes..  Two: top-loading washers and front-
                                loading washers. Shipments forecasts
                                established for all CCWs and then
                                disaggregated into the two equipment
                                classes based on the market share of top-
                                 and front-loading washers.
New Construction Shipments...  Determined by multiplying multi-housing
                                forecasts by forecasted saturation of
                                CCWs for new multi-housing. Multi-
                                housing forecasts with AEO 2013.
                                Verified frozen saturations with data
                                from the U.S. Census Bureau's American
                                Housing Survey (AHS) for 1997-2011.
Replacements.................  Determined by tracking total equipment
                                stock by vintage and establishing the
                                failure of the stock using retirement
                                functions from the LCC and PBP analysis.
                                Retirement functions revised to be based
                                on Weibull lifetime distributions.
Retired Units not Replaced     Used to calibrate shipments model to
 (i.e., non-replacements).      historical shipments data. Froze the
                                percentage of non-replacements at 31.6
                                percent for the period 2012-2047 to
                                account for the increased saturation
                                rate of in-unit washers in the multi-
                                family stock between 2000 and 2011
                                timeframe shown by the AHS.
Historical Shipments.........  Data sources include AHAM data submittal,
                                Appliance Magazine, and U.S. Bureau of
                                Economic Analysis' quantity index data
                                for commercial laundry. Relative market
                                shares of the two equipment
                                applications, common-area laundry
                                facilities in multi-family housing and
                                laundromats, estimated to be 85 and 15
                                percent, respectively.
------------------------------------------------------------------------

    DOE implemented a cross-price elasticity to capture the response to 
a change in price of one equipment class on the demand of the other 
equipment class. Due to insufficient data on CCW units, DOE was not 
able to estimate cross-price impacts on the market share of top-loading 
and front-loading commercial clothes washers and instead relied on its 
analysis performed for the 2012 residential clothes washers 
rulemaking.\21\ The regression results suggest that a 10% increase in 
the price of front-loading washers would lead to a 10.7% decrease in 
top-loading washers' market share, holding other variables constant and 
measured as changes from the reference case using average values for 
each variable. In this case, the front-loading cross-price impact 
(percent change in top-loading market share over percent change in 
front-loading price) is 1.07. The results indicate that a 20% price 
increase for top-loading washers would yield a 21.49 percent increase 
in front-loading market share. Thus, in this example, the top-loading 
washer cross-price impact is also 1.07. For further details on this 
estimation, please refer to chapter 9 of the NOPR TSD.
---------------------------------------------------------------------------

    \21\ See chapter 9 in Direct Final Rule Technical Support 
Document. http://www.regulations.gov/#!documentDetail;D=EERE-2008-
BT-STD-0019-0047.
---------------------------------------------------------------------------

1. Shipments by Market Segment
    For the new construction market, DOE assumed shipments are driven 
solely by multi-family construction starts. Implicit in this assumption 
is the fact that a certain percentage of multi-family residents will 
need to wash their laundry in either a common-area laundry facility 
(within the multi-family building) or a laundromat.
    For existing buildings replacing broken equipment, the shipments 
model uses a stock accounting framework. Given the equipment entering 
the stock in each year and a retirement function based on the lifetime 
distribution developed in the LCC analysis, the model predicts how many 
units reach the end of their lifetime in each year. DOE typically 
refers to new shipments intended to replace retired units as 
``replacement'' shipments. Such shipments are usually the largest part 
of total shipments.
    Historical data show a rise in shipments in the 2nd half of the 
1990s followed by a significant drop in 1999-2002, and a slower decline 
since then. DOE believes that a large part of the decline was due to 
growth of in-unit washers in multi-family housing (possibly due to 
conversions of rental property to condominiums), leading to non-
replacement of failed commercial clothes washers in common-area laundry 
facilities.\22\ To account for the decline and to reconcile the 
historical shipments with the accounting model, DOE assumed that every 
retired unit is not replaced. Starting in 1999 and extending to 2011, 
DOE estimated the share of retired units that were not replaced (as 
discussed in chapter 9 of the NOPR TSD).
---------------------------------------------------------------------------

    \22\ Data from the American Housing Survey as well as RECS 
indicate that there has been growth of in-unit washer saturation in 
the multi-family housing stock over the last 10-15 years. See 
chapter 9 of the NOPR TSD for further discussion.
---------------------------------------------------------------------------

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the national 
NPV of total customer costs and savings that would be expected to 
result from amended standards at specific efficiency levels.
    DOE used an MS Excel spreadsheet model to calculate the energy 
savings and the national customer costs and savings from each TSL.\23\ 
The NIA calculations are based on the annual energy consumption and 
total installed cost data from the energy use analysis and the LCC 
analysis. DOE projected the lifetime energy savings, energy cost 
savings, equipment costs, and NPV of customer benefits for each 
equipment class for equipment sold from 2018 through 2047.
---------------------------------------------------------------------------

    \23\ 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. In addition, 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.
---------------------------------------------------------------------------

    DOE evaluated the impacts of potential amended standards for front-
loading and top-loading CCW by comparing base-case projections with 
standards-case projections. The base-case projections characterize 
energy use and customer costs for each equipment

[[Page 12322]]

class in the absence of amended energy conservation standards.
    Table IV.5 briefly describes the key inputs for the NIA. The 
sections following provide further details, as does chapter 10 of the 
NOPR TSD.

           Table IV.5--Inputs for the National Impact Analysis
------------------------------------------------------------------------
                 Input                             Description
------------------------------------------------------------------------
Shipments..............................  Annual shipments from shipments
                                          model.
Compliance date........................  January 1, 2018.
Base case efficiency...................  Based on the current market
                                          distribution of efficiencies,
                                          with the option of a frozen,
                                          1%, and 2% growth in
                                          efficiency.
Standards case efficiency..............  Based on a ``Roll up'' scenario
                                          to establish a 2018 shipment
                                          weighted efficiency.
Annual energy and water consumption per  Calculated for each efficiency
 unit.                                    level and equipment class
                                          based on inputs from the
                                          energy and water use analysis.
Total installed cost per unit..........  Calculated equipment prices by
                                          efficiency level using
                                          manufacturer selling prices
                                          and weighted-average overall
                                          markup values. Installation
                                          costs vary in direct
                                          proportion to the weight of
                                          the equipment.
Electricity and water expense per unit.  Annual energy use for each
                                          equipment class is multiplied
                                          by the corresponding average
                                          energy and water and
                                          wastewater price.
Escalation of electricity and water      AEO 2013 forecasts (to 2040)
 prices.                                  and extrapolation beyond 2040
                                          for electricity and gas
                                          prices. BLS's historical
                                          Consumer Price Index for water
                                          for projecting the prices
                                          beyond 2020.
Electricity site-to-primary energy       A time series conversion
 conversion.                              factor; includes electric
                                          generation, transmission, and
                                          distribution losses.
Discount rates.........................  3% and 7% real.
Present year...........................  2013.
------------------------------------------------------------------------

1. Efficiency Trends
    A key component of DOE's estimates of NES and NPV is the equipment 
energy and water efficiencies forecasted over time for the base case 
and for each of the standards cases. For the base case, DOE considered 
the lack of change in the historical trends and assumed that efficiency 
would remain constant at the 2018 levels derived in the LCC and PBP 
analysis. DOE provides a 1% and 2% efficiency growth rates as options 
for sensitivities.
    To estimate the impact that standards would have in the year 
compliance becomes required, DOE used a ``roll-up'' scenario, which 
assumes that equipment efficiencies in the base case that do not meet 
the standard level under consideration would ``roll up'' to meet the 
new standard level and equipment shipments at efficiencies above the 
standard level under consideration are not affected. In each standards 
case, the efficiency distributions remain constant at the 2018 levels 
for the remainder of the shipments forecast period.
2. National Energy and Water Savings
    For each year in the forecast period, DOE calculates the national 
energy and water savings for each standard level by multiplying the 
shipments of front-loading and top-loading by the per-unit annual 
energy and water savings. Cumulative energy and water savings are the 
sum of the annual energy and water savings over the lifetime of all 
equipment shipped during 2018-2047.
    The annual energy consumption per unit depends directly on 
equipment efficiency. DOE used the shipment-weighted energy and water 
efficiencies associated with the base case and each standards case, in 
combination with the annual energy and water use data, to estimate the 
shipment-weighted average annual per-unit energy and water consumption 
under the base case and standards cases. The national energy 
consumption is the product of the annual energy consumption per unit 
and the number of units of each vintage, which depends on shipments. 
DOE calculates the total annual site energy savings for a given 
standards case by subtracting total energy use in the standards case 
from total energy use in the base case. Note that shipments are the 
same in the standards cases as in the base case.
    DOE converted the site electricity consumption and savings to 
primary energy (power sector energy consumption) using annual 
conversion factors derived from the AEO 2013 version of the NEMS. 
Cumulative primary energy and water savings are the sum of the national 
energy and water savings for each year in which equipment shipped 
during 2018-2047 continue to operate.
    DOE has historically presented national energy savings in terms of 
primary energy savings. In response to the recommendations of a 
committee on ``Point-of-Use and Full-Fuel-Cycle Measurement Approaches 
to Energy Efficiency Standards'' appointed by the National Academy of 
Science, DOE announced its intention to use full-fuel-cycle (FFC) 
measures of energy use and greenhouse gas and other emissions in the 
national impact analyses and emissions analyses included in future 
energy conservation standards rulemakings. 76 FR 51281 (August 18, 
2011). While DOE stated in that notice that it intended to use the 
Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation 
(GREET) model to conduct the analysis, it also said it would review 
alternative methods, including the use of EIA's National Energy 
Modeling System (NEMS). After evaluating both models and the approaches 
discussed in the August 18, 2011 notice, DOE published a statement of 
amended policy in the Federal Register in which DOE explained its 
determination that NEMS is a more appropriate tool for this specific 
use. 77 FR 49701 (August 17, 2012). Therefore, DOE is using NEMS to 
conduct FFC analyses. The approach used for today's NOPR, and the FFC 
multipliers that were applied, are described in appendix 10-A of the 
NOPR TSD.
3. Net Present Value of Customer Benefit
    The inputs for determining the NPV of the total costs and benefits 
experienced by customers of the considered equipment are: (1) Total 
annual installed cost; (2) total annual savings in operating costs; and 
(3) a discount factor. DOE calculates the lifetime net savings for 
equipment shipped each year as the difference between the base case and 
each standards case in total savings in lifetime operating costs and 
total

[[Page 12323]]

increases in installed costs. DOE calculates lifetime operating cost 
savings over the life of each front-loading and top-loading CCW unit 
shipped during the forecast period.
a. Total Annual Installed Cost
    The total installed cost includes both the equipment price and the 
installation cost. For each equipment class, DOE calculated equipment 
prices by efficiency level using manufacturer selling prices and 
weighted-average overall markup values (weights based on shares of the 
distribution channels used). Because DOE calculated the total installed 
cost as a function of equipment efficiency, it was able to determine 
annual total installed costs based on the annual shipment-weighted 
efficiency levels determined in the shipments model.
    As noted in section IV.F.1, DOE assumed no change in front-loading 
and top-loading CCW equipment prices over the analysis period. However, 
DOE conducted sensitivity analyses using alternative price trends: one 
in which prices decline after 2013, and one in which prices rise. These 
price trends, and the NPV results from the associated sensitivity 
cases, are described in appendix 10-B of the NOPR TSD.
b. Total Annual Operating Cost Savings
    The per-unit energy and water savings were derived as described in 
section IV.H.2. To calculate future electricity and natural gas prices, 
DOE applied the projected trend in national-average commercial 
electricity and natural gas price from the AEO 2013 Reference case, 
which extends to 2040, to the prices derived in the LCC and PBP 
analysis. DOE used the trend from 2025 to 2040 to extrapolate beyond 
2040. To calculate future water prices, DOE applied the historical 
price trend based on the consumer price index of water, published by 
the Bureau of Labor Statistics.
    In addition, DOE analyzed scenarios that used the energy price 
projections in the AEO 2013 Low Economic Growth and High Economic 
Growth cases. These cases have higher and lower energy price trends 
compared to the Reference case. These price trends, and the NPV results 
from the associated cases, are described in appendix 10-C of the NOPR 
TSD.
    DOE estimated that annual maintenance costs (including minor 
repairs) do not vary with efficiency within each equipment class, so 
they do not figure into the annual operating cost savings for a given 
standards case. In addition, as noted previously, DOE developed 
annualized repair costs using the approach described in Section IV.F.5.
    In calculating the NPV, DOE multiplies the net dollar savings in 
future years by a discount factor to determine their present value. DOE 
estimates the NPV using both a 3-percent and a 7-percent real discount 
rate, in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\24\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \24\ OMB Circular A-4, section E (Sept. 17, 2003). Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------

I. Customer Subgroup Analysis

    In analyzing the potential impacts of new or amended standards, DOE 
evaluates impacts on identifiable groups (i.e., subgroups) of customers 
that may be disproportionately affected by a national standard. For the 
NOPR, DOE evaluated impacts on a small business subgroup using the LCC 
spreadsheet model. The customer subgroup analysis is discussed in 
detail in chapter 11 of the NOPR TSD.

J. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the impacts of amended energy 
conservation standards on manufacturers of commercial clothes washers. 
The MIA has both quantitative and qualitative aspects and includes 
analyses of forecasted industry cash flows, the INPV, investments in 
research and development (R&D) and manufacturing capital, and domestic 
manufacturing employment. Additionally, the MIA seeks to determine how 
amended energy conservation standards might affect manufacturing 
capacity, and competition, as well as how standards contribute to 
overall regulatory burden. Finally, the MIA serves to identify any 
disproportionate impacts on manufacturer subgroups.
    The quantitative part of the MIA relies primarily on the Government 
Regulatory Impact Model (GRIM), an industry cash flow model with inputs 
specific to this rulemaking. The key GRIM inputs include data on the 
industry cost structure, unit production costs, product shipments, 
manufacturer markups, and investments in R&D and manufacturing capital 
required to produce compliant products. The key GRIM outputs are the 
INPV, which is the sum of industry annual cash flows over the analysis 
period, discounted using the industry weighted average cost of capital, 
and the impact to domestic manufacturing employment. The model 
estimates the impacts of amended energy conservation standards on a 
given industry by comparing changes in INPV and domestic manufacturing 
employment between a base case and the various TSLs in the standards 
case. To capture the uncertainty relating to manufacturer pricing 
strategy following amended standards, the GRIM estimates a range of 
possible impacts under different markup scenarios.
    The qualitative part of the MIA addresses manufacturer 
characteristics and market trends. Specifically, the MIA considers such 
factors as manufacturing capacity, competition within the industry, the 
cumulative impact of other regulations, and impacts on manufacturer 
subgroups. The complete MIA is outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the commercial clothes washer 
manufacturing industry. DOE used public sources of information to 
derive preliminary financial inputs for the GRIM (e.g., revenues; 
materials, labor, overhead, and depreciation expenses; selling, 
general, and administrative expenses (SG&A); and R&D expenses). Sources 
of data used in this initial characterization of the commercial clothes 
washer manufacturing industry included company filings of form 10-K 
from the Securities and Exchange Commission (SEC), corporate annual 
reports, the U.S. Census Bureau's Economic Census, and reports from Dun 
& Bradstreet.
    In Phase 2 of the MIA, DOE prepared an industry cash flow analysis 
to quantify the impacts of new and amended energy conservation 
standards. The GRIM uses several factors to determine a series of 
annual cash flows starting with the announcement of the standard and 
extending over a 30-year period following the effective date of the 
standard. These factors include annual expected revenues, costs of 
sales, SG&A and R&D expenses, taxes, and capital expenditures. In 
general, energy conservation standards can affect

