[Federal Register Volume 65, Number 194 (Thursday, October 5, 2000)]
[Proposed Rules]
[Pages 59550-59588]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-25335]



[[Page 59549]]

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Part III





Department of Energy





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Office of Energy Efficiency and Renewable Energy



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10 CFR Part 430



Energy Conservation Program for Consumer Products: Clothes Washer 
Energy Conservation Standards; Proposed Rule

Federal Register / Vol. 65 , No. 194 / Thursday, October 5, 2000 / 
Proposed Rules

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DEPARTMENT OF ENERGY

Office of Energy Efficiency and Renewable Energy

10 CFR Part 430

[Docket No. EE-RM-94-403]
RIN 1904-AA67


Energy Conservation Program for Consumer Products: Clothes Washer 
Energy Conservation Standards

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

ACTION: Notice of proposed rulemaking and public hearing.

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SUMMARY: The Energy Policy and Conservation Act, as amended 
(hereinafter referred to as EPCA or the Act), prescribes energy 
conservation standards for certain major household appliances, and 
requires the Department of Energy (DOE, Department, or we) to 
administer an energy conservation program for these products. We 
conducted several analyses regarding the energy savings, benefits and 
burdens of amended energy conservation standards for clothes washers 
and have shared the results of these analyses with all stakeholders. 
Based on these analyses, several of the major stakeholders, including 
clothes washer manufacturers and energy efficiency advocates, submitted 
to the Department a joint proposal for the highest standard level which 
they believed to be technically feasible and economically justified. 
Based on our review of this proposal, we found the proposed standards 
technically feasible and economically justified. Therefore, today we 
propose to amend the energy conservation standard for clothes washers 
for residential applications as recommended in the joint proposal and 
announce a public hearing.
    As part of this rulemaking in response to the joint proposal by the 
clothes washer manufacturers and energy efficiency advocates, we have 
also included revisions to the test procedure based on issues found 
during this rulemaking dealing with the energy test cloth, remaining 
moisture content (RMC), extractor testing and the correction factor. In 
addition, we incorporated minor editorial changes to help clarify both 
Appendix J and J1 of the test procedure based on the joint proposal by 
stakeholders. These changes have been included in their entirety in 
this rulemaking pertaining to the test procedure.

DATES: If you wish to submit comments on the proposed rule, they must 
be received on or before December 4, 2000 to Ms. Brenda Edwards-Jones 
at the address listed below. We request 10 copies of the written 
comments and, if possible, a computer disk. Oral views, data, and 
arguments may be presented at the public hearing. We will hold a Public 
Hearing on November 15, 2000, beginning at 9:00 a.m.
    If you wish to speak at the hearing, requests must be received by 
the Department no later than 4:00 p.m., November 6, 2000. Copies of 
statements to be given at the public hearing must be received by the 
Department no later than 4:00 p.m., November 6, 2000. We will read the 
statements in advance of the hearing and would appreciate the oral 
presentations to be limited to a summary of the statement. The length 
of each oral presentation is limited to 5 minutes.

ADDRESSES: The hearing will be at the U.S. Department of Energy, 
Forrestal Building, Room 6E-069, 1000 Independence Avenue, SW., 
Washington, DC 20585. Written comments, oral statements, and requests 
to speak at the hearing are to be submitted to Ms. Brenda Edwards-
Jones, U.S. Department of Energy, Office of Energy Efficiency and 
Renewable Energy, Energy Conservation Program for Consumer Products: 
Clothes Washers Energy Conservation Standards, Docket No. EE-RM-94-403, 
1000 Independence Avenue, SW., Washington, DC 20585-0121.
    Copies of the public comments received, the Technical Support 
Document (TSD) and the transcript of the public hearing may be read at 
the DOE Freedom of Information Reading Room, U.S. Department of Energy, 
Forrestal Building, Room 1E-190, 1000 Independence Avenue, SW., 
Washington, DC 20585, (202) 586-3142, between the hours of 9:00 a.m. 
and 4:00 p.m., Monday through Friday, except Federal holidays. Copies 
of the TSD may be obtained from: U.S. Department of Energy, Office of 
Energy Efficiency and Renewable Energy, Forrestal Building, Mail 
Station EE-41, 1000 Independence Avenue, SW., Washington, DC 20585-
0121. (202) 586-9127. Copies of the analysis can also be found on the 
Codes and Standards Internet site at: http://www.eren.doe.gov/buildings/codes_standards/applbrf/clwasher.html
    For more information concerning public participation in this 
rulemaking proceeding see Section VII, ``Public Comment Procedures,'' 
of this Notice.

FOR FURTHER INFORMATION CONTACT: Bryan Berringer, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Forrestal 
Building, Mail Station EE-41, 1000 Independence Avenue, SW, Washington, 
DC 20585-0121, (202) 586-0371, E-mail: <a href="/cdn-cgi/l/email-protection#5210202b333c7c103720203b3c3537201217177c161d177c151d04"><span class="__cf_email__" data-cfemail="9fddede6fef1b1ddfaededf6f1f8faeddfdadab1dbd0dab1d8d0c9">[email protected]</span></a>, or 
Eugene Margolis, U.S. Department of Energy, Office of General Counsel, 
Forrestal Building, Mail Station GC-72, 1000 Independence Avenue, SW, 
Washington, DC 20585, (202) 586-9526, E-mail: 
<a href="/cdn-cgi/l/email-protection#d396a6b4b6bdb6fd9eb2a1b4bcbfbaa0939b82fd979c96fd949c85"><span class="__cf_email__" data-cfemail="e4a19183818a81caa98596838b888d97a4acb5caa0aba1caa3abb2">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:
I. Summary of Proposed Rule
II. Introduction
    A. Consumer Overview
    B. Authority
    C. Background
    1. Current Standards
    2. History of Previous Rulemakings
    3. Process Improvement
    4. Test Procedures
III. General Discussion
    A. Test Procedures
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    3. Product Classes
    C. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    D. Rebuttable Presumption
    E. Economic Justification
    1. Economic Impact on Manufacturers and Consumers
    2. Life-Cycle Cost (LCC)
    3. Energy Savings
    4. Lessening of Utility or Performance of Products
    5. Impact of Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Other Factors
IV. Methodology
    A. Product Classes
    B. Engineering Analysis
    C. Life-Cycle Cost (LCC) Analysis
    D. Payback Period Analysis
    E. National Impact Analyses
    1. National Energy Savings (NES) Spreadsheet Model
    2. Net National Employment
    F. Consumer Analysis
    G. Manufacturer Impact Analysis
    H. Utility Analysis
    I. Environmental Analysis
V. Analytical Results
    A. Trial Standard Levels
    1. Economic Impacts on Consumers
    a. Life-Cycle-Cost
    b. Payback Period
    c. Rebuttable Presumption Payback
    d. Consumer Sub-Group Analysis
    2. Economic Impact on Manufacturers
    B. Significance of Energy Savings
    C. Lessening of Utility or Performance of Products
    D. Impact of Lessening of Competition
    E. Need of the Nation to Save Energy and Net National Employment
    1. National Net Present Value
    2. National Water Savings

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    3. Environmental Impacts
    4. Net National Employment
    F. Conclusion
VI. Procedural Reviews
    A. Review under the National Environmental Policy Act of 1969
    B. Review under Executive Order 12866, ``Regulatory Planning and 
Review''
    C. Review under the Regulatory Flexibility Act of 1980
    D. Review under the Paperwork Reduction Act
    E. Review under Executive Order 12988, ``Civil Justice Reform''
    F. ``Takings'' Assessment Review
    G. Review under Executive Order 13132, ``Federalism''
    H. Review under the Unfunded Mandates Reform Act of 1995
    I. Review under the Treasury and General Government 
Appropriation Act of 1999
    J. Review Under the Plain Language Directives
VII. Public Comment Procedures
    A. Written Comment Procedures
    B. Public Workshop (Hearing)
    1. Procedure for Submitting Requests to Speak
    2. Conduct of Workshop (Hearing)

I. Summary of the Proposed Rule

    The EPCA, as amended, specifies that any new or amended energy 
conservation standard the Department prescribes shall be designed to 
``achieve the maximum improvement in energy efficiency * * * which the 
Secretary determines is technologically feasible and economically 
justified.'' Section 325(o)(2)(A), 42 U.S.C. 6295(o)(2)(A). 
Furthermore, the amended standard must ``result in significant 
conservation of energy.'' Section 325(o)(2(B)(3)(B), 42 U.S.C. 
6295(o)(2)(B)(3)(B).
    In accordance with the statutory criteria discussed in this notice, 
we are proposing to amend the clothes washer energy efficiency 
standards. The proposed standards are based on a Joint Stakeholders 
Comment recommendation submitted to the Department by clothes washer 
manufacturers and energy conservation advocates. (Joint Comment, No. 
204). The Joint Stakeholders consist of the following: Alliance Laundry 
Systems LLC; Amana Appliances; Asko Incorporated; Frigidaire Home 
Products; General Electric Appliances (GEA), Maytag Corporation; Miele, 
Inc.; Fisher & Paykel Ltd; Whirlpool Corporation; Alliance to Save 
Energy; American Council for an Energy Efficient Economy (ACEEE); 
Appliance Standards Awareness Project; California Energy Commission 
(CEC); City of Austin, Texas; Natural Resources Defense Council (NRDC); 
Northwest Power Planning Council; and Pacific Gas and Electric (PG&E). 
The proposal as submitted in the Joint Stakeholders Comment consists of 
four parts as follows:
    ``Clothes Washer Energy Standard. The clothes washer energy 
standards for standard class clothes washers shall be 1.04 modified 
energy factor (MEF) in 1/1/2004 and 1.26 MEF in 1/1/2007. The energy 
test procedure will be revised to ensure that variability between test 
cloths will not significantly affect remaining moisture content (RMC) 
results. Additional clarifications will also be made to test procedure.
    Energy Star Labeling Program. Energy Star levels shall be set as 
follows: Standard Class Clothes Washers--1.26 MEF in 2001; 1.42 MEF in 
2004; Refrigerator/Freezers--10% better than the 2001 standard in 2001; 
change to 15% better than the 2001 in 2004.
    Tax Credit for the Production of Energy Efficient Clothes Washers 
and Refrigerator-Freezers. The credit shall provide for two energy 
efficiency tiers, each with separately designated funds. There is $30 
million in each designated fund per company per efficiency tier. Cap of 
$60 million per company for the two funds or yearly cap with carry 
forward. Annual total tax credit cannot exceed in any taxable year 2% 
of corporate gross revenues as determined by average of 3 prior years.
    Standard Class Clothes Washers: Two tiers coterminous 2001-2006; 
$50 per unit for products manufactured with a 1.26 MEF and $100 per 
unit for products manufactured with a 1.42 MEF, increasing to 1.5 MEF 
in 2004. Includes residential-style ``coin-operated'' washers.
    Refrigerators: First tier effective in 2001. $50 per unit for 
products manufactured 10% above 2001 minimum efficiency standard. 
Credit runs through 2004. Second tier also effective in 2001 and runs 
through 2006. It is $100 for products manufactured 15% above the 2001 
minimum efficiency standard. Credits apply to automatic defrost 
refrigerator-freezers only, at 16.5 cubic feet internal volume and 
above.
    Voluntary Industry Water Program. Water factor reporting shall be 
part of a voluntary industry sponsored program. AHAM members agree to 
publicly disclose through AHAM, water factors for each model that meets 
Energy Star/Tax Credit MEF levels, starting sometime in calendar year 
2001. In calendar year 2002 and each year thereafter, industry-wide 
shipment weighted average water factors for units shipped in the 
previous year shall be reported by AHAM. Water factor calculations will 
use Appendix J water factor through 2003 and will use Appendix J1 
thereafter. Starting in 2007, AHAM members agree to report water factor 
for all models. AHAM will sponsor water conference.'' (Joint Comment, 
No. 204).
    This rulemaking only addresses the clothes washer energy standards 
of this agreement. The above proposed standard, based on this agreement 
would go into effect in stages, with the first level going into effect 
on January 1, 2004, and the second level going into effect on January 
1, 2007. The initial standard is a 22 percent (%) reduction in energy 
consumption over the current standard or a MEF of 1.04, and can be 
attained with current vertical-axis (V-axis) clothes washer designs. 
The later, more stringent standard, is a 35 percent reduction in energy 
consumption over the current standard or a MEF of 1.26. While both 
vertical- and horizontal-axis (H-axis) design clothes washers are 
currently available in retail appliance stores at these levels, they 
represent less than nine percent of the washers sold per year.
    The Department's analyses indicates that the proposed standards, 
trial standard level of a 1.04 MEF in 2004 and a 1.26 MEF in 2007 saves 
an estimated 5.52 quads of energy over 27 years (2004-2030), a 
significant amount. This amount is more than the primary energy used 
for heating water in all U.S. buildings (residential, commercial and 
industrial) in 1997 (3.82 quads). The economic impacts on consumers 
(i.e., the average life-cycle cost (LCC) savings) are positive.
    The national NPV of trial standard level of a 1.04 MEF in 2004 and 
a 1.26 MEF in 2007 is $15.3 billion from 2004-2030 in 1997 dollars. 
This is the estimated total value of future savings discounted to 1997 
minus the estimated increased equipment costs also discounted to 1997. 
The clothes washer industry net present value (INPV) today is estimated 
to be $1,452 million. If we adopt trial standard level proposed, we 
expect manufacturers may lose between 28.6-36.0% of the INPV, which is 
approximately $411.0-$518.3 million. With the present value of future 
energy savings for the U.S. of $15.3 billion, this would exceed 
industry losses due to energy efficiency standards by about 30 times. 
Additionally, based on our interviews with the five major 
manufacturers, we do not expect any plant closings or loss of 
employment because the manufacturers stated that they would stay in 
business.
    The proposed standard has significant environmental benefits, 
reducing greenhouse gas emissions and air pollution. This proposed 
standard level would result in cumulative greenhouse gas emission 
reductions of 95.1 million

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metric tons (Mt) of carbon dioxide (CO<INF>2</INF> equivalent. 
Additionally, air pollution would be reduced by the elimination of 
253.5 thousand metric tons of nitrous oxides (NO<INF>X</INF>) and 28.1 
thousand metric tons of sulfur dioxide (SO<INF>2</INF>) from 2004-2030. 
The NO<INF>X</INF> reduction are derived from the power sector and 
household emissions, whereas the SO<INF>2</INF> reductions are derived 
only from household emission.
    The proposed standard also saves a significant quantity of water, 
which amounts to 11.59 trillion gallons through the period 2004-2030.
    Therefore, DOE has determined that the benefits (energy and water 
savings, consumer life cycle cost savings, national net present value 
increase, job creation and emission reductions) to the nation outweigh 
the burdens (loss of manufacturer net present value and consumer life 
cycle cost increases for some users of clothes washers). We conclude 
that the proposed standard of a 1.04 MEF in 2004 and a 1.26 MEF in 2007 
is economically justified. Furthermore, DOE has determined this 
standard level is technologically feasible. Clothes washers reaching 
this standard level already are commercially available in both V- and 
H-axis models.

II. Introduction

A. Consumer Overview

    The Energy Policy and Conservation Act, as amended, specifies that 
the Department must consider, for amended standards, those standards 
that ``achieve the maximum improvement in energy efficiency which the 
Secretary determines is technologically feasible and economically 
justified'' and which will ``result in significant conservation of 
energy.'' Accordingly, today's proposed rule would be amending the 
energy conservation standard for residential clothes washers.
    We are currently establishing a new energy efficiency standard for 
clothes washers that will amend the standard set in 1994. When today's 
proposed standards go into effect, they will essentially require more 
efficient Standard class clothes washers. The efficiency levels can be 
met by either top or front loading machines. The major stakeholders, 
including manufacturers and energy efficiency advocates, have jointly 
submitted a proposed clothes washer efficiency standard to the 
Department that they both feel is technically feasible and economically 
justified. The proposed standard would go into effect in two stages. 
The first stage would begin January 1, 2004, and require that all new 
residential clothes washers be 22 percent more efficient than today's 
baseline clothes washer. The second stage would begin January 1, 2007, 
and require that all new residential clothes washers be 35 percent more 
efficient than today's baseline clothes washer.
    The Department has reviewed this proposal and its analyses, and 
agrees that the standard they proposed is technically feasible and 
economically justified. The Department therefore proposes to amend the 
energy conservation standard for Standard class clothes washers for 
residential applications as recommended in the joint stakeholders 
proposal and announce a public hearing.
    As a result of today's proposed rule, clothes water efficiency 
standard will provide significant energy savings and water savings to 
the nation. The Department's analyses indicates that the proposed 
standards would save an estimated 5.52 quads of energy over 27 years 
(2004 to 2030). That is equivalent to saving enough electricity to 
light 16 million U.S. homes for 25 years, while cutting greenhouse gas 
emissions by an amount equal to that produced by three million cars 
every year. This proposed standard level would result in cumulative 
greenhouse gas emission reductions of 95.1 million metric tons (Mt) of 
carbon dioxide (CO<INF>2</INF>) equivalent. Additionally, air pollution 
would be reduced by the elimination of 253.5 thousand metric tons of 
nitrous oxides (NO<INF>X</INF>) and 28.1 thousand metric tons of sulfur 
dioxide (SO<INF>2</INF>) from 2004 to 2030. The NO<INF>X</INF> 
reductions are derived from the power sector and household emissions. 
The SO<INF>2</INF> reductions are derived only from household emissions 
and is a result of less home heating oil and LPG being used in oil-
fired and LPG-fired water heaters for water heating.\1\ DOE is seeking 
comment on what will be the likely impact of EPA rules, such as its 
proposed rule to reduce sulfur levels in highway diesel fuel, on home 
heating oil sulfur levels and household SO<INF>2</INF> emissions. In 
2020, the standards will save the amount of electricity generated by 15 
large, 400 megawatt, power plants. \2\ The standards will save enough 
water to supply the needs of 6.6 million households for 25 years. The 
water savings will reach up to 11 trillion gallons, meaning less water 
needs to be pumped from America's aquifers and rivers, and less strain 
on many of the nation's overtaxed water and sewer systems. In total, we 
estimated the net present value (NPV) to the nation of this standard to 
be $15.3 billion from 2004 to 2030.
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    \1\ The Department recognizes that the Environmental Protection 
Agency is considering regulations which could affect the amount of 
sulfur in home heating oil.
    \2\ DOE estimates that standards will result in 5 coal-fired and 
11 gas-fired power plants avoided.
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    The proposed clothes washer energy efficiency standard will not 
impact clothes washer features valued by consumers. For instance, 
consumers will still be able to purchase either a top loading clothes 
washer or a front loading machine, whichever they prefer. The energy 
and water savings will result primarily from a variety of design 
changes, such as higher spin speeds, more efficient use of hot water, 
more sensitive clothes load technologies, more efficient motors, and 
the increased use of spray rinse cycles. The Department does not expect 
the cleaning ability or reliability of washing machines to be 
compromised by the design changes anticipated under the proposed 
clothes washer standard.
    The Department expects the purchase price of the high efficiency 
clothes washers (i.e., 35 percent efficiency increase) to be 
approximately $200 higher than the average price of clothes washers 
today. Although the purchase cost is expected to increase, the energy 
and water efficiency gains will result in lower washer-related energy 
costs and water costs, saving consumers $30 a year on their utility 
bills and 18 gallons of water for every load of wash. As such, the life 
cycle cost analysis estimates that the payback period for the high 
efficiency machines will be approximately 7 years. In other words, the 
energy and water cost savings will enable the average consumer to 
recoup the additional $200 he/she had to spend on the purchase of the 
high efficiency machine in 7 years through the energy and water cost 
savings. When these savings are summed over the lifetime of the high 
efficiency machine, consumers will save $260, on average, compared to 
today's baseline clothes washing machines.

B. Authority

    Part B of Title III of the Energy Policy and Conservation Act, Pub. 
L. 94-163, as amended by the National Energy Conservation Policy Act, 
Pub. L. 95-619, by the National Appliance Energy Conservation Act, Pub. 
L. 100-12, by the National Appliance Energy Conservation Amendments of 
1988, Pub. L. 100-357, and the Energy Policy Act of 1992, Pub. L. 102-
486 \3\ (the Act

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or EPCA) created the Energy Conservation Program for Consumer Products 
other than Automobiles. The consumer products subject to this program 
(often referred to hereafter as ``covered products'') include clothes 
washers.
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    \3\ Part B of Title III of the Energy Policy and Conservation 
Act, as amended by the National Energy Conservation Policy Act, the 
National Appliance Energy Conservation Act, the National Appliance 
Energy Conservation Amendments of 1988, and the Energy Policy Act of 
1992, is referred to in this notice as the ``Act.'' Part B of Title 
III is codified at 42 U.S.C. 6291 et seq. Part B of Title III of the 
Energy Policy and Conservation Act, as amended by the National 
Energy Conservation Policy Act only, is referred to in this notice 
as the National Energy Conservation Policy Act.
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    Under the Act, the program consists essentially of three parts: 
testing, labeling, and Federal energy conservation standards. The 
Department, in consultation with the National Institute of Standards 
and Technology, amends or establishes new test procedures for each of 
the covered products. Section 323. The test procedures measure the 
energy efficiency, energy use, or estimated annual operating cost of a 
covered product during a representative average use cycle or period of 
use. They must not be unduly burdensome to conduct. Section 323(b)(3). 
A test procedure is not required if DOE determines by rule that one 
cannot be developed. Section 323(d)(1). Test procedures appear at 10 
CFR Part 430, Subpart B.
    A test procedure promulgated under Section 323 of the Act must be 
reasonably designed to produce test results which measure energy 
efficiency, energy use, water use (in the case of shower heads, 
faucets, water closets and urinals), or estimated annual operating cost 
of a covered product during a representative average use cycle or 
period of use, and must not be unduly burdensome to conduct. EPCA, 
Section 323(b)(3). A test procedure is not required if DOE determines 
by rule that one cannot be developed. EPCA, Section 323(d)(1). One 
hundred and eighty days after a test procedure for a product is 
adopted, no manufacturer may make representations with respect to 
energy use, efficiency or water use of such product, or the cost of 
energy consumed by such product, except as reflected in tests conducted 
according to the DOE procedure. EPCA, Section 323(c)(2). This 180-day 
period may be extended for up to an additional 180 days if the 
Secretary determines that the requirements of Section 323(c)(2) would 
impose undue burden. EPCA, Section 323(c)(3).
    Section 323(e) of the Act requires DOE to determine to what extent, 
if any, a proposed test procedure would alter the measured energy 
efficiency, measured energy use or measured water use of any covered 
product as determined under the existing test procedure. If DOE 
determines that an amended test procedure would alter the measured 
efficiency or measured use of a covered product, DOE is required to 
amend the applicable energy conservation standard accordingly. EPCA, 
Section 323(e)(2).
    The Federal Trade Commission (FTC) prescribes rules governing the 
labeling of covered products after DOE publishes test procedures. 
Section 324(a). The FTC labels indicate the annual operating cost for 
the particular model and the range of estimated annual operating costs 
for other models of that product. Section 324(c)(1). Disclosure of 
estimated operating cost is not required if the FTC determines that 
such disclosure is not likely to assist consumers in making purchasing 
decisions, or is not economically feasible. In such a case, the FTC 
must require a different useful measure of energy consumption. Section 
324(c). At the present time, there are Federal Trade Commission rules 
requiring labels for the following products: room air conditioners, 
furnaces, clothes washers, dishwashers, water heaters, refrigerators, 
refrigerator-freezers and freezers, central air conditioners and 
central air conditioning heat pumps, and fluorescent lamp ballasts.
    The National Appliance Energy Conservation Act of 1987 amended the 
Act to impose prescriptive standards (design feature requirements) for 
clothes washers as part of the energy conservation program for consumer 
products. EPCA, Sec. 325(g), 42 U.S.C. 6295(g). The design feature 
requirement that clothes washers shall have an unheated rinse option 
was effective for appliances manufactured on or after January 1, 1988. 
The Act required the Department to conduct a rulemaking by January 1, 
1990, to determine if the above mentioned standards should be amended. 
The Act provided that any amendment to the standards would apply to 
products manufactured three years after the rulemaking. The Final Rule 
was issued on May 14, 1991, and is effective for products manufactured 
on or after May 14, 1994, (hereinafter referred to as the May 1991 
Final Rule) which required top loading compact clothes washers (less 
than 1.6 cubic feet capacity) to have an energy factor (EF) of 0.90 
cubic feet/kilowatt-hours/cycle (cu.ft/Kwh/cycle) and top loading 
standard clothes washers (1.6 cu. ft. or greater capacity) to have an 
EF of 1.18 cu. ft./Kwh/cycle). 56 FR 22279. The Act also requires the 
Department to conduct a subsequent rulemaking no later than five years 
after the date of publication of the previous final rule.
    Any new or amended standard must be designed so as to achieve the 
maximum improvement in energy efficiency that is technologically 
feasible and economically justified. Section 325(o)(2)(A).
    Section 325(o)(2)(B)(i) provides that before DOE determines whether 
a standard is economically justified, it must first solicit comments on 
a proposed standard. After reviewing comments on the proposal, DOE must 
then determine that the benefits of the standard exceed its burdens, 
based, to the greatest extent practicable, on a weighing of the 
following seven factors:
    (1) The economic impact of the standard on the manufacturers and on 
the consumers;
    (2) The savings in operating costs throughout the estimated average 
life of the covered product in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses;
    (3) The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the standard;
    (4) Any lessening of the utility or the performance of the covered 
products likely to result from 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 
standard;
    (6) The need for national energy and water conservation; and
    (7) Other factors the Secretary considers relevant.
    In addition, Section 325(o)(2)(B)(iii), 42 U.S.C. 
6295(o)(2)(b)(iii), establishes a rebuttable presumption of economic 
justification in instances where the Secretary determines 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 applicable test procedure. * * *'' The rebuttable 
presumption test is an alternative path to establishing economic 
justification.
    Section 327 of the Act addresses the effect of Federal rules on 
State laws or regulations concerning testing, labeling, and standards. 
Generally, all such State laws or regulations are superseded by the Act 
unless specifically exempted in Section 327. The Department can grant a 
waiver of preemption in accordance with the procedures and other 
provisions of Section 327(d) of the Act. 42 U.S.C. 6297(d).

