```

[Federal Register Volume 78, Number 176 (Wednesday, September 11, 2013)]
[Proposed Rules]
[Pages 55889-55991]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-21531]

[[Page 55889]]

Vol. 78

Wednesday,

No. 176

September 11, 2013

Part III

Department of Energy

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10 CFR Part 431

Energy Conservation Program: Energy Conservation Standards for 
Commercial Refrigeration Equipment; Proposed Rule

Federal Register / Vol. 78 , No. 176 / Wednesday, September 11, 2013 
/ Proposed Rules

[[Page 55890]]

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DEPARTMENT OF ENERGY

10 CFR Part 431

[Docket No. EERE-2010-BT-STD-0003]
RIN 1904-AC19

Energy Conservation Program: Energy Conservation Standards for 
Commercial Refrigeration Equipment

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

ACTION: Notice of proposed rulemaking and public meeting.

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

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

DATES: DOE will hold a public meeting on Thursday, October 3, 2013, 
from 9 a.m. to 4 p.m., in Washington, DC. The meeting will also be 
broadcast as a webinar. See section VII, ``Public Participation,'' for 
webinar registration information, participant instructions, and 
information about the capabilities available to webinar participants.
    DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than November 12, 2013. See section VII, ``Public 
Participation,'' for details.

ADDRESSES: The public meeting will be held at the U.S. Department of 
Energy, Forrestal Building, Room 8E-089, 1000 Independence Avenue SW., 
Washington, DC 20585. To attend, please notify Ms. Brenda Edwards at 
(202) 586-2945. Persons can attend the public meeting via webinar. For 
more information, refer to section VII, Public Participation.
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for Commercial Refrigeration Equipment and 
provide docket number EERE-2010-BT-STD-0003 and/or regulatory 
information number (RIN) 1904-AC19. Comments may be submitted using any 
of the following methods:
    1. Federal eRulemaking Portal: www.regulations.gov. Follow the 
instructions for submitting comments.
    2. Email: CRE-2010-STD-0003@ee.doe.gov. Include the docket number 
and/or RIN in the subject line of the message.
    3. Mail: Ms. Brenda Edwards, U.S. Department of Energy, Building 
Technologies Program, Mailstop EE-2J, 1000 Independence Avenue SW., 
Washington, DC 20585-0121. If possible, please submit all items on a 
CD. It is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies Program, 950 L'Enfant Plaza SW., Suite 
600, Washington, DC 20024. Telephone: (202) 586-2945. If possible, 
please submit all items on a CD, in which case it is not necessary to 
include printed copies.
    Written comments regarding the burden-hour estimates or other 
aspects of the collection-of-information requirements contained in this 
proposed rule may be submitted to Office of Energy Efficiency and 
Renewable Energy through the methods listed above and by email to 
Chad_S_Whiteman@omb.eop.gov.
    For detailed instructions on submitting comments and additional 
information on the rulemaking process, see section VII of this document 
(``Public Participation'').
    Docket: The docket, which includes Federal Register notices, public 
meeting attendee lists and transcripts, comments, and other supporting 
documents/materials, is available for review at regulations.gov. All 
documents in the docket are listed in the regulations.gov index. 
However, some documents listed in the index, such as those containing 
information that is exempt from public disclosure, may not be publicly 
available.
    A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2010-BT-STD-0003. This Web 
page will contain a link to the docket for this notice on the 
regulations.gov site. The regulations.gov Web page will contain simple 
instructions on how to access all documents, including public comments, 
in the docket. See section VII for further information on how to submit 
comments through www.regulations.gov.
    For further information on how to submit a comment, review other 
public comments and the docket, or participate in the public meeting, 
contact Ms. Brenda Edwards at (202) 586-2945 or by email: 
Brenda.Edwards@ee.doe.gov.

FOR FURTHER INFORMATION CONTACT: Mr. Charles Llenza, U.S. Department of 
Energy, Office of Energy Efficiency and Renewable Energy, Building 
Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, 
DC 20585-0121. Telephone: (202) 586-2192. Email: commercial_refrigeration_equipment@EE.Doe.Gov.
    Ms. Jennifer Tiedeman, U.S. Department of Energy, Office of the 
General Counsel, GC-71, 1000 Independence Avenue SW., Washington, DC 
20585-0121. Telephone: (202) 287-6111. Email: 
Jennifer.Tiedeman@hq.doe.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Summary of the Proposed Rule
    A. Benefits and Costs to Customers
    B. Impact on Manufacturers
    C. National Benefits
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Commercial Refrigeration 
Equipment
III. General Discussion
    A. Test Procedures and Normalization Metrics
    1. Test Procedures
    2. Normalization Metrics
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    D. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Commercial Customers
    b. Life-Cycle Costs
    c. Energy Savings
    d. Lessening of Utility or Performance of Equipment
    e. Impact of Any Lessening of Competition
    f. Need of the Nation To Conserve Energy
    g. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion of Comments
    A. General Rulemaking Issues
    1. Statutory Authority
    2. January 2009 Final Rule Equipment
    3. Normalization Metrics
    4. Treatment of Blast Chillers, Thawing Cabinets, Prep Tables, 
Salad Bars, and Buffet Tables
    5. Dedicated Remote Condensing Units
    6. Small Units
    7. Consideration of Impact of Amended Standards
    8. CO2 Cascade Systems
    9. Coverage of Existing Cases Undergoing Refurbishments or 
Retrofits
    10. Components Shipped as After-Market Additions

[[Page 55891]]

    11. Definition of Hybrid Equipment
    12. Coverage of Commercial Refrigeration Equipment With Drawers
    B. Test Procedures
    C. Market and Technology Assessment
    1. Equipment Classes
    a. Equipment Classification
    b. Application Temperature Equipment
    c. Open Cases
    d. Service Over Counter Equipment
    2. Technology Assessment
    a. Technologies Applicable to All Equipment
    b. Technologies Relevant Only to Equipment With Doors
    c. Technologies Applicable Only to Equipment Without Doors
    d. Self-Contained Equipment Technologies
    D. Screening Analysis
    E. Engineering Analysis
    1. Representative Equipment for Analysis
    a. Representative Unit Selection
    b. Baseline Models
    2. Design Options
    3. Refrigerants
    4. Cost Assessment Methodology
    a. Teardown Analysis
    b. Cost Model
    c. Manufacturer Production Cost
    d. Cost-Efficiency Relationship
    e. Manufacturer Markup
    f. Shipping Costs
    g. Manufacturer Interviews
    5. Energy Consumption Model
    a. Energy Consumption Model Results
    b. Anti-Sweat Heater Power
    c. Evaporator Fan Motor Power
    d. Condenser Energy Consumption
    e. Evaporator Coil Design
    F. Markups Analysis
    1. Baseline and Incremental Markups
    2. Distribution Channel Market Shares
    G. Energy Use Analysis
    H. Life-Cycle Cost Analysis
    1. Effect of Current Standards
    2. Equipment Cost
    3. Installation, Maintenance, and Repair Costs
    a. Maintenance and Repair Costs by Efficiency Level
    b. Maintenance and Repair Cost Annualization
    c. Maintenance Cost Estimates
    d. Refrigerant Costs
    e. Repair Costs
    4. Annual Energy Consumption
    5. Energy Prices
    6. Energy Price Projections
    7. Equipment Lifetime
    8. Discount Rates
    9. Compliance Date of Standards
    10. Base-Case and Standards-Case Efficiency Distributions
    11. Inputs to Payback Period Analysis
    12. Rebuttable-Presumption Payback Period
    I. National Impact Analysis--National Energy Savings and Net 
Present Value
    1. Shipments
    a. VOP.RC.L Shipments
    b. Shipments by End User Type
    c. Shipments Forecasts
    2. Forecasted Efficiency in the Base Case and Standards Cases
    3. National Energy Savings
    4. Net Present Value of Customer Benefit
    5. Benefits From Effects of Amended Standards on Energy Prices
    J. Customer Subgroup Analysis
    K. Manufacturer Impact Analysis
    1. Overview
    2. Government Regulatory Impact Model
    a. Government Regulatory Impact Model Key Inputs
    b. Government Regulatory Impact Model Scenarios
    3. Discussion of Comments
    a. Testing and Certification
    b. Cumulative Regulatory Burden
    c. Small Manufacturers
    d. Manufacturer Markup
    4. Manufacturer Interviews
    a. Enforcement
    b. Certification and Compliance Costs
    c. Disproportionate Impact on Small Businesses
    d. Potential Loss of Product Utility and Decrease in Food Safety
    L. Employment Impact Analysis
    M. Utility Impact Analysis
    N. Emissions Analysis
    O. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    c. Current Approach and Key Assumptions
    2. Valuation of Other Emissions Reductions
    P. Regulatory Impact Analysis
V. Analytical Results
    A. Trial Standard Levels
    1. Trial Standard Level Formulation Process and Criteria
    2. Trial Standard Level Equations
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Commercial Customers
    a. Life-Cycle Cost and Payback Period
    b. Life-Cycle Cost Subgroup Analysis
    2. Economic Impacts on Manufacturers
    a. Industry Cash-Flow Analysis Results
    b. Impacts on Direct Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Subgroups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Amount and Significance of Energy Savings
    b. Net Present Value of Customer Costs and Benefits
    c. Employment Impacts
    4. Impact on Utility or Performance of Equipment
    5. Impact of Any Lessening of Competition
    6. Need of the Nation To Conserve Energy
    7. Other Factors
    C. Proposed Standard
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    1. Description and Estimated Number of Small Entities Regulated
    2. Description and Estimate of Compliance Requirements
    3. Duplication, Overlap, and Conflict With Other Rules and 
Regulations
    4. Significant Alternatives to the Rule
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements for 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
    1. Primary and Secondary Equipment Classes
    2. Design Option and Core Case Costs
    3. Offset Factors
    4. Extension of Standards
    5. Types of Refrigerant Analyzed
    6. Distribution Channel Market Shares and Markups
    7. Market Shares of Efficiency Levels
    8. Maintenance and Repair Costs at Higher Efficiency Levels
    9. Impact of Amended Standards on Future Shipments
    10. Small Businesses
VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    Title III, Part C of the Energy Policy and Conservation Act of 1975 
(EPCA), Public Law 94-163 (42 U.S.C. 6311-6317, as codified), added by 
Public Law 95-619, Title IV, section 441(a), established the Energy 
Conservation Program for Certain Industrial Equipment, a program 
covering certain industrial equipment, which includes the commercial 
refrigeration equipment that is the focus of this notice.1 2 
EPCA specifies that any new or amended energy conservation standard 
that DOE prescribes for the equipment covered shall be designed to 
achieve the maximum improvement in energy efficiency that the Secretary 
of Energy (Secretary) determines is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) 
Furthermore, EPCA mandates that the new or amended standard must result 
in significant conservation of energy. (42 U.S.C. 6295(o)(3)(B) and 
6316(e)(1)) In accordance with these and other statutory criteria 
discussed in this

[[Page 55892]]

notice, DOE proposes to adopt amended energy conservation standards for 
commercial refrigeration equipment. The proposed standards, which 
consist of maximum daily energy consumption (MDEC) values as a function 
of either refrigerated volume or total display area (TDA), are shown in 
Table I.1. DOE proposes that the standards proposed in this NOPR, if 
adopted, would apply to all equipment listed in Table I.1 that is 
manufactured in, or imported into, the United States on or after 3 
years following the publication date of the final rule. (42 U.S.C. 