[[Page 12324]]

manufacturer cash flow in three distinct ways: (1) Create a need for 
increased investment; (2) raise production costs per unit; and (3) 
alter revenue due to higher per-unit prices and changes in sales 
volumes.
    In Phase 3 of the MIA, DOE interviewed representative 
manufacturers. During these interviews, DOE discussed engineering, 
manufacturing, procurement, and financial topics to validate 
assumptions used in the GRIM and to identify key issues or concerns. 
See section IV.J.4 for a description of the key issues raised by 
manufacturers during the interviews. As part of Phase 3, DOE also 
evaluated subgroups of manufacturers that may be disproportionately 
impacted by amended standards or that may not be accurately represented 
by the average cost assumptions used to develop the industry cash flow 
analysis. In addition to small business manufacturers, such 
manufacturer subgroups may include low volume manufacturers (LVMs), 
niche players, and/or manufacturers exhibiting a cost structure that 
largely differs from the industry average. DOE identified two subgroups 
for which average cost assumptions may not hold: small businesses and 
LVMs.
    Based on the size standards published by the SBA and available at 
http://www.sba.gov/content/table-small-business-size-standards, to be 
categorized as a small business manufacturer of commercial clothes 
washers under North American Industry Classification System (NAICS) 
333318, ``Other commercial and service industry machinery 
manufacturing,'' a commercial laundry equipment manufacturer and its 
affiliates may employ a maximum of 1000 employees. The 1000-employee 
threshold includes all employees in a business's parent company and any 
other subsidiaries. Using this classification in conjunction with a 
search of industry databases and the SBA member directory, DOE did not 
identify any manufacturers of commercial clothes washers that qualify 
as small businesses.
    Unlike small business manufacturers, there is no employment limit 
associated with LVMs. Instead, LVMs are characterized by their low 
overall production volumes relative to their competitors, often 
associated with specialization within a singular industry. In the 
industry characterization from Phase 1, DOE identified two 
manufacturers that represent over 90 percent of commercial clothes 
washer shipments.\25\ DOE categorized one of these manufacturers as a 
LVM because of the concentration of its business in commercial clothes 
washers relative to its competitors. In 2012, the LVM derived 98 
percent of its revenues from the sale of laundry equipment and service 
parts, while, for its main competitor, this percentage was 30 percent. 
Within the washer segment, DOE estimates that the LVM derived 88 
percent of its washer equipment revenues from the sale of commercial 
clothes washers covered by this rulemaking. Because the commercial 
clothes washer industry itself is characterized by low total shipments, 
with less than 200,000 units sold annually in the U.S., the 
concentration of this manufacturer's business in this industry 
qualifies them as an LVM. Where the LVM operates at a much smaller 
scale and does not manufacture products across a broad range of 
industries, this rulemaking could have disproportionate impacts on the 
LVM compared to its large, diversified competitors. Accordingly, DOE 
performed an in-depth analysis of the issues relating to the commercial 
clothes washer LVM. The manufacturer subgroup analysis is discussed in 
greater detail in Chapter 12 of the NOPR TSD and in section V.B.2.d of 
this notice.
2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in industry cash flows 
resulting from amended energy conservation standards. The GRIM uses 
manufacturer costs, markups, shipments, and industry financial 
information to arrive at a series of base-case annual cash flows absent 
new or amended standards, beginning with the present year, 2013, and 
continuing through 2047. The GRIM then models changes in costs, 
investments, shipments, and manufacturer margins that may result from 
new or amended energy conservation standards and compares these results 
against those in the base-case forecast of annual cash flows. The 
primary quantitative output of the GRIM is the INPV, which DOE 
calculates by summing the stream of annual discounted cash flows over 
the full analysis period. For manufacturers of commercial clothes 
washers, DOE used a real discount rate of 8.6 percent, the weighted 
average cost of capital derived from industry financials and modified 
based on feedback received during confidential interviews with 
manufacturers.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between the base case and the various 
TSLs. The difference in INPV between the base case and a standards case 
represents the financial impact of the amended standard on 
manufacturers at that particular TSL. As discussed previously, DOE 
collected the necessary information to develop key GRIM inputs from a 
number of sources, including publicly available data and interviews 
with manufacturers (described in the next section). The GRIM results 
are shown in section V.B.2.a. Additional details about the GRIM can be 
found in chapter 12 of the NOPR TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing a higher efficiency product is typically more 
expensive than manufacturing a baseline product due to the use of more 
complex and typically more costly components. The changes in the MPCs 
of the analyzed products can affect the revenues, gross margins, and 
cash flow of the industry, making product cost data key GRIM inputs for 
DOE's analysis. For each efficiency level of each equipment class, DOE 
used the MPCs developed in the engineering analysis, as described in 
section IV.A.2 and further detailed in chapter 5 of the NOPR TSD. 
Additionally, DOE used information from its teardown analysis, 
described in section IV.C to disaggregate the MPCs into material and 
labor costs. These cost breakdowns and equipment markups were validated 
with manufacturers during manufacturer interviews.
Base-Case Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of shipments by efficiency 
level. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
uses the NIA's annual shipment forecasts derived from the shipments 
analysis from 2013, the base year, to 2047, the end of the analysis 
period. See chapter 9 of the NOPR TSD for additional details.
Standards-Case Shipments Forecast
    For each standards case, the GRIM assumes that shipments of 
products below the projected minimum standard levels would roll up to 
the standard efficiency levels in response to an increase in energy 
conservation standards. The GRIM also assumes that demand for high-
efficiency equipment is a function of price, and is independent of the 
standard level. Additionally, the standards case shipments forecast 
includes a partial shift of shipments from one equipment class to 
another depending on the standard level, reflecting positive cross-

[[Page 12325]]

price elasticity of demand, as one equipment class becomes relatively 
more expensive than the other to produce and for consumers to purchase. 
A decrease in shipments offsets the relative increase in costs to 
produce at a given TSL for a given equipment class. See Chapter 9 of 
the NOPR TSD for additional details.
Product and Capital Conversion Costs
    Amended energy conservation standards may cause manufacturers to 
incur one-time conversion costs to bring their production facilities 
and product designs into compliance with the new standards. For the 
purpose of the MIA, DOE classified these one-time conversion costs into 
two major groups: (1) Product conversion and (2) capital conversion 
costs. Product conversion costs are investments in research, 
development, testing, and marketing, focused on making product designs 
comply with the new energy conservation standard. Capital conversion 
expenditures are investments in property, plant, and equipment to adapt 
or change existing production facilities so that new product designs 
can be fabricated and assembled.
Stranded Assets
    If new or amended energy conservation standards require investment 
in new manufacturing capital, there also exists the possibility that 
they will render existing manufacturing capital obsolete. If this 
obsolete manufacturing capital is not fully depreciated at the time new 
or amended standards go into effect, this would result in the stranding 
of these assets, and would necessitate the expensing of the residual 
un-depreciated value.
    DOE used multiple sources of data to evaluate the level of product 
and capital conversion costs and stranded assets manufacturers would 
likely face to comply with amended energy conservation standards. DOE 
used manufacturer interviews to gather data on the level of investment 
anticipated at each proposed efficiency level and validated these 
assumptions using estimates of capital requirements derived from the 
product teardown analysis and engineering model described in section 
IV.C. These estimates were then aggregated and scaled to derive total 
industry estimates of product and capital conversion costs and to 
protect confidential information.
    In general, DOE assumes that all conversion-related investments 
occur between the year the final rule is published and the year by 
which manufacturers must comply with the new or amended standards. The 
investment figures used in the GRIM can be found in section V.B.2 of 
this notice. For additional information on the estimated product 
conversion and capital conversion costs, see chapter 12 of the NOPR 
TSD.
b. Government Regulatory Impact Model Scenarios
Markup Scenarios
    As discussed in section IV.D, MSPs include direct manufacturing 
production costs (i.e., labor, material, overhead, and depreciation 
estimated in DOE's MPCs) and all non-production costs (i.e., SG&A, R&D, 
and interest), along with profit. To calculate the MSPs in the GRIM, 
DOE applied manufacturer markups to the MPCs estimated in the 
engineering analysis. Modifying these markups in the standards case 
yields different sets of impacts on manufacturers. 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 preservation of gross margin \26\ 
(percentage) scenario; and (2) a preservation of operating profits (in 
absolute dollars) scenario. These scenarios lead to different markups 
values that, when applied to the MPCs, result in varying revenue and 
cash flow impacts.
---------------------------------------------------------------------------

    \26\ ``Gross margin'' is defined as revenues minus cost of goods 
sold. On a unit basis, gross margin is selling price minus 
manufacturer production cost. In the GRIMs, markups determine the 
gross margin because various markups are applied to the manufacturer 
production costs to reach manufacturer selling price.
---------------------------------------------------------------------------

    Under the preservation of gross margin percentage scenario, DOE 
applied a single, uniform ``gross margin percentage'' markup across all 
efficiency levels. As production costs increase with efficiency, this 
scenario implies that the absolute dollar markup will increase as well. 
Based on publicly available financial information for manufacturers of 
commercial clothes washers and comments from manufacturer interviews, 
DOE assumed the industry average markup on production costs to be 
1.285. Because this markup scenario assumes that manufacturers would be 
able to maintain their gross margin percentage as production costs 
increase in response to an amended energy conservation standard, it 
represents a lower bound of industry impacts (higher industry 
profitability) under an amended energy conservation standard.
    In the preservation of operating profits (in absolute dollars) 
scenario, manufacturer markups are calibrated so that operating profits 
(in absolute dollars) in the year after the compliance date of the 
amended energy conservation standard is the same as in the base case. 
Under this scenario, as the cost of production goes up, manufacturers 
are generally required to reduce the markups on their minimally 
compliant products to maintain a cost competitive offering. The 
implicit assumption behind this scenario is that the industry can only 
maintain operating profits after compliance with the amended standard 
is required. Therefore, gross margin (as a percentage) shrinks in the 
standards cases. This markup scenario represents an upper bound of 
industry impacts (lower profitability) under an amended energy 
conservation standard.
3. Discussion of Comments
    At the Framework public meeting, AHAM commented that DOE should 
interview the customers of commercial clothes washer manufacturers, as 
customers will have valuable information on issues including the impact 
of higher efficiency standards on end user utility and whether 
standards will increase maintenance and repair costs (AHAM, No. 13 at 
pp. 5). Because commercial clothes washer customers have direct access 
to the end user, these customers may have information concerning 
consumer usage patterns and utility, as well as maintenance and repair 
costs. DOE attempted to contact, but did not receive any affirmative 
responses, from national route operators and trade groups representing 
multi-housing laundry providers and coin laundry owners, all of whom 
purchase CCWs. DOE will continue to solicit feedback from route 
operators prior to publishing the final rule.
4. Manufacturer Interviews
    To inform the MIA, DOE interviewed manufacturers with an estimated 
combined market share of 95 percent. The information gathered during 
these interviews enabled DOE to tailor the GRIM to reflect the unique 
financial characteristics of the commercial clothes washer industry. 
These interviews provided information that DOE used to evaluate the 
impacts of amended energy conservation standards on manufacturer cash 
flows, manufacturing capacities, and employment levels.
    During the interviews, DOE asked manufacturers to describe their 
major

[[Page 12326]]

concerns about this rulemaking. The following sections describe the 
most significant issues identified by manufacturers. DOE also includes 
additional concerns in chapter 12 of the NOPR TSD.
a. Impacts to Cleaning Performance
    All of the manufacturers interviewed expressed concerns that future 
energy conservation standards would have an adverse impact on cleaning 
performance and reliability. One manufacturer asserted that products 
currently considered to be at the max-tech efficiency level are not 
truly commercial products. Another manufacturer noted that reaching the 
max-tech level would require higher spin speeds, which could decrease 
the reliability of the product. Two manufacturers expressed concerns 
that the max-tech level for top loaders pushes the boundary of 
acceptable water level in terms of both cleaning performance and market 
acceptance. The lower water level of max-tech products would 
necessitate lighter loads in order to maintain cleaning performance. A 
lighter load size requirement would contradict consumer tendencies to 
overload machines. As discussed in section IV.C.6, and further in 
chapter 5 of the TSD, DOE has determined that the proposed standards 
would not negatively impact the cleaning performance of commercial 
clothes washers.
b. Consumer Behavior
    All manufacturers noted that energy efficiency efforts are 
inherently less effective in the commercial clothes washer market than 
in markets for residential appliances, including residential clothes 
washers. They attributed this to the usage patterns of commercial 
clothes washer end users, reflecting the fact that end users: (1) Do 
not own the machines, and (2) pay by the load to use machines. Such 
usage patterns include tendencies to put too much detergent into 
machines (leading to ``suds lock'', a condition where the clothes 
washer is unable to achieve full spin speed due to the friction caused 
by detergent suds in gap between the inner wash basket and outer wash 
tub), overfilling machines with oversized loads, choosing to use hot 
water when it is unnecessary to do so, and washing clothes twice to 
counteract the effect of having used too much detergent.
    Platform changes and reduced water levels of higher efficiency 
products exacerbate these issues. One manufacturer noted that there is 
a steep learning curve for end users relating to adaptation to low-
water machines. For instance, end users should be using high efficiency 
detergents in recommended quantities, yet are unlikely to do so. 
Concerns that machines are not functioning properly leads to increased 
service calls. Another manufacturer noted that end user dissatisfaction 
with high efficiency products may drive the need for selectable cycle 
modifiers, which would allow end users to choose less efficient 
settings to reach an acceptable level of cleaning performance to 
resolve the performance issues caused by incorrect use of the machines. 
Selectable modifiers would undermine the energy savings otherwise 
achievable with higher efficiency machines.
    As discussed in section IV.C.6, and further in chapter 5 of the 
TSD, DOE has determined that the proposed standards would not 
negatively impact the cleaning performance of commercial clothes 
washers. Furthermore, DOE has determined that the proposed standards 
would not require significant design (platform) changes to either top-
loading or front-loading CCWs, and thus would not require changes in 
user operation compared to current baseline products. Therefore, the 
consumer behaviors noted by commenters would not be exacerbated by the 
proposed amended standards. In addition, DOE notes that since viable 
products are readily available at the proposed standard levels, the use 
of optional selectable cycle modifiers will not be necessary to achieve 
acceptable levels of cleaning performance.
c. Disproportionate Impacts
    Several manufacturers expressed concerns relating to competitive 
impacts caused by future energy conservation standards. One 
manufacturer specifically noted that a genuine and comprehensive 
approach to redesigning products to meet DOE standards will result in a 
competitive disadvantage relative to other manufacturers. As this 
company's revenue is so closely tied to commercial clothes washers, 
they predict that any increase in standards will impact their business 
disproportionately. For a detailed discussion of the manufacturer 
subgroup analysis, see chapter 12 of the NOPR TSD.
d. Market Model Challenges
    The majority of the manufacturers interviewed emphasized that the 
profit structure of the commercial clothes washer market fundamentally 
opposes increased levels of product efficiency, and that an amended 
conservation standard would negatively impact the profits of 
manufacturers' customers, in addition to their own.
    Commercial clothes washer manufacturers sell their products to 
either route-operators, distributors, or both. Route-operators lease 
the machines to multi-family housing unit owners under 5- to 15-year 
contract agreements, and typically provide a 1-2 day service guarantee 
on their machines. Distributors sell commercial clothes washers to 
owners of laundromats.
    The profits of both route-operators and laundromat owners are 
driven by throughput, which is maximized by small capacity machines 
with short cycle times (less than 35 minutes). In addition to 
maximizing throughput, one manufacturer noted that consistency of cycle 
times (at approximately 32 minutes) is necessary for ensuring the 
correct number of washers and dryers in a given premise or laundromat.
    Thus, commercial clothes washer manufacturers are constrained by 
capacity and cycle time limits in any efforts to further increase the 
efficiency of their machines. Also, due to the length of route-
operators lease contracts with their customers, if energy efficiency 
improvements necessitate an increase in manufacturing selling price, 
any required replacement of units before lease contracts are expired 
will likely squeeze route-operators' profits, as they will not be able 
to pass-through increased unit costs to lessees. One manufacturer noted 
that in instances where route-operators and laundromat owners are able 
to pass-through the costs of energy efficiency improvements, this will 
negatively impact end users who are often the least able to bear 
increased costs, as users of commercial laundry machines tend to be 
from lower income consumer subgroups.
    Finally, several manufacturers asserted that higher efficiency 
machines require more complex designs and hence more time and money to 
repair. Additionally, efficiency changes, such as reduced water levels, 
are likely to be ill-received by end users and will lead to increases 
in service calls and failures. Both outcomes will again potentially cut 
into route-operator and laundromat owner profits.
    As discussed in section IV.C and chapter 5 of the TSD, DOE has 
determined that the proposed standard levels would not require any 
major changes in the design complexity of CCWs. Wash basket size and 
cycle time under the proposed standards will remain within the 
acceptable ranges described by manufacturers. Section IV.F.5. describes 
DOE's approach for considering changes in repair and

[[Page 12327]]

maintenance costs as a result of amended standards.

K. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of carbon dioxide (CO2), nitrogen oxides 
(NOX), sulfur dioxide (SO2), and mercury (Hg) 
from potential energy conservation standards for commercial clothes 
washers. In addition, DOE estimates emissions impacts in production 
activities (extracting, processing, and transporting fuels) that 
provide the energy inputs to power plants. These are referred to as 
``upstream'' emissions. Together, these emissions account for the full-
fuel-cycle (FFC). In accordance with DOE's FFC Statement of Policy (76 
FR 51282 (Aug. 18, 2011)),\27\ the FFC analysis includes impacts on 
emissions of methane (CH4) and nitrous oxide 
(N2O), both of which are recognized as greenhouse gases.
---------------------------------------------------------------------------

    \27\ DOE's FFC was amended in 2012 for reasons unrelated to the 
inclusion of CH4 and N2O. 77 FR 49701 (Aug. 
17, 2012).
---------------------------------------------------------------------------

    DOE primarily conducted the emissions analysis using emissions 
factors for CO2 and most of the other gases derived from 
data in the Energy Information Agency's (EIA's) Annual Energy Outlook 
2013 (AEO 2013). Combustion emissions of CH4 and 
N2O were estimated using emissions intensity factors 
published by the Environmental Protection Agency (EPA), GHG Emissions 
Factors Hub.\28\ Site emissions of CO2 and NOX 
(from gas water heaters) were estimated using emissions intensity 
factors from an EPA publication.\29\ DOE developed separate emissions 
factors for power sector emissions and upstream emissions. The method 
that DOE used to derive emissions factors is described in chapter 13 of 
the NOPR TSD.
---------------------------------------------------------------------------

    \28\ http://www.epa.gov/climateleadership/guidance/ghg-emissions.html.
    \29\ U.S. Environmental Protection Agency, Compilation of Air 
Pollutant Emission Factors, AP-42, Fifth Edition, Volume I: 
Stationary Point and Area Sources. 1998. http://www.epa.gov/ttn/chief/ap42/index.html.
---------------------------------------------------------------------------

    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying the physical units by the gas' global warming potential 
(GWP) over a 100-year time horizon. Based on the Fourth Assessment 
Report of the Intergovernmental Panel on Climate Change,\30\ DOE used 
GWP values of 25 for CH4 and 298 for N2O.
---------------------------------------------------------------------------

    \30\ Forster, P., V. Ramaswamy, P. Artaxo, T. Berntsen, R. 
Betts, D.W. Fahey, J. Haywood, J. Lean, D.C. Lowe, G. Myhre, J. 
Nganga, R. Prinn,G. Raga, M. Schulz and R. Van Dorland. 2007: 
Changes in Atmospheric Constituents and in Radiative Forcing. In 
Climate Change 2007: The Physical Science Basis. Contribution of 
Working Group I to the Fourth Assessment Report of the 
Intergovernmental Panel on Climate Change. S. Solomon, D. Qin, M. 
Manning, Z. Chen, M. Marquis, K.B. Averyt, M.Tignor and H.L. Miller, 
Editors. 2007. Cambridge University Press, Cambridge, United Kingdom 
and New York, NY, USA. p. 212.
---------------------------------------------------------------------------

    EIA prepares the Annual Energy Outlook using the National Energy 
Modeling System (NEMS). Each annual version of NEMS incorporates the 
projected impacts of existing air quality regulations on emissions. AEO 
2013 generally represents current legislation and environmental 
regulations, including recent government actions, for which 
implementing regulations were available as of December 31, 2012.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous states and the 
District of Columbia (DC). SO2 emissions from 28 eastern 
states and D.C. were also limited under the Clean Air Interstate Rule 
(CAIR; 70 FR 25162 (May 12, 2005)), which created an allowance-based 
trading program that operates along with the Title IV program. CAIR was 
remanded to the U.S. Environmental Protection Agency (EPA) by the U.S. 
Court of Appeals for the District of Columbia Circuit but it remained 
in effect. See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011 
EPA issued a replacement for CAIR, the Cross-State Air Pollution Rule 
(CSAPR). 76 FR 48208 (August 8, 2011). On August 21, 2012, the D.C. 
Circuit issued a decision to vacate CSAPR. See EME Homer City 
Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at *24 (D.C. Cir. 
Aug. 21, 2012). The court ordered EPA to continue administering CAIR. 
The AEO 2013 emissions factors used for today's NOPR assumes that CAIR 
remains a binding regulation through 2040.
    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 adoption of an efficiency standard could be used to permit 
offsetting increases in SO2 emissions by any regulated EGU. 
In past rulemakings, DOE recognized that there was uncertainty about 
the effects of efficiency standards on SO2 emissions covered 
by the existing cap-and-trade system, but it concluded that negligible 
reductions in power sector SO2 emissions would occur as a 
result of standards.
    Beginning in 2015, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants, 
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16, 
2012). In the final MATS rule, EPA established a standard for hydrogen 
chloride as a surrogate for acid gas hazardous air pollutants (HAP), 
and also established a standard for SO2 (a non-HAP acid gas) 
as an alternative equivalent surrogate standard for acid gas HAP. The 
same controls are used to reduce HAP and non-HAP acid gas; thus, 
SO2 emissions will be reduced as a result of the control 
technologies installed on coal-fired power plants to comply with the 
MATS requirements for acid gas. AEO 2013 assumes that, in order to 
continue operating, coal plants must have either flue gas 
desulfurization or dry sorbent injection systems installed by 2015. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Under the MATS, NEMS shows a reduction 
in SO2 emissions when electricity demand decreases (e.g., as 
a result of energy efficiency standards). Emissions will be far below 
the cap established by CAIR, so it is unlikely that excess 
SO2 emissions allowances resulting from the lower 
electricity demand would be needed or used to permit offsetting 
increases in SO2 emissions by any regulated EGU. Therefore, 
DOE believes that efficiency standards will reduce SO2 
emissions in 2015 and beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
states and the District of Columbia. Energy conservation standards are 
expected to have little effect on NOX emissions in those 
states covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions. However, 
standards would be expected to reduce NOX emissions in the 
states not affected by the caps, so DOE estimated NOX 
emissions reductions from the standards considered in today's NOPR for 
these states.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions reduction using emissions factors based on AEO 2013, which 
incorporates the MATS.

[[Page 12328]]

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. 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 equipment shipped in 
the forecast period for each TSL. This section summarizes the basis for 
the monetary values used for each of these emissions and presents the 
values considered in this rulemaking.
    For today's NOPR, DOE is relying on a set of values for the social 
cost of carbon (SCC) that was developed by an interagency process. A 
summary of the basis for these values is provided below, and a more 
detailed description of the methodologies used is provided as an 
appendix to chapter 14 of the NOPR TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide. 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.
    Under section 1(b)(6) of Executive Order 12866, ``Regulatory 
Planning and Review,'' 58 FR 51735 (Oct. 4, 1993), agencies must, to 
the extent permitted by law, assess both the costs and the benefits of 
the intended regulation and, recognizing that some costs and benefits 
are difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs. The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the monetized social benefits of 
reducing CO2 emissions into cost-benefit analyses of 
regulatory actions 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 the SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of serious 
challenges. A recent report from the National Research Council 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.
    Despite the serious limits of both quantification and monetization, 
SCC estimates can be useful in estimating the social benefits of 
reducing carbon dioxide 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 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 the future benefits 
by an appropriate discount factor and summing across all affected 
years. This approach assumes that the marginal damages from increased 
emissions are constant for small departures from the baseline emissions 
path, an approximation that is reasonable for policies that have 
effects on emissions that are small relative to cumulative global 
carbon dioxide emissions. For policies that have a large (non-marginal) 
impact on global cumulative emissions, there is a separate question of 
whether the SCC is an appropriate tool for calculating the benefits of 
reduced emissions. This concern is not applicable to this rulemaking, 
however.
    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. 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
    Economic analyses for Federal regulations have used a wide range of 
values to estimate the benefits associated with reducing carbon dioxide 
emissions. In the final model year 2011 CAFE rule, the U.S. Department 
of Transportation (DOT) used both a ``domestic'' SCC value of $2 per 
metric ton of CO2 and a ``global'' SCC value of $33 per 
metric ton of CO2 for 2007 emission reductions (in 2007$), 
increasing both values at 2.4 percent per year. DOT also included a 
sensitivity analysis at $80 per metric ton of CO2.\31\ A 
2008 regulation proposed by DOT assumed a domestic SCC value of $7 per 
metric ton of CO2 (in 2006$) for 2011 emission reductions 
(with a range of $0-$14 for sensitivity analysis), also increasing at 
2.4 percent per year.\32\ 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 $20 per metric ton 
CO2 for 2007 emission reductions (in 2007$). 73 FR 58772, 
58814 (Oct. 7, 2008). In addition, EPA's 2008 Advance Notice of 
Proposed Rulemaking on Regulating Greenhouse Gas Emissions Under the 
Clean Air Act identified what it described as ``very preliminary'' SCC 
estimates subject to revision. 73 FR 44354 (July 30, 2008). EPA's 
global mean values were $68 and $40 per metric ton CO2 for 
discount rates of approximately 2 percent and 3

[[Page 12329]]

percent, respectively (in 2006$ for 2007 emissions).
---------------------------------------------------------------------------

    \31\ See Average Fuel Economy Standards Passenger Cars and Light 
Trucks Model Year 2011, 74 FR 14196 (March 30, 2009) (Final Rule); 
Final Environmental Impact Statement Corporate Average Fuel Economy 
Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at 
3-90 (Oct. 2008) (Available at: http://www.nhtsa.gov/fuel-economy) 
(Last accessed December 2012).
    \32\ See Average Fuel Economy Standards, Passenger Cars and 
Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 2008) 
(Proposed Rule); Draft Environmental Impact Statement Corporate 
Average Fuel Economy Standards, Passenger Cars and Light Trucks, 
Model Years 2011-2015 at 3-58 (June 2008) (Available at: http://www.nhtsa.gov/fuel-economy) (Last accessed December 2012).
---------------------------------------------------------------------------

    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$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specifically, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: the FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change. Each model 
was given equal weight in the SCC values that were developed.
    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.
    In 2010, the interagency group selected four sets of SCC values for 
use in regulatory analyses.\33\ Three sets of values are based on the 
average SCC from three integrated assessment models, at discount rates 
of 2.5 percent, 3 percent, and 5 percent. The fourth set, 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 climate change further out in the tails of the 
SCC distribution. The values grow in real terms over time. 
Additionally, the interagency group determined that a range of values 
from 7 percent to 23 percent should be used to adjust the global SCC to 
calculate domestic effects, although preference is given to 
consideration of the global benefits of reducing CO2 
emissions. Table IV.6 presents the values in the 2010 interagency group 
report, which is reproduced in appendix 14-A of the NOPR TSD.
---------------------------------------------------------------------------

    \33\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government, February 2010. http://www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

                      Table IV.6--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                      [In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount rate %
                                                 ---------------------------------------------------------------
                                                         5               3              2.5              3
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for today's notice were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\34\ Table IV.7 
shows the updated sets of SCC estimates from the 2013 interagency 
update in five-year increments from 2010 to 2050. Appendix 14-B of the 
NOPR TSD provides the full set of values. The central value that 
emerges is the average SCC across models at 3-percent discount rate. 
However, for purposes of capturing the uncertainties involved in 
regulatory impact analysis, the interagency group emphasizes the 
importance of including all four sets of SCC values.
---------------------------------------------------------------------------

    \34\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866. Interagency 
Working Group on Social Cost of Carbon, United States Government. 
May 2013; revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.

[[Page 12330]]

                      Table IV.7--Annual SCC Values from 2013 Interagency Update, 2010-2050
                                      [In 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount rate %
                                                 ---------------------------------------------------------------
                                                         5               3              2.5              3
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              11              32              51              89
2015............................................              11              37              57             109
2020............................................              12              43              64             128
2025............................................              14              47              69             143
2030............................................              16              52              75             159
2035............................................              19              56              80             175
2040............................................              21              61              86             191
2045............................................              24              66              92             206
2050............................................              26              71              97             220
----------------------------------------------------------------------------------------------------------------

    NRDC and ASAP indicated that DOE's current approach to monetizing 
carbon underestimates the benefits. (NRDC and ASAP, No. 11 at p.5) The 
range of SCC estimates used by DOE has been closely reviewed by the 
interagency group and was updated in 2013. The range includes a set of 
values that represents the 95th-percentile SCC estimate across all 
three models at a 3-percent discount rate, which was included to 
represent higher-than-expected impacts from climate change further out 
in the tails of the SCC distribution. DOE acknowledges that the 
estimates will continue to evolve over time as the science and economic 
understanding of climate change and its impact on society improves.
    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 Federal agencies participating in the 
interagency process to estimate the SCC. The interagency group intends 
to periodically review and reconsider those estimates to reflect 
increasing knowledge of the science and economics of climate impacts, 
as well as improvements in modeling.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions resulting from today's rule, DOE 
used the values from the 2013 interagency report, adjusted to 2012$ 
using the Gross Domestic Product price deflator. For each of the four 
SCC cases specified, the values used for emissions in 2015 were $11.8, 
$39.7, $61.2, and $117 per metric ton avoided (values expressed in 
2012$). DOE derived values after 2050 using the relevant growth rates 
for the 2040-2050 period in the interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.
2. Valuation of Other Emissions Reductions
    As noted above, DOE has taken into account how new or amended 
energy conservation standards would reduce NOX emissions in 
those 22 states 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 estimates found in the 
relevant scientific literature. Estimates of monetary value for 
reducing NOX from stationary sources range from $468 to 
$4,809 per ton in 2012$.\35\ DOE calculated monetary benefits using a 
medium value for NOX emissions of $2,639 per short ton (in 
2012$), and real discount rates of 3-percent and 7-percent.
---------------------------------------------------------------------------

    \35\ 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.
---------------------------------------------------------------------------

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

M. Utility Impact Analysis

    The utility impact analysis estimates several effects on the power 
generation industry that would result from the adoption of new or 
amended energy conservation standards. In the utility impact analysis, 
DOE analyzes the changes in installed electricity capacity and 
generation that would result for each trial standard level. The utility 
impact analysis uses a variant of NEMS,\36\ which is a public domain, 
multi-sectored, partial equilibrium model of the U.S. energy sector. 
DOE uses a variant of this model, referred to as NEMS-BT,\37\ to 
account for selected utility impacts of new or amended energy 
conservation standards. DOE's analysis consists of a comparison between 
model results for the most recent AEO Reference Case and for cases in 
which energy use is decremented to reflect the impact of potential 
standards. The energy savings inputs associated with each TSL come from 
the NIA. Chapter 15 of the NOPR TSD describes the utility impact 
analysis in further detail.
---------------------------------------------------------------------------

    \36\ For more information on NEMS, refer to the U.S. Department 
of Energy, Energy Information Administration documentation. A useful 
summary is National Energy Modeling System: An Overview 2003, DOE/
EIA-0581(2003) (March, 2003).
    \37\ DOE/EIA approves use of the name NEMS to describe only an 
official version of the model without any modification to code or 
data. Because this analysis entails some minor code modifications 
and the model is run under various policy scenarios that are 
variations on DOE/EIA assumptions, DOE refers to it by the name 
``NEMS-BT'' (``BT'' is DOE's Building Technologies Program, under 
whose aegis this work has been performed).
---------------------------------------------------------------------------

N. Employment Impact Analysis

    Employment impacts from new or amended energy conservation 
standards include direct and indirect impacts. Direct employment 
impacts are any changes in the number of employees of

[[Page 12331]]

manufacturers of the equipment subject to standards; the MIA addresses 
those impacts. 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 
equipment. Indirect employment impacts from standards consist of the 
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 supply by the 
utility industry; (3) increased consumer spending on the purchase of 
new equipment; and (4) the effects of those three factors throughout 
the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS). 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. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment may 
increase because of shifts in economic activity resulting from amended 
standards.
    For the standard levels considered in the NOPR, DOE estimated 
indirect national employment impacts using an input/output model of the 
U.S. economy called Impact of Sector Energy Technologies, Version 3.1.1 
(ImSET). ImSET is a special-purpose version of the ``U.S. Benchmark 
National Input-Output'' (I-O) model, which was designed to estimate the 
national employment and income effects of energy-saving technologies. 
The ImSET software includes a computer-based I-O model having 
structural coefficients that characterize economic flows among 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 most 
relevant to industrial, commercial, and residential building energy 
use. DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run. For the NOPR, DOE used ImSET only to 
estimate short-term employment impacts.
    For more details on the employment impact analysis, see chapter 16 
of the NOPR TSD.