[[Page 59554]]

C. Background

1. Current Standards
    The existing clothes washer efficiency standards have been in 
effect since 1994. Energy efficiency for a clothes washer is measured 
in terms of an energy factor (EF), which measures overall clothes 
washer efficiency, in terms of cubic feet per kilowatt-hour per cycle, 
and is determined by the DOE test procedure. 10 CFR Part 430, Subpart 
B, Appendix J. The current clothes washer efficiency standards are as 
follows:
    <bullet> Top loading, compact (less than 1.6 cubic feet capacity), 
EF = 0.90.
    <bullet> Top loading, standard (1.6 cubic feet or greater 
capacity), EF = 1.18.
    <bullet> Top loading, semi-automatic, must have an unheated rinse 
option.
    <bullet> Front loading, must have an unheated rinse option.
    <bullet> Suds saving, must have an unheated rinse option.
2. History of Previous Rulemakings
    On November 14, 1994 DOE published an Advance Notice of Proposed 
Rulemaking (ANOPR). 59 FR 56423. On November 19, 1998, DOE published a 
Supplemental ANOPR. (Hereafter referred to as the 1998 Supplemental 
ANOPR.) 63 FR 64344. In the 1998 Supplemental ANOPR, we provided 
interested persons an opportunity to comment on:
    (1) The product classes that we propose to analyze;
    (2) The analytical framework, models (e.g., the Government 
Regulatory Impact Model (GRIM)), and tools (e.g., a Monte Carlo 
sampling methodology, and life-cycle-cost (LCC) and national energy 
savings (NES) spreadsheets) that we plan to use in performing analyses 
of the impacts of standards; and
    (3) The results of preliminary analyses for LCC, payback and 
national energy savings contained in the Preliminary Technical Support 
Document: Energy Efficiency Standards for Consumer Products: Clothes 
Washers (TSD) dated October 1998 and summarized in the 1998 
Supplemental ANOPR.
3. Process Improvement
    The fiscal year (FY) 1996 appropriations legislation imposed a 
moratorium on proposed or final rules for appliance efficiency 
standards for FY 1996. Public Law 104-134. During the moratorium, the 
Department examined the appliance standards program and how it was 
working. Congress advised DOE to correct the standards-setting process 
and to bring together stakeholders (such as manufacturers and 
environmentalists) for assistance. We consulted with energy efficiency 
groups, manufacturers, trade associations, state agencies, utilities 
and other interested parties to provide input to the process used to 
develop appliance efficiency standards. As a result, on July 15, 1996, 
the Department published a Final Rule: Procedures for Consideration of 
New or Revised Energy Conservation Standards for Consumer Products 
(referred to as the Process Rule) (61 FR 36974), codified at 10 CFR 
Part 430, Subpart C, Appendix A. DOE completed this review and decided 
to use the Process Rule, to the extent possible, in the development of 
the revised clothes washer standards.
    We developed an analytical framework for the clothes washer 
standards rulemaking for our stakeholders. The analytical framework 
described the different analyses (e.g., LCC, payback and manufacturing 
impact analyses (MIA)) to be conducted, the method for conducting them, 
the use of new LCC and national energy savings (NES) spreadsheets, and 
the relationship between the various analyses. We have conducted 
several meetings, workshops and discussions regarding energy efficiency 
standards for clothes washers. These workshops included discussions on 
proposed design options and a preliminary engineering analysis on 
November 15, 1996; development of an analytical framework for appliance 
standards rulemaking on July 23, 1997; and development of two new 
spreadsheet tools for LCC and NES on March 11, 1998. We conducted 
public hearings on December 15, 1998, to receive additional comments on 
the 1998 Supplemental ANOPR and on July 22, 1999, to discuss the 
process, analytical tools and uncertainties with the test procedures.
    In this rulemaking we incorporated the recommendations made by the 
Advisory Committee on Appliance Energy Efficiency Standards on April 
21, 1998. (Advisory Committee, No. 96). These recommendations relate to 
using the full range of consumer marginal energy prices (CMEP) in the 
LCC analysis (replacing the use of national average energy prices), 
defining a range of energy price futures for each fuel used in the 
economic analyses and defining a range of primary energy conversion 
factors and associated emission reductions, based on the generation 
displaced by energy efficiency standards for each rulemaking. We 
discuss how these recommendations have been incorporated in the 
discussions on methodology (Section IV). Marginal energy prices are 
used in the LCC, payback and NES analyses. Because the NES results are 
inputs to the analyses for utility, emissions and employment; these 
analyses are also impacted by using marginal rates.
4. Test Procedures
    Federal test procedures for clothes washers were first established 
in 1977. Simultaneous with the rulemaking for clothes washer standards, 
the Department was also in the process of revising the clothes washer 
test procedure. The Department needed to address a number of innovative 
technologies for which there were no test procedures. A number of 
proposals were published, one on December 22, 1993, (58 FR 67710) and 
another on March 23, 1995. 60 FR 15330. In its comments to the March, 
1995 proposed rule, AHAM requested that DOE adopt an additional new 
test procedure, based on current consumer habits, which would be used 
in considering the revision of the clothes washer energy conservation 
standards, and would go into effect upon issuance of standards.
    On April 22, 1996, the Department issued a supplemental Notice of 
Proposed Rulemaking proposing such a new test procedure, Appendix J1, 
as well as certain additional revisions to the currently applicable 
test procedure in Appendix J to Subpart B of 10 CFR Part 430. 61 FR 
17589. The supplemental notice was published to seek comments on 
whether DOE should adopt the AHAM recommended test procedure with 
certain changes. The Final Rule, published on August 27, 1997, adopted 
this recommendation. 62 FR 45484. Appendix J is the current applicable 
test procedure. Appendix J1 is informational and will not become 
mandatory until the energy conservation standards of this rule become 
effective. Appendix J1 includes a modified energy factor (MEF) which 
replaces the EF. Contrasting with the previous EF (energy factor) 
descriptor, the MEF descriptor incorporates clothes dryer energy by 
consideration of the remaining moisture content (RMC) of clothes 
leaving the clothes washer. Other substantive differences between the 
test procedures include using different water temperatures for testing 
and using cloth loads in J1 and not in J. The issuance of the Final 
Rule was a major step in accelerating the development of clothes washer 
standards because it provided the basis upon which the energy and water 
consumption, as well as the manufacturing costs would be submitted.

[[Page 59555]]

III. General Discussion

A. Test Procedure

    As part of the July 15, 1996, Process Rule (61 FR 36974), we stated 
that a final modified test procedure would be issued prior to the 
notice of proposed rulemaking on standards. The process described in 
this rule provides for greatly enhanced opportunities for public input, 
improved analytical approaches, and encouragement of consensus-based 
standards. Section 7, Test Procedures, of the Process Rule provides 
that modifications in test procedures will be proposed before revised 
standards are proposed. Today's proposed revisions to the clothes 
washer test procedures follows the process in the Process Rule in that 
the Final Rule for test procedures was published on August 27, 1997, 
with the exception of today's proposed revisions to the test procedure 
language as recommended by clothes washer manufacturers and energy 
conservation advocates. (Joint Comment, No. 204)
    During this standards rulemaking, it was discovered that the test 
cloth to be used for determining the RMC was giving inconsistent 
results. Over the approximately 20 year period that the original 
clothes washer and clothes dryer test procedures have been used, no 
variations or inconsistency of washer or dryer test results had been 
attributed to variations in the test cloths. A significant 
inconsistency in RMC test results under the new Appendix J1 procedure 
was noted by Alliance Laundry Systems LLC and was brought to the 
Department of Energy's attention in a letter dated June 7, 1999. 
(Alliance Laundry Systems, No. 179). In the tests referred to in this 
letter, which were run at Intertek Testing Services (ITS), the RMC 
values that were obtained in one machine with two different lots of 
energy test cloths differed by over 11 percentage points (67.9% versus 
56.0%). When these two lots of energy test cloth were run through a 
second machine, a similar difference in RMC occurred.
    The effect of RMC on MEF can be substantial, particularly for 
washers which are more efficient with respect to electrical consumption 
and use of hot water. The following scenario illustrates: For a high 
efficiency horizontal axis washer, an 18% increase in RMC (54.5%-64.5%) 
will result in a 13% decrease in MEF (1.52-1.33). For a lower 
efficiency washer, a 17% increase in RMC (57.7%-67.7%) will result in 
only a 6% decrease in MEF (0.82-0.77).
    The Department investigated possible causes for the inconsistent 
test results, and results are summarized in the DOE report, 
``Development of a Standardized Energy Test Cloth for Measuring 
Remaining Moisture Content in a Residential Clothes Washer,'' May 2000. 
(DOE, No. 200). As part of our investigation into the cause of these 
discrepancies, we found that various lots of test cloth will yield 
inconsistent RMC results. To understand the effects of operating 
variables and cloth specifications, it was necessary to conduct 
laboratory tests to determine RMC. To insure that test results would 
not be influenced or biased by any manufacturer's product (clothes 
washer), we used an extractor to remove moisture content. An extractor 
is a centrifuge--basically a rotating basket that has a controllable 
speed to produce a variety of centrifugal forces. The speed was varied 
to impose different centripetal accelerations on the test load. These 
accelerations are reported in terms of gravitational acceleration (g). 
We also soak the cloth in a tub at controlled temperature rather than 
use the agitated soak cycle provided by a typical washer. The RMC tests 
closely resembles those specified in the energy test procedure.
    An extractor based test has been established to examine RMC values 
at different gravitational forces (g-forces). A correction factor is 
derived by which the deviation between a new production batch of test 
cloth and a standard reference test cloth is measured. This deviation 
is measured as the root mean square between the set of measured RMC 
values and the set of standard RMC values. If this absolute deviation 
is below 2%, then no correction factors are needed in MEF tests using 
that batch of cloth. If the absolute root-mean-square (RMS) difference 
between the cloth RMC values and standard RMC values is above 2%, then 
correction factors may be applied when using the cloth to test the MEF 
of a clothes washer.
    As part of this rulemaking, we have included revisions to the test 
procedure based on our proposed language addressed in the May 2000 
report dealing with the energy test cloth, RMC, extractor testing and 
the correction factor and Joint Stakeholders Comment. (Joint Comment 
No. 204). In addition, we incorporated AHAM's comments and Joint 
Stakeholders Comment requesting minor editorial changes to help clarify 
both Appendix J and J1. (AHAM , Nos. 197 and 199, and Joint Comment No. 
204). These changes have been included in their entirety in this 
rulemaking pertaining to the test procedure.

B. Technological Feasibility

1. General
    There are or have been clothes washers in the market at all of the 
efficiency levels analyzed in today's notice. Therefore, the Department 
believes all of the efficiency levels discussed in today's notice are 
technologically feasible.
2. Maximum Technologically Feasible Levels
    Under the guidelines in the Process Rule, DOE will eliminate from 
consideration, early in the process, any design option which is not 
practicable to manufacture, install, or service, will eliminate product 
utility features or for which there are safety concerns that can not be 
resolved. In order to conduct the screening analysis, the Department 
gathers information regarding all current technology options and 
prototype designs. In consultation with interested parties, the 
Department develops a list of design options for consideration in the 
rulemaking. All technologically feasible design options are candidates 
in this initial assessment. We did not reject any design options from 
consideration in this rulemaking.
    The Department considers design options technologically feasible if 
they are already in use by the respective industry or research has 
progressed to the development of a working prototype. The Process Rule 
sets forth a definition of technological feasibility as follows: 
``Technologies incorporated in commercially available products or in 
working prototypes will be considered technologically feasible.'' 10 
CFR 430, Subpart C, Appendix A(4)(a)(4)(I).
    When we amend or consider new standards, we must consider those 
that ``shall be designed to achieve the maximum improvement in energy 
efficiency which the Secretary determines is technologically feasible 
and economically justified.'' (Section 325 (l)(2)(A)). For this clothes 
washer rulemaking, the Department determined that a 50% reduction in 
the energy use of the baseline model (corresponding to an MEF of 1.634) 
is the maximum technologically feasible level for the Standard class 
(1.6 ft.\3\ or greater capacity). This determination was based on 
information relative to existing technology options and prototype 
designs. In consultation with interested parties, the Department 
developed a list of design options for consideration. All 
technologically feasible design options were candidates in this initial 
assessment. Furthermore, the clothes washer rulemaking analysis was 
originally performed using the design

[[Page 59556]]

option approach. Using this approach, information was gathered on all 
possible energy saving design options. The Department gathered design 
option information from previous clothes washer analyses, trade 
publications, industry research organizations, product brochures from 
domestic and foreign manufacturers, and appliance conferences, 
including the International Appliance Technical Conference (IATC). The 
``Draft Report on Design Options for Clothes Washers'' and ``Draft 
Report on the Preliminary Engineering Analysis for Clothes Washers'' 
provide details on the potential technologies. (Clothes Washer Public 
Workshop, No. 55B and 55C).
3. Product Classes
    DOE divides clothes washers into classes based on the size and 
features, e.g., suds saving. For the existing standards, DOE defines 
residential clothes washers in the following classes:
    <bullet> Top loading, compact (less than 1.6 cubic feet capacity);
    <bullet> Top loading, standard (1.6 cubic feet or greater 
capacity);
    <bullet> Top loading, semi-automatic;
    <bullet> Front loading; and
    <bullet> Suds saving.
    The Department is proposing to maintain the current definitions for 
all these product classes. For this rulemaking, the Department is 
proposing to maintain the current requirements for the Semi-Automatic 
Top-Loading and Suds Saving classes. In the May 1991 Final Rule, these 
classes were not subject to minimum energy conservation standards 
because they represented a small portion of the market, and due to a 
lack of adequate information to analyze them. The standard for these 
classes will continue to be ``not applicable,'' except for the 1988 
requirement of an unheated rinse water option.

C. Energy Savings

1. Determination of Savings
    The Department forecasted energy savings through the use of a 
national energy savings (NES) spreadsheet, which forecasted energy 
savings over the period of analysis for candidate standards relative to 
the base case. The Department quantified the energy savings that would 
be attributable to a standard as the difference in energy consumption 
between the candidate standards case and the base case. The base case 
represents the forecast of energy consumption in the absence of amended 
mandatory efficiency standards.
    The NES spreadsheet model is described in Section IV.e of this 
notice, infra, and in Chapters 9 and 10 of the TSD. The NES spreadsheet 
model first calculates the energy savings in site energy. The energy 
savings to the nation is expressed in quads, that is, quadrillions of 
British thermal units (Btus).
2. Significance of Savings
    Under Section 325(o)(3)(B) of the Act, the Department is prohibited 
from adopting a standard for a product if that standard would not 
result in ``significant'' energy savings. While the term 
``significant'' has never been defined in the Act, the U.S. Court of 
Appeals, in 768 F.2d 1355, 1373 (D.C. Cir. 1985), concluded that 
Congressional intent in using the word ``significant'' was to mean 
``non-trivial.''

D. Rebuttable Presumption

    The National Appliance Energy Conservation Act established new 
criteria for determining whether a standard level is economically 
justified. Section 325(o)(2)(B)(iii) states:

    ``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, there shall be a rebuttable presumption 
that such standard level is economically justified. A determination 
by the Secretary that such criterion is not met shall not be taken 
into consideration in the Secretary's determination of whether a 
standard is economically justified.''

    If the increase in initial price of an appliance due to a 
conservation standard would repay itself to the consumer in energy 
savings in less than three years, then we presume that such standard is 
economically justified.\4\ This presumption of economic justification 
can be rebutted upon a proper showing.
---------------------------------------------------------------------------

    \4\ For this calculation, the Department calculated cost-of-
operation based on the DOE test procedures with assumed usage shown 
in Chapter 7 of the TSD. Consumers that use the clothes washer less 
will experience a longer payback while those that use them more will 
have a shorter payback.
---------------------------------------------------------------------------

E. Economic Justification

    As noted earlier, Section 325(o)(2)(B)(i) of the Act provides seven 
factors to be evaluated in determining whether a conservation standard 
is economically justified.
1. Economic Impact on Manufacturers and Consumers
    The July 1996 Process Improvement Rule established procedures, 
interpretations and policies to guide the Department in the 
consideration of new or revised appliance efficiency standards 
(Procedures for Consideration of New or Revised Energy Conservation 
Standards for Consumer products). 61 FR 36974 (July 15, 1996). Key 
objectives of the rule have direct bearing on the implementation of 
manufacturer impact analyses. First, the Department will utilize an 
annual cash flow approach in determining the quantitative impacts on 
manufacturers. This includes a short-term assessment based on the cost 
and capital requirements during the period between the announcement of 
a regulation and the time when the regulation comes into effect, and a 
long-term assessment. Impacts analyzed include industry net present 
value, cash flows by year, changes in revenue and income, and other 
measures of impact, as appropriate. Second, the Department will analyze 
and report the impacts on different types of manufacturers, with 
particular attention to impacts on small manufacturers. Third, the 
Department will consider the impact of standards on domestic 
manufacturer employment, manufacturing capacity, plant closures and 
loss of capital investment. Finally, the Department will take into 
account cumulative impacts of different DOE regulations on 
manufacturers.
    For consumers, measures of economic impact are the changes in 
purchase price and annual energy expense. The purchase price and annual 
energy expense, i.e., life-cycle cost, of each standard level are 
presented in Chapter 7 of the TSD. Under Section 325 of the Act, the 
life-cycle cost analysis is a separate factor to be considered in 
determining economic justification.
2. Life-Cycle Cost (LCC)
    One measure of the effect of proposed standards on consumers is the 
change in operating expense as compared to the change in purchase 
price, both resulting from standards. This is quantified by the 
difference in the LCC between the baseline and the more efficient 
technologies for the clothes washers analyzed. The LCC is the sum of 
the purchase price and the operating expense, including installation 
and maintenance expenditures, discounted over the lifetime of the 
appliance.
    For each clothes washer, we calculated the life-cycle costs for six 
efficiency levels: 20, 25, 35, 40, and 50% reduction in the energy use 
of the baseline model. In addition, a two-step standard as proposed by 
the Joint Stakeholders Comment was analyzed. A distribution of discount 
rates averaging 6.1% was used in the calculations. The consumer is 
assumed to purchase a clothes washer in 2004 or 2007 (for step 2 of the 
Joint Stakeholders Comment).

[[Page 59557]]

Price forecasts are taken from the 1999 Annual Energy Outlook of the 
Energy Information Administration (DOE/EIA-0383). Chapter 7 of the TSD 
contains the details of the life-cycle cost calculations including 
those considered under factor seven below, infra.
3. Energy Savings
    While significant conservation of energy is a separate statutory 
requirement for imposing an energy conservation standard, the Act 
requires DOE, in determining the economic justification of a standard, 
to consider the total projected energy savings that are expected to 
result directly from revised standards. The Department used the NES 
spreadsheet results, discussed earlier, in its consideration of total 
projected savings. The savings are provided in Section V of today's 
notice.
4. Lessening of Utility or Performance of Products
    This factor cannot be quantified. In establishing classes of 
products the Department tries to eliminate any degradation of utility 
or performance in the products under consideration in this rulemaking.
    An issue of utility that was considered in this rule concerns the 
consumer utility of V-axis and H-axis machines. We conducted consumer 
focus groups and a conjoint analysis study to address this issue.
5. Impact of Lessening of Competition
    It is important to note that this factor has two parts; on the one 
hand, it assumes that there could be some lessening of competition as a 
result of standards; and on the other hand, it directs the Attorney 
General to gauge the impact, if any, of that effect.
    In order to assist the Attorney General in making such a 
determination, the Department will provide the Attorney General with 
copies of this notice and the Technical Support Document for review.
6. Need of the Nation To Conserve Energy
    Most of the non-monetary benefits of the proposed standard are 
likely to be reflected in improvements to the environment, rather than 
in the security or reliability of the Nation's energy system. We report 
the environmental effects in Section V of today's notice.
7. Other Factors
    This provision 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. Section 
325(o)(2)(B)(i)(VI), 42 U.S.C. 6295(o)(2)(B)(i)(VI).
    Under this factor, we considered the water savings from each 
standard level. The Department received numerous comments asking for 
the inclusion of a water factor standard in addition to the MEF 
standard. (City of Austin, No. 105 at 1; City of Bellingham, 
Washington, Department of Public Works, No. 106 at 1; Lower Colorado 
River Authority (LRCA), No. 109 at 1; Amy Vicker and Associates, Inc., 
No. 110 at 1; City of San Diego, No. 123 at 1; City of Santa Barbara, 
Public Works Department, No. 125 at 1; City of Seattle, No. 126 at 2; 
Santa Clara Valley Water District, No. 127 at 1; American Water Works 
Association, No. 149 at 1; City of Redmond, Office of the Mayor, No. 
153 at 1; Massachusetts Water Resources Authority, No. 152 at 4; State 
of New Mexico, Office of the State Engineer, No. 158 at 1). As stated 
previously, the Department is considering water savings as a factor in 
determining the economic justification of the clothes washer standard 
level. However, the Department does not have the authority to prescribe 
a minimum water factor standard.
    Another factor that the Department considered is the life-cycle 
cost impacts on those subgroups of consumers who, if forced by 
standards to purchase more efficient washers, would choose to repair 
their existing machines.

IV. Methodology

    The methodology to be used in this rulemaking was described in the 
1998 Supplemental ANOPR and accompanying TSD. In this section we will 
discuss comments and changes in the methodology. These changes were 
performed because new data was obtained or in response to comments 
received after publication of the 1998 Supplemental ANOPR.
    In general, when information is based on periodic forecasts and 
surveys such as the Annual Energy Outlook (AEO) forecasts of energy 
prices and the Residential Energy Consumption Survey, both from the 
Energy Information Administration (EIA), we try to use the latest 
available information. The analysis in support of this proposed rule 
was performed using RECS93 and AEO 1999 data. Just prior to publication 
of this proposed rule both RECS97 and AEO2000 data became available. 
Although we do not expect a significant difference in results by 
updating to RECS97 and AEO2000, we intend to use this updated 
information for the final rule. We seek comment on the use of the most 
current RECS and AEO data.

A. Product Classes

    The Supplemental ANOPR contained three proposals regarding clothes 
washer product classes. The first proposal suggested eliminating the 
Semi-Automatic Top-Loading, Front-Loading and Suds Saving classes 
identified in the May 1991 Final Rule. In its second proposal, the 
Department proposed to increase the compact class to include all 
clothes washers with a volume less than 2.0 cubic feet. The third 
proposal was to not establish separate classes for Horizontal and 
Vertical-axis clothes washers.
    The Department received no comments on its proposal to eliminate 
the Semi-Automatic Top-Loading and Suds Saving classes. In the May 1991 
Final Rule, these classes were not subject to minimum energy 
conservation standards because they represented a small portion of the 
market, and due to a lack of adequate information to analyze them. 
However, the 1988 standard requiring an unheated rise option is still 
applicable to these classes. Given the continued absence of information 
available to analyze these classes and ensure that they could meet the 
proposed standard levels, the Department is proposing to maintain these 
product classes but not to subject them to minimum energy conservation 
standards. However, the unheated rise water option is still applicable 
to these classes.
    DOE received several comments regarding changing the definition of 
the compact clothes washers class maximum capacity, from 1.6 cubic feet 
to 2.0 cubic feet. Whirlpool believes that this re-definition for the 
compact class would better reflect the actual product offerings that 
exist in the marketplace which range from 1.6 to 1.96 cubic feet. 
(Whirlpool, No. 141 at 3). Amana Appliances is not opposed to the 
change. (Amana, No. 146 at 1). ACEEE and American Water Works 
Association (AWWA) also find this proposal acceptable. (ACEEE, No. 150 
at 4 and AWWA, No. 149 at 4). Maytag is concerned that a clothes washer 
at 2.0 cubic feet, if not subjected to the same standard as full size 
washers will become a relatively larger volume seller. This would 
result in a reduction in the potential national energy and water 
savings of the standard and may place some manufacturers that have 
complied with more stringent standards at a competitive disadvantage. 
Accordingly, Maytag recommends that the Department develops safeguards 
as retail market share or product sales volume limits which, if 
exceeded, would require the product to meet the

[[Page 59558]]

same energy standards as full-size washers. (Maytag, No. 137 at 4-5). 
PG&E supported changing the ``compact'' size to 2.0 cubic feet, up from 
1.6 cubic feet under the condition that the ``compact'' washers are 
required to at least meet the 25 percent more efficient standard level. 
(PG&E, No. 189 at 1).
    We received several comments in support of maintaining the current 
limit of 1.6 cubic feet for the compact class. (Northwest Energy 
Efficiency Alliance, No. 131 at 3; the Northwest Power Planning 
Council, No. 135 at 2; Bosch, No. 142 at 1; and Miele, No. 156 at 1). 
GEA opposed the change in definition because it believed there is 
substantial room for these products to increase their efficiency. (GEA, 
No. 143 at 11). The Oregon Office of Energy commented that the new 2.0 
cu. ft. definition puts a significantly greater number of more 
efficient machines in the compact class. For this reason it will insist 
that the Department conduct enough of an analysis on this class of 
products to justify raising the standard for this class. (Oregon, No. 
162 at 2).
    Staber Industries proposed removing tub size as a factor in 
determining both capacity and energy efficiency and proposed instead 
classifying washers by loading capacity. (Staber, Nos. 185 and 187).
    The Department agrees that the increasing the compact class size to 
2.0 cu. ft. will increase the number of washers in this class and 
possibly incorporate products currently already more efficient than 
compact models of 1.6 cu. ft. The Department has not been provided any 
information in order to conduct such an analysis. For this notice the 
Department is maintaining the existing 1.6 cu. ft. definition of the 
compact product class and given the small size of this market (less 
than one percent) is proposing not to change the minimum efficiency 
levels. However given the new test procedure (Appendix J1) and the 
change in descriptor it is necessary to translate the current standard 
of EF of 0.9 into an MEF value. Since no mathematical translation is 
possible, we have estimated this value using engineering calculations 
and assumptions which are detailed in the TSD. This value is estimated 
to be an MEF of 0.65.
    For the Final Rule, the Department will consider changes to the 
definition and efficiency standards for the top loading compact class. 
A new definition could have different capacity requirements (such as 
less than 2.0 cu. ft.) and additional requirements for the maximum 
external dimensions (such as a width not to exceed 22.5 inches). The 
Department will also consider any new information on the efficiency of 
current models under Appendix J1. The Department seeks comment on these 
issues.
    The Department's ANOPR proposal to eliminate the Front-Loading 
product class also received no negative comments. NRDC commented that 
the existence of a top-loading horizontal-axis washer clearly dispels 
the notion that the location of a washer's port of access (Top or 
Front) is synonymous with axis of rotation (Vertical and Horizontal). 
Amana notes that because of technological differences it would be more 
appropriate to refer to the current ``Front-Loading'' and ``Top-
Loading'' product classes as Horizontal-Axis and Vertical-Axis (Amana, 
No. 146 at 1). Elimination of the Front-Loader class is invariably 
linked by many comments with the need to establish separate classes for 
V- and H-axis washers.
    The Department received numerous comments on the proposal not to 
establish separate classes for V- and H-axis clothes washers. Comments 
supportive of the Department's proposal were received from Maytag, 
Whirlpool, Bosch, Staber, Miele, NRDC, the Alliance to Save Energy, 
ACEEE, and approximately fifteen state or city agencies and utilities. 
(Maytag, No. 137 at 2; Whirlpool, No. 141 at 7; Bosch , No. 142 at 1; 
Staber, Nos. 185 and 187; Miele, No. 156 at 1; NRDC, No. 138 at 5; the 
Alliance to Save Energy, No. 148 at 2; and ACEEE, No. 150 at 5).
    GEA, Alliance Laundry and Amana opposed the Department's proposal. 
GEA commented that the unique characteristic and energy performance of 
H- and V-axis washers require two-product classes with separate minimum 
energy efficiency standards for each. H-axis are less convenient and 
potentially less reliable with different systems or features for 
loading clothes and adding clothes during the wash cycle, longer cycle 
times, smaller capacities, more expensive detergents, and availability 
of deep pre-soak which are important to consumers. (GEA, No. 143 at 2). 
Alliance Laundry commented that the V- and H-axis product 
classifications would ignore relevant consumer utility differences and 
would combine two distinct products which do not compete in the market 
for energy comparison purposes. (Alliance Laundry, No. 145 at 3). Amana 
commented that the machines differ in cost/price, utility, energy 
efficiency, performance, and ergonomics. The integration of these two 
categories into one will increase rather than decrease confusion in the 
marketplace with consumers. (Amana, No. 146 at 2). These concerns, DOE 
believes, are superceded by the Joint Comment in which the same 
standard was agreed to for V- and H-axis products.
    The Alliance to Save Energy commented that recent technology 
development shows that various axis types can meet relatively stringent 
performance criteria. (Alliance to Save Energy, No. 148 at 2). The 
Department agrees with this view. Recent product introductions by 
Whirlpool Corporation and Fisher & Paykel of high-efficiency V-axis 
washers have positively demonstrated that V-axis designs are available 
for the same range of efficiencies as H-axis washers. Since both H-axis 
and V-axis washers can achieve the same range of efficiency, there is 
no basis for separate efficiency standards based on axis of rotation or 
orientation of loading. Additionally the existence of a Top Loading 
horizontal-axis washers dispels the notion that orientation of loading 
is necessarily associated with efficiency. Therefore, in today's 
proposal the Department is maintaining the Front Loading product class 
but is proposing a single efficiency standard for both the Front 
Loading and the Top Loading, Standard class washers.