6313(c)(6)(C)) For the NOPR analysis, DOE assumed a publication date in 
2014 for this final rule and a compliance date in 2017 for the amended 
standards established by the final rule.
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part C was re-designated Part A-1.
    \2\ All references to EPCA in this document refer to the statute 
as amended by the American Energy Manufacturing Technical 
Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 2012).

    Table I.1--Proposed Energy Conservation Standards for Commercial
                         Refrigeration Equipment
                 [Assumes compliance beginning in 2017]
------------------------------------------------------------------------
                                             Proposed standard level **
             Equipment class *                        [dagger]
------------------------------------------------------------------------
VCT.RC.L..................................  0.43 x TDA + 2.03
VOP.RC.M..................................  0.61 x TDA + 3.03
SVO.RC.M..................................  0.63 x TDA + 2.41
HZO.RC.L..................................  0.57 x TDA + 6.88
HZO.RC.M..................................  0.35 x TDA + 2.88
VCT.RC.M..................................  0.08 x TDA + 0.72
VOP.RC.L..................................  2.11 x TDA + 6.36
SOC.RC.M..................................  0.39 x TDA + 0.08
VOP.SC.M..................................  1.51 x TDA + 4.09
SVO.SC.M..................................  1.5 x TDA + 3.99
HZO.SC.L..................................  1.92 x TDA + 7.08
HZO.SC.M..................................  0.75 x TDA + 5.44
HCT.SC.I..................................  0.49 x TDA + 0.37
VCT.SC.I..................................  0.52 x TDA + 2.56
VCS.SC.I..................................  0.35 x V + 0.81
VCT.SC.M..................................  0.04 x V + 1.07
VCT.SC.L..................................  0.22 x V + 1.21
VCS.SC.M..................................  0.03 x V + 0.53
VCS.SC.L..................................  0.13 x V + 0.43
HCT.SC.M..................................  0.02 x V + 0.51
HCT.SC.L..................................  0.11 x V + 0.6
HCS.SC.M..................................  0.02 x V + 0.37
HCS.SC.L..................................  0.12 x V + 0.42
PD.SC.M...................................  0.03 x V + 0.83
SOC.SC.M..................................  0.32 x TDA + 0.53
VOP.RC.I..................................  2.68 x TDA + 8.08
SVO.RC.L..................................  2.11 x TDA + 6.36
SVO.RC.I..................................  2.68 x TDA + 8.08
HZO.RC.I..................................  0.72 x TDA + 8.74
VOP.SC.L..................................  3.79 x TDA + 10.26
VOP.SC.I..................................  4.81 x TDA + 13.03
SVO.SC.L..................................  3.77 x TDA + 10.01
SVO.SC.I..................................  4.79 x TDA + 12.72
HZO.SC.I..................................  2.44 x TDA + 9.0
SOC.RC.L..................................  0.83 x TDA + 0.18
SOC.RC.I..................................  0.97 x TDA + 0.21
SOC.SC.I..................................  1.35 x TDA + 0.29
VCT.RC.I..................................  0.51 x TDA + 2.37
HCT.RC.M..................................  0.14 x TDA + 0.11
HCT.RC.L..................................  0.3 x TDA + 0.23
HCT.RC.I..................................  0.35 x TDA + 0.27
VCS.RC.M..................................  0.1 x V + 0.24
VCS.RC.L..................................  0.21 x V + 0.5
VCS.RC.I..................................  0.25 x V + 0.58
HCS.SC.I..................................  0.35 x V + 0.81
HCS.RC.M..................................  0.1 x V + 0.24
HCS.RC.L..................................  0.21 x V + 0.5
HCS.RC.I..................................  0.25 x V + 0.58
SOC.SC.L..................................  0.67 x TDA + 1.12
------------------------------------------------------------------------
* Equipment class designations consist of a combination (in sequential
  order separated by periods) of: (1) an equipment family code (VOP =
  vertical open, SVO = semivertical open, HZO = horizontal open, VCT =
  vertical transparent doors, VCS = vertical solid doors, HCT =
  horizontal transparent doors, HCS = horizontal solid doors, SOC =
  service over counter, or PD = pull-down); (2) an operating mode code
  (RC = remote condensing or SC = self-contained); and (3) a rating
  temperature code (M = medium temperature (382[emsp14][deg]F), L = low temperature (02[emsp14][deg]F), or I = ice-cream temperature (-152[emsp14][deg]F)). For example, ``VOP.RC.M'' refers to the
  ``vertical open, remote condensing, medium temperature'' equipment
  class. See discussion in chapter 3 of the NOPR technical support
  document (TSD) for a more detailed explanation of the equipment class
  terminology.
** ``TDA'' is the total display area of the case, as measured in the Air-
  Conditioning, Heating, and Refrigeration Institute (AHRI) Standard
  1200-2010, appendix D.
[dagger] ``V'' is the volume of the case, as measured in American
  National Standards Institute (ANSI)/Association of Home Appliance
  Manufacturers (AHAM) Standard HRF-1-2004.

A. Benefits and Costs to Customers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on customers of commercial refrigeration equipment, 
as measured by the average life-cycle cost (LCC) savings \3\ and the 
median payback period (PBP).\4\ The average LCC savings are positive 
for all equipment classes under the standard proposed by DOE in this 
notice. At TSL 4, the percentage of customers who experience net 
benefits or no impacts ranges from 59 to 100 percent, and customers 
experiencing a net cost range from 0 to 41 percent. Chapter 11 presents 
the LCC subgroup analysis on groups of customers that may be 
disproportionately affected by the proposed standard.
---------------------------------------------------------------------------

    \3\ Life-cycle cost (LCC) of commercial refrigeration equipment 
is the cost to customers of owning and operating the equipment over 
the entire life of the equipment. Life-cycle cost savings are the 
reductions in the life-cycle costs due to amended energy 
conservation standards when compared to the life-cycle costs of the 
equipment in the absence of amended energy conservation standards. 
Further discussion of the LCC analysis can be found in Chapter 8 of 
the TSD.
    \4\ Payback period (PBP) refers to the amount of time (in years) 
it takes customers to recover the increased installed cost of 
equipment associated with new or amended standards through savings 
in operating costs. Further discussion of the PBP can be found in 
Chapter 8 of the TSD.

   Table I.2--Impacts of Proposed Standards on Customers of Commercial
                         Refrigeration Equipment
------------------------------------------------------------------------
                                                Average LCC
               Equipment class *                   savings    Median PBP
                                                   2012$        years
------------------------------------------------------------------------
VOP.RC.M......................................    $1,493.72         3.91
VOP.RC.L......................................     1,129.51         2.22
VOP.SC.M......................................       691.27         4.39
VCT.RC.M......................................     1,108.13         2.70
VCT.RC.L......................................       797.91         1.64
VCT.SC.M......................................       641.05         2.54
VCT.SC.L......................................     1,342.84         0.96
VCT.SC.I......................................       431.88         1.97
VCS.SC.M......................................       131.80         1.75
VCS.SC.L......................................       220.83         1.15
VCS.SC.I......................................       152.69         2.42
SVO.RC.M......................................     1,008.46         4.50
SVO.SC.M......................................       491.99         4.75
SOC.RC.M......................................       494.51         4.41
HZO.RC.M **...................................         0.00           NA
HZO.RC.L **...................................         0.00           NA
HZO.SC.M......................................        28.78         6.40
HZO.SC.L **...................................         0.00           NA
HCT.SC.M......................................       253.60         3.08
HCT.SC.L......................................       368.92         1.47
HCT.SC.I......................................        42.48         4.28
HCS.SC.M......................................         8.68         4.28
HCS.SC.L......................................        80.72         2.57
PD.SC.M.......................................       310.43         2.27
SOC.SC.M......................................       739.75         2.99
------------------------------------------------------------------------
* Values have been shown only for primary equipment classes, which are
  equipment classes that have significant volume of shipments and,
  therefore, were directly analyzed. See chapter 5 of the NOPR TSD,
  Engineering Analysis, for a detailed discussion of primary and
  secondary equipment classes.