V. Analytical Results

A. Trial Standard Levels

    At the NOPR stage, DOE develops Trial Standard Levels (TSLs) for 
consideration. TSLs are formed by grouping different efficiency levels, 
which are potential standard levels for each equipment class. Table V.1 
presents the TSLs analyzed and the corresponding efficiency level for 
each CCW equipment class. TSL 3 is comprised of the max-tech efficiency 
levels. TSL 2 is comprised of efficiency level 2 for front-loading CCWs 
and efficiency level 1 for top-loading CCWs. TSL 1 is comprised of 
efficiency level 1 for each equipment class.

             Table V.1--Summary of TSLs for Front-Loading and Top-Loading Commercial Clothes Washers
----------------------------------------------------------------------------------------------------------------
                         Equipment class                               TSL 1           TSL 2           TSL 3
----------------------------------------------------------------------------------------------------------------
                                                                                Efficiency Level *
                                                                 -----------------------------------------------
Front Loading CCW Units.........................................               1               2               3
Top Loading CCW Units...........................................               1               1               2
----------------------------------------------------------------------------------------------------------------
* For the MEFJ2 and IWF that correspond to efficiency levels 1 through 3, see Table IV.3.

B. Economic Justification and Energy Savings

    As discussed in section II.A, EPCA provides seven factors to be 
evaluated in determining whether a more stringent standard for front-
loading and top-loading commercial clothes washers is economically 
justified. (42 U.S.C. 6313(a)(6)(B)(ii)) The following sections discuss 
how DOE addresses each of those factors in this rulemaking.
1. Economic Impacts on Individual Customers
    DOE analyzed the economic impacts on front-loading and top-loading 
commercial clothes washers customers by looking at the effects 
potential standards would have on the LCC and PBP. DOE also examined 
the impacts of potential standards on customer subgroups. These 
analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of standards on front-loading 
and top-loading CCW customers, DOE conducted LCC and PBP analyses for 
each TSL. Section IV.F of this notice discusses the inputs DOE used for 
calculating the LCC and PBP.
    For each representative unit, the key outputs of the LCC analysis 
are a mean LCC savings and a median PBP relative to the base case, as 
well as the fraction of customers for which the LCC will decrease (net 
benefit), increase (net cost), or exhibit no change (no impact) 
relative to the base case. No impacts occur when the base-case 
efficiency equals or exceeds the efficiency at a given TSL. Table V.2 
through Table V.5 show the key results for each representative unit.

[[Page 12332]]

    Table V.2--Summary Life-Cycle Cost and Payback Period Results for Front-Loading, Multi-Family Application
                                         Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................               1               2               3
MEFJ2/IWF.......................................................       1.80/4.50       2.00/4.10       2.20/3.90
Total Installed Cost ($)........................................         1853.19         1853.69         1884.93
Mean LCC Savings ($)............................................             229             285               8
Customers with LCC Increase (Cost) (%) *........................               0               0              46
Customers with LCC Decrease (Benefit) (%) *.....................              27              61              53
Customers with No Change in LCC (%) *...........................              73              39               0
Median PBP (Years)..............................................             0.0             0.0             3.8
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.

     Table V.3--Summary Life-Cycle Cost and Payback Period Results for Front-Loading, Laundromat Application
                                         Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................               1               2               3
MEFJ2/IWF.......................................................       1.80/4.50       2.00/4.10       2.20/3.90
Total Installed Cost ($)........................................         1853.19         1853.69         1884.93
Mean LCC Savings ($) [dagger]...................................             198             235            (19)
Customers with LCC Increase (Cost) (%) *........................               0               0              72
Customers with LCC Decrease (Benefit) (%) *.....................              27              61              28
Customers with No Change in LCC (%) *...........................              73              39               0
Median PBP (Years)..............................................             0.0             0.0             8.0
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.
[dagger] Values in parentheses are negative values.

     Table V.4--Summary Life-Cycle Cost and Payback Period Results for Top-Loading, Multi-Family Application
                                         Commercial Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................               1               1               2
MEFJ2/IWF.......................................................       1.35/8.80       1.35/8.80       1.55/6.90
Total Installed Cost ($)........................................         1251.06         1251.06         1313.40
Mean LCC Savings ($)............................................             259             259             813
Customers with LCC Increase (Cost) (%) *........................               0               0               0
Customers with LCC Decrease (Benefit) (%) *.....................              99              99             100
Customers with No Change in LCC (%) *...........................               1               1               0
Median PBP (Years)..............................................             0.0             0.0             0.6
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.

Table V.5--Summary Life-Cycle Cost and Payback Period Results for Top-Loading, Laundromat Application Commercial
                                              Clothes Washer Units
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................               1               1               2
MEFJ2/IWF.......................................................       1.35/8.80       1.35/8.80       1.55/6.90
Total Installed Cost ($)........................................         1251.06         1251.06         1313.40
Mean LCC Savings ($)............................................             145             145             654
Customers with LCC Increase (Cost) (%) *........................               0               0               0
Customers with LCC Decrease (Benefit) (%) *.....................              99              99             100
Customers with No Change in LCC (%) *...........................               1               1               0
Median PBP (Years)..............................................             0.0             0.0             0.6
----------------------------------------------------------------------------------------------------------------
* Rounding may cause some items to not total 100 percent.

b. Customer Subgroup Analysis
    In the customer subgroup analysis, DOE estimated the impacts of the 
considered TSLs on small business customers. The LCC savings and 
payback periods for small business customers are similar to the impacts 
for all customers. Chapter 11 of the NOPR TSD presents detailed results 
of the customer subgroup analysis.
c. Rebuttable Presumption Payback
    As discussed in section III.E.2, EPCA establishes a rebuttable 
presumption that an energy conservation standard is economically 
justified if the increased purchase cost for equipment that meets the 
standard is less than three times the value of the first-year energy 
savings resulting from the standard. DOE calculated a rebuttable-
presumption PBP for each TSL.
    DOE based the calculations on average usage profiles. As a result, 
DOE

[[Page 12333]]

calculated a single rebuttable-presumption payback value, and not a 
distribution of PBPs, for each TSL. Table V.6 and Table V.7 show the 
rebuttable-presumption PBPs for the considered TSLs. In addition to the 
rebuttable presumption analysis, however, DOE routinely conducts an 
economic analysis that considers the full range of impacts to the 
customer, manufacturer, nation, and environment, as required by EPCA. 
The results of that analysis serve as the basis for DOE to evaluate the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any three-year PBP analysis). 
Section V.C addresses how DOE considered the range of impacts to select 
today's proposed standards.

 Table V.6--Rebuttable-Presumption Payback Periods (Years) for Front-Loading and Top-Loading Commercial Clothes
                                     Washer Units: Multi-Family Application
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................         FL: EL1         FL: EL2         FL: EL3
                                                                          TL:EL1          TL:EL1          TL:EL2
Front Loading CCW Units.........................................            0.00            0.04            8.77
Top Loading CCW Units...........................................             0.0             0.0             2.3
----------------------------------------------------------------------------------------------------------------

 Table V.7--Rebuttable-Presumption Payback Periods (Years) for Front-Loading and Top-Loading Commercial Clothes
                                      Washer Units: Laundromat Application
----------------------------------------------------------------------------------------------------------------
                      Trial standard level                               1               2               3
----------------------------------------------------------------------------------------------------------------
Efficiency Level................................................         FL: EL1         FL: EL2         FL: EL3
                                                                          TL:EL1          TL:EL1          TL:EL2
Front Loading CCW Units.........................................            0.00            0.05           11.19
Top Loading CCW Units...........................................            0.00            0.00            2.73
----------------------------------------------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of new energy 
conservation standards on commercial clothes washer manufacturers. The 
following section describes the expected impacts on manufacturers at 
each TSL. Chapter 12 of the NOPR TSD explains the analysis in further 
detail.
a. Industry Cash-Flow Analysis Results
    The following tables depict the financial impacts (represented by 
changes in INPV) of amended energy conservation standards on 
manufacturers of commercial clothes washers as well as the conversion 
costs that DOE estimates manufacturers would incur for each equipment 
class at each TSL. To evaluate the range of cash flow impacts on the 
commercial clothes washer manufacturing industry, DOE used two 
different markup assumptions to model scenarios that correspond to the 
range of anticipated market responses to amended energy conservation 
standards.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled a preservation of gross margin percentage markup 
scenario, in which a uniform ``gross margin percentage'' markup is 
applied across all efficiency levels. In this scenario, DOE assumed 
that a manufacturer's absolute dollar markup would increase as 
production costs increase in the amended energy conservation standards 
case. Manufacturers have indicated that it is optimistic to assume that 
they would be able to maintain the same gross margin percentage markup 
as their production costs increase in response to a new or amended 
energy conservation standard, particularly at higher TSLs.
    To assess the higher (more severe) end of the range of potential 
impacts, DOE modeled the preservation of operating profit (in absolute 
dollars) markup scenario, which assumes that manufacturers would not be 
able to preserve the same overall gross margin, but instead cut their 
markup for marginally compliant products to maintain a cost competitive 
product offering and keep the same overall level of operating profit as 
in the base case. The two tables below show the range of potential INPV 
impacts for manufacturers of commercial clothes washers. The first 
table reflects the lower bound of impacts (higher profitability) and 
the second represents the upper bound of impacts (lower profitability).
    Each scenario results in a unique set of cash flows and 
corresponding industry values at each TSL. In the following discussion, 
the INPV results refer to the sum of discounted cash flows through 
2047, the difference in INPV between the base case and each standards 
case, and the total industry conversion costs required for each 
standards case.

    Table V.8--Manufacturer Impact Analysis Under the Preservation of Gross Margin Percentage Markup Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  2012$ Millions..          $124.2           118.3           118.2            33.0
Change in INPV................  2012$ Millions..  ..............           (5.9)           (6.0)          (91.2)
                                (%).............  ..............           (4.7)           (4.9)          (73.4)
Product Conversion Costs......  2012$ Millions..  ..............             9.9            10.2            62.4
Capital Conversion Costs......  2012$ Millions..  ..............  ..............  ..............            63.1
                               ---------------------------------------------------------------------------------

[[Page 12334]]

 
    Total Conversion Costs....  2012$ Millions..  ..............             9.9            10.2           126.6
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

  Table V.9--Manufacturer Impact Analysis Under the Preservation of Operating Profit in Absolute Dollars Markup
                                                    Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  2012$ Millions..          $124.2           118.3           118.2            28.8
Change in INPV................  2012$ Millions..  ..............           (5.9)           (6.0)          (95.4)
                                (%).............  ..............           (4.7)           (4.9)          (76.8)
Product Conversion Costs......  2012$ Millions..  ..............             9.9            10.2            62.4
Capital Conversion Costs......  2012$ Millions..  ..............  ..............  ..............            63.1
                               ---------------------------------------------------------------------------------
    Total Conversion Costs....  2012$ Millions..  ..............             9.9            10.2           126.6
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

    Beyond impacts on INPV, DOE includes a comparison of free cash flow 
between the base case and the standards case at each TSL in the year 
before amended standards take effect to provide perspective on the 
short-run cash flow impacts in the discussion of the results below.
    At TSL 1, DOE estimates the impact on INPV for manufacturers of 
commercial clothes washers to be $5.9 million, or a change in INPV of -
4.7 percent under either markup scenario. At this TSL, industry free 
cash flow is estimated to decrease by approximately 30.2 percent to 
$6.3 million, compared to the base-case value of $9.1 million in the 
year before the compliance date (2017).
    TSL 1 represents an improvement in MEFJ2 (as determined 
using appendix J2) from the baseline level of 1.65 to 1.80 (ft\3\/kWh/
cycle) for front-loading equipment and an improvement in 
MEFJ2 from the baseline level of 1.15 to 1.35 (ft\3\/kWh/
cycle) for top-loading equipment. The identical results for the two 
markup scenarios at TSL 1 occur because for both equipment classes, the 
baseline MPCs and the MPCs at TSL 1 are the same. For front-loading 
equipment, this is because the 1.8 MEFJ2 (as determined 
using appendix J2) products (on which the EL 1 standard is based) are 
the lowest efficiency front-loading equipment available on the market. 
As such, TSL 1 would have no impact on the front-loading market. 
Similarly, the design options associated with EL 1 for top-loading 
equipment relate to control changes and different cycle options, rather 
than material changes to the equipment itself. While there are product 
conversion costs associated with the research and development needed to 
make these changes, there are no changes in the per unit production 
costs. Given these conditions, the impacts on INPV at TSL 1 can be 
attributed solely to the $9.9 million in product conversion costs for 
top-loading equipment.
    At TSL 2, DOE estimates the impact on INPV for manufacturers of 
commercial clothes washers to be $6.0 million, or a change in INPV of -
4.9 percent under either markup scenario. At this TSL, industry free 
cash flow is estimated to decrease by approximately 31.2 percent to 
$6.2 million, compared to the base-case value of $9.1 million in the 
year before the compliance date (2017).
    TSL 2 represents an improvement in MEFJ2 from the 
baseline level of 1.65 to 2.00 (ft\3\/kWh/cycle) for front-loading 
equipment and an improvement in MEFJ2 from the baseline 
level of 1.15 to 1.35 (ft\3\/kWh/cycle) for top-loading equipment. Much 
like TSL 1, the identical results for the two markup scenarios at TSL 2 
occur because the baseline MPCs and the MPCs at TSL 2 are very close 
for front-loading equipment, and the same for top-loading equipment. 
For front-loading equipment, this is because the 2.0 MEFJ2 
EL (as determined using appendix J2) requires only minor changes to 
baseline equipment needed to enable slightly faster spin speeds. The 
standard level for top-loading equipment at TSL 2 is the same at TSL 1, 
and again relates to control changes and different cycle options, 
rather than material changes to the equipment. Because there are no 
substantive changes to MPCs for either equipment class, much as in TSL 
1, nearly all of the impacts on INPV at TSL 2 can be attributed to the 
$10.2 million in product conversion costs.
    At TSL 3, DOE estimates impacts on INPV for manufacturers of 
commercial clothes washers to range from -$91.2 million to -$95.4 
million, or a change in INPV of -73.4 percent to -76.8 percent. At this 
TSL, industry free cash flow is estimated to decrease by over 500 
percent to -$36.8 million, compared to the base-case value of $9.1 
million in the year before the compliance date (2017).
    TSL 3 represents an improvement in MEFJ2 from the 
baseline level of 1.65 to 2.20 (ft\3\/kWh/cycle) for equipment class 1 
and an improvement in MEFJ2 from the baseline level of 1.15 
to 1.55 (ft\3\/kWh/cycle) for equipment class 2. Unlike TSL 1 and TSL 
2, the efficiency levels specified at TSL 3 would require substantial 
redesigns of products in both equipment classes. The design options 
proposed at these efficiency levels include switching to direct-drive 
motors, hung suspension, non-traditional agitation, and increasing the 
tub capacity--all of which require major platform overhauls and 
significant changes to manufacturing capital. These design options do 
not contribute to substantially different MPCs, but the conversion 
costs associated with product development and testing, as well as the 
investments in manufacturing capital including