B. Engineering Analysis

    The engineering analysis develops cost-efficiency relationships to 
show the manufacturer costs of achieving increased efficiency. Three 
methodologies can be used to generate the manufacturing costs needed 
for the engineering analysis. These methods include: (1) The design-
option approach, reporting the incremental costs of adding design 
options to a baseline model; (2) the efficiency-level approach, 
reporting relative costs of achieving energy efficiency improvements; 
and/or (3) the cost-assessment approach which requires a ``bottoms-up'' 
manufacturing cost assessment based on a detailed bill of materials.
    As summarized in the Supplemental ANOPR, the engineering analysis 
was conducted using the efficiency-level approach. The cost-assessment 
approach was also used to supplement the efficiency-level approach 
because of the existence of a proprietary technology for which no data 
was available. The objective of the manufacturing cost assessment was 
to quantify the differential manufacturing costs of producing high 
efficiency clothes washers based on (1) a Whirlpool proprietary V-axis 
design, and (2) commercially available V- and H-axis designs.

[[Page 59559]]

C. Life-Cycle Cost (LCC) Analysis

    The effect of standards on individual consumers includes a change 
in operating expense (usually decreased) and a change in purchase price 
(usually increased). The life-cycle cost (LCC) spread sheet is used to 
analyze the economic impacts of possible standards on individual 
consumers. This section describes modifications to the LCC spreadsheet 
model and revisions to data inputs as a result to new data or 
recommendations from comments received after the publication of the 
1998 Supplemental ANOPR. 63 FR 64353 (November 19, 1998).
    Table 1 summarizes the assumptions used in the LCC analysis for the 
1998 Supplemental ANOPR analysis and the changes made for this proposed 
rule analysis than followed by a written discussion of these changes.

              Table 1.--Assumptions in the LCC Analysis \1\
------------------------------------------------------------------------
            Parameter             Supplemental ANOPR     Proposed rule
------------------------------------------------------------------------
Energy Price....................  average prices....  marginal prices.
Variation in Household Energy     1993 RECS data....  Marginal prices
 Prices, Energy Use, and Water                         derived from 1993
 Heater Shares.                                        RECS data and
                                                       adjusted to 1997
                                                       prices.
Energy Price Projections........  AEO 1998 reference  AEO 1999
                                   case to the year    reference, high &
                                   2020, with          low cases to the
                                   extrapolations to   year 2020, with
                                   the year 2030.      extrapolations to
                                                       the year 2030;
                                                       used FEMP
                                                       methodology for
                                                       extrapolations.
Water and Sewer Prices..........  Urban ($0.00 to     Urban 0-$7.97.
                                   $7.84 per 1000     Rural 0-$7.97.
                                   gallons).          Rural (no sewer) 0-
                                  Ave. price = $3.18   $3.53.
                                   per 1000 gals.     Individual well
                                                       2.61 kWh/1000
                                                       gals.
                                                      Ave. price = $2.48
                                                       per 1000 gals.
Annual Real Change in Water and   0 percent.........  Urban = 3.01%
 Sewer Cost (Water Price                               (high 5.41%, low
 Projections).                                         0.53%).
                                                      Rural = 3.01%
                                                       (high 5.41%, low
                                                       0.53%).
                                                      Rural with septic
                                                       = 0.64% (high
                                                       2.93%, low -
                                                       2.89%).
                                                      Individual well
                                                       (electricity
                                                       price
                                                       escalation).
Manufacturer Cost...............  AHAM..............  No change.
Manufacturer Mark-ups...........  Min. 1.000........  Range: varies with
                                  Mean 1.175........   standard level.
                                  Max. 1.350........  Distribution:
                                  Distribution:        uniform.
                                   triangular.
Retail Mark-up..................  1.4...............  No change.
Detergent Savings...............  not an input        allowed as an
                                   parameter.          input (detergent
                                                       savings = zero).
Discount Rate...................  Distribution (0-15  No change.
                                   percent).
Lifetime........................  Distribution (12-   No change.
                                   17 years).
Cycles Per Year.................  Distribution from   No change.
                                   RECS database
                                   (207-645).
Start Year (Effective Date of     2003..............  2004 (and 2007 if
 Standard).                                            a second tier).
------------------------------------------------------------------------
\1\ All prices and costs are shown in 1997 dollars.

    Energy Prices. For the Supplemental ANOPR the LCC spreadsheet model 
sampled the individual prices paid by households in the 1993 version of 
the Residential Energy Consumption Survey (RECS). These prices were 
updated (scaled up or down based on AEO 1998 national prices) and 
converted to 1997 dollars. The Advisory Committee recommended DOE use 
the full range of consumer marginal energy prices instead of national 
average energy prices. Marginal energy prices are those prices 
consumers pay (or save) for their last units of energy used (or saved). 
The Department agreed that marginal energy prices would improve the 
accuracy of the LCC analysis and estimated marginal rates for 
electricity and natural gas from the 1993 RECS database.
    In accordance with the Advisory Committee's recommendation, the 
Department elected to substitute marginal energy prices for average 
prices for calculating LCC and NPV. EIA gathered monthly energy bills 
and energy consumption data for the RECS public use data. It did not 
gather information on rate schedules, fixed charges, or marginal 
prices. DOE estimated consumer marginal electricity and natural gas 
prices directly from household data in the 1993 RECS public use data 
survey as the change in household monthly energy bills divided by the 
change in monthly energy consumption for each fuel, referred to as the 
change in monthly bill method. This provides a precise marginal energy 
rate based on actual household bills.
    Households for which marginal energy prices could not be calculated 
were eliminated, resulting in a reduction of approximately 10% of the 
households used from the RECS. Although electricity rates were 
calculated separately for four summer months (June-September) and, 
separately for winter (October-May) months, unlike other appliances, 
the usage of clothes washers for summer and winter months is on 
average, approximately constant.
    In order to understand and characterize regional variations in 
pricing and distribution of fuel oil and LPG, we collected information 
relating to pricing and distribution of fuel oil and LPG. We learned 
that bills paid by residential consumers for both fuel oil and LPG are 
essentially volume-driven, with a single block rate. We interpreted the 
average prices inherent in those bills, as reported in the RECS public 
use data, as being equivalent to marginal prices for the purposes of 
the LCC price analysis. A detailed description of the methodology used 
to determine marginal energy rates is contained in the report entitled 
``Marginal Energy Prices Final Report, July, 1999,'' which can be 
obtained at the website address: http://www.eren.doe.gov/buildings/codes_standards/applbrf/clwasher.html.
    As an enhancement to the LCC analysis for the proposed rule, Liquid

[[Page 59560]]

Petroleum Gas (LPG or propane) was added as a water heater fuel type.
    Variation in Household Energy Prices, Energy Use, and Water Heater 
Shares. In addition to determining energy prices RECS data is used to 
determine the market share, i.e., percentage of water heaters and 
dryers, that are electric, gas, liquefied petroleum gas (LPG) or oil. 
The current analysis was based on Residential Energy Consumption Survey 
1993 (RECS93) and Annual Energy Outlook 1999 (AEO99). Although 
demographic information, price and equipment types change from survey 
to survey, we do not expect that the differences are significant enough 
to change the outcome of this rulemaking.
    Energy Price Projections. For the proposed rule, the Annual Energy 
Outlook 1999 (AEO99) forecasts replaced AEO98 energy price forecasts 
for electricity, gas and oil. Given the uncertainty of projections of 
future energy prices, DOE used scenario analysis to examine the 
robustness of proposed energy efficiency standards under different 
energy price conditions. The LCC calculations use these scenarios. Each 
scenario provides a self-consistent projection, integrating energy 
supply and demand. The scenarios differ from each other in the energy 
prices that result. The Advisory Committee suggested the use of three 
scenarios. While many scenarios can be envisioned, specification of 
three scenarios should be sufficient to bound the range of energy 
prices.
    The AEO 1999 reference case provides a well-defined middle 
scenario. DOE also used AEO fuel price forecasts under assumptions of 
high and low economic growth. The future trend in energy prices assumed 
in each of the three scenarios is clearly labeled and accessible in the 
LCC spreadsheet. The Gas Research Institute (GRI) reference case fuel 
price forecast is another choice available in the LCC spreadsheet. 
Stakeholders can easily substitute alternative assumptions in the LCC 
spreadsheet to examine additional scenarios as needed.
    Another modification for the proposed rule analysis concerns the 
extrapolation method used to project the AEO energy prices from 2020 to 
2030. (The AEO contains energy prices projections to the year 2020.) 
For the ANOPR the price of electricity was extrapolated based on the 
trend of the last five years of the scenario used. For gas and oil, 
prices values were kept constant from the year at which the 
extrapolation was necessary.
    For the proposed rule we are now using the approach EIA uses to 
forecast fuel prices for the Federal Energy Management Program (FEMP). 
This was done to be consistent with the rest of the energy forecasting 
also done by EIA.
    Water and Sewer Prices. For the Supplemental ANOPR the main source 
of data on water and sewer prices was from a 1994 survey of water 
prices in major metropolitan areas by Ernst & Young. The Ernst and 
Young data was adjusted for service population, base utility charges 
and average household use by Al Dietemann of Seattle Water.
    The Department received several comments on this issue. Denver 
Water suggested replacing the 1994 Rates Study done by Ernst and Young 
and using the 1998 Raftelis Study. (Denver Water, No. 107 at 20). The 
American Water Works Association (AWWA) commented that an average water 
price of $3.18 per thousand gallons as used was too high. (AWWA, No. 
108 at 64360). Energy Market and Policy Analysis, Inc. observed that 
the data was limited to certain metropolitan areas and probably would 
overstate water and sewer costs in non-metropolitan areas. Therefore, 
use of the data would probably overstate potential water and sewer cost 
savings that might be achieved by using a washer that uses less water. 
(Energy Market and Policy Analysis, Inc., No. 144 at 8).
    In response to comments received and for the proposed rule 
analysis, 1998 prices and projected escalation rates were added for 
rural water and wastewater to the previous estimates for urban 
customers. The revised analysis, based on the 1998 Raftelis Study, 
divided water use into categories of urban, rural with water and 
wastewater utilities, rural with water utility service and septic tank, 
and individual well with septic tank. The range of prices used for each 
category is: for urban areas 0-$7.97, rural areas 0-$7.97, rural areas 
(no sewer) 0-$3.53, individual well 2.61 kWh/1000 gals. The resulting 
average price is $2.48 per 1,000 gallons.
    Water Price Projections. As of the time of publication of the 
Supplemental ANOPR, the Department had found no national level water 
price forecasts and thus the Supplemental ANOPR assumed that future 
water prices would remain constant. In the Supplemental ANOPR the 
Department agreed that future water prices should not be assumed to be 
constant and described an approach to establish marginal water prices 
and escalation rates. See Chapter 7 of the TSD for details on how these 
marginal water prices and escalation rates where determined.
    At a workshop held on December 15, 1998, DOE detailed its proposal 
for water prices and escalation rates. Support for this proposal was 
given by ACEEE, the Oregon Office of Energy, NRDC, the Northwest Energy 
Efficiency Alliance, PG&E, and the City of Seattle, Seattle Public 
Utilities. (ACEEE, No. 150 at 1; Oregon Office of Energy, No. 162 at 7; 
NRDC, No. 138 at 14; Northwest Energy Efficiency Alliance, No. 131 at 
2; PG&E, No. 130 at 2; and the City of Seattle, Seattle Public 
Utilities, No. 126 at 2). In contrast, the Edison Electric Institute 
(EEI) commented that the escalation rate of 3.1% real will probably 
overstate the change in water and wastewater prices. (EEI, No. 122 at 
6).
    For the proposed rule, escalation rates were specified for urban 
and rural water and wastewater customers. The average escalation rates 
used are: for urban areas, 3.01% (high 5.41%, low 0.53%), rural areas, 
3.01% (high 5.41%, low 0.53%), rural areas with septic 0.64% (high 
2.93%, low -2.89%). Finally for areas with individual wells, the 
electricity price escalation rates were used.
    Manufacturing Cost. The cost data used was provided by 
manufacturers. It was then compiled and reported to the Department by 
AHAM as a range of costs at each efficiency level. NRDC observed that 
the Department's engineering analysis weights incremental costs 
submitted by AHAM manufacturers by their 1997 market shares. In its 
opinion the real impact on consumers will be weighted not by 1997 
market shares but by the market shares following the introduction of 
the standards. The argument is based not on a lack of credibility of 
the AHAM data but on the assumption that the market share of the very 
expensive machines will go down. As a consequence, NRDC believes the 
Department should weight the outlier points at the high cost end of the 
cost distribution curve minimally, if at all, in doing its analysis. 
(NRDC, No. 138 at 6 and 14).
    The Department agrees that a wide variation in costs exists in the 
AHAM data. This variation in incremental costs are driven in part by 
the variability in cost structures of the various manufacturers 
(production volume, current technology) and in part by the variability 
in designs. Additionally, given the lack of experience manufacturing 
some of these technologies, uncertainty contributes to the range in 
costs. The Department believes the mean values of the distribution are 
the most appropriate for consideration in the LCC analysis and will 
weight analysis results for values surrounding the mean more heavily. 
However it will continue to incorporate the full range of costs as it 
represents a probability-weighted distribution of

[[Page 59561]]

costs based on the full spectrum of possible costs.
    Manufacturer Mark-ups. In the Preliminary TSD for the ANOPR, the 
Department used a manufacturer mark-up over the full production costs 
with a maximum value of 1.35, which maintains industry (manufacturer) 
cost structure, and a minimum value of 1.00, which represents a pass-
through of full production costs. This was modeled as a triangular 
distribution with a minimum value of 1.00, a most likely value of 
1.175, and a maximum value of 1.35. For the proposed rule, a uniform 
distribution was used. The range of the mark-up is dependent on the 
standard level and obtained from the GRIM model.
    Alliance Laundry believes that the low end of 1.00 for the 
manufacturing mark-up should not be used at all. It commented that 
history suggests manufacturing mark-up is within the 1.27 to 1.35 
range. (Alliance Laundry, No. 164 at 10). The Oregon Office of Energy 
commented that manufacturer mark-ups are not static over time. Nor are 
they typically the same for products at the lower end of the product 
line as they are for the upper end. It further recommended that DOE 
find a way to model a variable mark-up pattern for each manufacturer--a 
pattern that is appropriate for each and responsive to market 
conditions as they evolve. (Oregon Office of Energy, No. 162 at 8). As 
suggested, the Department worked with each manufacturer to forecast its 
future mark-ups at the various standards levels factoring anticipated 
market dynamics. These market dynamics include: the technology status 
of existing product offerings as it relates to the cost-efficiency 
relationship; the status of manufacturing technology, including an 
assessment of conversion and restructuring costs; likely product 
offerings at each efficiency level (e.g., V-axis, H-axis), consumer 
demand for product features and its implications for trade-offs between 
manufacturing cost and consumer utility; patent restrictions on design 
options; brand equity; availability of technical and financial 
resources; manufacturing versus sourcing strategies; and company cost 
structure and ability to pass on fixed (and sometimes even variable) 
costs. Individual mark-up forecasts were aggregated to characterize the 
industry and the resulting range of mark-ups was used in both the 
industry GRIM and LCC analysis.
    Retail Mark-up. In the Preliminary TSD for the ANOPR, the 
Department used a fixed retail mark-up of 1.40, and a fixed mark-up of 
1.052 to cover the sales tax. There was no change made for the proposed 
rule. ACEEE commented that the retail mark-up of 40% is too high. It 
proposed that the Department use an average retail mark-up based on the 
last five years of available data. (ACEEE, No. 150 at 4). In response 
to this comment, the Department did examine more recent data from the 
same data sources originally used (Dealerscope Merchandising's Annual 
Statistics Surveys, Bureau of Census--Current Industrial Report (CIR), 
Bureau of Labor Statistics--Consumer Expenditure Survey (CES), 
INTELECT--Elrick & Lavidge Computerized Audit Program (ELCAP) price 
database, AHAM Fact Book) and found no significant cause to alter its 
earlier estimate.
    Detergent Savings. In the Supplemental ANOPR we did not include any 
possible detergent savings into the LCC analysis. The Northwest Power 
Planning Council, Oregon Office of Energy, ACEEE, Northwest Energy 
Efficiency Alliance, and PG&E commented that the Department should 
consider detergent cost savings as a benefit of H-axis clothes washers. 
(Northwest Power Planning Council, No. 135 at 1; Oregon Office of 
Energy, No. 162 at 6; ACEEE, No. 150 at 4; Northwest Energy Efficiency 
Alliance, No. 131 at 2&3; and PG&E, No. 189 at 2). These comments did 
not have specific recommendations as to appropriate values to use for 
detergent cost savings in the LCC.
    Alliance Laundry System LLC commented that detergent cost savings 
associated with horizontal axis machines are unlikely. In fact, 
detergent costs may even be higher due to the fact that higher priced 
specially formulated detergent may have to be used for optimal cleaning 
performance. (Alliance Laundry, No. 145 at 11). Maytag believes that 
the detergent and dosage recommended by the detergent manufacturer will 
produce the best washing performance and that detergent use will not be 
a significant factor in consumer operating cost savings. (Maytag, No. 
137 at 7).
    The Department believes there is no conclusive evidence that 
detergent costs will change due to new standards. We believe results of 
the Bern Study (Bern Clothes Washer Study Final Report; ORNL/M-6382; 
prepared by Oak Ridge National Laboratory for the U.S. DOE, dated March 
1998) do not show any significant difference in cost savings related to 
detergent use. Patterns of detergent use will change as detergent 
specially formulated for H-axis machines become more available. In 
addition, comments by major detergent manufacturers state that savings 
based on less detergent use will not occur (Procter & Gamble, No. 9 at 
1) and using a lessor amount of detergent produced inferior cleaning 
performance (Lever Brothers, No. 51 at 2). In consideration of the 
previous evidence detergent savings were not included in the analysis. 
However, the LCC spread sheet does include the capability to input 
detergent costs, at the users' option.
    Cycles per year. The EEI commented that the number of washer cycles 
appeared to be on the high side, especially for one and two person 
households. (EEI, No. 122 at 3). The Department used the most current 
information available to estimate the cycles per year. The Department 
adjusted the number of cycles per year based on the number of occupants 
for each RECS household. The cycles per week are based on a Procter and 
Gamble survey and adjusted using the RECS data, so the overall average 
cycles per year agree with the test procedure assumption of an overall 
average of 392 cycles per year.
    Discount Rate. The LCC spreadsheet uses a distribution for discount 
rates ranging from 0 to 15%. These represent the variability in 
financing methods consumers use in purchasing appliances. The average 
discount rate from this distribution is 6.1% real.
    Four comments suggested that the discount rate used in the consumer 
analysis was likely too high. Comments stated that DOE should take into 
account such factors as: declining bank card rates, the substantial 
fraction of card users who pay off monthly credit card balances, the 
substantial number of buyers who use lower-cost credit such as home 
equity credit lines, and bank card default rates. Future interest rates 
on credit cards are not expected to rise, so future inflation will 
yield lower real interest rates. (Alliance to Save Energy, No. 148 at 
3; ACEEE, No. 150 at 4; Oregon Office of Energy, No. 162 at 7; and 
NRDC, No. 138 at 6). Three comments suggested that the discount rate 
may be too low. (Energy Market and Policy Analysis, Inc., No. 144 at 8; 
Consumer Alert, No. 155 at 4; and EEI, No. 122 at 6). Opportunity costs 
are higher and EIA uses higher rates for forecasting residential 
purchase decisions. DOE policy is to base discount rates on average 
financing costs (or opportunity cost of reduced savings).
    In the Process Rule, DOE committed to using real (adjusted for 
federal taxes) discount rates for residential consumers by considering 
a range of three different real discount rates: credit card financing 
rate, a rate based on consumers having substantial savings, and a mid-
range

[[Page 59562]]

rate. The mid-range discount rate will represent DOE's approximation of 
the average financing cost (or opportunity cost of reduced savings) 
experienced by typical consumers.
    Based on the guidelines from the Process Rule, we derived a 
distribution of discount rates to reflect the variability in financing 
methods consumers can use in purchasing clothes washers. The real 
interest rate associated with financing an appliance purchase is a good 
indicator of the additional costs incurred by consumers who pay a 
higher first cost, but enjoy future savings, although it is not the 
only indicator of such costs. While the method used to derive this 
distribution relies on a number of uncertain assumptions regarding the 
financing methods used by consumers, DOE believes the resulting 
distribution of discount rates encompasses the full range of discount 
rates that are appropriate to consider in evaluating the impacts of 
standards on consumers (i.e., values represented by the mid-range 
financing cost, consumers with no savings, and consumers with 
substantial savings), as well as all the discount rates that fall 
between the high and low extreme values.
    DOE assumes the method of purchase used by consumers is indicative 
of the source of the funds and the type of financing used, although DOE 
is not aware of detailed research into this relationship. Whirlpool 
Corporation indicated that approximately 40% of white goods are 
purchased in cash, 35% with credit cards, and 25% with retailer loans. 
(1994 Eight Product Notice of Proposed Rulemaking, 59 FR 10464, March 
4, 1994.) Whirlpool also indicated that 25% of appliance purchases are 
for new homes. However, we know consumers purchase 20% of clothes 
washers with new homes, i.e., in mortgages, and 80% as replacements for 
existing clothes washers in separate retail purchases. Consumers pay 
for retail purchases by cash, credit cards, or loans. In order to 
derive a full distribution of discount rates, DOE estimated a range of 
interest rates, based on historical data and judgments of future 
trends, for different types of consumer savings or financing.
    For new housing, the estimated nominal mortgage rate ranges from 5-
8%, the derived after-tax rate is based on a tax of 28%, and a 2% 
inflation rate is subtracted from the total. The result is a range of 
real mortgage rates from 1.60%-3.76%. Example: 5%*(100%-28%)-2%=1.6%.
    For cash, the minimum interest rate is 0%. This rate applies to 
consumers making cash purchases without withdrawing from savings 
accounts or interest bearing checking accounts. For the maximum rate, 
the opportunity cost is the interest that could have been earned in a 
savings account or mutual fund. Historic savings rate ranged from 4.5-
5.5% from 1970-1986 (real rates of -8.27 to +3.58%). We believe the 
current maximum is the opportunity cost represented by the interest 
earned in a typical mutual fund (assumed to be 6% real). DOE selected a 
real rate of 3% as the mean.
    DOE assumed the interest rates for retail loans and credit cards 
have the same range. The minimum credit card rate is 6% real. 
Introductory rates on some credit cards today are 5.9% nominal, but 
after the introductory period (often six months), the rate can increase 
sharply. Maximum rates are more than 20% nominal. However, if the 
consumer pays with a credit card and the balance is paid in less than 
the life of the clothes washer, then the effective interest rate is 
lower than the nominal credit card rate. The current assumption is a 
range of 6-15% real.
    Combining the assumed shares of each financing method, the above 
real interest rates result in a weighted-average (mean) value of 6% and 
a distribution that varies from 0-15%. Sensitivity studies show that 
while the LCC results are sensitive to the value chosen for the mean 
discount rate, the LCC results are not sensitive to the distribution of 
discount rates.
    DOE believes the methods described above are valid for establishing 
a distribution of discount rates relevant to most purchasers of the 
products covered by this rulemaking. However, the Department 
acknowledges that different assumptions could be made about likely 
interest, inflation and marginal tax rates, or about consumer financing 
methods, and that different approaches to identifying consumer discount 
rates might also be valid. For example, it is possible to base consumer 
discount rates on the average real rates of return on consumer 
investment or other measures of the opportunity costs incurred by 
consumers who purchase the covered products. DOE does not believe, 
however, such alternative assumptions or alternative approaches would 
significantly alter the range of discount rates used by the Department 
or the conclusions drawn from the LCC analyses conducted using these 
discount rates.
    The Department is seeking any information that would support 
significant alterations in the range or distribution of the discount 
rates derived from its analysis. Alternatively, DOE is soliciting 
comment on the possible use of a standardized distribution of discount 
rates ranging from approximately 4-12%, with a mean of 6%. The use of 
such a standardized distribution would explicitly recognize the many 
uncertainties associated with DOE's current analysis and, based on 
sensitivity analyses already performed by DOE, such a standardized 
distribution would not significantly alter the conclusions of DOE's 
life cycle cost analyses.
    Lifetime. The ANOPR analysis assumes that the period of time a 
clothes washer will provide service ranges from 12 to 16 years with an 
average of 14.2 years. One comment asked the Department to explain the 
assumptions used to determine the lifetime of a clothes washer. Since 
few consumers who purchase a clothes washer own it for the full 
lifetime of the appliance, using this value in the LCC may overstate 
the benefits to the original purchaser. (Energy Market and Policy 
Analysis, Inc., No. 119 at 4). For the national energy savings, 
calculating the benefits requires consideration of the full lifetime of 
the product. In response, DOE believes that the requirements of the 
statute are to analyze the savings in operating costs throughout the 
estimated average life of the covered product even if there is more 
than one owner during this lifetime for the LCC analysis.
    Start Year. This is the year the new standard is expected to become 
effective. The Joint Stakeholder Comment proposes a two-step standard 
in which the first standard level is effective in 2004 and the second 
high standard level becomes effective in 2007. (Joint Comment No. 204).
    Maintenance and Repair Costs. The ANOPR analysis assumed no change 
in maintenance and repair costs as a result of new clothes washer 
standards. The Department received a comment expressing the need to 
account for maintenance, repair and warranty costs in the LCC analysis. 
(Energy Market and Policy Analysis, Inc., No. 119 at 3). Staber 
Industries also requested that the Department consider maintenance in 
the LCC analysis since H-axis have no transmissions and it is more 
reliable than V-axis. (Staber, Nos. 185 and 187). In response, the 
Department's analysis does not consider changes in the maintenance and 
repair cost as we do not have any data to indicate the costs to be 
different for more efficient products for the proposed rule.
    Request for Comment. DOE requests comments on the LCC analysis, 
particularly the range of values used as input to the analysis. For 
example,

[[Page 59563]]

RECS does not measure usage so we used the Proctor & Gamble survey data 
for national average usage values and then adjusted those values based 
on RECS-reported household size. DOE would like comment both on the 
Proctor & Gamble and RECS data as well as the method DOE used to 
develop the range of usage.

D. Payback Period Analysis

    The payback period measures the amount of time needed to recover 
the additional consumer investment in increased efficiency through 
lower operating costs. The payback period is the ratio of the increase 
in purchase price to the decrease in annual operating expenditures from 
replacing the baseline clothes washer with a more efficient washer. We 
express payback periods in years.
    Rebuttable Payback. In accordance with EPCA, DOE calculated payback 
based on the values specified by the DOE test procedure, Appendix J1. 
This includes the Appendix J1 test procedure assumption of an electric 
water heater and an electric dryer. Today's amendments to Appendix J1 
have no effect on these results. This payback, however, does take into 
account that a distribution of clothes washer efficiencies exists in 
the current and future stock. This distribution is approximated by 
assuming that the efficiency of the stock of washers is a combination 
of baseline and H-axis efficiency washers. Table 2 shows the changes in 
assumptions since the ANOPR for the base case.