** For equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L, no efficiency
  levels above the baseline were found to be economically justifiable.
  Therefore, the proposed standards for these equipment classes are the
  same as the current standards. As a result, LCC savings for these
  equipment classes are shown as zero. The PBP values are indeterminate
  and are shown as ``NA.''

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year (2013) through the end of 
the analysis period (2046). Using a real discount rate of 10 
percent,\5\ DOE estimates that the INPV for manufacturers of commercial 
refrigeration equipment is $1,162.0 million in 2012$. Under the 
proposed standards, DOE expects the industry net present value to 
decrease by 3.95

[[Page 55893]]

percent to 7.97 percent. Total industry conversion costs are expected 
to total $87.5 million.
---------------------------------------------------------------------------

    \5\ This is the rate used to discount future cash flows in the 
Manufacturer Impact Analysis. A discount rate of 10% was calculated 
based on SEC filings and feedback from manufacturer interviews about 
the current cost of capital in the industry. For more information, 
refer to Chapter 12 of the NOPR TSD.
---------------------------------------------------------------------------

C. National Benefits

    DOE's analyses indicate that the proposed standards would save a 
significant amount of energy. The lifetime savings for commercial 
refrigeration equipment purchased in the 30-year period that begins in 
the year of the compliance with amended standards (2017-2046) amount to 
1.001 quadrillion British thermal units (quads). The average annual 
energy savings over the life of commercial refrigeration equipment 
purchased in 2017 through 2046 is 0.04 quads.\6\
---------------------------------------------------------------------------

    \6\ Total U.S. commercial sector energy (source energy) used for 
refrigeration in 2010 was 1.21 quads. Source: U.S. Department of 
Energy--Office of Energy Efficiency and Renewable Energy. Buildings 
Energy Data Book, Table 3.1.4, 2010 Commercial Energy End-Use 
Splits, by Fuel Type (Quadrillion Btu). 2012. (Last accessed April 
23, 2013.) http://buildingsdatabook.eren.doe.gov/TableView.aspx?table=3.1.4.
---------------------------------------------------------------------------

    The cumulative national net present value (NPV) of total customer 
costs and savings of the proposed standards for commercial 
refrigeration equipment in 2012$ ranges from $1.606 billion (at a 7-
percent discount rate) to $4.067 billion (at a 3-percent discount 
rate). This NPV expresses the estimated total value to customers of 
future operating cost savings minus the estimated increased installed 
costs for equipment purchased in 2017-2046, discounted to 2013.
    The proposed standards are expected to have significant 
environmental benefits. The energy savings would result in cumulative 
greenhouse gas (GHG) emission reductions of 54.88 million metric tons 
(MMt) \7\ of carbon dioxide (CO2), 265.9 thousand tons of 
methane, 1.1 thousand tons of nitrous oxide, 70.1 thousand tons of 
sulfur dioxide (SO2), 81.1 thousand tons of NOX 
and 0.1 tons of mercury (Hg).\8\ \9\
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 U.S. short tons. Results 
for NOX and Hg are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook (AEO) 2013 Reference case, which generally represents 
current legislation and environmental regulations for which 
implementing regulations were available as of December 31, 2012.
    \9\ DOE also estimated CO2 and CO2 
equivalent (CO2eq) emissions that occur through 2030 
(CO2eq includes greenhouse gases such as CH4 
and N2O). The estimated emissions reductions through 2030 
are 16 million metric tons CO2, 1,687 thousand tons 
CO2eq for CH4, and 72.27 thousand tons 
CO2eq for N2O.
---------------------------------------------------------------------------

    The value of the CO2 reductions is calculated using a 
range of values per metric ton of CO2 (otherwise known as 
the Social Cost of Carbon, or SCC) developed by a recent Federal 
interagency process. The derivation of the SCC values is discussed in 
section IV.O. DOE estimates that the net present monetary value of the 
CO2 emissions reduction would be between $0.31 and $4.55 
billion. DOE also estimates the present monetary value of the 
NOX emissions reduction would be between $8.8 and $90.7 
million at a 7-percent discount rate, and between $19.1 and $196.2 
million at a 3-percent discount rate.\10\
---------------------------------------------------------------------------

    \10\ DOE is currently investigating valuation of avoided Hg and 
SO2 emissions.
---------------------------------------------------------------------------

    Table I.3 summarizes the national economic costs and benefits 
expected to result from the proposed standards for commercial 
refrigeration equipment.

 Table I.3--Summary of National Economic Benefits and Costs of Proposed
    Commercial Refrigeration Equipment Energy Conservation Standards
------------------------------------------------------------------------
                                        Present value     Discount rate
              Category                  million 2012$       (percent)
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings..............             2,695                 7
                                                 6,034                 3
CO2 Reduction Monetized Value (at                  308                 5
 $12.9/Metric Ton) *................
CO2 Reduction Monetized Value (at                1,504                 3
 $40.8/Metric Ton) *................
CO2 Reduction Monetized Value (at                2,452               2.5
 $62.2/Metric Ton) *................
CO2 Reduction Monetized Value (at                4,552                 3
 $117.0/Metric Ton) *...............
NOX Reduction Monetized Value (at                   50                 7
 $2639/Ton) **......................
                                                   108                 3
Total Benefits [dagger].............             4,249                 7
                                                 7,646                 3
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
Incremental Installed Costs.........             1,089                 7
                                                 1,967                 3
------------------------------------------------------------------------
                              Net Benefits
------------------------------------------------------------------------
Including CO2 and NOX Reduction                  3,160                 7
 Monetized Value....................
                                                 5,679                 3
------------------------------------------------------------------------
* The interagency group selected four sets of SCC values for use in
  regulatory analyses. Three sets of values are based on the average SCC
  from the integrated assessment models, at discount rates of 2.5, 3,
  and 5 percent. The fourth set, which represents the 95th percentile
  SCC estimate across all three models at a 3-percent discount rate, is
  included to represent higher-than-expected impacts from temperature
  change further out in the tails of the SCC distribution. The values in
  parentheses represent the SCC in 2015. The SCC time series incorporate
  an escalation factor.
** The value represents the average of the low and high NOX values used
  in DOE's analysis.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the CO2 reduction monetized value series corresponding to average SCC
  with 3-percent discount rate.

    The benefits and costs of today's proposed standards, for 
commercial refrigeration equipment sold in 2017-2046, can also be 
expressed in terms of annualized values. The annualized monetary values 
are the sum of (1) the annualized national economic value of the 
benefits from the customer operation of equipment that meets the 
proposed standards (consisting primarily of operating cost savings from 
using less energy, minus increases in equipment

[[Page 55894]]

installed cost, which is another way of representing customer NPV); and 
(2) the annualized monetary value of the benefits of emission 
reductions, including CO2 emission reductions.\11\
---------------------------------------------------------------------------

    \11\ DOE used a two-step calculation process to convert the 
time-series of costs and benefits into annualized values. First, DOE 
calculated a present value in 2013, the year used for discounting 
the NPV of total consumer costs and savings, for the time-series of 
costs and benefits using discount rates of 3 and 7 percent for all 
costs and benefits except for the value of CO2 
reductions. For the latter, DOE used a range of discount rates, as 
shown in Table I.4. From the present value, DOE then calculated the 
fixed annual payment over a 30-year period (2017 through 2046) that 
yields the same present value. The fixed annual payment is the 
annualized value. Although DOE calculated annualized values, this 
does not imply that the time-series of cost and benefits from which 
the annualized values were determined is a steady stream of 
payments.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 emission reductions provides a useful perspective, two 
issues should be considered. First, the national operating savings are 
domestic U.S. customer monetary savings that occur as a result of 
market transactions, while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO2 savings are performed with different methods 
that use different time frames for analysis. The national operating 
cost savings is measured over the lifetimes of commercial refrigeration 
equipment shipped in 2017-2046. The SCC values, on the other hand, 
reflect the present value of some future climate-related impacts 
resulting from the emission of 1 ton of CO2 in each year. 
These impacts continue well beyond 2100.
    Table I.4 shows the annualized benefits and costs of the proposed 
standards. The results of the primary estimate are as follows. Table 
I.4 shows the primary, low net benefits, and high net benefits 
scenarios. The primary estimate is the estimate in which the operating 
cost savings were calculated using the Annual Energy Outlook 2013 
(AEO2013) Reference Case forecast of future electricity prices. The 
other two estimates, low net benefits estimate and high net benefits 
estimate, are based on the low and high electricity price scenarios 
from the AEO2013 forecast. At a 7-percent discount rate for benefits 
and costs, the cost in the primary estimate of the standards proposed 
in today's notice is $82 million per year in increased equipment costs. 
The annualized benefits are $203 million per year in reduced equipment 
operating costs, $75 million in CO2 reductions (note that 
DOE used a 3-percent discount rate, along with the corresponding SCC 
series that uses a 3-percent discount rate, to calculate the monetized 
value of CO2 emissions reductions), and $3.75 million in 
reduced NOX emissions. In this case, the annualized net 
benefit amounts to $199 million. At a 3-percent discount rate for all 
benefits and costs, the cost in the primary estimate of the amended 
standards proposed in today's notice is $97 million per year in 
increased equipment costs. The benefits are $299 million per year in 
reduced operating costs, $75 million in CO2 reductions, and 
$5.33 million in reduced NOX emissions. In this case, the 
net benefit amounts to $281 million per year.
    DOE also calculated the low net benefits and high net benefits 
estimates by calculating the operating cost savings and incremental 
installed costs at the AEO2013 low economic growth case and high 
economic growth case scenarios, respectively. These scenarios do not 
change the monetized emissions reductions values. The net benefits and 
costs for low and high net benefits estimates were calculated in the 
same manner as the primary estimate by using the corresponding values 
of operating cost savings and incremental installed costs.