[[Page 12335]]

retooling of tubs and agitators significantly impact the INPV.
b. Impacts on Direct 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 2013 to 2047. DOE used statistical data from the most recent U.S 
Census Bureau's ``Annual Survey of Manufactures,'' 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 for the manufacture of a 
product are a function of the labor intensity of the product, the sales 
volume, and an assumption that wages in real terms remain constant.
    DOE notes that the MIA's analysis detailing impacts on employment 
focuses specifically on the production workers manufacturing the 
covered products in question, rather than a manufacturer's broader 
operations. Thus, the estimated number of impacted employees in the MIA 
is separate from the total number of employees used to determine 
whether a manufacturer is a small business for purposes of analysis 
under the Regulatory Flexibility Act.
    The estimates of production workers in this section cover only 
those up to and including the line-supervisor level directly involved 
in fabricating and assembling a product within the original equipment 
manufacturer (OEM) facility. In addition, workers that perform services 
closely associated with production operations are included. Employees 
above the working-supervisor level are excluded from the count of 
production workers. Thus, the labor associated with non-production 
functions (e.g., factory supervision, advertisement, sales) is 
explicitly not covered.\38\ In addition, DOE's estimates account for 
production workers that manufacture only the specific products covered 
by this rulemaking. For example, a worker on a clothes dryer production 
line would not be included in the estimate of the number of commercial 
clothes washer production workers. Finally, this analysis also does not 
factor in the dependence by some manufacturers on production volume to 
make their operations viable. For example, should a major line of 
business cease or move, a production facility may no longer have the 
manufacturing scale to obtain volume discounts on its purchases nor be 
able to justify maintaining major capital equipment. Thus, the impact 
on a manufacturing facility due to a line closure may affect more 
employees than just the production workers, but as stated previously, 
this analysis focuses on the production workers impacted directly. The 
aforementioned scenarios, however, are considered relative to 
employment impacts specific to the LVM at the end of this section.
---------------------------------------------------------------------------

    \38\ The 2010 ASM provides the following definition: ``The 
`production workers' number includes workers (up through the line-
supervisor level) engaged in fabricating, processing, assembling, 
inspecting, receiving, storing, handling, packing, warehousing, 
shipping (but not delivering), maintenance, repair, janitorial and 
guard services, product development, auxiliary production for 
plant's own use (e.g., power plant), recordkeeping, and other 
services closely associated with these production operations at the 
establishment covered by the report. Employees above the working-
supervisor level are excluded from this item.''
---------------------------------------------------------------------------

    In the 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 commercial clothes washer 
manufacturing industry. DOE used information gained through interviews 
with manufacturers to estimate the portion of the total labor 
expenditures that is attributable to domestic labor.
    The employment impacts shown in Table V.10 represent the potential 
production employment that could result following amended energy 
conservation standards. These are independent of the employment impacts 
from the broader U.S. economy, which are documented in chapter 16 of 
the NOPR TSD.
    DOE estimates that in the absence of amended energy conservation 
standards, there would be 334 domestic production workers involved in 
manufacturing commercial clothes washers in 2018. Table V.10 shows the 
range of the impacts of potential amended energy conservation standards 
on U.S. production workers in the commercial clothes washer 
manufacturing industry. The upper end of the results in this table 
estimates the total potential increase in the number of production 
workers after amended energy conservation standards. To calculate the 
total potential increase, DOE assumed that manufacturers continue to 
produce the same scope of covered products in domestic production 
facilities and domestic production is not shifted to lower-labor-cost 
countries. Because there is a risk of manufacturers evaluating sourcing 
decisions in response to amended energy conservation standards, the 
lower end of the range of employment results in Table V.10 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 United States.

         Table V.10--Change in Total Number of Domestic Production Employees in 2018 in the CCW Industry
----------------------------------------------------------------------------------------------------------------
                                                     Base case         TSL 1           TSL 2           TSL 3
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in               334             334             334             364
 2018...........................................
Potential Changes in Domestic Production Workers  ..............         0-(334)         0-(334)        30-(364)
 in 2018*.......................................
----------------------------------------------------------------------------------------------------------------

    Because production employment expenditures are assumed to be a 
fixed percentage of Cost of Goods Sold (COGS) and the MPCs typically 
increase with more efficient products, labor tracks the increased 
prices in the GRIM. As efficiency of washers increases, so does the 
complexity of the machines, generally requiring more labor to produce. 
As previously discussed, for TSL 1, there is no change in MPCs from the 
base case, and, for TSL 2, there is a small increase in MPCs for front-
loaders that would be offset by a shift in shipments from front-loaders 
to top-loaders. As a result, DOE expects that there would be no 
employment impacts among domestic commercial clothes washer 
manufacturers for TSL 1 and TSL 2. For TSL 3, the GRIM predicts an 
increase in domestic employment following amended standards based on 
the increase in complexity and relative price of the equipment.
    Using the U.S. Census Bureau's 2010 Annual Survey of Manufactures 
\39\ and interviews with manufacturers, DOE estimates that 
approximately 83 percent of commercial clothes washers are currently 
produced domestically. In the

[[Page 12336]]

commercial clothes washer industry, 100 percent of top-loaders are 
manufactured domestically, while a much larger share of front-loaders 
are produced abroad. As illustrated in Table V.10, the actual impacts 
on domestic employment after standards would be different than 
estimated if any U.S. manufacturer decided to shift remaining U.S. 
production to lower-cost countries. The proposed standard could result 
in losing all 334 production workers if all U.S. manufacturers source 
standards-compliant washers or shift U.S. production abroad. However, 
feedback from manufacturers during NOPR interviews supports the notion 
that top-loading commercial clothes washers will continue to be 
produced domestically following amended energy conservation standards, 
unless the max-tech level is chosen.
---------------------------------------------------------------------------

    \39\ The 2010 Annual Survey of Manufacturers is available at: 
http://www.census.gov/mcd/asmhome.html.
---------------------------------------------------------------------------

c. Impacts on Manufacturing Capacity
    According to the majority of commercial clothes washer 
manufacturers, new energy conservation standards could potentially 
impact manufacturers' production capacity depending on the efficiency 
level required. For TSL 1 and TSL 2, the most significant conversion 
costs are the research and development, testing, and certification of 
products with more-efficient components, which does not affect 
production line capacity. Available information indicates that 
manufacturers will be able to maintain manufacturing capacity levels 
and continue to meet market demand under new energy conservation 
standards as long as manufacturers continue to offer top-loading and 
front-loading washers.
    However, a very high efficiency standard for top-loading clothes 
washers could cause certain manufacturers to abandon further domestic 
production of top-loading clothes washers after the effective date, and 
choose instead to relocate manufacturing abroad or to source from a 
foreign manufacturer, which could lead to a permanently lower 
production capacity within the commercial clothes washer industry.
d. Impacts on Subgroups of Manufacturers
    Using average cost assumptions to develop an industry cash flow 
estimate is not adequate for assessing differential impacts among 
subgroups of manufacturers. Small manufacturers, niche players, or 
manufacturers exhibiting a cost structure that differs significantly 
from the industry average could be affected differently. DOE used the 
results of the industry characterization to group manufacturers 
exhibiting similar characteristics.
    As outlined earlier, one LVM of commercial clothes washers would be 
disproportionately affected by any energy efficiency regulation in the 
commercial clothes washer industry. This business is focused on one 
specific market segment and is at least ten times smaller than its 
diversified competitors. Due to this combination of market 
concentration and size, this LVM is at risk of material harm to its 
business, depending on the TSL chosen.
    The commercial clothes washer LVM indicated that it could not 
manufacture top-loading or front-loading washers at the proposed max-
tech level (MEFJ2 of 1.55 and 2.20, respectively, as 
determined using appendix J2) with its existing manufacturing capital 
and platform constraints. If DOE were to set the standard at the max-
tech level, the LVM believes that a ``green field'' design for front-
loaders would likely be required. For top-loaders, the LVM asserts that 
it does not have the technology to reach the max-tech level, and it 
would be forced to develop an entirely new business model, possibly 
ceasing commercial clothes washer production altogether, sourcing from 
abroad, shifting production abroad, or some combination thereof, which 
could cause employment impacts in the commercial clothes washer 
industry. If the LVM no longer offers top-loading washers, it would 
likely cease commercial clothes washer production altogether, resulting 
in significant impacts to the industry. Currently, the LVM's top-
loading washers account for more than half of the company's commercial 
clothes washer revenues and three-quarters of its commercial clothes 
washer shipments. To shift all top-loading commercial clothes washers 
to front-loading washers at current production volumes would require 
substantial investments that the company may not be able to justify. In 
addition, the LVM derives an estimated 88 percent of its clothes washer 
revenue from commercial clothes washers, so its sales in the 
residential clothes washer market would be too low to justify 
continuing any top-loading clothes washer manufacturing. Further detail 
and separate analysis of impacts on the LVM are found in chapter 12 of 
the NOPR TSD.
e. Cumulative Regulatory Burden
    One aspect of assessing manufacturer burden is the cumulative 
impact of multiple DOE standards and the regulatory actions of other 
Federal agencies and states that affect the manufacturers of a covered 
product or equipment. While any one regulation may not impose a 
significant burden on manufacturers, the combined effects of several 
existing or impending regulations may have serious consequences for 
some manufacturers, groups of manufacturers, or an entire industry.
    Companies that produce a wider range of regulated products may be 
faced with more capital and product development expenditures than their 
competitors. This can prompt those companies to exit the market or 
reduce their product offerings, potentially reducing competition. 
Smaller companies can be especially affected, since they have lower 
sales volumes over which to amortize the costs of compliance with new 
regulations.
    In addition to DOE's energy conservation regulations for commercial 
clothes washers, several other existing regulations apply to these 
products and other equipment produced by the same manufacturers. The 
most significant of these additional regulations include several 
additional existing or proposed Federal and State energy conservation 
and environmental standards, consumer product safety standards, the 
Green Chemistry law in California, and standards impacting commercial 
clothes washer suppliers such as the Conflict Minerals directive 
contained within the Dodd-Frank Act of 2010.
    Most manufacturers interviewed also sell products to other 
countries with energy conservation and standby standards. Manufacturers 
may incur a substantial cost to the extent that there are overlapping 
testing and certification requirements in other markets besides the 
United States. Because DOE has authority to set standards on products 
sold in the United States, DOE accounts only for domestic compliance 
costs in its analysis of cumulative regulatory burdens impacting 
commercial clothes washer manufacturers. For more details, see chapter 
12 of the NOPR TSD.
3. National Impact Analysis
    Projections of shipments are an important part of the NIA. As 
discussed in section IV.G, The market shares of the equipment classes 
are somewhat sensitive to the installed cost of new equipment. DOE 
applied a cross-price elasticity to estimate how the market would shift 
between front-loading and top-loading units in response to a change in 
price of the unit.
    Table V.11presents the estimated cumulative shipments in 2018-2047 
in the base case and under each TSL. Because DOE found CCW units to be 
relatively price inelastic, DOE estimated that the potential standards 
would not affect total shipments.

[[Page 12337]]

  Table V.11--Projected Cumulative Shipments of Front- and Top-Loading Commercial Clothes Washer Units in 2018-
                                                      2047
                                                 [Million units]
----------------------------------------------------------------------------------------------------------------
                                                                                                  TSL3  Max Tech
                                                     Base case     TSL1  FL: EL1   TSL2  FL: EL2      FL: EL3
                                                                      TL:EL1          TL:EL1          TL:EL2
----------------------------------------------------------------------------------------------------------------
Front Loading...................................           2.813           2.813           2.812           2.900
Top Loading.....................................           3.465           3.465           3.466           3.379
                                                 ---------------------------------------------------------------
Total...........................................           6.278           6.278           6.278           6.278
----------------------------------------------------------------------------------------------------------------

a. Significance of Energy Savings
    For each TSL, DOE projected energy savings for front-loading and 
top-loading commercial clothes washer unit purchased in the 30-year 
period that begins in the year of anticipated compliance with amended 
standards (2018-2047). The savings are measured over the entire 
lifetime of equipment purchased in the 30-year period. DOE quantified 
the energy savings attributable to each TSL as the difference in energy 
consumption between each standards case and the base case. Table V.12 
presents the estimated primary energy savings for each considered TSL, 
and Table V.13 presents the estimated FFC energy savings for each TSL. 
The approach for estimating national energy savings is further 
described in section IV.H.

Table V.12--Cumulative Primary Energy Savings for Front-Loading and Top-Loading Commercial Clothes Washers Trial
                                   Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                         Equipment class                         -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                       quads
                                                                 -----------------------------------------------
Front Loading CCW Units.........................................           0.007           0.023           0.005
Top Loading CCW Units...........................................           0.086           0.085           0.163
                                                                 -----------------------------------------------
    Total All Classes...........................................           0.092           0.109           0.168
----------------------------------------------------------------------------------------------------------------

   Table V.13--Cumulative Full-Fuel-Cycle Energy Savings for Front-Loading and Top-Loading Commercial Clothes
                            Washers Trial Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                         Equipment class                         -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                       quads
                                                                 -----------------------------------------------
Front Loading CCW Units.........................................           0.007           0.025           0.005
Top Loading CCW Units...........................................           0.090           0.090           0.170
                                                                 -----------------------------------------------
    Total All Classes...........................................           0.097           0.114           0.175
----------------------------------------------------------------------------------------------------------------

    For this rulemaking, DOE undertook a sensitivity analysis using 
nine instead of 30 years of equipment shipments. The choice of a nine-
year period is a proxy for the timeline in EPCA for the review of 
certain energy conservation standards and potential revision of and 
compliance with such revised standards.\40\ This timeframe may not be 
statistically relevant with regard to the equipment lifetime, equipment 
manufacturing cycles or other factors specific to front-loading and 
top-loading commercial clothes washer equipment. Thus, this information 
is presented for informational purposes only and is not indicative of 
any change in DOE's analytical methodology. The NES results based on a 
9-year analytical period are presented in Table V.14. The impacts are 
counted over the lifetime of commercial clothes washers purchased in 
2018-2026.
---------------------------------------------------------------------------

    \40\ EPCA requires DOE to review its standards at least once 
every 6 years, and requires, for certain products, a 3-year period 
after any new standard is promulgated before compliance is required, 
except that in no case may any new standards be required within 6 
years of the compliance date of the previous standards. While adding 
a 6-year review to the 3-year compliance period adds up to 9 years, 
DOE notes that it may undertake reviews at any time within the 6 
year period and that the 3-year compliance date may yield to the 6-
year backstop. A 9-year analysis period may not be appropriate given 
the variability that occurs in the timing of standards reviews and 
the fact that for some consumer products, the compliance period is 5 
years rather than 3 years.