           Table 2.--Changes in Rebuttable Payback Assumptions
------------------------------------------------------------------------
            Parameter             Supplemental ANOPR     Proposed rule
------------------------------------------------------------------------
H-axis sales....................  3.0% in 1998......  6.25% in 1998.
Escalation of H-axis sales......  0.5% annual         0.5% of sales not
                                   (linear).           already H-axis.
------------------------------------------------------------------------

    Changes in assumptions outlined in Table 1 that also apply to 
rebuttable payback include:
    <bullet> Water price;
    <bullet> Energy price;
    <bullet> Energy and water price escalation only to the year 2004; 
and
    <bullet> Manufacturer mark-up (average of range is used).
    Basecase Assumptions. The Department received comments on the 
assumptions made concerning the existing saturation of higher 
efficiency washers and their expected increase in sales over time. We 
received comments stating that we had either overestimated or 
underestimated the penetration of H-axis washers, and we either 
overestimated or underestimated the future escalation of H-axis sales. 
EEI, Whirlpool, NRDC, City of Seattle, Seattle Public Utilities, 
Alliance Laundry System, Northwest Power Planning Council, ACEEE, and 
Amana believes that the projections for sale of high efficiency units 
is too low. (EEI, No. 122 at 3; Whirlpool, No. 141 at 12; NRDC, No. 138 
at 8; City of Seattle, Seattle Public Utilities, No. 126 at 2; Alliance 
Laundry, No. 145 at 20; Northwest Power Planning Council, No. 135 at 1; 
ACEEE, No. 150 at 7; and Amana, No. 146 at 2). Northwest Energy 
Efficiency Alliance, Oregon Office of Energy and the Alliance to Save 
Energy believe DOE overestimated sales in the absence of standards 
because many incentive programs are ending. (Northwest Energy 
Efficiency Alliance, No. 131 at 4; Oregon Office of Energy, No. 162 at 
2; and Alliance to Save Energy, No.148 at 3-4).
    Based on additional updated data, we revised the estimated H-axis 
sales in 1998 from 3.0% to 6.25%. Previously the annual escalation rate 
of H-axis washer sales market were assumed to capture an additional 
0.5% per year of all clothes washer sales but now the annual sales of 
H-axis clothes washers is determined by an amount equal to 0.5% of the 
previous year's V-axis sales. Additional sensitivity analyses were 
performed at escalation rates of 0.25% and 0.75% with minimal effect on 
rebuttable payback (less than half a year payback difference from the 
reference case). Base case assumptions are addressed in greater detail 
in the National Impact Analysis, infra.

E. National Impact Analyses

    The national energy savings is determined in two steps using the 
integrated NES/Shipments spreadsheet model. First the shipments are 
determined before and after a new standard; and then the shipments are 
used to calculate energy savings and national economic benefits (net 
present value of the higher standards). Chapters 9 and 10 of the TSD 
contains a detail explanation of the NES/Shipments spreadsheet model.
    The basic outputs from the National Impact Analysis are shipments 
forecasts, energy and water consumption, and the Net Present Value 
(NPV) for baseline and standards scenarios. The shipments forecasts are 
an input into the National Energy Savings model as well as an input for 
the Manufacturing Impact Analysis. The cumulative savings for energy 
and water are determined for the nation to the year 2030. Finally, the 
net present values (NPVs) are determined for each standard level based 
average data for the nation. See results in Section V of this notice.
1. National Energy Savings (NES) Spreadsheet Model
    Historical Background. The development of the NES and shipments 
model consisted of three phases: (1) Supplemental ANOPR and preliminary 
TSD analysis, (2) analysis presented at the July 1999 Workshop, and (3) 
proposed rule and TSD analysis.
    At the time of the supplemental ANOPR the shipment model was a work 
in progress. We asked for comment on a general accounting methodology 
that included price, operating cost and income elasticities. Since the 
shipments model was not fully developed at the time of the supplemental 
ANOPR, a placeholder set of shipments were used as input to the NES 
spreadsheet in order to produce a preliminary analysis on the national 
impacts.
    At the July 1999 Workshop, we presented a fully developed shipment 
model that included a decision tree. The decision tree allows the 
consumer to choose between not buying a washer, buying a new washer, 
repairing a washer or buying a used washer. It also allows consumers to 
decide to replace a washer before it was necessary (see TSD Chapter 9 
for details). This model also incorporated results from the consumer 
conjoint analysis along with fitting parameters to historical data.
    After presenting this shipment model at the July 1999 Workshop, we 
received comments regarding specific parameters of the model, sources 
of data used in the model and whether or not the results forecasted 
seemed reasonable. We received comments agreeing that the general 
approach of the Shipment and NES models were appropriate, however, 
comments included suggestions to modify parts of the models. (Oregon 
Office of Energy, No. 162 at 8 and

[[Page 59564]]

ACEEE, No.188 at 3). Details of the Shipment and NES models are 
discussed in the sections on elasticity below. After the Workshop we 
carefully looked at the comments and began to make improvements to the 
model. These improvements included refinements that were not 
necessarily suggested by stakeholders but were based on using more data 
and detail. In addition, suggestions contributed by a renowned 
economist were carefully considered. (Assessment of DOE Shipments Model 
for Forecasting the Impacts of Clothes Washer Standards, Kenneth Train, 
Comment No. 194 at 13). After all of the revisions, the shipment model 
forecasted had significantly different results. The two changes made 
that had the greatest effect on results were using a longer historical 
time period to fit forecasting equations to and accounting for new 
appliance sales due to all changes in residence, not just purchases of 
new housing.
    The following section describes the modifications to the NES and 
Shipment spreadsheets as recommended in comments received after the 
publication of the 1998 Supplemental ANOPR. 63 FR 64347, 64359 
(November 19, 1998).
    The modifications to the NES Model follows the three phase 
development from the Supplemental ANOPR analysis to the July 1999 
Workshop analysis to the proposed rulemaking analysis. The changes to 
the Shipment Model as incorporated into the NES are summarized in Table 
3. Discussions of these changes and of comments received which prompted 
these changes are also discussed after the table.

                       Table 3.--Modifications to the NES Model, Including Shipments Model
----------------------------------------------------------------------------------------------------------------
            Parameter                  Supplemental ANOPR        July 1999 workshop           Proposed rule
----------------------------------------------------------------------------------------------------------------
Shipment Model...................  accounting model           accounting with decision  accounting with decision
                                    recommended--fixed         tree.                     tree.
                                    shipment values were
                                    used as a placeholder.
Shipment Elasticities............  price....................  price...................  price.
                                   operating cost...........  operating savings.......  operating savings.
                                   income...................  top/front access feature  top/front access
                                   (These were used in                                   feature.
                                    analysis prior to the                               price/income.
                                    Supplemental ANOPR.).                               income.
                                                                                        interest rate
                                                                                         elasticities.
Source of Elasticities...........  In previous analyses the   Operating savings--       Operating savings--
                                    three input variables      derived from the          derived from the
                                    below were used.           WashWise Intercept        WashWise Intercept
                                   Price Elasticity (PE)--     Survey.                   Survey.
                                    from Oak Ridge equation.  Features elasticity--     Features elasticity--
                                   Operating Cost (OC)         based on conjoint         based on conjoint
                                    elasticity--derived from   analysis.                 analysis.
                                    implicit discount rate.   Price elasticity--with    Price elasticity--with
                                   Income Elasticity--from     other parameters set,     other parameters set,
                                    Oak Ridge model.           determined by             determined by
                                   (For the ANOPR, a           calibrating to 1981-      calibrating to 1970-
                                    shipment analysis had      1996 historical data.     1996 historical data.
                                    not been performed yet
                                    and shipments were kept
                                    constant as a
                                    placeholder pending
                                    future analysis.).
Market Segments..................  new housing starts.......  New housing starts......  New housing completions
                                   existing homes             early replacement market   & moves.
                                    (replacement washers).    regular replacement       early replacement
                                                               market.                   market.
                                                              extra repair market.....  regular replacement
                                                              homes without a clothes    market.
                                                               washer.                  extra repair market.
                                                                                        homes without a clothes
                                                                                         washer.
Houses that Drop Out of Washer     not applicable...........  energy accounted for--    energy accounted for--
 Market.                                                       assumes laundry done at   assumes laundry done at
                                                               Laundromat or elsewhere.  Laundromat or
                                                                                         elsewhere.
Cost of Repairs and Used Washers.  None.....................  The model factored in     Allows input on the cost
                                                               the price of a new        of repairs and used
                                                               washer into the Replace   washers relative to
                                                               or buy Used versus buy    buying a new washer.
                                                               new decision without      Changed the net washer
                                                               subtracting the cost of   price in the Used vs.
                                                               repairing or buying a     New decision model and
                                                               used washer.              the Replace decision
                                                                                         model. The net washer
                                                                                         price is the price of a
                                                                                         new washer minus the
                                                                                         price of either the
                                                                                         used washer or the
                                                                                         repair, where the used
                                                                                         washer and the repair
                                                                                         are assumed to scale
                                                                                         with new washer price.
Residence-Change-Induced Purchase  None, however in prior     Assumes New Housing       A small market of
                                    analysis new housing       Market is determined by   purchases induced by
                                    starts were accounted      net housing increase.     changes of residence is
                                    for and this approach      Ignores AHAM data on      included. Assumed that
                                    was recommended in the     the number of washers     new sales from changes
                                    Supplemental ANOPR TSD.    purchased due to a        in residence are
                                                               change of residence.      correlated with new
                                                                                         housing completions.
                                                                                         The volume of sales
                                                                                         induced by change of
                                                                                         residence is calibrated
                                                                                         with AHAM NFO data on
                                                                                         washers purchased due
                                                                                         to a move.
Implied Discount Rate Used in      None--consumer discount    75%--from WashWise        75%--from WashWise
 Historical Fit.                    rate had not been          intercept survey.         intercept survey.
                                    established at this
                                    point.

[[Page 59565]]

 
Historical Fit...................  None.....................  Historical fit made to    Model projected back to
                                                               1981 to 1996 period.      1951. Fit made to 1970
                                                                                         to 1996 data.
Operating Cost Scaling...........  None.....................  Assumed operating cost    Disaggregates operating
                                                               scaled with electricity   cost and estimates
                                                               price changes.            operating cost back to
                                                                                         1951 using Electricity,
                                                                                         Gas, Water, Oil, and
                                                                                         LPG price indices.
Stock Accounting.................  Uses historical sales and  Uses historical sales     Model is more
                                    saturation data as input   and saturation data as    independent of
                                    to clothes washers         input to clothes          historical data inputs.
                                    household stock            washers household stock   It uses model estimates
                                    accounting due to lack     accounting due to lack    of annual sales as the
                                    of model estimates prior   of model estimates        input into stock
                                    to 1980.                   prior to 1980.            accounting after 1951.
Housing Start Data...............  Recommended using AEO      Uses AEO 1996 Housing     Uses AEO 1999
                                    1996 Housing Starts        Starts Projection.        projections adjusted to
                                    Projection.                                          reflect housing
                                                                                         completions.
Initial Stock Assumption.........  Pre-1957 clothes washer    Pre-1957 clothes washer   1951 automatic washer
                                    stock initialized as       stock initialized as      stock initialized at
                                    zero.                      zero.                     1.63 million (1950
                                                                                         sales) for one-year age
                                                                                         washers decreasing
                                                                                         linearly to 1.03
                                                                                         million at 13-year
                                                                                         vintage and zero
                                                                                         thereafter.
Operation Cost Comparison........  None--no shipments model   Measured operating cost   Measures savings in
                                    yet For NES incremental    savings relative to the   current year relative
                                    cost from the baseline     real operating cost in    to a baseline machine
                                    washer.                    1997 of a 1997 base       (MEF=0.817) with
                                                               case machine              current fuel costs.
                                                               (MEF=0.817).
Fuel Site-to-Source Conversion...  constant value...........  conversion varies yearly  conversion varies yearly
                                                               and is generated by       and is generated by
                                                               EIA's NEMS-BRS \1\        EIA's NEMS-BRS \1\
                                                               program.                  program.
Fuel Prices......................  average from RECS 93.....  average of marginal       average of marginal
                                                               prices determined from    prices determined from
                                                               RECS93.                   RECS93.
Escalation of Fuel Prices........  AEO98....................  AEO98...................  AEO99.
Fuel Price Extrapolation from      LBNL method..............  method used by EIA,       method used by EIA,
 2020 to 2030.                                                 consistent with new LCC   consistent with new LCC
                                                               methodology.              methodology.
Water Heater Fuels...............  electricity, gas, oil....  electricity, gas, oil...  added LPG.
Water & Wastewater Prices........  urban rates: $3.18 per     average rates: $2.66 per  updated average for
                                    1000 gallons.              1000 gallons in 1998.     urban & rural:
                                                                                         avg.=$2.48 per 1000
                                                                                         gals. (1998) (see LCC).
Water & Wastewater Price           0%.......................  2.96% an average from     2.96% an average from
 Escalation.                                                   LCC--a weighting of       LCC--a weighting of
                                                               3.01% and 0.64% (see      3.01% and 0.64% (see
                                                               LCC).                     LCC).
Base Case: H-axis Escalation       0.5%.....................  0.5%....................  0.5%.
 Rates.
Base Case: H-axis Sales..........  3% in 1998...............  6.25% in 1998...........  6.25% in 1998.
Discount Rate....................  7%.......................  7%......................  7%.
Manufacturer Mark-ups............  Min. 1.000...............  Min. 1.000..............  Range: varies with
                                   Mean 1.175...............  Mean 1.175..............   standard level.
                                   Max. 1.350...............  Max. 1.350..............  Distribution: uniform.
                                   Distribution: triangular.  Distribution: triangular
 
----------------------------------------------------------------------------------------------------------------
 \1\ EIA approves use of the names NEMS (National Energy Modeling System) only to describe an AEO version of the
  model with out any modification to code or data. Since, in this work, there will be some minor code
  modifications, DOE proposes use of the name NEMS-BRS for the model as used here.

    Shipments Model. In the Supplemental ANOPR, we examined several 
different approaches to forecasting washer sales. The investigated 
models included an Auto-Regressive Moving Average Model (ARIMA), a 
Multi-Variate Time Series Fit, a Saturation/Lifetime Model, and an 
Accounting Model with elasticity. Of the different approaches, we 
selected the Accounting Model because it was the most full-featured 
model which included price and operating cost elasticities. At the July 
1999 Workshop we described the revised accounting model for projecting 
annual clothes washer shipments. After stakeholder comment the Shipment 
model was further revised and integrated into a single spreadsheet 
called the NES/Shipment spreadsheet. It includes the following 
features:
    <bullet> Combined effects of price, operating cost, and features on 
annual U.S. shipments
    <bullet> Market segments (e.g., new housing, replacement decisions, 
non-owner adding a washer)
    <bullet> Decisions to repair rather than replace
    <bullet> Purchases of used washers
    <bullet> Age categories of clothes washers
    The NES/Shipment spreadsheet now incorporates information from the 
DOE Consumer Analysis. Since the Supplemental ANOPR, DOE has gathered 
additional information about features of clothes washers that influence 
consumers' purchase decisions, and analyzed consumer's stated 
preferences. This new information also has been calibrated with updated 
information about historical purchases. Details of the consumer 
analysis and shipment

[[Page 59566]]

spreadsheet are explained in Chapters 8 (Consumer Analysis) and 9 
(Shipments) of the TSD.
    Shipment Elasticities. The Department received many comments 
concerning which elasticities need to be considered in the shipments 
model. Whirlpool notes that combining the impacts of the purchase 
behavior of discretionary buyers with the postponement and repair 
decisions or ``forced purchase'' consumers, and assuming energy 
reduction regulation of 35% (a $250 retail price increase), it is 
reasonable to expect shipment decreases in excess of 10%. (Whirlpool, 
No. 141 at 10). Amana states that the elasticity of price and sales 
needs to be considered. (Amana, No. 146 at 3). Both ACEEE and the 
Alliance to Save Energy stated that the only market for which there is 
likely to be an elasticity of demand is the early replacement market, 
since homeowners expect to have access to a clothes washer and will 
continue to purchase them even if the cost is higher. (ACEEE, No. 150 
at 6 and Alliance to Save Energy, No. 148 at 3). The Oregon Office of 
Energy and ACEEE recommended reconstructing the shipments model without 
a price-based elasticity variable but including variables for 
disposable income, credit availability, usable washer capacity, and 
average washer cleaning ability (Oregon Office of Energy, No. 190 at 11 
and ACEEE, No. 188 at 5).
    In consideration of the comments received, the Department elected 
to use elasticity values for the following factors: clothes washer 
price, operating savings, top/front access feature, clothes washer 
price/income. In addition, income elasticities, and interest rate 
elasticities were added as input options to the spreadsheet. Details of 
how elasticities were derived are explained in Chapter 9 (Shipments) of 
the TSD.
    Source of Elasticities. After we presented the shipments model at 
the July 1999 Workshop, we received several comments relating to how 
the value of elasticities are determined. The Oregon Office of Energy 
took issue with the methodologies used to derive price elasticities, 
especially the use of the consumer conjoint analysis. (Oregon Office of 
Energy, Nos.162 at 8 and No. 190 at 4-9). Several comments also 
question whether price elasticities derived from past declining prices 
would apply in a future market of increased prices due to a standard. 
(ACEEE, No.188 at 3; Oregon Office of Energy, No.190 at 8; and PG&E, 
No. 189 at 2-3). PG&E also questions the use of the consumer research 
survey to calibrate elasticity variables. It states that instead of 
asking questions about a 10-year-old washer, the questions should have 
been posed for a series of washer ages. It also believes that the 
likely repair cost of a washer is likely to exceed the $150 value used 
in the questionnaire. (PG&E, No. 189 at 2).
    Many enhancements were made to the shipment model to address the 
stakeholder comments listed above. The purpose of these model 
enhancements is to provide the best possible estimates of the impacts 
of standards, consistent with the recent history of washer shipments, 
clothes washer market structure and consumer preferences. These 
enhancements are: (1) Calibration of the model over a longer historical 
period. (2) more detailed and accurate calculation of operating costs 
and savings (3) inclusion of additional user specified explanatory 
macroeconomic variables (4) inclusion of consumer responsiveness to 
price and operating costs as calibrated to historical clothes washer 
shipments. (5) calibration of the relative size of the features 
response, and estimation of the rate at which clothes washer owners 
might drop out of the market using the results from the Clothes Washer 
Consumer Analysis. (6) use of NFO Research Incorporated data from a 
1996 survey (prepared for AHAM) to estimate the proportion of early 
(discretionary) replacements, and the proportion of new versus used 
purchases. (7) consideration of AHAM historical shipments and 
statistics on the recent (post 1994 standard) changes in mean clothes 
washer efficiency. (8) inclusion of Consumer Reports data on repair 
rates during the first five years of the clothes washer lifetime. These 
enhancements are described in more detail below.
    Market Segments. Shipment models used prior to the supplemental 
ANOPR accounted for the new clothes washer and the replacement markets 
which assumed that a washer was replaced by a new machine when it broke 
down. The new shipment model presented at the July 1999 Workshop 
provides a more detailed accounting of different market segments, 
washer ownership categories and accounts for a variety of other market 
dynamics including new versus used shipments, changes in repair 
behavior and life extension of machines through extra repairs.
    Houses That Drop Out of Washer Market. Houses that drop out of the 
washer market are where the laundry is done at Laundromats or elsewhere 
and were not accounted for in analyses presented prior to the July 1999 
Workshop. One stakeholder commented that the analysis will be 
incomplete and not useful without an assessment of the used appliance 
market, and participation in that market on the part of low income 
consumers. (Oregon Office of Energy, No. 162 at 11). Another comment 
emphasized that low income consumers will find it increasingly 
difficult to purchase clothes washers at more stringent standard 
levels, and may simply not be able to buy a new machine. Thus DOE 
should expect an increase in used/repaired clothes washer sales and a 
relative decrease in shipments of new high efficiency models. 
(Whirlpool, No. 141 at 15). In response to the previous comments, the 
revised shipments model takes in account the households that drop out 
of the washer market, and assumes that they wash their clothes at a 
Laundromat or elsewhere.
    Cost of Repair and Used Washers. The shipment model presented at 
the July 1999 Workshop incorporated changes in the prices of new 
washers, but not changes in the prices of used washers or the price of 
repairing an existing washer. The Department received a comment which 
asked that the model incorporate the higher price of used washers and 
repair services resulting from increased demand as consumers delay the 
purchase of new washers in response to higher prices. (Assessment of 
DOE Shipments Model for Forecasting the Impacts of Clothes Washer 
Standards, Kenneth Train, Comment No. 194 at 13). The proposed rule 
Shipment/NES model now gives an input option for the cost ratios of 
repairing a washer and of buying a used washer instead of buying a new 
washer. This option is now an input in terms of the ratio between these 
options and buying a new washer. See TSD Chapter 9 on Shipments.
    Residence-Change-Induced Purchase. The versions of the Shipment 
model presented at the July 22 Workshop only considered residence 
changes for those purchasing new housing. The model now includes 
purchases of washers for change of residences for new and existing 
housing. This improvement to the model has a significant effect on 
forecasted shipments.
    Implied Discount Rate Used in Historical Fit. The implied discount 
rate is a value that describes how important energy cost savings are to 
consumers relative to increases in price. This is different from the 7% 
discount rate used in the analysis that describes the time value of 
money in order to convert dollar costs and savings (first price and 
operating savings) to the same year in order to determine the LCC. Ken 
Train commented that both a 20% implied discount rate which was derived 
from the conjoint analysis and a 75% implied discount rate which was 
derived from

[[Page 59567]]

the WashWise survey are consistent with historical shipments data. (Ken 
Train, Comment No. 194 at 4 and 13). A lower implied discount rate 
would place greater value on future operating cost savings and result 
in a lower drop in shipments as compared to the higher implied discount 
rate. We agree that several values for the implied discount rate can be 
used to fit a curve to historical data. We derived an implied discount 
rate by two methods: (1) The relationship of price and efficiency for 
current models (based on the engineering analysis) is consistent with 
an implied discount rate of 50-100%; (2) while stated preference 
surveys are often unreliable indicators of revealed preferences, we 
analyzed. We believe the WashWise intercept survey results are a more 
accurate measurement of the implied discount rate because its sole 
intent was specific to recent washer purchases, designed to measure 
price savings and interviewed consumers at the point of purchase. In 
contrast, the conjoint analysis provided a limited set of choices for 
implied discount rate and was conducted in a setting removed from 
purchase decision. See TSD Chapter 9. Both derivations (engineering 
analysis and WashWise) are consistent with an implied discount rate of 
75%. This value is higher than found from studies of other appliances, 
perhaps in part because consumers are unaware of how much water costs 
contribute to operating expense. The Department is interested in 
comments.
    Historical Fit; Operating Cost Scaling; Stock Accounting; Housing 
Start Data; Initial Stock Assumption; and Operation Cost Comparison. 
These parameters were refined, after the July 1999 Workshop, to reflect 
updated data or longer historical time periods. These changes were not 
prompted by any specific stakeholder comments.
    Fuel Site-to-Source Conversion. The Appliance Energy Efficiency 
Standards Advisory Committee recommended (letter dated April 21, 1998) 
that we define a range of energy conversion factors and associated 
emission reductions based on generation displaced by standards. In the 
supplemental ANOPR, a constant conversion factor was used. EEI 
commented that the value shown for electric conversion (heat rates) on 
the NES spreadsheet is overstated by at least 11% because AEO 98 
(authored by EIA) assigns the same factor for fossil fuel power plant 
heat rates to hydro-electric and other renewable forms of electric 
generation. This results in overstating primary energy savings from 
reductions in electricity usage. (EEI, No.122 at 7). We have addressed 
this issue by using a year-by-year conversion rate that is calculated 
based on displaced generation using NES.
    Fuel Prices. As discussed in the LCC methodology section, after the 
supplemental ANOPR, marginal gas and electric prices were used, whereas 
previously average prices were used. The marginal price is the price 
paid for the last increment of fuel used. Refer to Section C. Life-
Cycle Cost (LCC) Analysis for a description of these changes.
    Escalation of Fuel Prices. The Alliance to Save Energy, ACEEE and 
the Oregon Office of Energy believe that assumptions of residential 
price declines are overstated. (Alliance to Save Energy, No. 148 at 1-
2; ACEEE, No. 150 at 4; and Oregon Office of Energy, No. 162 at 6). The 
Alliance to Save Energy recommends that DOE analyze at least one case 
with flat residential energy prices. (Alliance to Save Energy, No. 148 
at 1-2). ACEEE believes EIA estimates of residential energy price 
declines remain too high. It cites its April 1998 comments in which it 
referred to a survey by the Association of Energy Service Professionals 
of its members projected on average that residential bills will 
increase 4.9% with restructuring while commercial and industrial bills 
will decrease an average of 5.8 to 8.6%. Based on this information, 
ACEEE believes EIA's projections of future residential electricity 
prices are higher in the 1999 Annual Energy Outlook than in the 1998. 
ACEEE recommends that DOE conduct a sensitivity analysis with smaller 
price declines, such as the EIA high use forecast. (ACEEE, No. 150 at 
4). Similarly, the Oregon Office of Energy believes residential rates 
will remain flat or rise somewhat. (Oregon Office of Energy, No.162 at 
6).
    While we generally agree that future energy prices are uncertain, 
we are relying on the EIA and its forecasts for the analysis. To 
account for the uncertainty, we have included the high and low fuel and 
electricity forecasts, i.e., AEO low & high economic growth scenarios 
in the analysis.
    Fuel Price Extrapolation from 2020 to 2030. Refer to Section C. 
Life-Cycle Cost (LCC) Analysisfor a description of this change.
    Water Heater Fuels. LPG was added as a fuel type.
    Water and Wastewater Prices; and Water and Wastewater Price 
Escalation. Refer to Section C. Life-Cycle Cost (LCC) Analysis for a 
description of these changes.
    Base Case H-axis Escalation Rates; and Base Case H-axis Sales. 
These issues concern the estimated initial percentage of sales that are 
H-axis and the estimated escalation of H-axis sales. EEI, Whirlpool, 
NRDC, City of Seattle, Seattle Public Utilities, Alliance Laundry 
System LLC, Northwest Power Planning Council, ACEEE, and Amana believe 
that the projections for sale of high efficient units is too low. (EEI, 
No. 122 at 3; Whirlpool, No. 141 at 12; NRDC, No. 138 at 8; City of 
Seattle, Seattle Public Utilities, No. 126 at 2; Alliance Laundry, No. 
145 at 20; Northwest Power Planning Council, No. 135 at 1; ACEEE, No. 
150 at 7; and Amana, No. 146 at 2). Northwest Energy Efficiency 
Alliance, Oregon Office of Energy and the Alliance to Save Energy 
believe DOE overestimated sale in the absence of standards because many 
incentive programs are ending. (Northwest Energy Efficiency Alliance, 
No. 131 at 4; Oregon Office of Energy, No. 162 at 2; and Alliance to 
Save Energy, No. 148 at 3-4).
    NRDC commented that the Supplemental ANOPR proposal to use a single 
basecase forecast with a known gradually increasing penetration of high 
efficiency clothes washers is incorrect. (NRDC, No. 138 at 8). 
Whirlpool, Amana, and Alliance Laundry System LLC provide estimates of 
the growth of H-axis clothes washers. Whirlpool commented that the 
forecasts presented in the TSD of 0.5% per year growth in market 
penetration is significantly low based on actual trends. (Whirlpool, 
No. 141 at 12). Amana commented that the assumption of 1.5% H-axis 
washers in 1995 with a 0.5% yearly increase has proved to be a 
conservative assumption and that its competitive information indicates 
a 6% market share of H-axis machines is a more appropriate number to 
use at this time. (Amana, No. 146 at 2). Alliance Laundry System LLC 
commented that it does not believe that front load washing penetration 
will actually shrink 20% in the next 24 months, as the DOE spreadsheet 
analysis presumes. (See TSD at page 8-16, Table 8.3). It believes that 
a more realistic projection would show front load washing machines 
gaining in acceptance for those consumers who choose energy and water 
savings over other features such as ergonomics or far lower purchase 
price. (Alliance Laundry, No. 145 at 20). With regard to the 
assumptions concerning sales in absence of standards, ACEEE believes 
the DOE forecast seems conservative in early years. Saturation are 
currently running higher than DOE's forecast. But, without a standard, 
we'd expect a leveling off at around 15% saturation (based on levels 
achieved in the North-