      Table I.4--Annualized Benefits and Costs of Proposed Standards for Commercial Refrigeration Equipment
----------------------------------------------------------------------------------------------------------------
                                                                                                    High net
                                            Discount rate        Primary      Low net benefits      benefits
                                              (percent)        estimate *        estimate *        estimate *
                                                              million 2012$     million 2012$     million 2012$
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings..................                 7               203               197               212
                                                         3               299               288               314
CO2 Reduction Monetized Value (at $12.9/                 5                19                19                19
 Metric Ton) **.........................
CO2 Reduction Monetized Value (at $40.8/                 3                75                75                75
 Metric Ton) **.........................
CO2 Reduction Monetized Value (at $62.2/               2.5               114               114               114
 Metric Ton) **.........................
CO2 Reduction Monetized Value (at $117.0/                3               225               225               225
 Metric Ton) **.........................
NOX Reduction Monetized Value (at $2,639/                7              3.75              3.75              3.75
 Ton) **................................
                                                         3              5.33              5.33              5.33
                                         -----------------------------------------------------------------------
Total Benefits (Operating Cost Savings,                  7               281               275               290
 CO2 Reduction and NOX Reduction)
 [dagger]...............................
                                                         3               379               368               394
----------------------------------------------------------------------------------------------------------------
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Total Incremental Installed Costs.......                 7                82                84                80
                                                         3                97               100                95
----------------------------------------------------------------------------------------------------------------
                                             Net Benefits Less Costs
----------------------------------------------------------------------------------------------------------------
Total Benefits Less Incremental Costs...                 7               199               191               210
                                                         3               281               268               299
----------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with equipment shipped in 2017-2046. These
  results include benefits to consumers which accrue after 2046 from the products purchased in 2017-2046. The
  primary, low, and high estimates utilize forecasts of energy prices from the AEO2013 Reference Case, Low
  Economic Growth Case, and High Economic Growth Case, respectively. In addition, incremental equipment costs
  reflect a medium decline rate for projected product price trends in the Primary Estimate, a low decline rate
  for projected equipment price trends in the Low Benefits Estimate, and a high decline rate for projected
  equipment price trends in the High Benefits Estimate. The methods used to derive projected price trends are
  explained in Appendix 10B.

[[Page 55895]]

 
** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values
  are based on the average SCC from the three integrated assessment models, at discount rates of 2.5, 3, and 5
  percent. The fourth set, which represents the 95th percentile SCC estimate across all three models at a 3-
  percent discount rate, is included to represent higher-than-expected impacts from temperature change further
  out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time
  series incorporate an escalation factor. The value for NOX is the average of the low and high values used in
  DOE's analysis.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
  average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
  the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
  to the full range of CO2 values.

    DOE has tentatively concluded that the proposed standards meet the 
requirements found in EPCA by representing maximum improvement in 
energy efficiency that is technologically feasible and economically 
justified, and would result in significant conservation of energy. (42 
U.S.C. 6295 (o), 6316(e)) DOE further notes that technologies used to 
achieve these standard levels are already commercially available for 
the equipment classes covered by today's proposal. Based on the 
analyses described above, DOE has tentatively concluded that the 
benefits of the proposed standards to the Nation (energy savings, 
positive NPV of customer benefits, customer LCC savings, and emission 
reductions) would outweigh the burdens (loss of INPV for manufacturers 
and LCC increases for some customers).
    DOE also considered more-stringent and less-stringent energy use 
levels as trial standard levels (TSLs), and is still considering them 
in this rulemaking. However, DOE has tentatively concluded that the 
potential burdens of the more-stringent energy use levels would 
outweigh the projected benefits. Based on consideration of the public 
comments DOE receives in response to this notice and related 
information collected and analyzed during the course of this rulemaking 
effort, DOE may adopt energy use levels presented in this notice that 
are either higher or lower than the proposed standards, or some 
combination of level(s) that incorporate the proposed standards in 
part.

II. Introduction

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

A. Authority

    Title III, Part C of EPCA, Public Law 94-163 (42 U.S.C. 6311-6317, 
as codified), added by Public Law 95-619, Title IV, section 441(a), 
established the Energy Conservation Program for Certain Industrial 
Equipment, a program covering certain industrial equipment, which 
includes the commercial refrigeration equipment that is the focus of 
this notice.12 13 EPCA prescribes energy conservation 
standards for commercial refrigeration equipment (42 U.S.C. 6313(c)(2)-
(4)), and directs DOE to conduct rulemakings to establish new and 
amended standards for commercial refrigeration equipment. (42 U.S.C. 
6313(c)(4)-(6)) (DOE notes that under 42 U.S.C. 6295(m) and 6316(e)(1) 
the agency must periodically review its already established energy 
conservation standards for covered equipment. Under this requirement, 
the next review that DOE would need to conduct must occur no later than 
6 years from the issuance of a final rule establishing or amending a 
standard for covered equipment.)
---------------------------------------------------------------------------

    \12\ For editorial reasons, upon codification in the U.S. Code, 
Part C was re-designated Part A-1.
    \13\ All references to EPCA in this document refer to the 
statute as amended through the American Energy Manufacturing 
Technical Corrections Act (AEMTCA), Public Law 112-210 (Dec. 18, 
2012).
---------------------------------------------------------------------------

    Pursuant to EPCA, DOE's energy conservation program for covered 
equipment generally consists of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. For commercial refrigeration 
equipment, DOE is responsible for the entirety of this program. Subject 
to certain criteria and conditions, DOE is required to develop test 
procedures to measure the energy efficiency, energy use, or estimated 
annual operating cost of each type or class of covered equipment. (42 
U.S.C. 6314) Manufacturers of covered equipment must use the prescribed 
DOE test procedure as the basis for certifying to DOE that their 
equipment complies with the applicable energy conservation standards 
adopted under EPCA and when making representations to the public 
regarding the energy use or efficiency of that equipment. (42 U.S.C. 
6315(b), 6295(s), and 6316(e)(1)) Similarly, DOE must use these test 
procedures to determine whether that equipment complies with standards 
adopted pursuant to EPCA. The DOE test procedure for commercial 
refrigeration equipment currently appears at title 10 of the Code of 
Federal Regulations (CFR) part 431, subpart C.
    DOE must follow specific statutory criteria for prescribing amended 
standards for covered equipment. As indicated above, any amended 
standard for covered equipment must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and 
economically justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) 
Furthermore, DOE may not adopt any standard that would not result in 
the significant conservation of energy. (42 U.S.C. 6295(o)(3) and 
6316(e)(1)) DOE also may not prescribe a standard: (1) For certain 
equipment, including commercial refrigeration equipment, if no test 
procedure has been established for the product; or (2) if DOE 
determines by rule that the proposed standard is not technologically 
feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B) and 
6316(e)(1)) In deciding whether a proposed standard is economically 
justified, DOE must determine whether the benefits of the standard 
exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1)) DOE 
must make this determination after receiving comments on the proposed 
standard, and by considering, to the greatest extent practicable, the 
following seven factors:
    1. The economic impact of the standard on manufacturers and 
consumers of the equipment subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the covered equipment in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered equipment that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
equipment likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the U.S. Attorney General (Attorney General), that is likely 
to result from the imposition of the standard;
    6. The need for national energy and water conservation; and
    7. Other factors the Secretary considers relevant.

(42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII) and 6316(e)(1))

[[Page 55896]]

    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of covered 
equipment. (42 U.S.C. 6295(o)(1) and 6316(e)(1)) Also, the Secretary 
may not prescribe an amended or new standard if interested persons have 
established by a preponderance of the evidence that the standard is 
likely to result in the unavailability in the United States of any 
covered product type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States. (42 U.S.C. 6295(o)(4) and 6316(e)(1))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (See 42 U.S.C. 6295(o)(2)(B)(iii) and 
6316(e)(1)) Section III.D.2 presents additional discussion about the 
rebuttable presumption payback period.
    Additionally, 42 U.S.C. 6295(q)(1) and 6316(e)(1) specify 
requirements when promulgating a standard for a type or class of 
covered equipment that has two or more subcategories that may justify 
different standard levels. DOE must specify a different standard level 
than that which applies generally to such type or class of equipment 
for any group of covered products that has the same function or 
intended use if DOE determines that products within such group (A) 
consume a different kind of energy from that consumed by other covered 
equipment within such type (or class); or (B) have a capacity or other 
performance-related feature that other equipment within such type (or 
class) do not have and such feature justifies a higher or lower 
standard. (42 U.S.C. 6295(q)(1) and 6316(e)(1)) In determining whether 
a performance-related feature justifies a different standard for a 
group of equipment, DOE must consider such factors as the utility to 
the consumer of the feature and other factors DOE deems appropriate. 