[[Page 12338]]

Table V.14--Cumulative Primary Energy Savings for Front-Loading and Top-Loading Commercial Clothes Washers Trial
                                   Standard Levels for Units Sold in 2018-2026
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                         Equipment class                         -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                       quads
                                                                 -----------------------------------------------
Front Loading CCW Units.........................................           0.002           0.006           0.001
Top Loading CCW Units...........................................           0.024           0.024           0.046
                                                                 -----------------------------------------------
    Total All Classes...........................................           0.026           0.030           0.047
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Customer Costs and Benefits
    DOE estimated the cumulative NPV of the total costs and savings for 
customers that would result from the TSLs considered for CCWs. In 
accordance with OMB's guidelines on regulatory analysis,\41\ DOE 
calculated the 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. This discount rate approximates the opportunity cost of 
capital in the private sector. The 3-percent rate reflects the 
potential effects of standards on private consumption (e.g., through 
higher prices for equipment and reduced purchases 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 United States 
Treasury notes), which has averaged about 3 percent for the past 30 
years.
---------------------------------------------------------------------------

    \41\ OMB Circular A-4, section E (Sept. 17, 2003). Available at: 
http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------

    Table V.15 shows the customer NPV results for each TSL considered 
for CCWs. In each case, the impacts cover the lifetime of equipment 
purchased in 2018-2047.

 Table V.15--Net Present Value of Customer Benefits for Front-Loading and Top-Loading Commercial Clothes Washers
                                Trial Standard Levels for Units Sold in 2018-2047
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                 Equipment class                  Discount  rate -----------------------------------------------
                                                         %               1               2               3
----------------------------------------------------------------------------------------------------------------
                                                  ..............                   billion 2012$
                                                                 -----------------------------------------------
Front Loading CCW Units.........................               3           0.120           0.344          -0.132
Top Loading CCW Units...........................  ..............           0.596           0.594           2.131
                                                                 -----------------------------------------------
Total All Classes...............................  ..............           0.716           0.938           1.999
Front Loading CCW Units.........................               7           0.051           0.145          -0.060
Top Loading CCW Units...........................  ..............           0.261           0.260           0.910
                                                                 -----------------------------------------------
    Total All Classes...........................  ..............           0.311           0.405           0.850
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the nine-year analytical period discussed 
in section V.B.3.a are presented in Table V.16. The impacts are counted 
over the lifetime of equipment purchased in 2018-2026. As mentioned 
previously, this information is presented for informational purposes 
only and is not indicative of any change in DOE's analytical 
methodology or decision criteria.

 Table V.16--Net Present Value of Customer Benefits for Front-Loading and Top-Loading Commercial Clothes Washers
                           Trial Standard Levels for Units Sold in 2018-2026 [dagger]
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                 Equipment class                  Discount  rate -----------------------------------------------
                                                         %               1               2               3
----------------------------------------------------------------------------------------------------------------
                                                  ..............                   billion 2012$
                                                                 -----------------------------------------------
Front Loading CCW Units.........................               3            0.04            0.11          (0.04)
Top Loading CCW Units...........................  ..............            0.21            0.21            0.71
                                                                 -----------------------------------------------
Total All Classes...............................  ..............            0.24            0.31            0.67
Front Loading CCW Units.........................               7            0.02            0.06          (0.03)
Top Loading CCW Units...........................  ..............            0.13            0.12            0.42
                                                                 -----------------------------------------------

[[Page 12339]]

 
    Total All Classes...........................  ..............            0.15            0.19            0.40
----------------------------------------------------------------------------------------------------------------
[dagger] Values in parentheses are negative values.

c. Indirect Impacts on Employment
    DOE expects energy conservation standards for front-loading and 
top-loading commercial clothes washers to reduce energy costs for 
equipment owners, and the resulting net savings to be redirected to 
other forms of economic activity. Those shifts in spending and economic 
activity could affect the demand for labor. As described in section 
IV.N, DOE used an input/output model of the U.S. economy to estimate 
indirect employment impacts of the TSLs that DOE considered in this 
rulemaking. DOE understands that there are uncertainties involved in 
projecting employment impacts, especially changes in the later years of 
the analysis. Therefore, DOE generated results for near-term time 
frames, where these uncertainties are reduced.
    The results suggest that the proposed standards are likely to have 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the NOPR TSD presents detailed results.
4. Impact on Utility
    As discussed in section IV.C, DOE has determined that the standards 
it is proposing today will not lessen the utility of front-loading and 
top-loading commercial clothes washers.
5. Impact of Any Lessening of Competition
    DOE considers any lessening of competition likely to result from 
amended standards. The Attorney General determines the impact, if any, 
of any lessening of competition likely to result from a proposed 
standard, and transmits such determination to the Secretary, together 
with an analysis of the nature and extent of such impact.
    To assist the Attorney General in making such determination, DOE 
will provide DOJ with copies of this NOPR and the TSD for review. DOE 
will consider DOJ's comments on the proposed rule in preparing the 
final rule, and DOE will publish and respond to DOJ's comments in that 
document.
6. Need of the Nation to Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the nation's energy security, strengthens the economy, and reduces the 
environmental impacts or costs of energy production. Reduced 
electricity demand due to energy conservation standards is also likely 
to reduce the cost of maintaining the reliability of the electricity 
system, particularly during peak-load periods. As a measure of this 
reduced demand, chapter 15 in the NOPR TSD presents the estimated 
reduction in generating capacity for the TSLs that DOE considered in 
this rulemaking.
    Energy savings from standards for front-loading and top-loading 
commercial clothes washers could also produce environmental benefits in 
the form of reduced emissions of air pollutants and greenhouse gases. 
Table V.17 provides DOE's estimate of cumulative emissions reductions 
projected to result from the TSLs considered in this rulemaking. DOE 
reports annual emissions reductions for each TSL in chapter 13 of the 
NOPR TSD.

    Table V.17--Cumulative Emissions Reduction Estimated for Front-Loading and Top-Loading Commercial Clothes
                                          Washers Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                        Power Sector and Site Emissions *
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................           4.5             5.4             8.2
SO2 (thousand tons).............................................           4.0             4.3             8.6
NOX (thousand tons).............................................           1.2             1.7             1.2
Hg (tons).......................................................           0.00            0.01            0.01
N2O (thousand tons).............................................           0.07            0.07            0.14
CH4 (thousand tons).............................................           0.40            0.44            0.83
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................           0.4             0.5             0.7
SO2 (thousand tons).............................................           0.04            0.04            0.08
NOX (thousand tons).............................................           6.0             7.4            10.0
Hg (tons).......................................................           0.00            0.00            0.00
N2O (thousand tons).............................................           0.002           0.002           0.004
CH4 (thousand tons).............................................          40.4            49.7            65.3
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................           5.0             5.9             8.8
SO2 (thousand tons).............................................           4.0             4.4             8.7

[[Page 12340]]

 
NOX (thousand tons).............................................           7.3             9.1            11.1
Hg (tons).......................................................           0.00            0.01            0.01
N2O (thousand tons).............................................           0.07            0.08            0.15
N2O (thousand tons CO2eq) **....................................          20.4            22.6            43.2
CH4 (thousand tons).............................................          40.8            50.1            66.2
CH4 (thousand tons CO2eq) **....................................        1019.1          1253.4          1654.1
----------------------------------------------------------------------------------------------------------------
* Includes site emissions from gas water heaters.
** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP).

    As part of the analysis for this 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.L, DOE used the most recent values for the 
SCC developed by an interagency process. The four sets of SCC values 
resulting from that process (expressed in 2012$) are represented by 
$11.8/metric ton (the average value from a distribution that uses a 5-
percent discount rate), $39.7/metric ton (the average value from a 
distribution that uses a 3-percent discount rate), $61.2/metric ton 
(the average value from a distribution that uses a 2.5-percent discount 
rate), and $117/metric 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 2015; the values for 
later years are higher due to increasing damages as the projected 
magnitude of climate change increases.
    Table V.18 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values, and these results are presented in 
chapter 14 of the NOPR TSD.

 Table V.18--Estimates of Present Value of CO2 Emissions Reduction Under
 Front-Loading and Top-Loading Commercial Clothes Washers Trial Standard
                                 Levels
------------------------------------------------------------------------
                                    SCC Case *
         ---------------------------------------------------------------
   TSL      5% discount     3% discount    2.5% discount    3% discount
           rate, average   rate, average   rate, average    rate, 95th
                 *               *               *         percentile *
------------------------------------------------------------------------
                                   Million 2012$
------------------------------------------------------------------------
                     Power Sector and Site Emissions
------------------------------------------------------------------------
1.......          30.06          139.38          221.96          430.59
2.......          35.45          164.70          262.39          508.93
3.......          54.38          251.50          400.32          776.76
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......           2.652          12.450          19.876          38.514
2.......           3.219          15.136          24.170          46.828
3.......           4.434          20.818          33.234          64.399
------------------------------------------------------------------------
                             Total Emissions
------------------------------------------------------------------------
1.......          32.71          151.83          241.83          469.10
2.......          38.67          179.84          286.56          555.76
3.......          58.81          272.31          433.55          841.16
------------------------------------------------------------------------
* For each of the four cases, the corresponding global SCC value for
  emissions in 2015 is $11.8, $39.7, $61.2, and $117 per metric ton
  (2012$).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other greenhouse gas (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 on reducing CO2 emissions in this rulemaking is 
subject to change. DOE, together with other Federal agencies, will 
continue to review various methodologies for estimating the monetary 
value of reductions in CO2 and other GHG emissions. This 
ongoing review will consider the comments on this subject that are part 
of the public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this proposed rule the 
most recent values and analyses resulting from the interagency process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from

[[Page 12341]]

amended standards for Front-loading and Top-loading CCWs. The dollar-
per-ton values that DOE used are discussed in section IV.L. Table V.19 
presents the cumulative present values for each TSL calculated using 
seven-percent and three-percent discount rates.

 Table V.19--Estimates of Present Value of NOX Emissions Reduction Under
 Front-Loading and Top-Loading Commercial Clothes Washers Trial Standard
                                 Levels
------------------------------------------------------------------------
                TSL                  3% discount rate   7% discount rate
------------------------------------------------------------------------
                                                Million 2012$
------------------------------------------------------------------------
                     Power Sector and Site Emissions
------------------------------------------------------------------------
1.................................               1.18               0.26
2.................................               1.77               0.50
3.................................               0.63              -0.30
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................               7.93               3.60
2.................................               9.66               4.36
3.................................              13.07               5.93
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................               9.10               3.85
2.................................              11.43               4.86
3.................................              13.71               5.63
------------------------------------------------------------------------

7. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the customer 
savings calculated for each TSL considered in this rulemaking. Table 
V.20 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO2 
and NOX emissions in each of four valuation scenarios to the 
NPV of customer 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 sets of SCC values discussed above.

 Table V.20--Net Present Value of Customer Savings Combined With Present
 Value of Monetized Benefits From CO[ihel2] and NOX Emissions Reductions
------------------------------------------------------------------------
                   Customer NPV at 3% discount rate added with:
         ---------------------------------------------------------------
   TSL    SCC Case $11.8/ SCC Case $39.7/ SCC Case $61.2/ SCC Case $117/
            metric ton      metric ton      metric ton      metric ton
            CO[ihel2]*      CO[ihel2]*      CO[ihel2]*      CO[ihel2]*
------------------------------------------------------------------------
                                   Billion 2012$
------------------------------------------------------------------------
1.......             0.8             0.9             1.0             1.2
2.......             1.0             1.1             1.2             1.5
3.......             2.1             2.3             2.4             2.9
------------------------------------------------------------------------

------------------------------------------------------------------------
                   Customer NPV at 7% Discount Rate added with:
         ---------------------------------------------------------------
   TSL    SCC Case $11.8/ SCC Case $39.7/ SCC Case $61.2/ SCC Case $117/
            metric ton      metric ton      metric ton      metric ton
            CO[ihel2]*      CO[ihel2]*      CO[ihel2]*      CO[ihel2]*
------------------------------------------------------------------------
                                   Billion 2012$
------------------------------------------------------------------------
1.......             0.3             0.5             0.6             0.8
2.......             0.4             0.6             0.7             1.0
3.......             0.9             1.1             1.3             1.7
------------------------------------------------------------------------
* These label values represent the global SCC in 2015, in 2012$. For NOX
  emissions, each case uses the medium value, which corresponds to
  $2,639 per ton.

    Although adding the value of customer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. customer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
the SCC are performed with different methods that use different time 
frames for analysis. The national operating cost savings is measured 
for the lifetime of equipment shipped in 2018-2047. The SCC values, on 
the other hand, reflect the present value of future climate-related 
impacts resulting from the emission of one metric ton of CO2 
in each year. These impacts continue well beyond 2100.

[[Page 12342]]

8. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6313(a)(6)(B)(ii)(VII)) No 
other factors were considered in this analysis.

C. Proposed Standards

    When considering proposed standards, the new or amended energy 
conservation standard that DOE adopts for any type (or class) of 
covered equipment shall be designed to achieve the maximum improvement 
in energy efficiency that the Secretary of Energy determines is 
technologically feasible and economically justified. (42 U.S.C. 
6295(o)(2)(A) and 6316(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, considering the seven statutory factors discussed 
previously. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(a)) The new or amended 
standard must also ``result in significant conservation of energy.'' 
(42 U.S.C. 6295(o)(3)(B) and 6316(a))
    For today's NOPR, DOE considered the impacts of standards at each 
TSL, 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 
highest efficiency level that is technologically feasible, economically 
justified and saves a significant amount of energy.
    To aid the reader in understanding the benefits and/or burdens of 
each TSL, tables in this section summarize the quantitative analytical 
results for each TSL, based on the assumptions and methodology 
discussed herein. The efficiency levels contained in each TSL are 
described in section V.A. 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 customers who may be disproportionately 
affected by a national standard (see section V.B.1.b), and impacts on 
employment. DOE discusses the impacts on employment in front-loading 
and top-loading commercial clothes washer equipment manufacturing in 
section V.B.2, and discusses the indirect employment impacts in section 
V.B.3.c.
1. Benefits and Burdens of Trial Standard Levels Considered for Front-
Loading and Top-Loading Commercial Clothes Washers
    Table V.21 and Table V.22 summarize the quantitative impacts 
estimated for each TSL for front-loading and top-loading commercial 
clothes washers.

Table V.21--Summary of Analytical Results for Front-Loading and Top-Loading Commercial Clothes Washers: National
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
                        Category                               TSL 1              TSL 2              TSL 3
----------------------------------------------------------------------------------------------------------------
                                        National FFC Energy Savings quads
----------------------------------------------------------------------------------------------------------------
                                                                     0.097              0.114              0.175
----------------------------------------------------------------------------------------------------------------
                                     NPV of Customer Benefits 2012$ billion
----------------------------------------------------------------------------------------------------------------
3% discount rate.......................................               0.72               0.94               2.00
----------------------------------------------------------------------------------------------------------------
7% discount rate.......................................               0.31               0.40               0.85
----------------------------------------------------------------------------------------------------------------
                              Cumulative Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO[ihel2] million metric tons..........................               4.94               5.87               8.84
NOX thousand tons......................................               7.26               9.10              11.14
Hg tons................................................               0.00               0.01               0.01
N[ihel2]O thousand tons................................               0.07               0.08               0.15
N[ihel2]O thousand tons CO[ihel2]eq*...................              20.37              22.57              43.25
CH4 thousand tons......................................              40.77              50.14              66.16
CH4 thousand tons CO[ihel2]eq*.........................              1,019              1,253              1,654
SO[ihel2] thousand tons................................               3.99               4.36               8.69
----------------------------------------------------------------------------------------------------------------
                               Value of Emissions Reduction (Total FFC Emissions)
----------------------------------------------------------------------------------------------------------------
CO[ihel2] 2012$ million **.............................      32.7 to 469.1      38.7 to 555.8      58.8 to 841.2
NOX--3% discount rate 2012$ million....................                9.1              11.43              13.71
NOX--7% discount rate 2012$ million....................               3.85               4.86               5.63
----------------------------------------------------------------------------------------------------------------
* CO[ihel2]eq is the quantity of CO[ihel2] that would have the same global warming potential (GWP).
** Range of the economic value of CO[ihel2] reductions is based on estimates of the global benefit of reduced
  CO[ihel2] emissions.