[[Page 59568]]

West, even with heavy promotion). (ACEEE, No. 150 at 7).
    The Northwest Energy Efficiency Alliance believes that the baseline 
forecast of resource-efficient clothes washers (RECWs) should begin 
with a current (1998) market penetration rate of 5-6%. It should then 
assume an annual increase of .75% every year until 2030 (i.e., 28% 
market share by 2030). This forecast would place the market share of 
RECWs at approximately 10% in 2030. This value represents the 
conservative end of the range of estimates provided by manufacturers 
participating in the Northwest Energy Efficiency Alliance's interviews, 
(Market Progress Evaluation Report: WashWise No. 2, publication No. 
E98-012.). (Northwest Energy Efficiency Alliance, No. 131 at 4.) Oregon 
Office of Energy believes DOE has potentially overestimated the base 
case share of high efficiency clothes washers defined by DOE, based on 
AHAM data, to be 35% more efficient than the minimum efficiency 
required of today's machines in future shipments. There is not a lot of 
expectation that this share will grow significantly, now or in the near 
term, as organized efficiency programs are seriously on the wane. 
(Oregon Office of Energy, No. 162, at 2).
    DOE agrees the market share of the more efficient clothes washers 
is greater than estimated. Based on the comments, DOE has updated the 
estimate of the H-axis sales to assume in 1998 that 6.25% of clothes 
washers are H-axis, escalating at 0.5% a year.
    Discount Rate. The NES analysis assumes a fixed discount rate of 
7%. This is used in determining the savings and costs due to a new 
standard and for calculating the NPV. This is unchanged from the ANOPR.
    Manufacturer Mark-ups. For the Supplemental ANOPR the shipment 
weighted average was used for the manufacturing mark-up. One value was 
used for all standard levels. For the proposed rule, a range of 
manufacturer mark-ups were calculated for each standard level. The 
average of the range was used.
2. Net National Employment
    The Process Rule includes national employment impacts among the 
factors DOE considers in selecting a proposed standard. The Department 
estimates the impacts of standards on employment for appliance 
manufacturers, relevant service industries, energy suppliers, and the 
economy in general. We estimate two employment impacts: total and 
direct impacts. Total impacts--or net national employment impacts--are 
impacts on the national economy, including the manufacturing sector 
being regulated. Direct employment impacts would result if standards 
led to a change in the number of employees at manufacturing plants and 
related supply and service firms. The MIA only discusses the direct 
employment impacts.
    Net national employment impacts from clothes washer standards are 
defined as net jobs created or eliminated in the general economy as a 
consequence of: (1) reduced spending by end users on energy 
(electricity, gas including LPG, and oil) and water; (2) reduced 
spending on new energy supply by the utility industry; (3) increased 
spending on the purchase price of new clothes washers; and (4) the 
associated indirect effects of those three factors throughout the 
national economy. The resulting net savings are expected to be 
redirected to other forms of economic activity. We expect these shifts 
in spending and economic activity to affect the demand for labor, but 
there is no generally accepted method for estimating these effects.
    One method to assess the possible effects on the demand for labor 
of such shifts in economic activity is to compare sectoral employment 
statistics developed by the Labor Department's Bureau of Labor 
Statistics (BLS). The BLS regularly publishes its estimates of the 
number of jobs per million dollars of economic activity in different 
sectors of the economy, as well as the jobs created elsewhere in the 
economy by this same economic activity. BLS data indicates that 
expenditures in the electric 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 the 
capital-intensity of the utility sector and wage differences. Based on 
the BLS data alone, we believe net national employment will increase 
due to shifts in economic activity resulting from the clothes washer 
standards.
    In developing this proposed rule, the Department attempted a more 
precise analysis of national employment impacts using an input/output 
model of the U.S. economy. The model, ImBuild, was developed by the 
Office of Building Technology, State and Community Programs, DOE. 
ImBuild is a PC-based economic analysis model that characterizes the 
interconnections among 35 sectors as national input/output structural 
matrices. It can be applied to future time periods. ImBuild calculates 
the total effect on employment, including job creation or deletion in 
the manufacturing sector. Inputs to the ImBuild model are outputs of 
the NES/Shipment spreadsheet. Since the electric utility sector is more 
capital-intensive and less labor-intensive than other sectors (see 
Bureau of Economic Analysis, Regional Multipliers: A User Handbook for 
the Regional Input-Output Modeling System (RIMS II), Washington, DC., 
U.S. Department of Commerce, 1992), a shift in spending away from 
energy bills into other sectors would be expected to increase overall 
employment. For more details on the net national employment analysis, 
please see Chapter 13 in the TSD.
    Because this is a new analysis for an energy conservation standard 
rulemaking, we are requesting public comments on the validity of the 
analytical methods used and the appropriate interpretation and use of 
the results of this analysis.

F. Consumer Analysis

    In determining whether a standard is economically justified, we 
consider any other factors that the Secretary deems to be relevant. 
Under this factor, the Department is considering the life-cycle cost 
impacts on those subgroups of consumers who, if forced by standards to 
purchase H-axis machines, would choose to repair their existing 
machines.

Consumer Sub-Groups

    The consumer analysis evaluates impacts to any identifiable groups, 
such as consumers of different income levels, who may be 
disproportionately affected by any national energy efficiency standard 
level. The impact on consumer sub-groups is determined using the LCC 
spreadsheet model for low income households and for household where the 
head of the household was a senior.

G. Manufacturer Impact Analysis

    The manufacturer analysis estimates the financial impact of 
standards on manufacturers and calculates impacts on employment and 
manufacturing capacity.
    Prior to initiating the detailed MIA for the clothes washer 
rulemaking, the Department prepared a document titled ``Clothes Washer 
Manufacturer Impact Analysis'' which outlines procedural steps and 
identifies issues for consideration in the MIA. This document was 
presented at a public workshop held on December 14-15, 1998. It was 
based on the general framework for the MIA presented by the Department 
at a workshop in March 1997 and was modified for its application to the 
clothes washer rule.
    As proposed in the approach document, the MIA was conducted in 
three phases. Phase 1, ``Industry Profile,'' consisted of the 
preparation of

[[Page 59569]]

an industry characterization. Phase 2, ``Preliminary Industry Cash 
Flow,'' had as its focus the larger industry. In this phase, the 
Government Regulatory Impact Model (GRIM) was used to prepare a 
preliminary industry cash flow analysis. Here, the Department used 
publicly available information developed in Phase 1 to adapt the GRIM 
structure to facilitate the analysis of new clothes washer standards. 
In Phase 3, ``Sub-Group Impact Analysis,'' the Department discussed 
fully the results of the Preliminary Industry Cash Flow analysis with 
each manufacturer and identified manufacturer-specific variances.
    Phase 3 also entailed documenting additional impacts on employment 
and manufacturing capacity through a structured interview process.
    Phase 1, Industry Profile. Phase 1 of the MIA consisted of 
preparing an Industry Profile. Prior to initiating the detailed impact 
studies, DOE received input on the present and past structure and 
market characteristics of the clothes washer industry. This activity 
involved both quantitative and qualitative efforts to assess the 
industry and products to be analyzed. Issues addressed included 
manufacturer market shares and characteristics, trends in the number of 
firms, the financial situation of manufacturers, and trends in clothes 
washer characteristics and markets.
    The industry profile included a top-down cost analysis of the 
appliance industry that was used to estimate the disaggregated costs of 
a baseline clothes washer. The cost structure was used to derive cost 
and financial inputs for the GRIM--e.g., material, labor, overhead, 
depreciation, Sales General & Administration (SG&A), and Research & 
Development (R&D). The profile was also instrumental in estimating the 
manufacturer and retail mark-ups that were used in the Life-Cycle Cost 
Analysis.
    Publicly-available quantitative data published by the U.S. Bureau 
of Census with regards to the clothes washer industry was included in 
Chapter 3 of the preliminary Technical Support Document (TSD) dated 
October 1998 accompanying the clothes washer Supplemental ANOPR dated 
November 19, 1998. These reports include such statistics as the number 
of companies, manufacturing establishments, employment, payroll, value 
added, cost of materials consumed, capital expenditures, product 
shipments, and concentration ratios.
    The Department also utilized additional sources of information to 
further characterize the clothes washer industry. These included 
company Securities and Exchange Commission (SEC) 10K and annual 
reports, Moody's company data reports, Standard & Poor's (S&P) stock 
reports, value line industry composites, and Dow Jones Financial 
Services.
    Phase 2, Preliminary Industry Cash Flow. Phase 2 of the MIA had as 
its focus the ``larger'' industry. The analytical tool used for 
calculating the financial impacts of standards on manufacturers is the 
GRIM. In Phase 2, the GRIM was used to perform a preliminary industry 
cash flow analysis.
    For the Preliminary Industry Cash Flow Analysis, DOE prepared a 
list of financial values to be used in the GRIM industry analysis. 
These were calculated by studying publicly-available financial 
statements of clothes washer manufacturers. A detailed definition of 
financial inputs and their values for a ``prototypical'' clothes washer 
manufacturer was presented in Chapter 9 of the preliminary TSD. Values 
for currently sold ``Base Case'' prices were derived from the Bureau of 
Census's Current Industrial Reports (CIRs). The dollar value of clothes 
washer shipments from factories is divided by the quantity of clothes 
washers shipped to arrive at the per-unit manufacturer price. In order 
to estimate manufacturing costs--labor, materials, depreciation/
tooling, etc.--from the average manufacturer prices obtained from the 
CIRs, a typical clothes washer industry cost structure was developed 
using publicly-available information from the Census of Manufacturers 
(CMs) and from industry statistics obtained from the SEC-10K reports. 
Finally, in preparing the Preliminary Industry Cash Flow Analysis, DOE 
used the same clothes washer shipment scenarios developed for the 
National Energy Savings (NES) spreadsheet.
    The Department received a comment accurately signaling an error in 
the Preliminary Industry Cash Flow Analysis calculation of the cost of 
capital. (NRDC, No. 138, at 12-13). The suggested change was made and 
its impact is the reduction of the discount factor from 7.25% to 6.65%. 
Another comment received concerned DOE's assumption of a 10.5% working 
capital requirement. Given ValueLine's estimate of just under 7%, a 
more detailed explanation for the Department's assumption was 
requested. (Oregon Office of Energy, No. 162 at 8). The Department 
recognizes that there exists considerable variability in the working 
capital requirements of various firms based on information obtained 
from SEC 10-K reports. Discussions with appliance industry analysts 
indicated that working capital requirements are in the 7-14%, thus the 
ANOPR input assumption. This assumption was subsequently verified 
through interviews with six clothes washer manufacturers and found to 
be accurate.
    Phase 3, Sub-Group Impact Analysis. DOE conducted detailed 
interviews with clothes washer manufacturers representing over 99% of 
domestic clothes washer sales to gain insight into the potential 
impacts of standards. During these interviews, the Department solicited 
the information necessary to validate industry cash flows and to assess 
employment and capacity impacts.
    The interview process played a key role in the MIA, since it 
allowed manufacturers to privately express their views on important 
issues and provide confidential information needed to assess financial, 
employment, and other business impacts. To verify the assumptions used 
to derive the Preliminary Industry Cash Flow, an interview guide 
solicited information on the possible impacts of new standards on 
manufacturing costs, product prices, and sales.
    Each manufacturer was provided a version of the GRIM that included 
discrete manufacturer costs for all percentiles reported by the AHAM. 
In preparation for the interview, each manufacturer could, if desired, 
input its own data and assumptions to develop its own expected cash 
flow. Alternatively, manufacturers could select the percentile values 
that best represented their costs at different efficiency levels.
    The evaluation of the possible impacts on direct employment and 
manufacturing assets also drew heavily on the information gathered 
during the interviews. The interview guide solicited both qualitative 
and quantitative information. Supporting documentation was requested 
whenever applicable. Interview participants were asked to identify all 
confidential information provided in writing or orally as such. 
Approximately two weeks following the interview, an interview summary 
was provided to give manufacturers the opportunity to confirm the 
accuracy and protect the confidentiality of all collected information.
    Small Manufacturer Sub-Group. We received a comment following the 
publication of the preliminary TSD indicating that smaller 
manufacturers of clothes washers could be negatively affected more than 
other manufacturers by any proposed standard. (Amana, No. 146 at 3). To 
assess the potential impacts of possible washer standards on

[[Page 59570]]

smaller manufacturers, Arthur D. Little (ADL) conducted preliminary 
interviews with the three smallest clothes washer manufacturers (by 
market share) and held discussions on possible approaches to performing 
the MIA for smaller manufacturers. ADL and the manufacturers discussed 
how a small-manufacturer GRIM could be constructed and contrasted with 
the industry cash flow analysis. Foremost in the discussions were 
issues surrounding data collection and aggregation and the ensuing 
confidentiality concerns given the small group of manufacturers and 
their unbalanced size.
    All of the smaller manufacturers worked with ADL to develop a 
company-specific GRIM analysis for their firms. Even within the small 
manufacturer sub-group, ADL found significant differences in financial 
structure for the firms depending on their business models (e.g., 
original equipment manufacturer (OEM) vs. retail emphasis, product 
market niche). ADL found that from a financial standpoint the common 
characteristic of this group, in contrast with the overall industry, 
was its need to spread fixed costs over smaller production volumes. 
During the interviews, small manufacturers demonstrated that several of 
the key costs necessary to meet any new regulation are largely 
independent of the product volume produced. The most apparent are the 
costs necessary to design a new product meeting the proposed energy 
standards. Other costs, such as plant engineering, some tooling, and 
other capital costs, have significant portions that are independent of 
final production volumes.
    To assess the ``differential'' potential impacts of possible washer 
standards on smaller manufacturers without revealing individual 
manufacturers' proprietary information, ADL prepared a cash flow 
analysis of the potential effects on a ``prototypical'' smaller 
manufacturer. The basic approach to analyzing the economic effects on a 
smaller manufacturer involved determining the smaller company's fixed 
cost structure relative to the industry average and the likely ability 
of the smaller company to recover its full costs and investments after 
implementation of a new standard.
    Dryer Analysis: An important consideration regarding new efficiency 
standards that came to light during the course of the manufacturer 
interviews, was the pull-through effect of clothes washers on the 
clothes dryer market. The majority of manufacturers indicated that 
stringent standards on clothes washers would have an effect on dryers 
since dryer sales are highly correlated to washer sales as people 
frequently buy these appliances as a set. A separate GRIM (referred to 
as the Dryer GRIM) was prepared in an effort to model the financial 
impact of these considerations on the dryer business.
    Impact on Clothes Washer Repair Industry: Should an increase in 
energy efficiency standards result in higher prices for new clothes 
washers, consumers may be influenced to repair old units rather than 
purchase new ones at the higher price. The Oregon Office of Energy 
strongly believes the parts side of the manufacturers' businesses 
should be included in the manufacturer impact analysis and urges the 
Department to gather the data necessary. (Oregon Office of Energy, No. 
190, at 10). The Department agrees that the repair business should be 
considered. Based on the forecast of clothes washer repairs in the LBNL 
shipments model, the Department estimated the impact of a change in 
clothes washer repair revenues on the NPV of the clothes washer 
manufacturers' repair parts business.

H. Utility Analysis

    The utility analysis estimates the effects of the reduced energy 
consumption due to improved appliance efficiency on the utility 
industry. Because electric utility restructuring is well underway, it 
is no longer valid to assume a cost recovery mechanism under public 
utility regulation, which was the basis of previous utility impact 
analyses. Therefore, this utility analysis consists of a comparison 
between forecast results for a case comparable to the AEO99 Reference 
Case and forecasts for policy cases incorporating each of the clothes 
washer trial standard levels.
    Table 4 lists the major assumptions DOE used in the clothes washer 
utility analysis. We discuss each of these assumptions briefly in this 
section. For more details on the utility analysis, see Chapter 12 in 
the TSD.

        Table 4.--Assumptions Used in the Utility Impact Analysis
------------------------------------------------------------------------
                Description                          Assumption
------------------------------------------------------------------------
 Energy Prices............................  AEO99.
Energy Savings............................  From the NES spreadsheet as
                                             site energy savings.
Interpolation of Scaling Factors..........  Linear.
------------------------------------------------------------------------

    The Department uses a variant of EIA's widely recognized National 
Energy Modeling System (NEMS) called the National Energy Modeling 
System-Building Research and Standards (NEMS-BRS) for the utility 
analysis, together with some scaling and interpolation calculations.\5\ 
EIA uses NEMS primarily for the purpose of preparing the Annual Energy 
Outlook. Using NEMS, EIA produces a baseline forecast for the U.S. 
energy economy through 2020. The NEMS-BRS model used for this analysis 
is based on the AEO99 version of NEMS with minor modifications.
---------------------------------------------------------------------------

    \5\ For more information on NEMS, please refer to the National 
Energy Modeling System: An Overview 1998. DOE/EIA-0581 (98), 
February, 1998. 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 our analysis entails some minor code 
modifications and the model is run under various policy scenarios 
that are variations on DOE/EIA assumptions, the name NEMS-BRS refers 
to the model as used here. BRS is DOE's Building Research and 
Standards office.
---------------------------------------------------------------------------

    NEMS-BRS has several advantages that have led to its adoption as 
the source for basic forecasting in the appliance energy efficiency 
analyses. NEMS-BRS relies on the AEO99 assumptions, which are well-
known and accepted due to the exposure and scrutiny each AEO receives. 
In addition, the comprehensiveness of NEMS-BRS permits the modeling of 
interactions among the various energy supply and demand sectors and the 
economy as a whole, so it produces a sophisticated picture of the 
effects of appliance standards. Perhaps most importantly, because it 
explicitly simulates the impact on the industry, NEMS-BRS provides an 
accurate estimate of marginal effects, which yield better indicators of 
actual effects than estimates based on industry-wide average values. 
Marginal rates show only the effects of standards. Average rates show 
the effects of standards as well as what is happening in the market.
    To analyze the effects of standards, we evaluate the trial standard 
levels by entering the changes in electricity, gas, LPG, and oil 
consumption values into the NEMS-BRS Residential Demand Module. We took 
the energy savings input from the NES spreadsheet, applied it to the 
clothes washer, water heater, and clothes dryer end uses, and allocated 
it appropriately among census divisions. In the TSD, we report results 
for several key industry parameters, notably residential energy sales, 
generation, and installed capacity, including the fuel mix that is used 
for generation. See Chapter 12 of the TSD for more details.

I. Environmental Analysis

    The Department determines the environmental impacts of each 
standard level as required in Section

[[Page 59571]]

325(o)(2)(B)(i)(VI), 42 U.S.C. 6295(o)(2)(B)(i)(VI). Specifically, DOE 
calculates the reduction in carbon from carbon dioxide (CO<INF>2</INF>) 
and nitrogen oxides (NO<INF>X</INF>) emissions with the NEMS-BRS 
computer model, together with external calculations. DOE also 
calculated the reduction in sulfur dioxide (SO<INF>2</INF>) household 
emissions which are not covered by NEMS-BRS.
    Table 5 lists the major assumptions DOE used in the clothes washer 
environmental analysis. We discuss each of these assumptions briefly in 
this section. For more details on the environmental analysis, please 
see the Environmental Assessment which is published with the TSD.

         Table 5.--Assumptions Used in the Environmental Analysis
------------------------------------------------------------------------
                Description                          Assumption
------------------------------------------------------------------------
Energy Prices.............................  AEO99.
Energy Savings............................  From the NES spreadsheet as
                                             site energy savings.
Interpolation of Scaling Factors..........  Linear.
Household Emissions.......................  C, NO<INF>X</INF> & SO<INF>2</INF> estimated from
                                             general factors.
------------------------------------------------------------------------

    We analyze the environmental effects of proposed clothes washer 
energy-efficiency standards using NEMS-BRS plus some scaling and 
interpolation calculations. Inputs to NEMS-BRS are similar to those 
used for the AEO99 reference case, except residential energy usage for 
clothes washer, water heaters, and clothes dryers is reduced by the 
amount of energy (gas, oil, LPG, and electricity) saved due to the 
clothes washer trial standard levels.
    The environmental analysis considers two pollutants, SO<INF>2</INF> 
and NO<INF>X</INF>, and one emission, carbon. NEMS-BRS has an algorithm 
for estimating NO<INF>X</INF> emissions from power generation. Since we 
use the AEO99 version of NES, the May 25, 1999, EPA rule (64 FR 28249) 
on trading of NO<INF>X</INF> is fully incorporated in our analysis. 
However, NEMS-BRS estimates of NO<INF>X</INF> emissions are incomplete 
because NEMS-BRS does not estimate household emissions. Household 
emissions result from the combustion of fossil fuels, primarily natural 
gas, within individual homes. Because households that use natural gas, 
fuel oil, or LPG contribute to NO<INF>X</INF> emissions, DOE's analysis 
includes a separate household NO<INF>X</INF> emissions estimation, 
based on simple emissions factors derived from the general literature. 
NEMS-BRS tracks carbon emissions based on the total of fuels consumed. 
NEMS-BRS also produces comprehensive estimates of the benefits of the 
trial standard levels, so no additional analysis is necessary. Because 
SO<INF>2</INF> emissions from power plants are capped by clean air 
legislation, physical emissions of this pollutant from electricity 
generation will be only minimally affected by possible clothes washer 
standards. Therefore, we do not consider power plant SO<INF>2</INF> 
emissions here, although we report household emissions savings using a 
method similar to that described for NO<INF>X</INF>. See Appendix EA-1 
in the TSD for a description of the methodology used to derive emission 
factors for residential combustion.
    The NES spreadsheet provides the input of energy savings for NEMS-
BRS, which then produces the emissions forecast. We calculate the net 
benefits of the standard as the difference between emissions estimated 
by the reference case version of NEMS-BRS and the emissions estimated 
with the trial clothes washer standard in place. See the Environmental 
Assessment (EA) which is published with the TSD for details.

V. Analytical Results

A. Trial Standard Levels

    In selecting trial standard levels, we followed the guidance set 
forth in the Process Rule. We identified and selected candidate 
standard levels at the lowest LCC (Trial Standard Levels 4 and 5), a 
three year or less payback period (Trial Standard Levels 1 and 2), and 
the most energy efficient achievable design (Trial Standard Level 6). 
Additionally, we selected as a trial standard level the efficiency 
levels proposed in the joint recommendation submitted to the Department 
by clothes washer manufacturers and energy conservation advocates 
(Trial Standard Level 3). The Joint Stakeholders Comment levels would 
go into effect in stages, with the first level going into effect on 
January 1, 2004, and the second level going into effect on January 1, 
2007. The initial standard will achieve a modified energy factor (MEF) 
of 1.04 (approximately a 22 percent reduction in energy consumption 
over the current standard). The later standard will achieve a MEF of 
1.26 (approximately 35 percent reduction in energy consumption over the 
current standard).
    We have examined six trial standard levels. Table 6 presents the 
baseline and trial standard levels, the associated MEF values and the 
percentage reduction in energy use, from the baseline, achieved at the 
trial standard level. Trial Standard Level 3 is the combination of 
standards proposed in the Joint Stakeholders Comment. (Joint Comment 
No. 204). In addition, Table 6 presents the retail price and 
incremental price from the baseline. For the clothes washer rulemaking 
the method we used to generate the manufacturing costs needed for the 
engineering analysis was the efficiency level approach, reporting 
relative costs of achieving energy efficiency improvements (represented 
here as the percentage reduction in energy use).

                               Table 6.-- Trial Standard Levels For Clothes Washers
----------------------------------------------------------------------------------------------------------------
                                                                                                    Incremental
         Trial standard level                    MEF              Percent reduction in    Retail    price from
                                                                       energy use         price      baseline
----------------------------------------------------------------------------------------------------------------
Baseline.............................  0.817..................  0......................     $421
1....................................  1.021..................  20.....................      450             $29
2....................................  1.089..................  25.....................      534             113
3....................................  1.04 in 2004...........  22 in 2004.............      474              53
                                       1.26 in 2007...........  35 in 2007.............      661             240
4....................................  1.257..................  35%....................      661             240
5....................................  1.362..................  40%....................      664             243
6....................................  1.634..................  50%....................      775             354
----------------------------------------------------------------------------------------------------------------


[[Page 59572]]

1. Economic Impact on Consumers
    a. Life-Cycle-Cost. To evaluate the economic impact on consumers, 
we conducted a LCC analysis for each of the trial standard levels as 
well as the proposed standards. LCC results are presented as 
differences in the LCC relative to the baseline clothes washer design. 
Life-cycle cost was determined for three scenarios: low, reference and 
high growth. The reference growth scenario assumes the average fuel 
price forecast found in the Energy Information Administration's (EIA) 
Annual Energy Outlook 1999 (AEO99) and expected water price escalations 
based on earlier DOE analysis, which can be found in Section 7.2 of the 
TSD. The high growth scenario assumes high economic growth will 
increase the demand for fuel, and therefore increase the price of fuel. 
The high growth scenario also assumes a high water price and wastewater 
escalation rate. The reference case is assumed by AEO the most likely 
case and is bounded by the high and low growth scenarios. In Table 7 we 
present results for the reference case. Results for the high and low 
growth scenarios can be found in Section 7.2.3 of the TSD.
    Table 7 shows the average LCC savings and the percentage of 
households benefitting for each of the trial standard levels. The 
average LCC savings for each of the trial standards and the joint 
comment proposed standards are positive. The convention is used whereby 
all values in parentheses are negative. A negative change in LCC means 
that the LCC after standards is lower than without standards, and 
implies positive LCC savings. Note that washers purchased under stage 1 
and stage 2 of joint comment proposal have different LCC savings. The 
LCC analysis indicates that 89% of households purchasing a clothes 
washer at the 1.04 MEF level would benefit, in comparison to the LCC of 
a baseline clothes washer. Starting in 2007, the LCC analysis indicates 
that 80% of households will benefit from the joint comments standard 
level, in comparison to the LCC of a baseline clothes washer.

                              Table 7.--Summary of LCC Results for the Reference Case
----------------------------------------------------------------------------------------------------------------
                                                                                  Mean change in   Percent with
             Trial standard level                              MEF                   LCC from      LCC less than
                                                                                   baseline \1\    baseline \2\
----------------------------------------------------------------------------------------------------------------
1.............................................  1.021...........................            (61)              84
2.............................................  1.089...........................           (211)              87
3.............................................  1.04 in 2004....................           (103)              89
                                                1.26 in 2007....................           (260)              80
4.............................................  1.257...........................           (242)              79
5.............................................  1.362...........................           (243)              80
6.............................................  1.634...........................           (176)             69
----------------------------------------------------------------------------------------------------------------
\1\ The baseline LCC, based on the shipment weighted average of the most likely costs, is $1633.
\2\ For a sample of 10,000 households.

    b. Payback Period. As part of the LCC analysis is the payback 
analysis. We report the median payback for the reference case from the 
distribution of paybacks for each trial standard level in Table 8. The 
median payback is the median number of years required to recover, in 
energy savings, the increased costs of the efficiency improvements. The 
mean or average payback period is also reported. Results for the high 
and low growth scenarios can be found in Section 7.2.3 of the TSD.