Id. Any rule prescribing such a standard must include an explanation of 
the basis on which such higher or lower level was established. (42 
U.S.C. 6295(q)(2) and 6316(e)(1))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c) and 6316(e))

B. Background

1. Current Standards
    The current energy conservation standards for commercial 
refrigeration equipment were established by two different legislative 
actions and one DOE final rule. EPCA, as amended by the Energy Policy 
Act of 2005 (EPACT 2005), established standards for self-contained 
commercial refrigerators and freezer with solid or transparent doors, 
self-contained commercial refrigerator-freezers with solid doors, and 
self-contained commercial refrigerators designed for pull-down 
applications. (42 U.S.C. 6313(c)(2)-(3)) On January 9, 2009, DOE 
published a final rule (January 2009 final rule) prescribing standards 
for commercial refrigeration equipment. 74 FR 1092. Specifically, this 
final rule completed the first standards rulemaking for commercial 
refrigeration equipment by establishing standards for equipment types 
specified in 42 U.S.C. 6313(c)(5), and for which EPCA did not prescribe 
standards in 42 U.S.C. 6313(c)(2)-(3). These types consisted of 
commercial ice-cream freezers; self-contained commercial refrigerators, 
commercial freezers, and commercial refrigerator-freezers without 
doors; and remote condensing commercial refrigerators, commercial 
freezers, and commercial refrigerator-freezers. More recently, the 
American Energy Manufacturing Technical Corrections Act (AEMTCA), 
Public Law 112-210 (Dec. 18, 2012), amended section 342(c) of EPCA to 
establish a new standard for self-contained service over counter medium 
temperature commercial refrigerators (this class is known as SOC.SC.M 
per DOE's equipment class nomenclature). (42 U.S.C. 6313(c)(4)) As a 
result, DOE's current energy conservation standards for commercial 
refrigeration equipment include the following: standards established by 
EPCA for commercial refrigeration equipment manufactured on or after 
January 1, 2010; standards established in the January 2009 final rule 
for commercial refrigeration equipment manufactured on or after January 
1, 2012; and standards established by AEMTCA for SOC.SC.M equipment 
manufactured on or after January 1, 2012.
    Table II.1 and Table II.2 present DOE's current energy conservation 
standards for commercial refrigeration equipment set by EPCA and the 
January 2009 final rule, respectively. The AEMTCA standard for SOC.SC.M 
equipment manufactured on or after January 1, 2012 is prescribed as 0.6 
x TDA + 1.0. (42 U.S.C. 6313(c)(4)).

  Table II.1--Commercial Refrigeration Equipment Standards Prescribed by EPCA--Compliance Required Beginning on
                                                 January 1, 2010
----------------------------------------------------------------------------------------------------------------
                  Category                                Maximum daily energy consumption kWh/day *
----------------------------------------------------------------------------------------------------------------
Refrigerators with solid doors.............  0.10 V ** + 2.04.
Refrigerators with transparent doors.......  0.12 V + 3.34.
Freezers with solid doors..................  0.40 V + 1.38.
Freezers with transparent doors............  0.75 V + 4.10.
Refrigerators/freezers with solid doors....  the greater of 0.27 AV [dagger] -0.71 or 0.70.
Self-contained refrigerators with            0.126V + 3.51.
 transparent doors designed for pull-down
 temperature applications.
----------------------------------------------------------------------------------------------------------------
* kilowatt-hours per day.
** Where ``V'' means the chilled or frozen compartment volume in cubic feet as defined in the Association of
  Home Appliance Manufacturers Standard HRF-1-1979. 10 CFR 431.66.
[dagger] Where ``AV'' means that adjusted volume in cubic feet measured in accordance with the Association of
  Home Appliance Manufacturers Standard HRF-1-1979. 10 CFR 431.66

[[Page 55897]]

 Table II.2--Commercial Refrigeration Equipment Standards Established in
the January 2009 Final Rule--Compliance Required Beginning on January 1,
                                  2012
------------------------------------------------------------------------
                                             Standard level ** [dagger]
             Equipment class *                         kWh/day
------------------------------------------------------------------------
VOP.RC.M..................................  0.82 x TDA + 4.07
SVO.RC.M..................................  0.83 x TDA + 3.18
HZO.RC.M..................................  0.35 x TDA + 2.88
VOP.RC.L..................................  2.27 x TDA + 6.85
HZO.RC.L..................................  0.57 x TDA + 6.88
VCT.RC.M..................................  0.22 x TDA + 1.95
VCT.RC.L..................................  0.56 x TDA + 2.61
SOC.RC.M..................................  0.51 x TDA + 0.11
VOP.SC.M..................................  1.74 x TDA + 4.71
SVO.SC.M..................................  1.73 x TDA + 4.59
HZO.SC.M..................................  0.77 x TDA + 5.55
HZO.SC.L..................................  1.92 x TDA + 7.08
VCT.SC.I..................................  0.67 x TDA + 3.29
VCS.SC.I..................................  0.38 x V + 0.88
HCT.SC.I..................................  0.56 x TDA + 0.43
SVO.RC.L..................................  2.27 x TDA + 6.85
VOP.RC.I..................................  2.89 x TDA + 8.7
SVO.RC.I..................................  2.89 x TDA + 8.7
HZO.RC.I..................................  0.72 x TDA + 8.74
VCT.RC.I..................................  0.66 x TDA + 3.05
HCT.RC.M..................................  0.16 x TDA + 0.13
HCT.RC.L..................................  0.34 x TDA + 0.26
HCT.RC.I..................................  0.4 x TDA + 0.31
VCS.RC.M..................................  0.11 x V + 0.26
VCS.RC.L..................................  0.23 x V + 0.54
VCS.RC.I..................................  0.27 x V + 0.63
HCS.RC.M..................................  0.11 x V + 0.26
HCS.RC.L..................................  0.23 x V + 0.54
HCS.RC.I..................................  0.27 x V + 0.63
SOC.RC.L..................................  1.08 x TDA + 0.22
SOC.RC.I..................................  1.26 x TDA + 0.26
VOP.SC.L..................................  4.37 x TDA + 11.82
VOP.SC.I..................................  5.55 x TDA + 15.02
SVO.SC.L..................................  4.34 x TDA + 11.51
SVO.SC.I..................................  5.52 x TDA + 14.63
HZO.SC.I..................................  2.44 x TDA + 9.
SOC.SC.I..................................  1.76 x TDA + 0.36
HCS.SC.I..................................  0.38 x V + 0.88
------------------------------------------------------------------------
* Equipment class designations consist of a combination (in sequential
  order separated by periods) of: (1) an equipment family code (VOP =
  vertical open, SVO = semivertical open, HZO = horizontal open, VCT =
  vertical transparent doors, VCS = vertical solid doors, HCT =
  horizontal transparent doors, HCS = horizontal solid doors, or SOC =
  service over counter); (2) an operating mode code (RC = remote
  condensing or SC = self-contained); and (3) a rating temperature code
  (M = medium temperature (38 [deg]F), L = low temperature (0 [deg]F),
  or I = ice-cream temperature (-15 [deg]F)). For example, ``VOP.RC.M''
  refers to the ``vertical open, remote condensing, medium temperature''
  equipment class.
** TDA is the total display area of the case, as measured in ANSI/Air-
  Conditioning and Refrigeration Institute (ARI) Standard 1200-2006,
  appendix D.
[dagger] V is the volume of the case, as measured in AHAM Standard HRF-1-
  2004.

2. History of Standards Rulemaking for Commercial Refrigeration 
Equipment
    EPCA, as amended by EPACT 2005, prescribes energy conservation 
standards for certain self-contained commercial refrigeration equipment 
designed for holding temperatures \14\ (i.e., commercial refrigerators, 
freezers, and refrigerator-freezers with transparent and solid doors 
designed for holding temperature applications) and self-contained 
commercial refrigerators with transparent doors designed for pull-down 
temperature applications.\15\ Compliance with these standards was 
required as of January 1, 2010. (42 U.S.C. 6313(c)(2)-(3)) DOE 
published a technical amendment final rule on October 18, 2005 
codifying these standards into subpart C of part 431 under title 10 of 
the Code of Federal Regulations (CFR). 70 FR 60407.
---------------------------------------------------------------------------

    \14\ EPCA defines the term ``holding temperature application'' 
as a use of commercial refrigeration equipment other than a pull-
down temperature application, except a blast chiller or freezer. (42 
U.S.C. 6311(9)(B))
    \15\ EPCA defines the term ``pull-down temperature application'' 
as a commercial refrigerator with doors that, when fully loaded with 
12 ounce beverage cans at 90 [deg]F, can cool those beverages to an 
average stable temperature of 38 [deg]F in 12 hours or less. (42 
U.S.C. 6311(9)(D))
---------------------------------------------------------------------------

    In addition, EPCA requires DOE to set standards for additional 
commercial refrigeration equipment that is not covered by 42 U.S.C. 
6313(c)(2)-(3), namely commercial ice-cream freezers; self-contained 
commercial refrigerators, freezers, and refrigerator-freezers without 
doors; and remote condensing commercial refrigerators, freezers, and 
refrigerator-freezers. (42 U.S.C. 6313(c)(5)) DOE published a final 
rule establishing these standards on January 9, 2009 (74 FR 1092), and 
manufacturers must comply with these standards starting on January 1, 
2012. (42 U.S.C. 6313(c)(5)(A))
    EPCA requires DOE to conduct a subsequent rulemaking to determine 
whether to amend the standards established under 42 U.S.C. 6313(c), 
which includes both the standards prescribed by EPACT 2005 and those 
prescribed by DOE in the January 2009 final rule. (42 U.S.C. 
6313(c)(6)) If DOE decides as part of this ongoing rulemaking to amend 
the current standards, DOE must publish a final rule establishing any 
such amended standards by January 1, 2013. Id.
    To satisfy this requirement, DOE initiated the current rulemaking 
on April 30, 2010 by publishing on its Web site its ``Rulemaking 
Framework for Commercial Refrigeration Equipment.'' (The Framework 
document is available at: www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/cre_framework_04-30-10.pdf.) DOE also 
published a notice in the Federal Register announcing the availability 
of the Framework document, as well as a public meeting to discuss the 
document. The notice also solicited comment on the matters raised in 
the document. 75 FR 24824 (May 6, 2010). The Framework document 
described the procedural and analytical approaches that DOE anticipated 
using to evaluate energy conservation standards for commercial 
refrigeration equipment, and identified various issues to be resolved 
in the rulemaking.