     Table V.22--Summary of Analytical Results for Front-Loading and Top-Loading Commercial Clothes Washers:
                                        Manufacturer and Consumer Impacts
----------------------------------------------------------------------------------------------------------------
                        Category                               TSL 1              TSL 2              TSL 3
----------------------------------------------------------------------------------------------------------------
Manufacturer Impacts...................................
Change in Industry NPV (2012$ million) [dagger]........              (5.9)              (6.0)   (91.2) to (95.4)
Change in Industry NPV (%) [dagger]....................              (4.7)             (4.90)   (73.4) to (76.8)
----------------------------------------------------------------------------------------------------------------
                                         Customer Mean LCC Savings 2012$
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-family............................                229                285                  8

[[Page 12343]]

 
Front-Loading, Laundromat [dagger].....................                198                235               (19)
Top-Loading, Multi-family..............................                259                259                813
Top-Loading, Laundromat................................                145                145                654
Weighted Average *.....................................                235                257                464
----------------------------------------------------------------------------------------------------------------
                                            Customer Median PBP years
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-family............................                0.0                0.0                3.8
Front-Loading, Laundromat..............................                0.0                0.0                8.0
Top-Loading, Multi-family..............................                0.0                0.0                0.6
Top-Loading, Laundromat................................                0.0                0.0                0.6
Weighted Average *.....................................                0.0                0.0                2.2
----------------------------------------------------------------------------------------------------------------
                                           Front-Loading, Multi-Family
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %..............................                  0                  0                 46
Customers with Net Benefit %...........................                 27                 61                 53
Customers with No Impact %.............................                 73                 39                  0
----------------------------------------------------------------------------------------------------------------
                                            Front-Loading, Laundromat
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %..............................                  0                  0                 72
Customers with Net Benefit %...........................                 27                 61                 28
Customers with No Impact %.............................                 73                 39                  0
----------------------------------------------------------------------------------------------------------------
                                            Top-Loading, Multi-Family
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %..............................                  0                  0                  0
Customers with Net Benefit %...........................                 99                 99                100
Customers with No Impact %.............................                  1                  1                  0
----------------------------------------------------------------------------------------------------------------
                                             Top-Loading, Laundromat
----------------------------------------------------------------------------------------------------------------
Customers with Net Cost %..............................                  0                  0                  0
Customers with Net Benefit %...........................                 99                 99                100
Customers with No Impact %.............................                  1                  1                  0
----------------------------------------------------------------------------------------------------------------
* Weighted by shares of each equipment class in total projected shipments in 2018.
[dagger] Values in parentheses are negative values.

    First, DOE considered TSL 3, the most efficient level (max tech), 
which would save an estimated total of 0.17 quads of energy, an amount 
DOE considers significant. TSL 3 has an estimated NPV of customer 
benefit of $0.85 billion using a 7 percent discount rate, and $1.99 
billion using a 3 percent discount rate.
    The cumulative emissions reductions at TSL 3 are 8.8 million metric 
tons of CO2, 11.1 thousand tons of NOX, 8.7 
thousand tons of SO2, and 0.01 tons of Hg. The estimated 
monetary value of the CO2 emissions reductions at TSL 3 
ranges from $59 million to $841 million.
    At TSL 3, the average LCC savings is $8 and -$19 for multi-family 
and laundromat applications for front-loading CCW units, and $813 and 
$654 for multi-family and laundromat applications for top-loading CCW 
units. The median PBP is 4 and 8 years for multi-family and laundromat 
applications for front-loading CCW units, and 0.6 years for both 
applications for top-loading CCW units. The share of customers 
experiencing a net LCC benefit is 53 percent and 28 percent for multi-
family and laundromat applications for front-loading CCW units, and 
99.8 percent for both applications for top-loading CCW units.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$91.2 million to a decrease of $95.4 million, equivalent to 73.4 
percent and 76.8 percent, respectively. Products that meet the 
efficiency standards specified by this TSL are forecast to represent 
only 12 percent of shipments in the year leading up to amended 
standards. As such, manufacturers would have to redesign nearly all 
products by the 2018 compliance date to meet demand. Redesigning all 
units to meet the current max-tech efficiency levels would require 
considerable capital and equipment conversion expenditures. At TSL 3, 
the capital conversion costs total $63.1 million, 13.1 times the 
industry annual capital expenditure in the year leading up to amended 
standards. DOE estimates that complete platform redesigns would cost 
the industry $62.4 million in equipment conversion costs. These 
conversion costs largely relate to the research programs required to 
develop new products that meet the efficiency standards set forth by 
TSL 3. These costs are equivalent to 14.3 times the industry annual 
budget for research and development. Total capital and equipment 
conversion costs associated with the changes in products and 
manufacturing facilities required at TSL 3 would require significant 
use of manufacturers' financial reserves (manufacturer capital pools), 
impacting other areas of business that compete for these resources, and 
significantly reducing INPV. In addition, manufacturers could face a 
substantial impact on profitability at TSL 3. Because manufacturers are 
more likely to reduce their margins to maintain a price-competitive 
product at higher TSLs, DOE expects that TSL 3 would yield impacts 
closer to the high end of the range of INPV impacts. If the high end of 
the range of impacts is reached,

[[Page 12344]]

as DOE expects, TSL 3 could result in a net loss of 76.8 percent in 
INPV to commercial clothes washer manufacturers. As a result, at TSL 3, 
DOE expects that some companies would be forced to exit the commercial 
clothes washer market or shift production abroad, both which would 
negatively impact domestic manufacturing capacity and employment.
    In view of the foregoing, DOE concludes that, at TSL 3 for front-
loading and top-loading CCW equipment, the benefits of energy savings, 
positive NPV of total customer benefits, customer LCC savings for three 
of the four applications, emission reductions and the estimated 
monetary value of the emissions reductions would be outweighed by the 
negative customer impacts for front-loadings CCWs in laundromats, the 
large reduction in industry value at TSL 3, as well as the potential 
for loss of domestic manufacturing. Consequently, DOE has concluded 
that TSL 3 is not economically justified.
    Next, DOE considered TSL 2, which would save an estimated total of 
0.11 quads of energy, an amount DOE considers significant. TSL 2 has an 
estimated NPV of customer benefit of $0.40 billion using a 7 percent 
discount rate, and $0.94 billion using a 3 percent discount rate.
    The cumulative emissions reductions at TSL 2 are 5.9 million metric 
tons of CO2, 9.1 thousand tons of NOX, 4.4 
thousand tons of SO2, and 0.01 tons of Hg. The estimated 
monetary value of the CO2 emissions reductions at TSL 2 
ranges from $39 million to $556 million.
    At TSL 2, the average LCC savings is $285 and $235 for front-
loading CCW units for multi-family application, and laundromat 
application, respectively. For top-loading CCW units, the average LCC 
savings are $259 and $145 for multi-family and laundromat applications. 
The median PBP is 0.02 and 0.01 years for multi-family and laundromat 
applications for front-loading CCW units, zero years for top-loading 
CCW units. The share of customers experiencing a net LCC benefit is 61 
percent for front-loading CCW units, and 99 percent for top-loading CCW 
units.
    At TSL 2, the projected change in INPV is a decrease of $6.0 
million, or a decrease of 4.9 percent. Although products that meet the 
efficiency standards specified by this TSL are forecast to represent 
only 15 percent of shipments in the year leading up to amended 
standards, DOE's testing and reverse-engineering analyses indicate that 
manufacturers can achieve TSL 2 at little or no additional capital cost 
compared to models at the current baseline levels. Through its 
analyses, DOE observed that manufacturers generally employ control 
strategies to achieve the TSL 2 efficiency levels (e.g., changes in 
water levels, water temperatures, and cycle settings available to the 
end user). Accordingly, this level corresponds more to incremental 
equipment conversions rather than platform redesigns. Thus, DOE 
estimates that compliance with TSL 2 would not require any up front 
capital investments, while the industry budget for capital expenditure 
in the year leading up to amended standards is $4.8 million. TSL 2 will 
require an estimated $10.2 million in equipment conversion costs 
primarily relating to the research and development programs needed to 
improve upon existing platforms to meet the specified efficiency 
levels. This represents 2.3 times the industry budget for research and 
development in the year leading up to amended standards. The 
substantial reduction in conversion costs corresponding to compliance 
with TSL 2 greatly mitigates the operational risk and impact on INPV.
    After considering the analysis and weighing the benefits and the 
burdens, DOE has tentatively concluded that at TSL 2 for front-loading 
and top-loading commercial clothes washer equipment, the benefits of 
energy savings, positive NPV of customer benefit, positive impacts on 
consumers (as indicated by positive average LCC savings, favorable 
PBPs, and the large percentage of customers who would experience LCC 
benefits), emission reductions, and the estimated monetary value of the 
emissions reductions would outweigh the potential reductions in INPV 
for manufacturers. The Secretary of Energy has concluded that TSL 2 
would save a significant amount of energy and is technologically 
feasible and economically justified.
    Based on the above considerations, DOE today proposes to adopt the 
energy conservation standards for front-loading and top-loading 
commercial clothes washers at TSL 2.
    Table V.23 presents the proposed energy conservation standards for 
commercial clothes washer equipment.

    Table V.23--Proposed Energy Conservation Standards for Commercial
                             Clothes Washers
------------------------------------------------------------------------
                                                                Maximum
                   Product class                     Minimum      IWF
                                                      MEFJ2*    [dagger]
------------------------------------------------------------------------
Top-Loading.......................................       1.35        8.8
Front-Loading.....................................       2.00        4.1
------------------------------------------------------------------------
* MEFJ2 (appendix J2 modified energy factor) is calculated as the
  clothes container capacity in cubic feet divided by the sum, expressed
  in kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot
  water energy consumption; (2) the total weighted per-cycle machine
  electrical energy consumption; and (3) the per-cycle energy
  consumption for removing moisture from a test load.
[dagger] IWF (integrated water factor) is calculated as the sum,
  expressed in gallons per cycle, of the total weighted per-cycle water
  consumption for all wash cycles divided by the clothes container
  capacity in cubic feet.

2. Summary of Benefits and Costs (Annualized) of the Proposed Standards
    The benefits and costs of today's proposed standards, for equipment 
sold in 2018-2047, can also be expressed in terms of annualized values. 
The annualized monetary values are the sum of (1) the annualized 
national economic value of the benefits from consumer operation of 
equipment that meet the proposed 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.\42\
---------------------------------------------------------------------------

    \42\ 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 2013, the year used for discounting 
the NPV of total customer 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. From 
the present value, DOE then calculated the fixed annual payment over 
a 30-year period (2019 through 2048) 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 emission reductions provides a useful perspective, two 
issues should be considered. First, the national operating savings are 
domestic U.S. customer 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 different time frames for

[[Page 12345]]

analysis. The national operating cost savings is measured for the 
lifetime of front-loading and top-loading commercial clothes washers 
shipped in 2018-2047. The SCC values, on the other hand, reflect the 
present value of some 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 the proposed 
standards for front-loading and top-loading commercial clothes washers 
are shown in Table V.24. The results under the primary estimate are as 
follows. Using a 7-percent discount rate for benefits and costs other 
than CO2 reduction, for which DOE used a 3-percent discount 
rate along with the average SCC series that uses a 3-percent discount 
rate, the cost of the standards proposed in today's rule is $0.02 
million per year in increased equipment costs; while the estimated 
benefits are $31 million per year in reduced equipment operating costs, 
$9 million in CO2 reductions, and $0.37 million in reduced 
NOX emissions. In this case, the net benefit would amount to 
$40 million per year. Using a 3-percent discount rate for all benefits 
and costs and the average SCC series, the estimated cost of the 
standards proposed in today's rule is $0.02 million per year in 
increased equipment costs; while the estimated benefits are $46 million 
per year in reduced operating costs, $9 million in CO2 
reductions, and $0.57 million in reduced NOX emissions. In 
this case, the net benefit would amount to approximately $56 million 
per year.

  Table V.24--Annualized Benefits and Costs of Proposed Standards for Front-Loading and Top-Loading Commercial
                                             Clothes Washers (TSL 2)
----------------------------------------------------------------------------------------------------------------
                                                                           Low net benefits    High net benefits
                                     Discount rate     Primary estimate*       estimate*           estimate*
----------------------------------------------------------------------------------------------------------------
                                                                          million 2012$/year
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings..........  7%................  31................  27................  38.
                                  3%................  46................  40................  60.
CO[ihel2] Reduction Monetized     5%................  2.................  2.................  3.
 Value ($11.8/t case) *.
CO[ihel2] Reduction Monetized     3%................  9.................  8.................  11.
 Value ($39.7/t case) *.
CO[ihel2] Reduction Monetized     2.5%..............  13................  12................  17.
 Value ($61.2/t case) *.
CO[ihel2] Reduction Monetized     3%................  28................  25................  34.
 Value ($117/t case) *.
NOX Reduction Monetized Value     7%................  0.37..............  0.33..............  0.45.
 (at $2,639/ton) **.
                                  3%................  0.57..............  0.51..............  0.70.
Total Benefits[dagger]..........  7% plus CO[ihel2]   33 to 58..........  29 to 52..........  42 to 73.
                                   range.
                                  7%................  40................  35................  50.
                                  3% plus CO[ihel2]   49 to 75..........  43 to 66..........  64 to 95.
                                   range.
                                  3%................  56................  49................  72.
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Incremental Product Costs.......  7%................  0.02..............  0.02..............  0.02.
                                  3%................  0.02..............  0.03..............  0.02.
----------------------------------------------------------------------------------------------------------------
                                                  Net Benefits
----------------------------------------------------------------------------------------------------------------
Total[dagger]...................  7% plus CO[ihel2]   33 to 58..........  29 to 52..........  42 to 73.
                                   range.
                                  7%................  40................  35................  50.
                                  3% plus CO[ihel2]   49 to 75..........  43 to 66..........  64 to 95.
                                   range.
                                  3%................  56................  49................  72.
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with front-loading and top-loading CCW units
  shipped in 2018-2047. These results include benefits to customers which accrue after 2047 from the products
  purchased in 2018-2047. The results account for the incremental variable and fixed costs incurred by
  manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low
  Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2013 Reference case,
  Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs
  reflect no change for projected product price trends in the Primary Estimate, an increasing trend for
  projected product prices in the Low Benefits Estimate, and a decreasing trend for projected product prices in
  the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F.
** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values
  are based on the average SCC from the three integrated assessment models, at discount rates of 2.5, 3, and 5
  percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3-
  percent discount rate, is included to represent higher-than-expected impacts from temperature change further
  out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time
  series incorporate an escalation factor. The value for NOX is the average of the low and high values used in
  DOE's analysis.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
  average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
  the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
  to the full range of CO2 values.