                           Table 8.--Summary of Payback Period Results--AEO reference
----------------------------------------------------------------------------------------------------------------
                                                                                    Median \1\       Mean \1\
             Trial standard level                              MEF                    payback         payback
----------------------------------------------------------------------------------------------------------------
1.............................................  1.021...........................             0.6             4.4
2.............................................  1.089...........................             4.0             5.0
3.............................................  1.04 in 2004....................             3.5             4.6
                                                1.26 in 2007....................             5.0             6.8
4.............................................  1.257...........................             5.1             7.0
5.............................................  1.362...........................             5.1             7.0
6.............................................  1.634...........................             7.0            8.7
----------------------------------------------------------------------------------------------------------------
\1\ For a sample of 10,000 households.

    c. Rebuttable Presumption Payback. The Act states that if the 
Department determines that the payback period of a standard is less 
than three years as calculated under the test procedure, there shall be 
a rebuttable presumption that such trial standard level is economically 
justified. The Act further states that if this three year payback is 
not met, this determination shall not be taken into consideration in 
deciding whether a standard is economically justified. Section 
325(o)(2)(B)(iii), 42 U.S.C. 6295(o)(2)(B)(iii). Rebuttable Presumption 
Paybacks (PBPs) are presented in order to provide the established 
rebuttable presumption that a energy efficiency standard is 
economically justified if the additional product costs attributed to 
the standard are less than three times the value of the first year 
energy cost savings. Rather than using distributions for input values, 
the Rebuttable PBP is based on discrete values and is based on the DOE 
clothes washer test procedure assumptions. These values (including 
cycles per year, electric fuel source, etc.) correspond to those 
outlined in the DOE test procedure, found in 10 CFR 10, Volume 3, Part 
430, Subpart B, Appendix J1. The result is a single payback value and 
not a distribution of PBPs.
    Payback periods are calculated at the new standard level for all 
efficiency levels of product sold in the basecase. For this analysis 
the Department has assumed two efficiency levels in the

[[Page 59573]]

basecase: baseline units (MEF=.817) and units at a 35% reduction in the 
energy use of the baseline model (MEF=1.26) to represent the H-axis 
market segment. With the presently available data, the baseline 
efficiency level is weighted with a market share of 91% and the 
horizontal axis market share is weighted at 9%.
    The payback periods are calculated for the expected effective year 
of the standard ( 2004 or 2007) and are presented in Table 9.

                                Table 9.--Rebuttable Presumption Payback in Years
----------------------------------------------------------------------------------------------------------------
                                                                    Payback for     Payback for
                                                                    baseline to   35% efficiency
                                                                  standard level     level to      Market share
         Trial standard level                      MEF           ---------------- standard level     weighted
                                                                                 ---------------- payback period
                                                                  Market share =  Market share =
                                                                        91%             9%
----------------------------------------------------------------------------------------------------------------
1.....................................  1.021...................             2.1              NA             2.1
2.....................................  1.089...................             2.9              NA             2.9
3.....................................  1.04 in 2004............             2.5              NA            2.5.
                                        1.26 in 2007............             4.1            19.8             5.5
4.....................................  1.257...................             4.2              NA             4.2
5.....................................  1.362...................             4.3            19.6             5.7
6.....................................  1.634...................             5.7            23.2            7.3
----------------------------------------------------------------------------------------------------------------
Note: NA = not applicable.

    The results in Table 9 are based on an increase of H-axis sales per 
year of 0.5%. Previously the annual escalation rate of H-axis washer 
sales market were assumed to capture an additional 0.5% per year of all 
clothes washer sales but now the annual sales of H-axis clothes washers 
is determined by an amount equal to 0.5% of the previous year's V-axis 
sales. The negotiated scenario of a two-tier standard with MEF levels 
of 1.04 becoming effective in the year 2004 and a MEF level of 1.26 
becoming effective in the year 2007 is also represented. The values 
shown for the second tier were calculated for the year 2007. All other 
calculations are based on the year 2004. The effective year does not 
have a great impact on the payback period because only the fuel and 
water price are different for different years.
    As can be seen from Table 9, Trial Standard Levels 1, 2 and the 
first level of 3 satisfy the rebuttable presumption test.
    d. Consumer Sub-Group Analysis. As part of the consumer analysis we 
evaluated the impact to any identifiable groups or consumers, such as 
households of different income levels, who may be disproportionately 
affected by any national energy efficiency standard level. This 
analysis examines the economic impacts on different groups of consumers 
by estimating the average change in LCC and by calculating the fraction 
of households that would benefit. We analyzed the potential effect of 
standards for households with low income levels and senior households, 
two consumer subgroups of interest identified by DOE and supported by 
stakeholders. Seniors is defined as having a head of household over 65. 
Low income is defined as at 100% of poverty level. (Inputs to the 
spreadsheet used in determining life-cycle-cost and payback periods are 
explained in detail in Chapter 7 of the TSD). We present the results of 
the analysis in Table 10.

                                     Table 10.--Consumer Subgroup LCC Savings and Percent of Households Benefitting
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Sample households benefitting (%)           Average LCC savings ($)
              Trial std levels                            MEF              -----------------------------------------------------------------------------
                                                                               Total        Senior     Low income     Total        Senior     Low income
--------------------------------------------------------------------------------------------------------------------------------------------------------
1..........................................  1.021........................           84           79           85           61           41           69
2..........................................  1.089........................           87           80           88          211          137          243
3..........................................  1.04 in 2004.................           90           84           90          103           68          118
                                             1.26 in 2007.................           81           72           81          260          147          310
4..........................................  1.257........................           79           71           81          242          132          289
5..........................................  1.362........................           80           70           80          243          130          287
6..........................................  1.634........................           69           55           71          176           61          227
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The two consumer subgroups show the same trend in average LCC 
savings and percent of sample households benefitting as the total 
sample of households.
    For the low-income subgroup the percentage of households 
benefitting from standards is either the same or greater than for the 
general population. This can be explained by looking at the cycles per 
year (i.e., washer loads) used in determining the LCC. This number is 
estimated from the number of occupants in a household. Our RECS sample 
of low income households showed a greater number of people per 
household and we calculated 410 cycles per year, greater than the 392 
used for the general population.
    The senior household subgroup had less people per household, and 
therefore had less wash loads per year (on average 299 wash loads per 
year or 24% less wash loads). Therefore, seniors benefitted from 
standards somewhat less.
    Other differences that could explain changes in LCC and the 
percentage in a subgroup benefitting from standards are other factors 
that determine the amount spent on fuel. Fuel costs are higher if 
electric water heaters and dryers are used instead of gas. The 
geographic location of these populations and the price they pay for 
fuel also affect the number of households in a subgroup

[[Page 59574]]

benefitting. These differences were small when compared to the 
differences in LCC due to the cycles per year between the subgroups and 
the total sample population.
    An analysis on the effects on payback period by subgroup are shown 
in Table 11. In agreement with the LCC results, the payback periods for 
the low income subgroup were somewhat shorter than that for the overall 
population, while the payback periods were somewhat longer for the 
senior subgroup. The primary reason for the differences in payback 
period is the same as for the LCC analysis; the differences in wash 
loads per year.

                             Table 11.--Consumer Subgroup Payback Period Comparisons
----------------------------------------------------------------------------------------------------------------
                                                                          Average payback period in years
                                                                 -----------------------------------------------
           Trial Std levels                        MEF              Total RECS
                                                                      sample          Senior        Low income
----------------------------------------------------------------------------------------------------------------
1.....................................  1.021...................             4.4             5.4             4.4
2.....................................  1.089...................             5.0             6.4             4.9
3.....................................  1.04 in 2004............             4.6             5.7            4.5.
                                        1.26 in 2007............             6.8             8.4             6.5
4.....................................  1.257...................             7.0             8.7             6.8
5.....................................  1.362...................             7.0             8.8             6.9
6.....................................  1.634...................             8.7            10.9             8.4
----------------------------------------------------------------------------------------------------------------

2. Economic Impact on Manufacturers
    We performed a Manufacturer Impact Analysis (MIA) to determine the 
impact of standards on manufacturers. The complete analysis is Chapter 
11 of the TSD. In conducting the analysis, we conducted detailed 
interviews with six clothes washer manufacturers that together supply 
more than 99% of the domestic clothes washer market. The interviews 
provided valuable information used to evaluate the impacts of a new 
standard on manufacturers' cash flows, manufacturing capacities and 
employment levels.
    Definition of Shipments Scenarios. The Manufacturer Impact Analysis 
was conducted using three shipment scenarios: High Price Elasticity 
Scenario, Medium Price Elasticity Scenario, and Medium Price/Income 
Elasticity Scenario. The High Price Elasticity scenario most closely 
resembles the original shipments forecast which was presented at the 
July 1999 workshop and used during the interviews. The results 
presented in this notice are for the Medium Price Elasticity Scenario--
the reference case--which forecasts a reduction in clothes washer 
shipments approximately half way between the other two scenarios. 
Additional parameters used in forecasting shipments are summarized in 
Table 17. Results for the High Price Elasticity and Medium Price/Income 
Elasticity Scenarios are shown in Chapter 11 of the TSD.
    Definition of Business Scenarios. During the interviews, several 
manufacturers stated that they would possibly exit the clothes washer 
manufacturing business if the standard exceeded certain improvement 
levels. To capture this uncertainty in future industry dynamics, ADL 
evaluated the industry financial impacts using two different business 
scenarios. In the first scenario, the ``no consolidation scenario,'' it 
is assumed that all current manufacturers continue to manufacture 
clothes washers and maintain their market share, even if they believe 
they will be unable to recuperate their incremental costs. This could 
result in a negative Standard Case industry net present value (INPV) 
for some manufacturers. In the second scenario, the ``industry 
consolidation scenario,'' it is assumed that some manufacturers would 
exit the industry or lose significant market share. In this scenario, 
their volumes are redistributed among the remaining and more profitable 
players in the industry.
    Industry Cash Flow Results. The Department used the interviews to 
understand each manufacturer's incremental costs and its ability to 
pass through these costs at the various standard levels. Some 
manufacturers provided their cash flow analysis using the GRIM 
spreadsheet while others provided information on mark-ups, cost pass-
through assumptions, prices, and expected shipments which were used by 
DOE to develop individual company cashflows. Individual company 
cashflow results were aggregated to calculate standard induced changes 
in Industry NPV (INPV) at each of the potential standard levels.
    The aggregated industry Standard Case INPV for the ``No 
Consolidation'' scenario and the Medium Price Elasticity Shipment 
Scenario is presented in Table 12. Results for both business scenarios 
and the three shipment scenarios are presented in Chapter 11 of the 
TSD. Not all manufacturers provided information at the 50% level 
(MEF=1.634) and hence the cash flows at this level were extrapolated 
from the available information. Similarly, the Department extrapolated 
data submitted at the 20% and 25% efficiency levels to estimate the 
impacts of a two step standard with a reduction in the energy use of 
the baseline model of approximately 22% (MEF=1.04) in 2004 followed by 
a second step at 35% in 2007.

                          Table 12.--Industry Cash Flow Results for the ``No Consolidation'' Scenario--Medium Price Elasticity
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              Base case                                                         Standard
            Trial standard level                            MEF                  INPV      Standard case    Change in INPV   % Change in INPV  deviation
                                                                              (million)  INPV  ($million)     ($million)                         % NPV
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...........................................  1.021.........................    1,439.1  1,420.4-1,349.5   (18.7)-(89.6)     (1.3)-(6.2)            11.5
2...........................................  1.089.........................    1,439.1  1,033.8-877.2     (405.2)-(561.9)   (28.2)-(39.0)          11.4
3...........................................  1.04 in 2004, 1.26 in 2007....    1,439.1  1,028.0-920.8     (411.0)-(518.3)   (28.6)-(36.0)          15.8
4...........................................  1.257.........................    1,439.1  944.7-842.3       (494.4)-(596.8)   (34.4)-(41.5)          17.7
5...........................................  1.362.........................    1,439.1  1,002.1-929.9     (437.0)-(509.2)   (30.4)-(35.4)          27.7

[[Page 59575]]

 
6...........................................  1.634.........................    1,439.1  989.7-815.2       (449.4)-(623.8)   (31.2)-(43.3)          27.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    From Table 12, we note that energy efficiency standards could 
result in losses of INPV between $411.0 and $518.3 million (28.6-36%) 
for the consensus proposal (Trial Standard Level 3). Although the 
impacts of the consensus proposal approach those of Trial Standard 
Levels 5 and 6, the Department found the impacts of Trial Standard 
Levels 5 and 6 to be much more unevenly distributed between firms. This 
large variability of impacts is attributed to the presence of existing 
product at these levels (H-axis designs) for some firms which may gain 
a competitive advantage over firms that do not have product.
    The standard deviation (SD) \6\ values reported in Table 12 provide 
a measure of how widely individual companies' percentage NPV changes 
are dispersed from the industry percentage change in value (% change in 
INPV). Calculating the SD of individual company % value change at each 
efficiency level from the industry INPV % change yields the following 
results: at Trial Standard Level 1 the SD is 11.5%; at Trial Standard 
Level 2 the SD is 11.4%; at Trial Standard Level 3 the SD is 15.8%, at 
Trial Standard Level 4 the SD is 17.7%; and at Trial Standard Levels 5 
and 6 the SD leaps to 27.7%. This is significant because the greater 
the difference in impacts between manufactures, the greater the risk of 
industry consolidation. Several manufacturers believe that setting the 
standard at Trial Standard Level 5 or more would result in industry 
consolidation and the exit of two or three firms.
---------------------------------------------------------------------------

    \6\ Refer to Chapter 11 of the TSD for details of how the 
standard deviation was calculated.
---------------------------------------------------------------------------

    Compared with Trial Standard Level 4 (MEF=1.26 in 2004), the 
industry impacts of the consensus proposal (Trial Standard Level 3) are 
lower and more evenly distributed among the manufacturers. A potential 
factor lessening the impact of the consensus proposal from the impacts 
shown is the possible effect of technological innovation. Delaying the 
standard implementation date to 2007 for the more stringent level 
(MEF=1.26) gives manufacturers more time to research and develop lower-
cost solutions to achieving higher standards.
    Impact on Clothes Dryer Business. The majority of manufacturers 
indicated that stringent standards on clothes washers would have a 
corresponding effect on clothes dryers. Dryer sales are highly 
correlated to washer sales as people frequently buy these appliances as 
a set. From the manufacturers' data, it is estimated that approximately 
45% to 55% of washers are sold in pairs with dryers. Therefore, any 
change in washer volumes will impact a significant portion of the dryer 
business. A separate GRIM was run in an effort to model the financial 
impact of these considerations on the dryer business. Table 13 presents 
the Base and Standard Case INPV for the Medium Price Elasticity 
Shipment Scenario. The loss of value is significant for standard levels 
2 and greater.

                Table 13.--Standard Case NPV for Dryer Business--Medium Price Elasticity Scenario
----------------------------------------------------------------------------------------------------------------
                                                                  Base case     Standard    Change in
         Trial standard level                     MEF                INPV      case INPV      INPV      % Change
                                                                  ($million)   ($million)  ($million)   in INPV
----------------------------------------------------------------------------------------------------------------
1....................................  1.021...................        665.1        664.5       (0.6)      (0.1)
2....................................  1.089...................        665.1        660.6      (4.48)      (0.7)
3....................................  1.04 in 2004, 1.26 in           665.1        654.1      (11.0)      (1.7)
                                        2007.
4....................................  1.257...................        665.1        648.3     (16.84)      (2.5)
5....................................  1.362...................        665.1        647.9      (17.2)      (3.9)
6....................................  1.634...................        665.1        638.3      (26.8)      (4.0)
----------------------------------------------------------------------------------------------------------------

    At the more stringent standard levels, manufacturers expect that 
they will redesign and retool their clothes washer platforms and these 
changes will dictate a change to the dryer platform as well. 
Manufacturers estimate that, at the more stringent standard levels of 
25% and above, total industry conversion costs for dryers could be in 
the range of $25 million to $75 million. The Dryer GRIM does not 
consider any conversion costs (capital and design) that might be 
required to upgrade the dryer platforms at the more stringent standard 
levels. Any such investments will increase the negative impact on the 
INPV of the dryer industry over and above those presented in Table 13.
    In addition, based on data gained from manufacturers, a decline in 
washer-related dryer sales will result in a decline in employment 
related to dryer production. The greatest impact is at and above a 35 
percent reduction in the energy use of the baseline model, when 
shipments are expected to decline substantially, resulting in a similar 
impact on related employment levels. Table 14 summarizes the potential 
impact of new clothes washer standards on dryer industry employment. As 
shown Trial Standard Level 3 and above will result in a loss of more 
than 200 jobs in the dryer industry.

[[Page 59576]]



Table 14.--Impact of Standards on Dryer Shipments on Dryer Industry Employment--Medium Price Elasticity Scenario
----------------------------------------------------------------------------------------------------------------
                                                                                   Forecast 2004      Impact
         Trial standard level                      MEF              1999 dryer         dryer        relative to
                                                                    employment      employment    2004 base case
----------------------------------------------------------------------------------------------------------------
Basecase..............................  Base Case...............           2,544           2,594  ..............
1.....................................  1.021...................           2,544           2,578            (16)
2.....................................  1.089...................           2,544           2,520            (74)
3.....................................  1.04 in 2004............           2,544     2,506/2,488   \1\(88)/(147)
                                        1.26 in 2007............
4.....................................  1.257...................           2,544           2,352           (241)
5.....................................  1.362...................           2,544           2,348           (245)
6.....................................  1.634...................           2,544           2,226           (368)
----------------------------------------------------------------------------------------------------------------
\1\ Reduction on top of first standard reduction, not cumulative.

    Impact on Clothes Washer Repair Industry. Should an increase in 
energy efficiency standards result in higher prices for new clothes 
washers, consumers may be influenced to repair old units rather than 
purchase new ones at the higher price. Based on the forecast of clothes 
washer repairs in the shipments model, we estimated the impact of a 
change in clothes washer repair revenues on the INPV of the clothes 
washer manufacturers' repair parts business. The INPV of the estimated 
additional profit stream is presented in Table 15. As may be observed 
the increase in NPV for the repair industry is one order of magnitude 
lower than the loss of value of the dryer industry. For instance for 
Trial Standard Level 3 the net present value of increases in OEM 
revenue is .9 million compared to a loss of 11 million for the dryer 
business.

           Table 15.--Net Present Value of OEM Repair Revenues
                              [$ millions]
------------------------------------------------------------------------
                                                           Medium price
       Trial standard level                  MEF            elasticity
------------------------------------------------------------------------
1.................................  1.021...............             0.1
2.................................  1.089...............             0.2
3.................................  1.04 in 2004........             0.9
                                    1.26 in 2007........
4.................................  1.257...............             1.1
5.................................  1.362...............             1.1
6.................................  1.634...............             1.7
------------------------------------------------------------------------

    Impacts on Small Manufacturers. Converting from a company's current 
basic product line involves creating a new design, testing it and 
moving it into production with associated capital investments. Small 
manufacturers of clothes washers, because of their need to spread fixed 
costs over smaller production volumes, could be affected more 
negatively than large manufacturers by a proposed standard. The 
Department conducted a separate GRIM analysis for small manufacturers 
which are presented in Table 16. The changes in value due to a standard 
for a small company compared to a large company illustrates the effects 
of capital and engineering costs that are fixed with respect to 
production volume.
    As shown in Table 16, a small manufacturer (4.2% market share) 
producing 331,000 clothes washers absent standards in 2004 sees its 
value reduced by 78.9-89.9% for Trial Standard Level 2. A small 
manufacturer (2.1% market share) producing 165,000 clothes washers in 
2004 will lose all of its value (143.1-153.9%) since it is above 100% 
for Trial Standard Level 2. This compares to the loss of 28.2-39.0% for 
a large manufacturer (20% market share) producing 1,578,000 clothes 
washers in 2004 for Trial Standard Level 2.
    At the time of the manufacturer interviews, the U.S. washer 
industry had one manufacturer of washers with a production volume of 
approximately 300,000 units (Alliance Laundry Systems, LLC), most of 
whose production was supplied to another relatively small appliance 
company (Amana Appliances) under the terms of a private label supply 
agreement entered into when the two companies were sold by Raytheon. 
This agreement ended in September 1999, and Amana announced that it 
would produce its own vertical-axis washers instead of sourcing them 
from Alliance. Amana and Alliance both report that any standard that 
requires a 25 percent or higher improvement (for Trial Standard Level 2 
and above) in energy efficiency would certainly require major 
investments and the development of a horizontal-axis machine. At this 
time, neither Amana nor Alliance believes they have a functioning 
horizontal-axis washer capable of cost-competitively participating in 
the mass consumer marketplace.
    The decision by either of the smaller producers, or any other 
washer manufacturer, to exit washer production would require an 
assessment of the linkages with their dryer business and with other 
appliances. Manufacturers and their retail partners generally perceive 
some value in being a full-line producer and greater value in producing 
both washers and dryers. If a manufacturer perceived significant value 
in its dryer businesses and if the total product line generated 
acceptable rates of return, it might continue to produce washers, even 
in the face of declining company values due to investment in new washer 
technology. Based on the major loss in company value associated with 
meeting a more stringent standard above Trial Standard Level 2 as seen 
in Table 16, it is likely that one or both of the two smaller companies 
would cease to produce washers covered by the standard and might also 
cease to market them.

[[Page 59577]]



 Table 16.--Change in Value of Small Manufacturers, Results for the ``No Consolidation'' Scenario--Medium Price
                                             Elasticity Scenario (%)
----------------------------------------------------------------------------------------------------------------
                                                                  Large             Small             Small
                                                              manufacturer      manufacturer      manufacturer
        Trial standard level                  MEF              (20% market      (4.2% market      (2.1% market
                                                                 share)            share)            share)
----------------------------------------------------------------------------------------------------------------
1..................................  1.021................  (1.3)-(6.2)       (17.4)-(22.4)     (37.9)-(42.8).
2..................................  1.089................  (28.2)-(39.0)     (78.9)-(89.8)     (143.1)-(153.9).
3..................................  1.04 in 2004.........  (28.6)-(36.0)     (83.1)-(90.6)     (152.2)-(159.6).
                                     1.26 in 2007.........
4..................................  1.257................  (34.4)-(41.5)     (91.8)-(98.9)     (164.4)-(171.6).
5..................................  1.362................  (30.4)-(35.4)     (87.7)-(92.7)     (160.3)-(165.3).
6..................................  1.634................  (31.2)-(43.3)     (90.7)-(102.8)    (166.0)-(178.1).
----------------------------------------------------------------------------------------------------------------

    Impacts on Employment. The weight of available evidence does not 
support a conclusive assessment of the impact that new energy 
efficiency standards would have on employment levels in the clothes 
washer industry. The data that is available is extremely variable and 
the true extent of the impact will be largely dependent on whether 
manufacturers choose to exit the industry or move to non-domestic 
production facilities.
    Manufacturers stated that any decrease in shipments will have a 
similar effect on employment, as employment levels tend to track 
production levels. However, while reductions in shipments may lead to 
reductions in employment at various manufacturers due to plant 
closures, this could be matched by increased employment in United 
States plants at those firms picking up the additional market share and 
corresponding volumes. In addition, the manufacturers' data supplied to 
the AHAM indicates that incremental labor-related costs are expected to 
increase at the higher efficiency levels (by up to 50 percent at the 40 
percent reduction in the energy use of the baseline model level), due 
to the increased complexity of production and assembly of more 
efficient machines. Tracking employment levels by shipments using this 
data actually indicates total industry employment could increase as the 
change in labor expense for higher efficiency machines is greater than 
the change in labor resulting from the decline in shipments.

B. Significance of Energy Savings

    The Act requires a standard to result in ``significant'' energy 
savings. Section 325(o)(3)(B), 42 U.S.C. 6295(o)(3)(B). While the term 
``significant'' is not defined in the Act, the U.S. Court of Appeals, 
in Natural Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 
(D.C. Cir. 1985), stated that Congress intended ``significant'' energy 
savings to be savings that were not ``genuinely trivial.'' The energy 
savings for all of the trial standard levels considered in this 
rulemaking are non-trivial and therefore we consider them 
``significant'' within the meaning of Section 325 of the Act.
    All efficiency levels for which we have engineering data were 
analyzed. Each efficiency level was analyzed for three scenarios. Some 
of the parameters that were varied are inputs to the shipment-model and 
some are inputs to the NES spreadsheet model. Since shipments have an 
effect on the national energy savings, changes to the shipment inputs 
have a direct effect on the national energy savings. Changes in the 
input parameter affect the base case results as well as the standards 
case results. Table 17 outlines the input parameters used to generate 
the high and low bound sensitivities. Three scenarios are run: (1) 
reference case, (2) lower bound and (3) upper bound. The lower bound is 
defined as having medium price/income elasticity. The upper bound is 
defined as the price elasticity being high. All other parameters are 
unchanged from the reference case.

                            Table 17.--NES Spreadsheet Model Shipments Sensitivities
----------------------------------------------------------------------------------------------------------------
                                                                Lower bound (least drop   Upper bound (greatest
              Parameter                     Reference case         in shipments after    drop in shipments after
                                                                       standard)                standards)
----------------------------------------------------------------------------------------------------------------
AEO growth...........................  AEO99 reference........  AEO99 reference........  AEO99 reference.
Water Escalation Rate................  medium.................  medium.................  medium.
H-axis base case escalation..........  0.5%...................  0.5%...................  0.5%.
Price Elasticity.....................  medium.................  none...................  high.
Price/Income Elasticity..............  none...................  medium.................  none.
Top-loading Elasticity...............  medium.................  medium.................  medium.
Manufacturer incremental price mark-   medium.................  medium.................  medium.
 up.
Year of standard.....................  2004...................  2004...................  2004.
----------------------------------------------------------------------------------------------------------------

    The Lower Bound Scenario results in the greatest energy savings. 
This scenario used price/income data to fit an equation to historical 
data. This resulted in a greater number of shipments and greater 
savings in energy than the reference case forecasted. The Upper Bound 
Scenario resulted in the least energy savings. This scenario assumed a 
high price elasticity. This resulted in lower shipments and energy 
savings. The Reference Case Scenario used medium or average values as 
parameter inputs and is bounded on both sides by the other scenarios 
described above. This is considered the most likely scenario.
    The national energy savings and net present value results from the 
NES spreadsheet for the reference case are shown in Tables 18 and 19, 
respectively. More detailed results are also available in Appendix N of 
the TSD. Results are cumulative to 2030 and are shown as absolute 
energy and water savings and as the discounted value of

[[Page 59578]]

these savings in dollar terms. Table 20 shows the water savings for 
different standard levels. It can be seen that while the two-tier 
standard is a combination or hybrid of Trial Standard Levels 1 and 4, 
it is estimated to attain nearly the same energy, water, and national 
cost savings as a pure Trial Standard Level 4.
    All of the trial standard levels considered in this rulemaking have 
significant energy savings, ranging from 2.12 quads to 7.53 quads, 
depending on the trial standard level.