    DOE held the Framework public meeting on May 18, 2010, at which it: 
(1) Presented the contents of the Framework document; (2) described the 
analyses it planned to conduct during the rulemaking; (3) sought 
comments from interested parties on these subjects; and (4) in general, 
sought to inform interested parties about, and facilitate their 
involvement in, the rulemaking. Major issues discussed at the public 
meeting included: (1) the scope of coverage for the rulemaking; (2) 
potential updates to the test procedure and appropriate test metrics 
(being addressed in a concurrent rulemaking); (3) manufacturer and 
market information, including distribution channels; (4) equipment 
classes, baseline units,\16\ and design options to improve efficiency; 
(5) life-cycle costs to customer, including installation, maintenance, 
and repair costs; and (6) any customer subgroups DOE should consider. 
At the meeting and during the comment period on the Framework document, 
DOE received many comments that helped it identify and resolve issues 
pertaining to commercial refrigeration equipment relevant to this 
rulemaking. These are discussed in subsequent sections of this notice.
---------------------------------------------------------------------------

    \16\ Baseline units consist of units possessing features and 
levels of efficiency consistent with the least-efficient equipment 
currently available and widely sold on the market.
---------------------------------------------------------------------------

    DOE then gathered additional information and performed preliminary 
analyses to help review energy conservation standards for this 
equipment. This process culminated in DOE's notice of another public 
meeting to discuss and receive comments regarding the tools and methods 
DOE used in performing its preliminary analysis, as well as the 
analyses results. 76 FR 17573 (March 30, 2011) (the March 2011 notice). 
DOE also invited written comments on these subjects and announced the 
availability on its Web site of a preliminary analysis technical 
support document (preliminary analysis TSD). Id. (The preliminary 
analysis TSD is available at: www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0003-0030.) Finally, DOE sought 
comments concerning other relevant issues that could affect amended 
energy

[[Page 55898]]

conservation standards for commercial refrigeration equipment, or that 
DOE should address in this NOPR. 76 FR 17575 (March 30, 2011).
    The preliminary analysis TSD provided an overview of DOE's review 
of the standards for commercial refrigeration equipment, discussed the 
comments DOE received in response to the Framework document, and 
addressed issues including the scope of coverage of the rulemaking. The 
document also described the analytical framework that DOE used (and 
continues to use) in considering amended standards for commercial 
refrigeration equipment, including a description of the methodology, 
the analytical tools, and the relationships between the various 
analyses that are part of this rulemaking. Additionally, the 
preliminary analysis TSD presented in detail each analysis that DOE had 
performed for this equipment up to that point, including descriptions 
of inputs, sources, methodologies, and results. These analyses were as 
follows:
     A market and technology assessment addressed the scope of 
this rulemaking, identified existing and potential new equipment 
classes for commercial refrigeration equipment, characterized the 
markets for this equipment, and reviewed techniques and approaches for 
improving its efficiency;
     A screening analysis reviewed technology options to 
improve the efficiency of commercial refrigeration equipment, and 
weighed these options against DOE's four prescribed screening criteria;
     An engineering analysis estimated the manufacturer selling 
prices (MSPs) associated with more energy efficient commercial 
refrigeration equipment;
     An energy use analysis estimated the annual energy use of 
commercial refrigeration equipment;
     A markups analysis converted estimated MSPs derived from 
the engineering analysis to customer purchase prices;
     A life-cycle cost analysis calculated, for individual 
customers, the discounted savings in operating costs throughout the 
estimated average life of commercial refrigeration equipment, compared 
to any increase in installed costs likely to result directly from the 
imposition of a given standard;
     A payback period analysis estimated the amount of time it 
would take customers to recover the higher purchase price of more 
energy efficient equipment through lower operating costs;
     A shipments analysis estimated shipments of commercial 
refrigeration equipment over the time period examined in the analysis;
     A national impact analysis (NIA) assessed the national 
energy savings (NES), and the national NPV of total customer costs and 
savings, expected to result from specific, potential energy 
conservation standards for commercial refrigeration equipment; and
     A preliminary manufacturer impact analysis (MIA) took the 
initial steps in evaluating the potential effects on manufacturers of 
amended efficiency standards.
    The public meeting announced in the March 2011 notice took place on 
April 19, 2011 (April 2011 preliminary analysis public meeting). At the 
April 2011 preliminary analysis public meeting, DOE presented the 
methodologies and results of the analyses set forth in the preliminary 
analysis TSD. Interested parties provided comments on the following 
issues: (1) Equipment classes; (2) technology options; (3) energy 
modeling; (4) installation, maintenance, and repair costs; (5) markups 
and distributions chains; (6) commercial refrigeration equipment 
shipments; and (7) test procedures. The comments received since 
publication of the March 2011 notice, including those received at the 
April 2011 preliminary analysis public meeting, have contributed to 
DOE's proposed resolution of the issues in this rulemaking as they 
pertain to commercial refrigeration equipment. This NOPR responds to 
the issues raised by the commenters.
    In December 2012, AEMTCA established new standards for SOC.SC.M 
equipment with a compliance date of January 1, 2012. (42 U.S.C. 
6313(c)(4)) The SOC.SC.M equipment had previously been classified under 
the category self-contained commercial refrigerators with transparent 
doors for which standards were established by EPACT 2005. (42 U.S.C. 
6313(c)(2)) The standard established by AEMTCA for SOC.SC.M equipment 
reduces the stringency of the standard applicable to this equipment.
    AEMTCA also directs DOE to determine, within three years of 
enactment of the new SOC.SC.M standard, whether this standard should be 
amended. (42 U.S.C. 6313(c)(4)(B)(i)) If DOE determines that the 
standard should be amended, then DOE must issue a final rule 
establishing an amended standard within this same three-year period. 
(42 U.S.C. 6313(c)(4)(B)(ii))

III. General Discussion

A. Test Procedures and Normalization Metrics

1. Test Procedures
    On December 8, 2006, DOE published a final rule in which it adopted 
American National Standards Institute (ANSI)/Air-Conditioning and 
Refrigeration Institute (ARI) Standard 1200-2006, ``Performance Rating 
of Commercial Refrigerated Display Merchandisers and Storage 
Cabinets,'' as the DOE test procedure for this equipment. 71 FR 71340, 
71369-70. ANSI/ARI Standard 1200-2006 requires performance tests to be 
conducted according to the American Society of Heating, Refrigerating, 
and Air-Conditioning Engineers (ASHRAE) Standard 72-2005, ``Method of 
Testing Commercial Refrigerators and Freezers.'' The standard also 
contains rating temperature specifications of 38 [deg]F (2 
[deg]F) for commercial refrigerators and refrigerator compartments, 0 
[deg]F (2 [deg]F) for commercial freezers and freezer 
compartments, and -5 [deg]F (2 [deg]F) for commercial ice-
cream freezers. During the 2006 test procedure rulemaking, DOE 
determined that testing at a -15 [deg]F (2 [deg]F) rating 
temperature was more representative of the actual energy consumption of 
commercial freezers specifically designed for ice-cream application. 71 
FR 71357 (Dec. 8, 2006). Therefore, in the test procedure final rule, 
DOE adopted a -15 [deg]F (2 [deg]F) rating temperature for 
commercial ice-cream freezers, rather than the -5 [deg]F (2 
[deg]F) prescribed in the ANSI/ARI Standard 1200-2006. In addition, DOE 
adopted ANSI/Association of Home Appliance Manufacturers (AHAM) 
Standard HRF-1-2004, ``Energy, Performance, and Capacity of Household 
Refrigerators, Refrigerator-Freezers, and Freezers,'' for determining 
compartment volumes for this equipment. 71 FR 71369-70 (Dec. 8, 2006).
    On February 21, 2012, DOE published a test procedure final rule 
(2012 test procedure final rule) in which it adopted several amendments 
to the DOE test procedure. This included an amendment to incorporate by 
reference ANSI/Air-Conditioning, Heating, and Refrigeration Institute 
(AHRI) Standard 1200-2010, ``Performance Rating of Commercial 
Refrigerated Display Merchandisers and Storage Cabinets,'' as the DOE 
test procedure for this equipment. 77 FR 10292, 10314 (Feb. 21, 2012). 
The 2012 test procedure final rule also included an amendment to 
incorporate by reference the updated ANSI/AHAM Standard HRF-1-2008,

[[Page 55899]]

``Energy, Performance, and Capacity of Household Refrigerators, 
Refrigerator-Freezers, and Freezers,'' for determining compartment 
volumes for this equipment.
    In addition, the 2012 test procedure final rule included several 
amendments designed to address certain energy efficiency features that 
were not accounted for by the previous DOE test procedure, including 
provisions for measuring the impact of night curtains \17\ and lighting 
occupancy sensors and scheduled controls. 77 FR 10296-98 (Feb. 21, 
2012). In the 2012 test procedure final rule, DOE also adopted 
amendments to allow testing of commercial refrigeration equipment at 
temperatures other than one of the three rating temperatures previously 
specified in the test procedure. Specifically, the 2012 test procedure 
final rule allows testing of commercial refrigeration equipment at its 
lowest application product temperature, for equipment that cannot be 
tested at the prescribed rating temperature. The 2012 test procedure 
final rule also allows manufacturers to test and certify equipment at 
the more-stringent temperatures and ambient conditions required by NSF 
for food safety testing. 77 FR 10305 (Feb. 21, 2012). (The NSF was 
founded in 1944 as the National Sanitation Foundation, and is now 
referred to simply as NSF.)
---------------------------------------------------------------------------

    \17\ Night curtains are devices made of an insulating material, 
typically insulated aluminum fabric, designed to be pulled down over 
the open front of the case to decrease infiltration and heat 
transfer into the case when the merchandizing establishment is 
closed.
---------------------------------------------------------------------------

    The test procedure amendments established in the 2012 test 
procedure final rule are required to be used in conjunction with any 
amended standards promulgated as a result of this energy conservation 
standard rulemaking. As such, use of the amended test procedure to show 
compliance with DOE energy conservation standards or make 
representations with respect to energy consumption of commercial 
refrigeration equipment is required on the compliance date of any 
revised energy conservation standards established as part of this 
rulemaking. 77 FR 10308 (Feb. 21, 2012).