[[Page 12346]]

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 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 
commercial 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 commercial clothes washers that are not captured by the 
users of such equipment. These benefits include externalities related 
to environmental protection and energy security that are not reflected 
in energy prices, such as reduced emissions of greenhouse gases.
    In addition, DOE has determined that today's regulatory action is a 
``significant regulatory action'' under Executive Order 12866. DOE 
presented for review to the Office of Information and Regulatory 
Affairs (OIRA) in the OMB the draft rule and other documents prepared 
for this rulemaking, including a regulatory impact analysis (RIA), and 
has included these documents in the rulemaking record. The assessments 
prepared pursuant to Executive Order 12866 can be found in the 
technical support document for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011 (76 FR 3281, Jan. 21, 2011). 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 NOPR is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (``RFA'', 5 U.S.C. 601 et seq.) 
requires preparation of an initial regulatory flexibility analysis 
(IRFA) for any rule that by law must be proposed for public comment, 
unless the agency certifies that the rule, if promulgated, will not 
have a significant economic impact on a substantial number of small 
entities. As required by Executive Order 13272, ``Proper Consideration 
of Small Entities in Agency Rulemaking,'' 67 FR 53461 (August 16, 
2002), DOE published procedures and policies on February 19, 2003, to 
ensure that the potential impacts of its rules on small entities are 
properly considered during the rulemaking process. 68 FR 7990. DOE has 
made its procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel).
    DOE reviewed today's NOPR pursuant to the RFA and the policies and 
procedures discussed above. DOE certifies that the standards 
established in today's NOPR, published elsewhere in today's Federal 
Register, will not have a significant impact on a substantial number of 
small entities. The factual basis for this certification is set forth 
below. DOE will consider any comments on the certification or economic 
impacts of the rule in determining whether to proceed with the NOPR.
    For manufacturers of commercial clothes washers, the Small Business 
Administration (SBA) has set a size threshold, which defines those 
entities classified as ``small businesses'' for the purposes of the 
statute. DOE used the SBA's small business size standards to determine 
whether any small entities would be subject to the requirements of the 
rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 
53544 (Sept. 5, 2000) and codified at 13 CFR part 121.The size 
standards are listed by North American Industry Classification System 
(NAICS) code and industry description and are available at: 
www.sba.gov/sites/default/files/SizeStandards_Table.pdf. Commercial 
clothes washer manufacturing is classified under NAICS 333318, ``Other 
commercial and service industry machinery 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.
    To estimate the number of small businesses which could be impacted 
by the amended energy conservation standards, DOE conducted a market 
survey using available public information to identify potential small 
manufacturers. DOE's research included the AHAM membership directory, 
product databases (CEE, CEC, and ENERGY STAR databases) and individual 
company Web sites to find potential small business manufacturers. DOE 
also asked interested parties and industry representatives if they were 
aware of any other small business manufacturers during manufacturer 
interviews and at previous DOE public meetings. DOE reviewed all 
publicly available data and contacted various companies, as necessary, 
to determine whether they met the SBA's definition of a small business 
manufacturer of covered commercial clothes washers. DOE screened out 
companies that did not offer products covered by this rulemaking, did 
not meet the definition of a ``small business,'' or are foreign owned 
and operated.
    All top-loading commercial clothes washers and approximately 40 
percent of front-loading commercial clothes washers are currently 
manufactured in the United States, accounting for 78 percent of overall 
domestic commercial clothes washer shipments. Three U.S.-

[[Page 12347]]

based companies are responsible for this 78 percent domestic production 
and over 95 percent of commercial clothes washer industry market share. 
Although one of these manufacturers has been identified and analyzed 
separately as a LVM, none of these manufacturers meet the definition of 
a small business manufacturer, as they all have more than 1,000 
employees. The small portion of the remaining commercial clothes washer 
market (approximately 5,800 shipments) is supplied by a combination of 
3 international companies, all of which have small market shares. These 
companies are all foreign owned and operated, and exceed the SBA's 
employment threshold for consideration as a small business under the 
appropriate NAICS code. Therefore, DOE did not identify any small 
business manufacturers of commercial clothes washers.
    Based on the discussion above, DOE certifies that the standards for 
commercial clothes washers set forth in today's rule would not have a 
significant economic impact on a substantial number of small entities. 
Accordingly, DOE has not prepared a regulatory flexibility analysis for 
this rulemaking. DOE will transmit the certification and supporting 
statement of factual basis to the Chief Counsel for Advocacy of the SBA 
for review under 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

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

D. Review Under the National Environmental Policy Act of 1969

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

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' imposes on Federal agencies the general duty 
to adhere to the following requirements: (1) Eliminate drafting errors 
and ambiguity; (2) write regulations to minimize litigation; and (3) 
provide a clear legal standard for affected conduct rather than a 
general standard and promote simplification and burden reduction. 61 FR 
4729 (Feb. 7, 1996). Section 3(b) of Executive Order 12988 specifically 
requires that Executive agencies make every reasonable effort to ensure 
that the regulation: (1) Clearly specifies the preemptive effect, if 
any; (2) clearly specifies any effect on existing Federal law or 
regulation; (3) provides a clear legal standard for affected conduct 
while promoting simplification and burden reduction; (4) specifies the 
retroactive effect, if any; (5) adequately defines key terms; and (6) 
addresses other important issues affecting clarity and general 
draftsmanship under any guidelines issued by the Attorney General. 
Section 3(c) of Executive Order 12988 requires Executive agencies to 
review regulations in light of applicable standards in section 3(a) and 
section 3(b) to determine whether they are met or it is unreasonable to 
meet one or more of them. DOE has completed the required review and 
determined that, to the extent permitted by law, this proposed rule 
meets the relevant standards of Executive Order 12988.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on state, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by state, local, and tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of state, local, and tribal

[[Page 12348]]

governments on a proposed ``significant intergovernmental mandate,'' 
and requires an agency plan for giving notice and opportunity for 
timely input to potentially affected small governments before 
establishing any requirements that might significantly or uniquely 
affect small governments. On March 18, 1997, DOE published a statement 
of policy on its process for intergovernmental consultation under UMRA. 
62 FR 12820. DOE's policy statement is also available at http://energy.gov/gc/office-general-counsel.
    DOE examined today's proposed rule according to UMRA and its 
statement of policy. Today's proposed rule does not contain a Federal 
intergovernmental mandate, and DOE expects it will not require 
expenditures of $100 million or more by the private sector. Such 
expenditures may include: (1) Investment in research and development 
and in capital expenditures by commercial clothes washer manufacturers 
in the years between the final rule and the compliance date for the new 
standards, and (2) incremental additional expenditures by consumers to 
purchase higher-efficiency commercial clothes washers, starting at the 
compliance date for the applicable standard. Therefore, the analytical 
requirements of UMRA do not apply.

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

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

I. Review Under Executive Order 12630

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

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

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

K. Review Under Executive Order 13211

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

L. Review Under the Information Quality Bulletin for Peer Review

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

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this notice. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or Brenda.Edwards@ee.doe.gov. As explained in the 
ADDRESSES section, foreign nationals visiting DOE Headquarters are 
subject to advance security screening procedures.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's rulemaking Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx/ruleid/56. Participants 
are responsible for ensuring their systems are compatible with the 
webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her

[[Page 12349]]

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

C. Conduct of the Public Meeting

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

D. Submission of Comments

    DOE will accept comments, data, and information regarding this 
proposed rule before or after the public meeting, but no later than the 
date provided in the DATES section at the beginning of this proposed 
rule. Interested parties may submit comments, data, and other 
information using any of the methods described in the ADDRESSES section 
at the beginning of this notice.
    Submitting comments via regulations.gov. The regulations.gov Web 
page will require you to provide your name and contact information. 
Your contact information will be viewable to DOE Building Technologies 
staff only. Your contact information will not be publicly viewable 
except for your first and last names, organization name (if any), and 
submitter representative name (if any). If your comment is not 
processed properly because of technical difficulties, DOE will use this 
information to contact you. If DOE cannot read your comment due to 
technical difficulties and cannot contact you for clarification, DOE 
may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to regulations.gov information for which disclosure 
is restricted by statute, such as trade secrets and commercial or 
financial information (hereinafter referred to as Confidential Business 
Information (CBI)). Comments submitted through regulations.gov cannot 
be claimed as CBI. Comments received through the Web site will waive 
any CBI claims for the information submitted. For information on 
submitting CBI, see the Confidential Business Information section 
below.
    DOE processes submissions made through regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery, or mail also 
will be posted to regulations.gov. If you do not want your personal 
contact information to be publicly viewable, do not include it in your 
comment or any accompanying documents. Instead, provide your contact 
information in a cover letter. Include your first and last names, email 
address, telephone number, and optional mailing address. The cover 
letter will not be publicly viewable as long as it does not include any 
comments
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible. It is 
not necessary to submit printed copies. No facsimiles (faxes) will be 
accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. According to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
one copy of the document marked confidential including all the 
information believed to be confidential, and one copy of the document 
marked non-confidential with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential

[[Page 12350]]

status of the information and treat it according to its determination.
    Factors of interest to DOE when evaluating requests to treat 
submitted information as confidential include: (1) A description of the 
items; (2) whether and why such items are customarily treated as 
confidential within the industry; (3) whether the information is 
generally known by or available from other sources; (4) whether the 
information has previously been made available to others without 
obligation concerning its confidentiality; (5) an explanation of the 
competitive injury to the submitting person which would result from 
public disclosure; (6) when such information might lose its 
confidential character due to the passage of time; and (7) why 
disclosure of the information would be contrary to the public interest.
    It is DOE's policy that all comments may be included in the public 
docket, without change and as received, including any personal 
information provided in the comments (except information deemed to be 
exempt from public disclosure).

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues:
    1. Information on historical product shipments and market share 
efficiency data, disaggregated by product class, for 2012 and 2013 as 
those data become available.
    2. Comments, information and data on characterizing the CCW usage 
for establishing energy consumption of CCW. Specifically, whether there 
are any data on on-premise laundry usage that could improve the usage 
characterization.
    3. Comments, information and data on the equipment lifetimes 
developed for multi-family and laundromat applications for both front-
loading and top-loading CCW. DOE defines lifetime as the age at which 
CCW equipment is retired from service. DOE welcomes further input on 
the multi-family, commercial clothes washer lifetimes of 11.25 years on 
average, a 15.5 year maximum, and a 7.0 year minimum. DOE also welcomes 
further input on the laundromat average lifetime assumption of 7.125 
years on average, a 9.3 year maximum, and a 5.0 year minimum. In the 
technical support document, these equipment lifetime assumptions 
applied to the LCC and PBP are discussed further in Chapter 8.2.3 and 
the Weibull distributions used for the lifetimes are discussed in 
Appendix 8C.
    4. Comments, information and data on the base case efficiency 
distributions of CCW. Given that market share efficiency data for 2010-
2011 were used to develop estimated base case efficiency distributions 
in the compliance year (2018), DOE seeks more historical market share 
efficiency data which would be useful for projecting the base case and 
standards case efficiency distributions for the analysis period.
    5. Comments, information, and data on the repair and maintenance 
costs for front-loading and top-loading CCW equipment classes. Whether 
repair costs for CCW equipment would increase at the efficiency levels 
indicated in today's proposed rule due to any changes in the design and 
materials and components used in order to comply with the new 
efficiency standards.
    6. Impacts that the energy and water conservation standards may 
have on any lessening of the utility or performance of the covered 
products. These impacts may include increased cycle times to wash 
clothes, ability to achieve good wash performance (e.g., cleaning and 
rinsing), increased longevity of clothing, improved ergonomics of 
washer use, increased noise, and other potential impacts.
    7. The reasonableness of the values that DOE used to characterize 
the rebound effect with the more efficient CCW equipment.
    8. Whether there would be any anticipated changes in the 
consumption of complementary goods (e.g., laundry detergent, stain 
removers, fabric softeners) that may result from the proposed 
standards.
    9. On the assumptions applied in the engineering analysis in 
Chapter 5 of the technical support document, for top-loading and front-
loading product classes for the baseline efficiency levels and 
technology cost assessment. For the top-loading product class, DOE used 
the baseline level on the 1.60 MEF and the 8.5 WF requirements 
specified by current Federal energy conservation standards, which 
became effective for commercial clothes washers manufactured on or 
after January 8, 2013. For the front-loading product class, DOE 
established the baseline level based on the 2.00 MEF and 5.5 WF 
requirements specified by current Federal energy conservation 
standards.
    10. To estimate the impact on shipments of the price increase for 
the considered efficiency levels, DOE used a cross price elasticity 
approach to measure the change in the market share of top-loaders 
caused by a change in the price of front loaders. At the efficiency 
levels proposed in this rule, front-loader CCW equipment would increase 
their market share by 48 percent from the current 40 percent in the 
analysis period. DOE welcomes stakeholder input and estimates on the 
effect of amended standards on future CCW equipment shipments. DOE also 
welcomes input and data on the cross elasticity estimates used in the 
analysis.
    11. DOE requests comment on whether there are features or 
attributes of the more energy-efficient CCW equipment that 
manufacturers would produce to meet the standards in this proposed rule 
that might affect how they would be used by consumers. DOE requests 
comment specifically on how any such effects on CCW product features or 
attributes should be weighed in the choice of standards for the CCW 
final rule.
    12. For this rulemaking, DOE analyzed the effects of this proposal 
assuming that the CCW equipment would be available to purchase for 30 
years, and it undertook a sensitivity analysis using 9 years rather 
than 30 years of product shipments. The choice of a 30-year period of 
shipments is consistent with the DOE analysis for other products and 
commercial equipment. The choice of a 9-year period is a proxy for the 
timeline in EPCA for the review of certain energy conservation 
standards and potential revision of and compliance with such revised 
standards. We are seeking input, information and data on whether there 
are ways to refine the analytic timeline further.
    13. DOE solicits comment on the application of the new SCC values 
used to determine the social benefits of CO2 emissions reductions over 
the rulemaking analysis period. The rulemaking analysis period covers 
from 2018 to 2047 plus an additional 50 years to account for the 
lifetime operation of the equipment purchased in that period. In 
particular, the agency solicits comment on its derivation of SCC values 
after 2050, where the agency applied the average annual growth rate of 
the SCC estimates in 2040-2050 associated with each of the four sets of 
values.
    14. The agency also seeks input on the cumulative regulatory burden 
that may be imposed on industry either from recently implemented 
rulemakings for these products or other rulemakings that affect the 
same industry.
    15. Whether DOE should incorporate the cost of risers or storage 
drawers (also referred to as pedestals) into the baseline installation 
costs for front-loading machines.

[[Page 12351]]

VIII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 431

    Administrative practice and procedure, Energy conservation, 
Household appliances, and Small businesses.

    Issued in Washington, DC, on February 21, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble, DOE proposes to amend 
part 431 of chapter II, subchapter D, of title 10 of the Code of 
Federal Regulations, to read as set forth below:

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

0
1. The authority citation for Part 431 continues to read as follows:

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

0
2. Section 431.156 to Subpart I is amended by revising paragraph (b) 
and adding paragraph (c) as follows:

Sec.  431.156  Energy and water conservation standards and their 
effective dates.

* * * * *
    (b) Each commercial clothes washer manufactured on or after January 
8, 2013, and before January 1, 2015, shall have a modified energy 
factor no less than and a water factor no greater than:

------------------------------------------------------------------------
                                                      Modified
                                                       energy     Water
                                                       factor    factor
                   Equipment class                     (MEF),     (WF),
                                                      cu. ft./  gal./cu.
                                                        kWh/      ft./
                                                        cycle     cycle
------------------------------------------------------------------------
Top-Loading.........................................      1.60       8.5
Front-Loading.......................................      2.00       5.5
------------------------------------------------------------------------

    (c) Each commercial clothes washer manufactured on or after January 
1, 2015 shall have a modified energy factor no less than and an 
integrated water factor no greater than:

------------------------------------------------------------------------
                                                    Modified
                                                     energy   Integrated
                                                     factor      water
                  Equipment class                   (MEFJ2),    factor
                                                    cu. ft./    (IWF),
                                                      kWh/     gal./cu.
                                                      cycle    ft./cycle
------------------------------------------------------------------------
Top-Loading.......................................      1.35        8.8
Front-Loading.....................................      2.00        4.1
------------------------------------------------------------------------

[FR Doc. 2014-04407 Filed 3-3-14; 8:45 am]
BILLING CODE 6450-01-P
```