   Table 18.--Reference Case--All Parameters Set to Medium or Average
------------------------------------------------------------------------
                                                                Energy
        Trial standard level                   MEF             savings
                                                                quads
------------------------------------------------------------------------
1..................................  1.021.................         2.12
2..................................  1.089.................         4.04
3..................................  1.04 in 2004..........         5.52
                                     1.26 in 2007..........
4..................................  1.257.................         5.99
5..................................  1.362.................         6.03
6..................................  1.634.................         7.53
------------------------------------------------------------------------

C. Lessening of Utility or Performance of Products

    This section summarizes the results of the department's consumer 
utility analysis. Preferences of low-income and elder populations are 
also addressed.
    The focus group and conjoint results indicate that price is the 
most important attribute when consumers are purchasing a new clothes 
washer, although in each case another attribute is virtually tied with 
price in terms of importance. In the focus groups, 83% of the 
respondents included price in their top ten list of important clothes 
washer attributes, while 81% included wash tub capacity in that same 
list. In the conjoint analysis, price had the highest relative 
importance score (26%), followed closely by the availability of a wash 
load size option on the control panel (25%). Of the six attributes 
included in the conjoint analysis survey, door placement was the fifth 
most important attribute with a relative importance score of 11% (for 
further information, see Chapter 8 and Appendix J of the TSD).
    In the likelihood of purchase scenarios, the purchase probabilities 
were more sensitive to price than any of the other washer 
attributes.\7\ While the shift from a standard to a high efficiency 
machine resulted in a drop in the estimated purchase probability, this 
was due to the change in price rather than to changes in the other 
attributes. When price was held constant at the standard efficiency 
level and the other attributes were allowed to change to reflect a high 
efficiency machine, the likelihood of purchase increased. This is due 
to the fact that consumers value energy savings more than top load door 
placement.
---------------------------------------------------------------------------

    \7\ Purchase probabilities indicate the likelihood a consumer 
will purchase a particular clothes washer, assuming (s)he has made 
the decision to buy a new clothes washer.
---------------------------------------------------------------------------

    The purchase probability findings indicate that low-income 
consumers and elderly consumers were slightly more likely to purchase a 
high efficiency, front-load washing machine than the total group of 
consumers. When the analysis focused exclusively on the impacts of 
clothes washer prices increasing, the data indicated that a smaller 
percentage of low-income consumers would be willing or able to purchase 
machines in the $650 price level, when compared to the total group of 
consumers. There was no statistical difference between elderly 
consumers and the full sample at the $650 level. While the data from 
the price impact questions indicate that low-income consumers are more 
adversely affected by higher clothes washer prices than the sample as a 
whole, the Department is unable to determine the magnitude of the 
impact on future clothes washer purchases using the survey data. For 
instance, the consumer analysis survey found that approximately half of 
the low-income respondents currently do not own a clothes washer, while 
more than three-quarters of the respondents making more than $25,000 
annually own a washing machine. The Department is unable to determine 
if this ratio would change with a price increase due to the proposed 
standards. The fact that the survey found low-income consumers are more 
likely to use store financing plans, such as no interest for one year, 
to purchase a clothes washing machine than the sample as a whole 
further clouds the magnitude of the new standards' impact on low-income 
consumers because store financing encourages consumers to purchase high 
price products by allowing payments to be paid over a number of months.
    The Department concludes that none of the trial standard levels 
reduces the performance of clothes washers. The Department conducted 
extensive consumer research to understand the product features that 
consumers value in clothes washers. Generally the trial standard levels 
increase clothes washer price and reduce operating cost but do not 
affect other product offerings. A significant issue raised during the 
rulemaking concerns the relative consumer utility of V-axis and H-axis 
washers. Some stakeholders believed that higher standard levels would 
require H-axis designs and this would result in eliminating the top 
loading V-axis machines thereby reducing utility for some consumers who 
prefer that option. Recent product offerings of high efficiency V-axis 
washers show that the axis-efficiency relationship is untenable.

D. Impact of Lessening of Competition

    The Act directs the Department to consider any lessening of 
competition that is likely to result from standards. It further directs 
the Attorney General to determine the impact, if any, of competition 
likely to result from such standard and transmit such determination, 
not later than 60 days after the publication of a proposed rule to the 
Secretary, together with an analysis of the nature and extent of such 
impact. Section 325(o)(2)(B)(i)(V), 42 U.S.C. 6295(o)(2)(B)(i)(V).
    In order to assist the Attorney General in making such a 
determination, the Department has provided the Department of Justice 
(DOJ) with copies of this notice and the TSD for review. At DOE's 
request, the DOJ reviewed the manufacturer impact analysis interview 
questionnaire to ensure that it would provide insight concerning any 
lessening of competition due to any proposed trial standard levels.

E. Need of the Nation To Save Energy and Net National Employment

1. National Net Present Value
    Table 19 lists the National NPV for the trial standard levels. The 
NPV considers the combined discounted energy savings less the increased 
consumer costs of a particular trial standard level. We base this 
calculation on all expenses and savings occurring between 2004 and 
2030.
    The national NPV is positive for all the trial standard levels. In 
this analysis, a positive NPV means that the estimated energy savings 
are greater than the increased costs due to standards. It can be 
observed that the National NPV of Trial Standard Levels 2 through 5 are 
in the range of 14 to 17 billion dollars. Trial Standard Level 6 
however has a lower NPV of 10 Billion due to the higher first cost of a 
clothes washer at this efficiency level.

[[Page 59579]]



   Table 19.--Reference Case--All Parameters Set to Medium or Average
------------------------------------------------------------------------
                                                            Net present
                                                            value (NPV)
                                                             (billion
       Trial standard level                  MEF              1997$)
                                                          (discounted to
                                                               1999)
------------------------------------------------------------------------
1.................................  1.021...............            3.66
2.................................  1.089...............           14.29
3.................................  1.04 in 2004........           15.30
                                    1.26 in 2007........
4.................................  1.257...............           16.88
5.................................  1.362...............           16.73
6.................................  1.634...............           10.79
------------------------------------------------------------------------

2. National Water Savings
    Table 20 presents the estimated energy water savings. The savings 
is positive for all of the trial standard levels.

   Table 20.--Reference Case--All Parameters Set to Medium or Average
------------------------------------------------------------------------
                                                           Water savings
       Trial standard level                  MEF             trillion
                                                              gallons
------------------------------------------------------------------------
1.................................  1.021...............            0.53
2.................................  1.089...............            9.09
3.................................  1.04 in 2004........           11.59
                                    1.26 in 2007........
4.................................  1.257...............           12.94
5.................................  1.362...............           12.94
6.................................  1.634...............           10.85
------------------------------------------------------------------------

3. Environmental Impacts
    Enhanced energy efficiency improves the Nation's energy security, 
strengthens the economy and reduces the environmental impacts of energy 
production. The energy savings from clothes washer standards result in 
reduced emissions of CO<INF>2</INF>, SO<INF>2</INF> and NO<INF>X</INF> 
and aid in addressing global climate change and reducing air pollution. 
Depending on the standard level chosen, the cumulative emission 
reductions to 2030 range from 38-135 Mt for carbon equivalent, 115-364 
thousand metric tons (kt) for NO<INF>X</INF>, and 28-31 kt for 
SO<INF>2</INF>. Cumulative emissions savings for the power and 
households sectors through the year 2030 are presented in Table 21.

                                  Table 21.--Cumulative Emissions Reductions Through 2030: Household and Power Sectors
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Trial standard level emission reductions and MEF
                                       -----------------------------------------------------------------------------------------------------------------
               Emission                                                        3  1.04 in 2004,
                                             1  0.817           2  1.089         1.26 in 2007         4  1.257           5  1.362           6  1.634
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carbon(Mt)............................               38.1               70.9               95.1              106.2              107.3                135
NO<INF>X</INF> (kt)..............................              115.6              193.6              253.5              280.6              283.1                364
SO<INF>2</INF> (kt)..............................           \1\ 31.4           \1\ 30.3           \1\ 28.1           \1\ 30.3           \1\ 30.3          \1\ 31.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Results include only household emissions reductions because the power sector emissions cap implies that savings from electricity generation will be
  negligible.

4. Net National Employment
    Net national employment impacts from clothes washer standards are 
defined as net jobs created or eliminated in the general economy as a 
consequence of: (1) Reduced spending by end users on energy 
(electricity, gas including LPG, and oil) and water; (2) reduced 
spending on new energy supply by the utility industry; (3) increased 
spending on the purchase price of new clothes washers; and (4) the 
associated indirect effects of those three factors throughout the 
national economy. Jobs are created when a clothes washer standard 
results in operating cost savings that more than offset the greater 
capital required to buy a more efficient clothes washer. More 
information on how these impacts are estimated is presented in the Net 
National Employment in Chapter 13 of the TSD.
    The model used to estimate net national employment impacts suggests 
that the greatest number of jobs would be created by the standard level 
calling for a 35% reduction in clothes washer energy use. For this 
standard level, the model estimates that there would be 142,800 more 
jobs in 2030 than if there were no new efficiency standard implemented. 
However, it is unlikely that net employment would increase to this 
extent if the economy was continuing to perform at levels comparable 
those experienced during 2000. Taking into consideration these 
legitimate concerns regarding the interpretation and use of the 
employment impacts analysis, the Department concludes only that the 
proposed clothes washer standards are likely to produce employment 
benefits that are sufficient to offset fully any

[[Page 59580]]

adverse impacts on employment in the clothes washer or energy 
industries.

F. Conclusion

    The Act specifies that any new or amended energy conservation 
standard for any type (or class) of covered product shall be designed 
to achieve the maximum improvement in energy efficiency which the 
Secretary determines is technologically feasible and economically 
justified. Section 325(o)(2)(A), 42 U.S.C. 6295(o)(2)(A). In 
determining whether a standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens. 
Section 325(o)(2)(B)(i), 42 U.S.C. 6295(o)(2)(B)(i). The amended 
standard must ``result in significant conservation of energy.'' Section 
325(o)(2)(B)(3)(B), 42 U.S.C. 6295(o)(B)(3)(B).
    We consider the impacts of standards at each of six trial standard 
levels, beginning with the most efficient level. We have included a 
summary of the analysis results in Table 22 to aid the reader in the 
discussion of the benefits and burdens for the different trial standard 
levels.

                                                           Table 22.--Summary Analysis Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Trial standard level                           1               2               3               4               5               6
--------------------------------------------------------------------------------------------------------------------------------------------------------
MEF.....................................................            1.02            1.09   1.04 in 2004,            1.26            1.36            1.63
                                                                                            1.26 in 2007
Total Energy Saved (Quads)..............................            2.12            4.04            5.52            5.99            6.03            7.53
Water Savings (trillion gallons)........................            0.53            9.09           11.59           12.94           12.94           10.85
NPV (Billion $).........................................            3.66           14.29            15.3           16.88           16.73           10.79
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
Carbon Equivalent (Mt)..................................            38.1            70.9            95.1           106.2           107.3           134.6
NO<INF>X</INF> (kt)................................................           115.6           193.6           253.5           280.6           283.1             364
SO<INF>2</INF> (kt) \1\............................................          131.41           30.31           28.11           30.31           30.31           31.41
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Manufacturer Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cumulative Loss in Industry NPV ($ Million) \2\.........       19.2-90.1     409.9-566.2     421.1-528.4     510.1-612.5     453.1-524.9     474.5-648.9
% Change in INPV........................................     (1.3)-(6.3)   (28.5)-(39.3)   (29.2)-(36.7)   (35.4)-(42.5)     (31.7-36.5)   (33.0)-(45.2)
Standard Deviation % NPV................................            11.5            11.4            15.8            17.7            27.7            27.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Life Cycle Cost ($)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mean Savings ($)........................................              61             211         103/260             242             243             176
Percent Households LCC Less than Baseline...............              84              87           89/80              79              80             69.
Payback (years).........................................             4.4               5         4.6/6.8               7               7            8.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Results only include household SO<INF>2</INF> emissions reductions because SO<INF>2</INF> emissions from power plants are capped by clean air legislation. Thus, SO<INF>2</INF>
  emissions will only be negligibly affected by possible water heater standards.
\2\ Includes impacts on dryer and repair business.

Trial Standard Level 6--MEF 1.63
    First, we considered the most efficient level (max tech), MEF 1.63, 
which saves a total of 7.53 quads of energy through 2030. This is a 
significant amount of energy. The cumulative water savings through 2030 
would be 10.85 trillion gallons. The emissions reductions through 2030 
would total 134.6 Mt of carbon equivalent, 364 kt of NO<INF>X</INF>, 
and 31.41 kt of SO<INF>2</INF>, which are significant. At this level, 
consumers experience a considerable savings in life cycle cost of $176, 
with a payback of 8.7 years.
    At Trial Standard Level 6, the clothes washer industry would 
experience a cumulative INPV loss of between $474.5-648.9 million which 
represents between 33.0 and 45.2% of the clothes washer industry value 
absent standards ($1,439.1 million--basecase). This impact is not 
evenly distributed among the six major manufactures.\8\ This large 
variability of impacts is attributed to the presence of existing 
product for some manufacturers at this efficiency level which means 
that some firms may gain a competitive advantage. This variability is 
measured by the standard deviation of individual companies' changes in 
NPV.\9\ At this level the standard deviation in individual companies' 
percentage change in NPV is 27.7%. Given the high industry impacts and 
the uneven burden on individual firms, there exists a significant risk 
of industry consolidation.
---------------------------------------------------------------------------

    \8\ Alliance Laundry Systems LLC, Amana Appliances, Frigidaire 
Home Products, General Electric Appliances (GEA), Maytag 
Corporation, and Whirlpool Corporation.
    \9\ The standard deviation is a measure of how widely individual 
companies' percentage NPV changes are dispersed from the industry 
percentage change in value. Refer to Chapter 11 of the TSD for a 
description of the calculation method.
---------------------------------------------------------------------------

    Based on the major loss in company value associated with meeting 
this trial standard level (90.7 to 102.8% assuming a 2.1% market share 
and 166 to 178.1% assuming a 4.2% market share) as shown in Table 16, 
it is likely that one or both of the two smaller manufacturers \10\ 
would cease to produce clothes washers covered by the standard and 
might also cease to market commercial clothes washers.
---------------------------------------------------------------------------

    \10\ Alliance Laundry Systems LLC and Amana Appliances.
---------------------------------------------------------------------------

    The Department concludes that the burdens of Trial Standard Level 6 
outweigh the benefits. Consequently, the Department concludes Trial 
Standard Level 6 is not economically justified.
Trial Standard Level 5--MEF 1.36
    Next, we considered a 1.36 MEF, which saves a total of 6.03 quads 
of energy through 2030, also a significant amount. The cumulative water 
savings through 2030 for this trial standard level would be 12.94 
trillion gallons. The emissions reductions through 2030 would total 
107.3 Mt of carbon equivalent, 283.1 kt of NO<INF>X</INF>, and 30.31 kt 
of SO<INF>2</INF>, which are significant. At this level, consumer 
experience a

[[Page 59581]]

considerable savings in life cycle cost of $243, with a 7 year payback.
    The clothes washer industry would experience a cumulative INPV loss 
of between $453.1-524.9 million. This represents between 31.7 and 36.5% 
of industry value absent standards ($1,439.1 million--basecase). For 
the same reason in Trial Standard Level 6, this impact is not evenly 
distributed among the six major manufactures. At this level the 
standard deviation in individual companies' percentage change in NPV is 
27.7%. Refer to Chapter 11 of the TSD for a description of the 
calculation method for standard deviation. Given the high industry 
impacts and the uneven burden on individual firms, there exists a 
significant risk of industry consolidation.
    Once again based on the major loss in company value associated with 
meeting this standard level (87.7 to 92.7% assuming a 2.1% market share 
and 160.3 to 165.3% assuming a 4.2% market share), as shown in Table 
16, it is likely that one or both of the two smaller manufacturers 
would cease to produce washers covered by the standard and might also 
cease to market commercial clothes washers.
    The Department concludes that the burdens of Trial Standard Level 5 
outweigh the benefits. Consequently, the Department concludes Trial 
Standard Level 5 is not economically justified.
Trial Standard Level 4--MEF 1.26
    Next, we considered a 1.26 MEF, which saves a total of 5.99 quads 
of energy through 2030, a significant amount. Just as in the case of 
the 1.36 MEF, the cumulative water savings through 2030 would equal 
12.94 trillion gallons. The cumulative emissions reductions through 
2030, however, are slightly lower for the 1.26 MEF because the 
cumulative energy savings is lower for this standard level than the 
1.36 MEF. The 1.26 MEF level would save 106.2 Mt of carbon equivalent, 
280.6 kt of NO<INF>X</INF>, and 30.31 kt of SO<INF>2</INF>, which are 
significant. At this level, consumers experience a considerable savings 
in life cycle cost of $242 with a payback of 7 years.
    Under a 1.26 MEF standard, the clothes washer industry would 
experience a cumulative INPV loss of between $510.1-612.5 million. This 
represents between 35.4 and 42.5% of industry value absent standards 
($1,439.1 million--basecase). Compared to Trial Standard Levels 5 and 
6, this impact is more evenly distributed amongst the six major 
manufactures as represented by a standard deviation in individual 
companies' NPV of 17.7%, and thus there exists less risk of industry 
consolidation. Refer to Chapter 11 of the TSD for a description of the 
calculation method for standard deviation. This lower standard 
deviation reflects the greater diversity of designs, approaches and 
engineering flexibility to meet this efficiency level compared to Trial 
Standard Levels 5 and 6. However, given the high level of investment 
required to meet this efficiency level and an inability to spread fixed 
costs over large volumes, small manufacturers are particularly 
vulnerable. Based on the major loss in company value associated with 
meeting this standard level (91.8 to 98.9% assuming a 2.1% market share 
and 164.4 to 171.6% assuming a 4.2% market share), as shown in Table 
16, it is likely that one or both of the two smaller manufacturers 
would cease to produce washers covered by the standard and might also 
cease to market commercial clothes washers.
    The Department concludes that the burdens of Trial Standard Level 4 
outweigh the benefits. Consequently, the Department concludes Trial 
Standard Level 4 is not economically justified.
Trial Standard Level 3--MEF 1.04/1.26
    Next, we considered the two step 1.04/1.26 MEF efficiency level, 
which had been proposed in the Joint Stakeholders Comment. (Joint 
Comment, No. 204). This trial standard level, Trial Standard Level 3, 
had energy savings of 5.52 quads through 2030, a significant amount. 
The cumulative water savings through 2030 would equal 11.59 trillion 
gallons. The emissions reductions through 2030 would total 95.1 Mt of 
carbon equivalent, 253.5 kt of NO<INF>X</INF>, and 28.11 kt of 
SO<INF>2</INF>, which are significant. At the 1.04 MEF level, consumers 
would experience a savings in life cycle cost of $103, while they would 
experience a LCC savings of $260 at the 1.26 MEF level that would go 
into effect in 2007. The payback for the 1.04 MEF level is 4.6 years, 
and 6.8 years for the 1.26 MEF. The clothes washer industry would 
experience a cumulative NPV loss of between $421.1-528.4 million 
representing between 29.2 and 36.7% of basecase industry value.
    Compared to a single step standard level of a 1.26 MEF implemented 
in 2004, the Joint Stakeholders Comment proposal reduces the impacts of 
the standards on manufacturers by delaying the effective date three 
years for the 1.26 MEF level. This allows clothes washer manufacturers 
more time to depreciate their current assets and plan a more orderly 
transition of their production facilities. Delaying the standard 
implementation date for the higher efficiency level gives manufacturers 
more time to research and develop lower-cost solutions to achieve 
higher standards.
    Since the MIA shows that small manufacturers suffer the greatest 
impact, the Department takes into consideration that the consensus 
proposal was developed in consultation with, and supported by small 
manufacturers.
    Furthermore, we consider that the Joint Stakeholders Comment 
specifically states that the proposal is not expected to eliminate any 
competitors. (Joint Comment No. 204).
    Based on the manufacturers' statement in the Joint Stakeholders 
Comment, we believe that these impacts from the proposal are mitigated 
and is sufficient to conclude that, given the benefits, the standards 
submitted in the Joint Stakeholders Comment are economically justified. 
(Joint Comment No. 204).
    After carefully considering the analysis and comments, the 
Department proposes to amend the energy conservation standards for 
clothes washers as proposed by the Joint Stakeholders Comment. (Joint 
Comment No. 204). The Department concludes this standard saves a 
significant amount of energy and is technologically feasible and 
economically justified. In determining economic justification, the 
Department finds that the benefits of energy and water savings, 
consumer life cycle cost savings, national net present value increase, 
job creation and emission reductions resulting from the standard 
outweigh the burdens of the loss of manufacturer net present value, and 
consumer life cycle cost increases for some users of clothes washers 
covered by today's notice. Therefore, the Department today proposes to 
adopt the energy conservation standards for clothes washers at Trial 
Standard Level 3.

VI. Procedural Issues and Regulatory Review

A. Review Under the National Environmental Policy Act of 1969

    The Department is preparing an Environmental Assessment of the 
impacts of the proposed rule and DOE anticipates completing a Finding 
of No Significant Impact (FONSI) before publishing the final rule on 
Energy Conservation Standards for Clothes Washers, pursuant to the 
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et 
seq.), the regulations of the Council on

[[Page 59582]]

Environmental Quality (40 CFR parts 1500-1508), and the Department's 
regulations for compliance with NEPA (10 CFR part 1021).

B. Review Under Executive Order 12866, ``Regulatory Planning and 
Review''

    Today's regulatory action has been determined to be an 
``economically significant regulatory action'' under Executive Order 
12866, ``Regulatory Planning and Review.'' (58 FR 51735, October 4, 
1993). Accordingly, today's action was subject to review under the 
Executive Order by the Office of Information and Regulatory Affairs 
(OIRA) in the Office of Management and Budget (OMB).
    The draft rule submitted to OIRA and other documents submitted to 
OIRA for review have been made a part of the rulemaking record and are 
available for public review in the Department's Freedom of Information 
Reading Room (1E-190), 1000 Independence Avenue, SW, Washington, DC 
20585, between the hours of 9:00 a.m. and 4:00 p.m., Monday through 
Friday, telephone (202) 586-3142.
    The following summary of the Regulatory Impact Analysis (RIA) 
focuses on the major alternatives considered in arriving at the 
proposed approach to improving the energy efficiency of consumer 
products. The reader is referred to the complete draft ``Regulatory 
Impact Analysis,'' which is contained in the TSD, available as 
indicated at the beginning of this proposed rule. It consists of: (1) A 
statement of the problem addressed by this regulation, and the mandate 
for government action; (2) a description and analysis of the feasible 
policy alternatives to this regulation; (3) a quantitative comparison 
of the impacts of the alternatives; and (4) the national economic 
impacts of the proposed standard.
    Each alternative has been evaluated in terms of its ability to 
achieve significant energy savings at reasonable costs, and has been 
compared to the effectiveness of the proposed rule. These alternatives 
were analyzed with the NES/Shipments model modified to allow inputs for 
voluntary measures, as explained in the RIA attached to the TSD.
    The RIA calculates the effects of feasible policy alternatives to 
clothes washer energy efficiency standards, and provides a quantitative 
comparison of the impacts of the alternatives. We evaluate each 
alternative in terms of its ability to achieve significant energy 
savings at reasonable costs, and we compare it to the effectiveness of 
the proposed rule.
    We created the RIA using a series of alternative scenarios (with 
various assumptions), which we used as input to the NES/Shipments model 
for clothes washers.
    We identified the following seven major policy alternatives for 
achieving consumer product energy efficiency. These alternatives 
include:
    <bullet> No New Regulatory Action
    <bullet> Enhanced Public Education & Information
    <bullet> Financial Incentives
--Tax credits
--Rebates
--Low income and seniors subsidy
    <bullet> Voluntary Energy Efficiency Targets (5 Years, 10 Years)
    <bullet> Mass Government Purchases
    <bullet> Early Replacement Program to existing standard levels
    <bullet> Early Replacement Program to high-efficiency clothes 
washers (defined as having an MEF of 1.257, a 35% energy reduction 
level)
    <bullet> The Proposed Approach (Performance Standards)
    We have evaluated each alternative in terms of its ability to 
achieve significant energy savings at reasonable costs (See Table 23), 
and have compared it to the effectiveness of the proposed rule.

                                       Table 23.--Alternatives Considered
----------------------------------------------------------------------------------------------------------------
                                                           Energy savings     Water savings
                  Policy alternatives                          quads         trillion gallons  NPV $ in billions
----------------------------------------------------------------------------------------------------------------
Enhanced Public Education & Information................              0.026              0.054              0.074
Consumer Tax Credits...................................              0.410              0.085              0.117
Consumer Rebates High Efficiency.......................              0.072              0.150              0.205
Low Income and Seniors Subsidy.........................              0.031              0.065              0.089
Manufacturer Tax Credits...............................        0.153-0.330        0.299-0.666        0.203-0.707
Voluntary Efficiency Target (5 year delay).............              4.550              9.970             11.570
Voluntary Efficiency Target (10 year delay)............              3.090              6.810              7.980
Mass Government Purchases..............................  .................              0.013  .................
Early Replacement Program (w/Current Eff.).............              0.004              0.006              0.024
Early Replacement Program (w/H-axis)...................              0.078              0.161              0.223
Proposed Negotiated Performance Standard...............              5.520             11.590             14.330
----------------------------------------------------------------------------------------------------------------
NPV=Net Present Value (2004-2030, in billion 1997 $).
Savings=Energy Savings (Source Quads).

    The Net Present Value amounts shown in Table 23 refer to the NPV 
for consumers. Rebates or tax credits are not included as an expense 
since on average consumers are both paying for and receiving benefits 
of the payments.
    The case in which no regulatory action is taken with regard to 
clothes washer efficiency constitutes the ``base case'' (or ``No 
Action'') scenario. In this case, between the years 2004 and 2030, 
clothes washers are expected to use 21.76 Quads (22.94 Exajoules (EJ)) 
of primary energy. Since this is the base case, energy savings and NPV 
are zero by definition.
    A short description of each alternative is provided below:
    Enhanced Public Education and Information. This would make the 
public more aware of energy savings available for more efficient 
clothes washers (examples would be Energy Star labeling, web sites with 
efficiency information and advertising). To model this possibility, we 
assumed that the effective market discount rates change from 75% to 47% 
for purchasers of clothes washers. This would have the same effect as a 
$39 discount on high efficiency washer prices. This program is assumed 
to continue through 2030.
    Consumer Tax Credits. We assume tax credits equal to 15% of the 
cost of high-efficiency models (MEF of 1.257) and that 60% of consumers 
buying a clothes washer would take advantage of the tax credit. We 
assume this program is in place for six years.
    Manufacturer Tax Credits. We assume that a manufacturer tax credit 
of $50 or $100 per machine with a cap on the number of washers per 
manufacturer (based on the proposed tax credit). The

[[Page 59583]]

tax credits are capped at $30 million per manufacturer per Tier, or $60 
million per manufacturer. This program is assumed to be in place in six 
years between 2004 to 2010.
    Consumer Rebates. We assume a rebate of 15% of the retail price of 
high-efficiency models for a period of 6 years. This is modeled by 
reducing the price of a washer with a MEF of 1.257 (a 35% reduction in 
energy use from the baseline model) by 15%.
    Low Income and Seniors Subsidy. Based on the RECS survey for 
households owning a clothes washer and dryer, 28% of households qualify 
as low-income or senior households. We assumed a subsidy program would 
provide an amount equivalent to 25% of the price of a high efficiency 
clothes washer. This program was assumed to be in effect for 6 years.
    Voluntary efficiency target (5 & 10 year delays). Assume a 1.26 MEF 
washer efficiency level but taking place 5 and 10 years after 2007.
    Mass Government Purchases. This alternative assumes a Government 
agency such as the U.S. Department of Housing and Urban Development 
(HUD) purchases high efficiency washers for low income housing. We 
assume a program in which 25% of the 1.3 million households in public 
housing would participate in the program. We also assume that only 
washers reaching the end of their lifetime of 14 years would be 
replaced. Over a 6 year program period, this would result in a 
replacement of 138,000 clothes washers.
    Early Replacement Programs. The purpose of this program would be to 
remove older, presumably less efficient models from the clothes washer 
stock with either existing base case efficiency washers or with high 
efficiency (MEF of 1.257, 35% energy reduction) washers. We model this 
by assuming a 15% increase in the size of the early replacement market 
segment. This program like the others is assumed to have a duration of 
6 years.
    Performance Standards. The proposed standard (proposed standard 
level 3).
    Lastly, all of these alternatives must be gauged against the 
performance standards we are proposing in this proposed rule. Such 
performance standards would result in energy savings of 5.52 Quads 
(5.82 EJ), and the NPV would be an expected $14.33 billion.
    As indicated in the paragraphs above, none of the alternatives we 
examined would save as much energy as the proposed rule. Also, several 
of the alternative would require new enabling legislation, since 
authority to carry out those alternatives does not presently exist.