    DOE has initiated a test procedure rulemaking for commercial 
refrigeration equipment to address many issues raised by stakeholders 
since the publication of the 2012 test procedure final rule. This 
rulemaking will address the following issues:
     A number of new definitions related to commercial 
refrigeration equipment,
     A description of the proper configuration and use of 
energy management systems,
     Clarifications on the use of calculation methods, 
appropriate reporting requirements, and determination of the lowest 
application product temperature,
     Incorporation of Interpretations 1 through 5 to AHRI 1200-
2010, and
     Updates and clarifications regarding the compliance dates 
of test procedure amendments adopted in the 2012 test procedure final 
rule by reorganizing the test procedure in two different appendices.
    The issues that will be addressed in the test procedure rulemaking 
are consistent with the analysis in this NOPR.
2. Normalization Metrics
    Both the January 2009 final rule and EPACT 2005 contain energy 
conservation standards for respective covered types of commercial 
refrigeration equipment, expressed in the form of equations developed 
as a function of unit size. This use of normalization metrics allows 
for a single standard-level equation developed for an equipment class 
to apply to a broad range of equipment sizes offered within that class 
by manufacturers. In the aforementioned commercial refrigeration 
equipment standards, the two normalization metrics used are 
refrigerated compartment volume, as determined using AHAM HRF-1-2004, 
and TDA, as determined using ANSI/ARI 1200-2006. In particular, the 
EPACT 2005 standards utilize volume as the normalization metric for all 
equipment types, with the exception of refrigerator-freezers with solid 
doors, for which it specifies adjusted volume. (42 U.S.C. 6313(c)(2)) 
The January 2009 final rule, meanwhile, utilized TDA as the 
normalization metric for all equipment with display capacity while 
specifying volume as the metric for solid-door (VCS and HCS) equipment. 
74 FR 1093 (Jan. 9, 2009).
    At the May 2010 Framework public meeting, interested parties raised 
several questions regarding the potential normalization metrics that 
could be used in amended standards. DOE also received stakeholder 
feedback pertaining to this issue following the publication of the 
Framework document. In the preliminary analysis, DOE suggested that it 
would consider retaining the normalization metrics in this rulemaking 
for the respective classes to which they were applied in EPCA (42 
U.S.C. 6313(c)(2)-(3)) and the January 2009 final rule. 74 FR 1093 
(Jan. 9, 2009). In chapter 2 of the preliminary analysis TSD, DOE 
presented its rationale for the continued use of TDA for equipment with 
display areas addressed in the January 2009 final rule and the 
continued use of volume as the metric for solid-door remote condensing 
equipment and ice-cream freezers, as well as for the equipment covered 
by EPACT 2005 standards. DOE did not receive any information or data 
while conducting the NOPR analyses that would alter this position, and 
thus DOE proposes continued use of the existing normalization metrics 
in today's notice.

B. Technological Feasibility

1. General
    In each standards rulemaking, DOE conducts a screening analysis, 
which is based on information that the Department has gathered on all 
current technology options and prototype designs that could improve the 
efficiency of the products or equipment that are the subject of the 
rulemaking. As the first step in such analysis, DOE develops a list of 
design options for consideration, in consultation with manufacturers, 
design engineers, and other interested parties. DOE then determines 
which of these options for improving efficiency are technologically 
feasible. DOE considers a design option to be technologically feasible 
if it is used by the relevant industry or if a working prototype has 
been developed. Technologies incorporated in commercially available 
equipment or in working prototypes will be considered technologically 
feasible. 10 CFR 430, subpart C, appendix A, section 4(a)(4)(i) 
Although DOE considers technologies that are proprietary, it will not 
consider efficiency levels that can only be reached through the use of 
proprietary technologies (i.e., a unique pathway), which could allow a 
single manufacturer to monopolize the market.
    Once DOE has determined that particular design options are 
technologically feasible, it further evaluates each of these design 
options in light of the following additional screening criteria: (1) 
Practicability to manufacture, install, or service; (2) adverse impacts 
on product utility or availability; and (3) adverse impacts on health 
or safety. 10 CFR part 430, subpart C, appendix A, section 4(a)(4)(ii)-
(iv) Chapter 4 of the NOPR TSD discusses the results of the screening 
analyses for commercial refrigeration equipment. Specifically, it 
presents the designs DOE considered, those it screened out, and those 
that are the bases for the TSLs considered in this rulemaking.

[[Page 55900]]

2. Maximum Technologically Feasible Levels
    When DOE proposes to adopt (or not adopt) an amended or new energy 
conservation standard for a type or class of covered equipment such as 
commercial refrigeration equipment, it determines the maximum 
improvement in energy efficiency that is technologically feasible for 
such equipment. (See 42 U.S.C. 6295(p)(1) and 6316(e)(1)) Accordingly, 
in the preliminary analysis, DOE determined the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for 
commercial refrigeration equipment in the engineering analysis using 
the design parameters that passed the screening analysis.
    As indicated previously, whether efficiency levels exist or can be 
achieved in commonly used equipment is not relevant to whether they are 
considered max-tech levels. DOE considers technologies to be 
technologically feasible if they are incorporated in any currently 
available equipment or working prototypes. Hence, a max-tech level 
results from the combination of design options predicted to result in 
the highest efficiency level possible for an equipment class, with such 
design options consisting of technologies already incorporated in 
commercial equipment or working prototypes. DOE notes that it 
reevaluated the efficiency levels, including the max-tech levels, when 
it updated its results for this NOPR. See chapter 5 of the NOPR TSD for 
the results of the analyses, and a list of technologies included in 
max-tech equipment. Table III.1 shows the max-tech levels determined in 
the engineering analysis for commercial refrigeration equipment.

 Table III.1--``Max-Tech'' Levels for Commercial Refrigeration Equipment
                             Primary Classes
------------------------------------------------------------------------
              Equipment class                ``Max-Tech'' level kWh/day
------------------------------------------------------------------------
VCT.RC.L..................................  0.41 x TDA + 1.93
VOP.RC.M..................................  0.6 x TDA + 2.99
SVO.RC.M..................................  0.62 x TDA + 2.38
HZO.RC.L..................................  0.55 x TDA + 6.7
HZO.RC.M..................................  0.34 x TDA + 2.83
VCT.RC.M..................................  0.07 x TDA + 0.66
VOP.RC.L..................................  2.07 x TDA + 6.26
SOC.RC.M..................................  0.39 x TDA + 0.08
VOP.SC.M..................................  1.5 x TDA + 4.06
SVO.SC.M..................................  1.5 x TDA + 3.97
HZO.SC.L..................................  1.91 x TDA + 7.03
HZO.SC.M..................................  0.74 x TDA + 5.35
HCT.SC.I..................................  0.36 x TDA + 0.28
VCT.SC.I..................................  0.5 x TDA + 2.44
VCS.SC.I..................................  0.33 x V + 0.76
VCT.SC.M..................................  0.03 x V + 0.97
VCT.SC.L..................................  0.21 x V + 1.16
VCS.SC.M..................................  0.02 x V + 0.41
VCS.SC.L..................................  0.11 x V + 0.38
HCT.SC.M..................................  0.01 x V + 0.38
HCT.SC.L..................................  0.08 x V + 0.45
HCS.SC.M..................................  0.01 x V + 0.18
HCS.SC.L..................................  0.07 x V + 0.24
PD.SC.M...................................  0.03 x V + 0.72
SOC.SC.M..................................  0.32 x TDA + 0.53
------------------------------------------------------------------------

C. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the products that 
are the subjects of this rulemaking, purchased during the 30-year 
period that begins in the year of compliance with amended standards 
(2017-2046). The savings are measured over the entire lifetime of 
products purchased in the 30-year period.\18\ DOE used the NIA model to 
estimate the NES for equipment purchased over the period 2017-2046. The 
model forecasts total energy use over the analysis period for each 
representative equipment class at efficiency levels set by each of the 
five considered TSLs. DOE then compares the energy use at each TSL to 
the base-case energy use to obtain the NES. The NIA model is described 
in section IV.I of this notice and in chapter 10 of the NOPR TSD.
---------------------------------------------------------------------------

    \18\ In the past, DOE presented energy savings results for only 
the 30-year period that begins in the year of compliance. In the 
calculation of economic impacts, however, DOE considered operating 
cost savings measured over the entire lifetime of products purchased 
during the 30-year period. DOE has chosen to modify its presentation 
of national energy savings to be consistent with the approach used 
for its national economic analysis.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from amended standards for the products that 
are the subject of this rulemaking. The NIA spreadsheet model 
(described in section IV.I of this notice) calculates energy savings in 
site energy, which is the energy directly consumed by products at the 
locations where they are used. For electricity, DOE reports national 
energy savings in terms of the savings in the energy that is used to 
generate and transmit the site electricity. To calculate this quantity, 
DOE derives annual conversion factors from the model used to prepare 
the Energy Information Administration's (EIA) Annual Energy Outlook 
(AEO).
    DOE has begun to also estimate full-fuel-cycle (FFC) energy 
savings. 76 FR 51282 (Aug. 18, 2011), as amended at 77 FR 49701 (August 
17, 2012). The FFC metric includes the energy consumed in extracting, 
processing, and transporting primary fuels, and thus presents a more 
complete picture of the impacts of energy efficiency standards. DOE's 
approach is based on calculation of an FFC multiplier for each of the 
energy types used by covered products.