C. Review Under the Regulatory Flexibility Act of 1980

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, requires 
an assessment of the impact of regulations on small businesses. Small 
businesses are defined as those firms within an industry that are 
privately owned and less dominant in the market.
    To be categorized as a ``small'' clothes washer manufacturer, a 
firm must employ no more than 1,000 employees. The clothes washer 
industry is characterized by six firms accounting for nearly 99% of 
sales. By this definition none of the six major U.S. manufacturers of 
clothes washers are considered ``small.'' The Department is aware of 
one small domestic manufacturer of clothes washer, Staber Industries, 
that produces a top loading horizontal-axis clothes washer. The energy 
efficiency of this product already exceeds the proposed standard level.
    The Department prepared a manufacturing impact analysis which was 
made public and available to all the clothes washer manufacturers. This 
analysis considered the effects on small manufacturers with a minimum 
annual production of 165,000 units (representing a 2.1% market share). 
The Department did not receive any information or comments indicating 
that even smaller manufacturers of clothes washers would be impacted 
differentially from those included in the small manufacturer analysis 
performed.
    In view of the foregoing, the Department has determined and hereby 
certifies pursuant to Section 605(b) of the Regulatory Flexibility Act 
that, for this particular industry, the proposed standard levels in 
today's proposed rule will not ``have a significant economic impact on 
a substantial number of small entities,'' and it is not necessary to 
prepare a regulatory flexibility analysis.

D. Review Under the Paperwork Reduction Act

    No new information or record keeping requirements are imposed by 
this rulemaking. Accordingly, no Office of Management and Budget 
clearance is required under the Paperwork Reduction Act. 44 U.S.C. 3501 
et seq.

E. Review Under Executive Order 12988, ``Civil Justice Reform''

    With respect to the review of existing regulations and the 
promulgation of new regulations, Section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive 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.
    With regard to the review required by Section 3(a), 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 reviewed 
today's proposed rule under the standards of Section 3 of the Executive 
Order and determined that, to the extent permitted by law, the proposed 
regulations meet the relevant standards.

F. ``Takings'' Assessment Review

    It has been determined pursuant to Executive Order 12630, 
``Governmental Actions and Interference with Constitutionally Protected 
Property Rights,'' 52 FR 8859 (March 18, 1988), that this regulation 
would not result in any takings that might require compensation under 
the Fifth Amendment to the United States Constitution.

G. Review Under Executive Order 13132, ``Federalism''

    Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. Agencies also must provide State and local 
officials an opportunity for meaningful and timely input in the 
development of regulatory proposals that have federalism implications. 
DOE published a notice of

[[Page 59584]]

its intergovernmental consultation policy on March 14, 2000. (65 FR 
13735).
    DOE has examined today's proposed rule and has determined that it 
would not have a substantial direct effect on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government. State regulations that may have existed on the products 
that are the subject of today's proposed rule were preempted by the 
Federal standards established in the National Appliance Energy 
Conservation Amendments of 1988. States can petition the Department for 
exemption from such preemption based on criteria set forth in EPCA.

H. Review Under the Unfunded Mandates Reform Act of 1995

    With respect to a proposed regulatory action that may result in the 
expenditure by the private sector of $100 million or more (adjusted 
annually for inflation), Section 202 of the Unfunded Mandates Reform 
Act of 1995 (UMRA) requires a Federal agency to publish estimates of 
the resulting costs, benefits and other effects on the national 
economy. 2 U.S.C. 1532(a), (b). Section 202 of UMRA authorizes an 
agency to respond to the content requirements of UMRA in any other 
statement or analysis that accompanies the proposed rule. 2 U.S.C. 
1532(c).
    The content requirements of Section 202(b) of UMRA relevant to a 
private sector mandate substantially overlap the economic analysis 
requirements that apply under Section 325(o) of EPCA and Executive 
Order 12866. The SUPPLEMENTARY INFORMATION section of the Notice of 
Proposed Rulemaking and ``Regulatory Impact Analysis'' section of the 
TSD for this proposed rule responds to those requirements.
    Under Section 205 of UMRA, we are obligated to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under Section 202 is 
required. We are required to select from those alternatives the most 
cost-effective and least burdensome alternative that achieves the 
objectives of the rule unless DOE publishes an explanation for doing 
otherwise or the selection of such an alternative is inconsistent with 
law. As required by Section 325(o) of the Energy Policy and 
Conservation Act (42 U.S.C. 6295(o)), this proposed rule would 
establish energy conservation standards for clothes washers that are 
designed to achieve the maximum improvement in energy efficiency that 
DOE has determined to be both technologically feasible and economically 
justified. DOE may not adopt an alternative that does not meet EPCA's 
substantive standard. A full discussion of the alternatives considered 
by DOE is presented in the ``Regulatory Impact Analysis'' section of 
the TSD for this proposed rule.

I. Review Under the Treasury and General Government Appropriations Act 
of 1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. No. 105-277) requires Federal agencies to issue a 
Family Policymaking Assessment for any proposed rule or policy that may 
affect family well-being. Today's proposal 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.

J. Review Under the Plain Language Directives

    Section 1(b)(12) of Executive Order 12866 requires that each agency 
draft its regulations to be simple and easy to understand, with the 
goal of minimizing the potential for uncertainty and litigation arising 
from such uncertainty. Similarly, the Presidential memorandum of June 
1, 1998 (63 FR 31883) directs the heads of executive departments and 
agencies to use plain language in all proposed and final rulemaking 
documents published in the Federal Register.
    Today's proposed rule uses the following general techniques to 
abide by Section 1(b)(12) of Executive Order 12866 and the Presidential 
memorandum of June 1, 1998 (63 FR 31883):
    <bullet> Organization of the material to serve the needs of the 
readers (stakeholders).
    <bullet> Use of common, everyday words in short sentences.
    <bullet> Shorter sentences and sections.
    We invite your comments on how to make this proposed rule easier to 
understand.

VII. Public Comment Procedures

A. Written Comment Procedures

    The Department invites interested persons to participate in the 
rulemaking by submitting data, comments, or information with respect to 
the proposed issues set forth in today's proposed rule to Ms. Brenda 
Edwards-Jones, at the address indicated at the beginning of this 
notice. We will consider all submittals received by the date specified 
at the beginning of this notice in developing the final rule.
    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 one complete copy of the document and ten (10) 
copies, if possible, from which the information believed to be 
confidential has been deleted. The Department of Energy will make its 
own determination with regard to the confidential status of the 
information and treat it according to its determination.
    Factors of interest to the Department when evaluating requests to 
treat as confidential information that has been submitted include: (1) 
A description of the items; (2) an indication as to 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) an indication as to 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.

B. Public Workshop (Hearing)

1. Procedures for Submitting Requests To Speak
    You will find the time and place of the public workshop (hearing) 
listed at the beginning of this notice of proposed rulemaking. The 
Department invites any person who has an interest in today's notice of 
proposed rulemaking, or who is a representative of a group or class of 
persons that has an interest in these proposed issues, to make a 
request for an opportunity to make an oral presentation. If you would 
like to attend the public workshop, please notify Ms. Brenda Edwards-
Jones at (202) 586-2945. You may hand deliver requests to speak to the 
address indicated at the beginning of this notice between the hours of 
8:00 a.m. and 4:00 p.m., Monday through Friday, except Federal 
holidays, or send them by mail.
    The person making the request should state why he or she, either 
individually or as a representative of a group or class of persons, is 
an appropriate spokesperson, briefly describe the nature of the 
interest in the rulemaking, and provide a telephone number for contact.

[[Page 59585]]

    The Department requests each person wishing to speak to submit an 
advance copy of his or her statement at least ten days prior to the 
date of this workshop as indicated at the beginning of this notice. The 
Department, at its discretion, may permit any person wishing to speak 
who cannot meet this requirement to participate if that person has made 
alternative arrangements with the Office of Building Research and 
Standards in advance. The letter making a request to give an oral 
presentation must ask for such alternative arrangements.
2. Conduct of Workshop (Hearing)
    The workshop (hearing) will be conducted in an informal, conference 
style. The Department may use a professional facilitator to facilitate 
discussion, and a court reporter will be present to record the 
transcript of the meeting. We will present summaries of major topics 
contained in the comments received before the workshop, allow time for 
presentations by workshop participants, and encourage all interested 
parties to share their views on issues affecting this rulemaking. 
Following the workshop, there is provided an additional comment period, 
during which time interested parties will have an opportunity to 
comment on the proceedings at the workshop, as well as on any aspect of 
the rulemaking proceeding.
    The Department reserves the right to select the persons to be heard 
at the hearing, to schedule the respective presentations, and to 
establish the procedures governing the conduct of the hearing. The 
length of each presentation is limited to 5 minutes.
    A DOE official will be designated to preside at the hearing. The 
hearing will not be a judicial or an evidentiary-type hearing, but will 
be conducted in accordance with 5 U.S.C. 533 and Section 336 of the 
Act. At the conclusion of all initial oral statements at each day of 
the hearing, each person who has made an oral statement will be given 
the opportunity to make a rebuttal statement, subject to time 
limitations. The rebuttal statement will be given in the order in which 
the initial statements were made. The official conducting the hearing 
will accept additional comments or questions from those attending, as 
time permits. Any interested person may submit, to the presiding 
official, written questions to be asked of any person making a 
statement at the hearing. The presiding official will determine whether 
the question is relevant, and whether time limitations permit it to be 
presented for answer.
    Further questioning of speakers will be permitted by DOE. The 
presiding official will afford any interested person an opportunity to 
question other interested persons who made oral presentations, and 
employees of the United States who have made written or oral 
presentations with respect to disputed issues of material fact relating 
to the proposed rule. This opportunity will be afforded after any 
rebuttal statements, to the extent that the presiding official 
determines that such questioning is likely to result in a more timely 
and effective resolution of such issues. If the time provided is 
insufficient, DOE will consider affording an additional opportunity for 
questioning at a mutually convenient time. Persons interested in making 
use of this opportunity must submit their request to the presiding 
official no later than shortly after the completion of any rebuttal 
statements and be prepared to state specific justification, including 
why the issue is one of disputed fact and how the proposed questions 
would expedite their resolution.
    Any further procedural rules regarding proper conduct of the 
hearing will be announced by the presiding official.
    The Department will arrange for a transcript of the workshop and 
will make the entire record of this rulemaking, including the 
transcript, available for inspection in the Department's Freedom of 
Information Reading Room as provided at the beginning of this notice. 
Any person may purchase a copy of the transcript from the transcribing 
reporter. You can also download the TSD and other analyses from the 
Internet at: http://www.eren.doe.gov/buildings/codes_standards/applbrf/clwasher.html

List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Energy conservation, 
Household appliances.

    Issued in Washington, DC., September 26, 2000.
Dan W. Reicher,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble Part 430 of Chapter II of 
Title 10, Code of Federal Regulations, is proposed to be amended as set 
forth below.

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

    Authority: 42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.
    2. Appendix J to subpart B of part 430 is amended by adding, in 
section 2, paragraphs 2.3.1, 2.3.2, and by revising paragraphs 2.10, 
2.11 and 2.11.1 to read as follows:

Appendix J to Subpart B of Part 430--Uniform Test Method for 
Measuring the Energy Consumption of Automatic and Semi-Automatic 
Clothes Washers

* * * * *

2. TESTING CONDITIONS

* * * * *
    2.3 Supply water. * * *
    2.3.1 Supply water requirements for water and energy consumption 
testing. For nonwater-heating clothes washers not equipped with 
thermostatically controlled water valves, the temperature of the hot 
and cold water supply shall be maintained at 100 deg. 
<plus-minus>10 deg.F (37.8 deg.C <plus-minus>5.5 deg.C). For 
nonwater-heating clothes washers equipped with thermostatically 
controlled water valves, the temperature of the hot water supply 
shall be maintained at 140 deg.F <plus-minus>5 deg.F (60.0 deg.C 
<plus-minus>2.8 deg.C) and the cold water supply shall be maintained 
at 60 deg.F <plus-minus>5F deg. (15.6 deg.C <plus-minus>2.8 deg.C). 
For water-heating clothes washers, the temperature of the hot water 
supply shall be maintained at 140 deg.F <plus-minus>5 deg.F 
(60.0 deg.C <plus-minus>2.8 deg.C) and the cold water supply shall 
not exceed 60 deg.F (15.6 deg.C). Water meters shall be installed in 
both the hot and cold water lines to measure water consumption.
    2.3.2 Supply water requirements for remaining moisture content 
testing. For nonwater-heating clothes washers not equipped with 
thermostatically controlled water valves, the temperature of the hot 
water supply shall be maintained at 140 deg.F <plus-minus>5 deg.F 
and the cold water supply shall be maintained at 60 deg.F 
<plus-minus>5 deg.F. All other clothes washers shall be connected to 
water supply temperatures as stated in section 2.3.1.
* * * * *
    2.10 Wash time (period of agitation or tumble) setting. If the 
maximum available wash time in the normal cycle is greater than 9.75 
minutes, the wash time shall be not less than 9.75 minutes. If the 
maximum available wash time in the normal cycle is less than 9.75 
minutes, the wash time shall be the maximum available wash time.
* * * * *
    2.11 Agitation speed and spin speed settings. Where controls are 
provided for agitation speed and spin speed selections, set them as 
follows:
    2.11.1 For energy and water consumption tests, set at the normal 
cycle settings. If settings at the normal cycle are not offered, set 
the control settings to the maximum speed permitted on the clothes 
washer.
    3. Appendix J to subpart B of part 430 is amended, in section 3, by 
revising paragraph 3.3.1 to read as follows:

3. TEST MEASUREMENTS

* * * * *
    3.3.1 The wash temperature shall be the same as the rinse 
temperature for all testing. Cold rinse is the coldest rinse 
temperature

[[Page 59586]]

available on the machine. Warm rinse is the hottest rinse 
temperature available on the machine.

* * * * *
    4. Appendix J1 to Subpart B of part 430 is amended, in section 1, 
by adding paragraphs 1.22 and 1.23 to read as follows:

Appendix J1 to Subpart B of Part 430--Uniform Test Method for 
Measuring the Energy Consumption of Automatic and Semi-Automatic 
Clothes Washers

* * * * *

    1. DEFINITIONS AND SYMBOLS
    1.22 Cold rinse means the coldest rinse temperature available on 
the machine (and should be the same rinse temperature selection 
tested in section 3.7).
    1.23 Warm rinse means the hottest rinse temperature available on 
the machine (and should be the same rinse temperature selection

    5. Appendix J1 to subpart B of part 430 is amended in section 2 by 
revising paragraphs 2.6.1, 2.6.2, and adding paragraphs 2.6.3 through 
2.6.7.2, to read as follows:

    2. TESTING CONDITIONS
* * * * *
    2.6.1 Energy Test Cloth. The energy test cloth shall be made 
from energy test cloth material, as specified in 2.6.4, that is 24 
inches by 36 inches (61.0 cm by 91.4 cm) and has been hemmed to 22 
inches by 34 inches (55.9 cm by 86.4 cm) before washing. The energy 
test cloth shall be clean and shall not be used for more than 60 
test runs (after preconditioning as specified in section 2.6.3). 
Mixed lots of material shall not be used for testing the clothes 
washers.
* * * * *
    2.6.2 Energy Stuffer Cloth. The energy stuffer cloth shall be 
made from energy test cloth material, as specified in 2.6.4, and 
shall consist of pieces of material that are 12 inches by 12 inches 
(30.5 cm by 30.5 cm) and have been hemmed to 10 inches by 10 inches 
(25.4 cm by 25.4 cm) before washing. The energy stuffer cloth shall 
be clean and shall not be used for more than 60 test runs (after 
preconditioning as specified in section 2.6.3). Mixed lots of 
material shall not be used for testing the clothes washers.
    2.6.3 Preconditioning of Test Cloths. The new test cloths, 
including energy test cloths and energy stuffer cloths, shall be 
pre-conditioned in a clothes washer in the following manner:
    2.6.3.1 Perform 5 complete normal wash-rinse-spin cycles, the 
first two with AHAM Standard detergent 2A and the last three without 
detergent. Place the test cloth in a clothes washer set at the 
maximum water level. Wash the load for ten minutes in soft water (17 
ppm hardness or less) using 6.0 grams per gallon of water of AHAM 
Standard detergent 2A. The wash temperature is to be controlled to 
135 deg.F <plus-minus>5 deg.F (57.2 deg.C <plus-minus>2.8C) and the 
rinse temperature is to be controlled to 60 deg.F 
<plus-minus>5 deg.F (15.6 deg.C <plus-minus>2.8 deg.C). Repeat the 
cycle with detergent and then repeat the cycle three additional 
times without detergent, bone drying the load between cycles (total 
of five wash and rinse cycles).
    2.6.4 Energy test cloth material. The energy test cloths and 
energy stuffer cloths shall be made from fabric meeting the 
following specifications. The material should come from a roll of 
material with a width of approximately 63 inches and approximately 
500 yards per roll, however, other sizes maybe used if they fall 
within the specifications.
    2.6.4.1 Nominal fabric type. Pure finished bleached cloth, made 
with a momie or granite weave, which is nominally 50 percent cotton 
and 50 percent polyester.
    2.6.4.2 The fabric weight shall be 5.60 ounces per square yard 
(190.0 g/m \2\), <plus-minus>5 percent.
    2.6.4.3 The thread count shall be 61 x 54 per inch (warp x 
fill), <plus-minus>2 percent.
    2.6.4.4 The warp yarn and filling yarn shall each have fiber 
content of 50 percent <plus-minus>4 percent cotton, with the balance 
being polyester, and be open end spun, 15/1 <plus-minus>5 percent 
cotton count blended yarn.
    2.6.4.5 Water repellent finishes, such as fluoropolymer stain 
resistant finishes shall not be applied to the test cloth. The 
absence of such finishes shall be verified by:
    2.6.4.5.1 AATCC-118 Oil Repellency Test (DuPont or 3M version) 
of each new lot of test cloth (when purchased from the mill) to 
confirm the absence of Scotchguard or other water repellent finish 
(required scores of ``D'' across the board).
    2.6.4.5.2 AATCC-79 Drop Absorbency Test of each new lot of test 
cloth (when purchased from the mill) to confirm the absence of 
Scotchguard <Copyright> or other water repellent finish (time to 
absorb one drop should be on the order of 1 second).
    2.6.4.6 The moisture absorption and retention shall be evaluated 
for each new lot of test cloth by the Standard Extractor Remaining 
Moisture Content (RMC) Test specified in section 2.6.5.
    2.6.4.6.1 Repeat the Standard Extractor RMC Test in section 
2.6.5 three times.
    2.6.4.6.2 An RMC correction curve shall be calculated as 
specified in section 2.6.6.
    2.6.5 Standard Extractor RMC Test Procedure. The following 
procedure is used to evaluate the moisture absorption and retention 
characteristics of a lot of test cloth by measuring the RMC in a 
standard extractor at a specified set of conditions. Table 2.6.5 is 
the matrix of test conditions. The 500g requirement will only be 
used if a clothes washer design can achieve spin speeds in the 500g 
range. When this matrix is repeated 3 times, a total of 48 extractor 
RMC test runs are required. For the purpose of the extractor RMC 
test, the test cloths may be used for up to 60 test runs (after 
preconditioning as specified in section 2.6.3).

                              Table 2.6.5.--Matrix of Extractor RMC Test Conditions
----------------------------------------------------------------------------------------------------------------
                                                             Warm soak                       Cold soak
                   ``g'' Force                   ---------------------------------------------------------------
                                                   15 min. spin     4 min. spin    15 min. spin     4 min. spin
----------------------------------------------------------------------------------------------------------------
50..............................................  ..............  ..............  ..............  ..............
200.............................................  ..............  ..............  ..............  ..............
350.............................................  ..............  ..............  ..............  ..............
500.............................................  ..............  ..............  ..............  ..............
----------------------------------------------------------------------------------------------------------------

    2.6.5.1 The standard extractor RMC tests shall be run in a Bock 
Model 215 extractor (having a basket diameter of 19.5 inches, length 
of 12 inches, and volume of 2.1 ft \3\), with a variable speed drive 
[Bock Engineered Products, P.O. Box 5127, Toledo, OH 43611] or an 
equivalent extractor with same basket design (i.e. diameter, length, 
volume, and hole configuration) and variable speed drive.
    2.6.5.2 Test Load. Test cloths shall be preconditioned in 
accordance with 2.6.3. The load size shall be 8.4 lbs., consistent 
with section 3.8.1.
    2.6.5.3 Procedure.
    2.6.5.3.1 Record the ``bone-dry'' weight of the test load (WI).
    2.6.5.3.2 Soak the test load for 20 minutes in 10 gallons of 
soft ( 17 ppm) water. The entire test load shall be submerged. The 
water temperature shall be 100 deg.F <plus-minus>5 deg.F.
    2.6.5.3.3 Remove the test load and allow water to gravity drain 
off of the test cloths. Then manually place the test cloths in the 
basket of the extractor, distributing them evenly by eye. Spin the 
load at a fixed speed corresponding to the intended centripetal 
acceleration level (measured in units of the acceleration of 
gravity, g) <plus-minus>1 g for the intended time period 
<plus-minus>5 seconds.
    2.6.5.3.4 Record the weight of the test load immediately after 
the completion of the extractor spin cycle (WC).
    2.6.5.3.5 Calculate the RMC as (WC-WI)/WI.
    2.6.5.3.6 The RMC of the test load shall be measured at three 
(3) g levels: 50g; 200g; and 350g, using two different spin times at 
each g level: 4 minutes; and 15 minutes. If a clothes washer design 
can achieve spin speeds in the 500g range than the RMC of the test 
load shall be measured at four (4) g levels: 50g; 200g; 350g; and 
500g, using two different spin times at each g level: 4 minutes; and 
15 minutes.

[[Page 59587]]

    2.6.5.4 Repeat 2.6.5.3 using soft (17 ppm) water at 60 deg.F 
<plus-minus>5 deg.F.
    2.6.6 Calculation of RMC correction curve.
    2.6.6.1 Average the values of 3 test runs and fill in Table 
2.6.5. Perform a linear least-squares fit to relate the standard RMC 
(RMC<INF>standard</INF>) values (shown in Table 2.6.6.1) to the 
values measured in 2.6.5 (RMC<INF>cloth</INF>): 
RMC<INF>standard</INF> <difference> A * RMC<INF>cloth</INF> + B
    Where A and B are coefficients of the linear least squares fit.

                                Table 2.6.6.1.--Standard RMC Values (RMC<INF>standard</INF>)
----------------------------------------------------------------------------------------------------------------
                                                                            RMC percent
                                                 ---------------------------------------------------------------
                        G                                    Warm soak                       Cold soak
                                                 ---------------------------------------------------------------
                                                   15 min. spin     4 min. spin    15 min. spin     4 min. spin
----------------------------------------------------------------------------------------------------------------
50..............................................            50.4            55.7            52.8            59.0
200.............................................            35.6            40.4            37.9            43.1
350.............................................            29.6            33.1            30.6            35.8
500.............................................            24.2            28.7            25.5            30.0
----------------------------------------------------------------------------------------------------------------

    2.6.6.2 Check accuracy of linear least squares fit using the 
following method:
    The root mean square value of
    [GRAPHIC] [TIFF OMITTED] TP05OC00.020
    
shall be less than 2 percent, where a sum is taken over all of the 
different tests, where RMC<INF>standard</INF>_<INF><careof></INF> is 
the RMC standard value measured for the I-th test, and 
RMC<INF>corr3</INF>_<INF><careof></INF> is the corrected RMC value 
for the I-th cloth test. This equation is valid only for the use 
with three (3) g force values therefore when using the 500g 
requirement; replace the 500g value instead of the 350g value.
    2.6.7 Application of RMC correction curve.
    2.6.7.1 Using the coefficients, A and B calculated in section 
2.6.6.1:

RMC<INF>corr</INF> = A * RMC + B

    2.6.7.2  Substitute RMC<INF>corr</INF> values in calculations in 
section 3.8.
* * * * *

    6. Appendix J1 to subpart B of part 430 is amended, in section 
4.1.5, by revising the definition of ``ER<INF>x</INF>, ER<INF>a</INF>, 
ER<INF>n</INF>'' to read as follows:


4. CALCULATION OF DERIVED RESULTS FROM TEST MEASUREMENTS

* * * * *
    4.1.5 * * * ER<INF>x</INF>, ER<INF>a</INF>, ER<INF>n</INF>, are 
reported electrical energy consumption values, in kilowatt-hours per 
cycle, at maximum, average, and minimum test loads, respectively, 
for the warm rinse cycle per definitions in section 3.7.2.
* * * * *

    7. Section 430.32 of subpart C, 10 CFR part 430 is amended by 
revising paragraph (g) to read as follows:

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

* * * * *
    (g) Clothes washers.
    (1) Clothes washers manufactured before January 1, 2004, shall 
have an energy factor no less than:

------------------------------------------------------------------------
                                     Energy factor
                                  (cu.ft./Kwh/cycle)     Energy factor
          Product class            as of January 1,   (cu.ft./Kwh/cycle)
                                         1988         as of May 14, 1988
------------------------------------------------------------------------
i. Top Loading, Compact (less     Not Applicable.\1\  0.9.
 than 1.6 ft.\3\ capacity).
ii. Top Loading, Standard (1.6    Not Applicable.\1\  1.18.
 ft.\3\ or greater capacity).
iii. Top Loading, Semi-Automatic  Not Applicable.\1\  Not Applicable.\1\
iv. Front Loading...............  Not Applicable.\1\  Not Applicable.\1\
v. Suds saving..................  Not Applicable.\1\  Not Applicable.\1\
 
------------------------------------------------------------------------
\1\ Must have an unheated rinse water option.


[[Page 59588]]

    (2) Clothes washers manufactured after January 1, 2004, shall 
have amodified energy factor no less than:

------------------------------------------------------------------------
                                    Modified Energy     Modified Energy
                                   factor  (cu.ft./    factor  (cu.ft./
          Product Class            Kwh/cycle) as of    Kwh/cycle) as of
                                    January 1, 2004     January 1, 2007
------------------------------------------------------------------------
i. Top Loading, Compact (less     0.65..............  0.65.
 than 1.6 ft.\3\ capacity)..
ii. Standard (1.6 ft.\3\ or       1.04..............  1.26.
 greater capacity..
iii. Top Loading, Semi-Automatic  Not Applicable.\1\  Not Applicable.\1\
iv. Front Loading...............  1.04..............  1.26.
v. Suds saving..................  Not Applicable.\1\  Not Applicable.\1\
 
------------------------------------------------------------------------
\1\ Must have an unheated rinse water option.

* * * * *
[FR Doc. 00-25335 Filed 9-29-00; 9:42 am]
BILLING CODE 6450-01-P


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