2. Significance of Savings
    EPCA prohibits DOE from adopting a standard that would not result 
in significant additional energy savings. (42 U.S.C. 6295(o)(3)(B),(v) 
and 6316(e)(1)) While the term ``significant'' is not defined in EPCA, 
the U.S. Court of Appeals for the District of Columbia in Natural 
Resources Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 
1985), indicated that Congress intended significant energy savings to 
be savings that were not ``genuinely trivial.'' The estimated energy 
savings in the 30-year analysis period for the TSLs considered in this 
rulemaking range from 0.236 to 1.278 quads (see section V.B.2 for 
additional details); therefore, DOE considers them significant within 
the meaning of section 325 of the Act.

D. Economic Justification

1. Specific Criteria
    As discussed in section II.A, EPCA provides seven factors to be 
evaluated in determining whether a potential energy conservation 
standard is economically justified. (42 U.S.C. 6295(o)(2)(B)(i) and 
6316(e)(1)) The following sections generally discuss how DOE is 
addressing each of those seven factors in this rulemaking. For further 
details and the results of DOE's analyses pertaining to economic 
justification, see sections IV and V of today's notice.
a. Economic Impact on Manufacturers and Commercial Customers
    In determining the impacts of a potential new or amended energy 
conservation standard on manufacturers, DOE first determines its 
quantitative impacts using an annual cash flow approach. This includes 
both a short-term assessment (based on the cost and capital 
requirements associated with new or amended standards during the period 
between the announcement of a regulation and the compliance date of the 
regulation) and a long-term assessment (based on the costs and marginal 
impacts over the 30-year analysis period). The impacts analyzed include 
INPV (which values the industry based on expected future cash

[[Page 55901]]

flows), cash flows by year, changes in revenue and income, and other 
measures of impact, as appropriate. Second, DOE analyzes and reports 
the potential impacts on different types of manufacturers, paying 
particular attention to impacts on small manufacturers. Third, DOE 
considers the impact of new or amended standards on domestic 
manufacturer employment and manufacturing capacity, as well as the 
potential for new or amended standards to result in plant closures and 
loss of capital investment. Finally, DOE takes into account cumulative 
impacts of other DOE regulations and non-DOE regulatory requirements on 
manufacturers.
    For individual customers, measures of economic impact include the 
changes in LCC and the PBP associated with new or amended standards. 
The LCC, which is also separately specified as one of the seven factors 
to be considered in determining the economic justification for a new or 
amended standard (42 U.S.C. 6295(o)(2)(B)(i)(II), and 6316(e)(1)), is 
discussed in the following section. For customers in the aggregate, DOE 
also calculates the NPV from a national perspective of the economic 
impacts on customers over the analysis period used in a particular 
rulemaking. For a description of the methodology used for assessing the 
economic impact on customers, see sections IV.H and IV.I; for results, 
see sections V.B.1 and V.B.2 of this notice. Additionally, chapters 8 
and 10 and the associated appendices of the NOPR TSD contain a detailed 
description of the methodology and discussion of the results. For a 
description of the methodology used to assess the economic impact on 
manufacturers, see section IV.K; for results, see section V.B.2 of this 
notice. Additionally, chapter 13 of the NOPR TSD contains a detailed 
description of the methodology and discussion of the results.
b. Life-Cycle Costs
    The LCC is the sum of the purchase price of equipment (including 
the cost of its installation) and the operating costs (including energy 
and maintenance and repair costs) discounted over the lifetime of the 
equipment. The LCC savings for the considered efficiency levels are 
calculated relative to a base-case scenario, which reflects likely 
trends in the absence of new or amended standards. DOE carried out the 
LCC analysis for this rulemaking by analyzing the LCC impacts on those 
customers who purchase the equipment in the year in which compliance 
with the new standard is required. To account for uncertainty and 
variability in specific inputs, such as equipment lifetime and discount 
rate, DOE uses a range of values, each with its own probability of 
selection. In addition to identifying distribution of customer impacts, 
DOE evaluates the LCC impacts of potential standards on identifiable 
subgroups of customers who may be disproportionately affected by a new 
national standard. For the results of DOE's analyses related to the 
LCC, see section V.B.1 of this notice and chapter 8 of the NOPR TSD; 
for LCC impacts on identifiable subgroups, see section V.B.1 of this 
notice and chapter 11 of the NOPR TSD.
c. Energy Savings
    While significant conservation of energy is a statutory requirement 
for imposing an energy conservation standard, EPCA also requires DOE, 
in determining the economic justification of a standard, to consider 
the total projected energy savings that are expected to result directly 
from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III) and 6316(e)(1)) DOE 
uses NIA spreadsheet results in its consideration of total projected 
savings. For the results of DOE's analyses related to the potential 
energy savings, see section VI.B.3 of this notice and chapter 10 of the 
NOPR TSD.
d. Lessening of Utility or Performance of Equipment
    In establishing classes of equipment, and in evaluating design 
options and the impact of potential standard levels, DOE seeks to 
develop standards that would not lessen the utility or performance of 
the equipment under consideration. None of the TSLs presented in 
today's NOPR would reduce the utility or performance of the equipment 
considered in the rulemaking. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 
6316(e)(1)) During the screening analysis, DOE eliminated from 
consideration any technology that would adversely impact customer 
utility. For the results of DOE's analyses related to the potential 
impact of amended standards on equipment utility and performance, see 
section IV.D of this notice and chapter 4 of the NOPR TSD.
e. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from the imposition of a standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V) Specifically, it directs the Attorney General to 
determine in writing the impact, if any, of any lessening of 
competition likely to result from a proposed standard and to transmit 
such determination to the Secretary, not later than 60 days after the 
publication of a proposed rule, together with an analysis of the nature 
and extent of such impact. (42 U.S.C. 6295(o)(2)B(ii) and 6316(e)(1)) 
For the results of DOE's analysis related to lessening of competition, 
see section V.B.5 of this notice.
f. Need of the Nation To Conserve Energy
    Another factor that DOE must consider in determining whether a new 
or amended standard is economically justified is the need for national 
energy and water conservation. (42 U.S.C. 6295(o)(2)(B)(i)(VI) and 
6316(e)(1)) The energy savings from new or amended standards are likely 
to provide improvements to the security and reliability of the Nation's 
energy system. Reductions in the demand for electricity may also result 
in reduced costs for maintaining the reliability of the Nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how new or amended standards may affect the Nation's needed power 
generation capacity.
    Energy savings from amended standards for commercial refrigeration 
equipment are also likely to result in environmental benefits in the 
form of reduced emissions of air pollutants and GHGs associated with 
energy production (i.e., from power plants). For a discussion of the 
results of the analyses relating to the potential environmental 
benefits of the amended standards, see sections IV.N, IV.O and V.B.6 of 
this notice. DOE reports the expected environmental effects from the 
proposed standards, as well as from each TSL it considered for 
commercial refrigeration equipment, in the emissions analysis contained 
in chapter 13 of the NOPR TSD. DOE also reports estimates of the 
economic value of emissions reductions resulting from the considered 
TSLs in chapter 14 of the NOPR TSD.
g. Other Factors
    EPCA allows the Secretary, in determining whether a new or amended 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) 
and 6316(e)(1)) In developing the TSLs set forth in this notice, DOE 
has also considered the comments submitted by interested parties. For 
the results of

[[Page 55902]]

DOE's analyses related to other factors, see section V.B.7 of this 
notice.
2. Rebuttable Presumption
    As set forth in 42 U.S.C. 6295(o)(2)(B)(iii) and 6316(e)(1), EPCA 
provides for a rebuttable presumption that an energy conservation 
standard is economically justified if the additional cost to the 
customer of equipment that meets the new or amended standard level is 
less than three times the value of the first-year energy (and, as 
applicable, water) savings resulting from the standard, as calculated 
under the applicable DOE test procedure. DOE's LCC and PBP analyses 
generate values that calculate the PBP for customers of potential new 
and amended energy conservation standards. These analyses include, but 
are not limited to, the 3-year PBP contemplated under the rebuttable 
presumption test. However, DOE routinely conducts a full economic 
analysis that considers the full range of impacts to the customer, 
manufacturer, Nation, and environment, as required under 42 U.S.C. 
6295(o)(2)(B)(i) and 6316(e)(1). The results of these analyses serve as 
the basis for DOE to evaluate the economic justification for a 
potential standard level definitively (thereby supporting or rebutting 
the results of any preliminary determination of economic 
justification). The rebuttable presumption payback calculation is 
discussed in section IV.H.12 of this notice and chapter 8 of the NOPR 
TSD.

IV. Methodology and Discussion of Comments

A. General Rulemaking Issues

    During the April 2011 preliminary analysis public meeting and in 
subsequent written comments, stakeholders provided input regarding 
general issues pertinent to the rulemaking, such as issues of scope of 
coverage and DOE's authority in setting standards. These issues are 
discussed in this section.
1. Statutory Authority
    In the preliminary analysis, DOE stated its position that EPCA 
prevents the setting of both energy performance standards and 
prescriptive design requirements (see chapter 2 of the preliminary 
analysis TSD \19\). DOE also stated its intent to amend the energy 
performance standards for commercial refrigeration equipment, and not 
to set prescriptive design requirements at this time (see chapter 2 of 
the preliminary analysis TSD). In a written comment, Earthjustice 
opined that DOE misread EPCA in suggesting that DOE does not have 
authority to establish design requirements for commercial refrigeration 
equipment. More specifically, Earthjustice asserted that DOE's 
interpretation of 42 U.S.C. 6311(18) ignores that EPCA uses the plural 
form in compelling this rulemaking to amend energy conservation 
``standards.'' Further, Earthjustice stated, even if DOE were only 
authorized to promulgate a single standard or single design requirement 
in any one rulemaking, nothing in EPCA indicates that prior 
establishment of performance standards would foreclose the issuance of 
design requirements in a subsequent rulemaking, provided that those 
design requirements achieved the maximum technologically feasible and 
economically justified energy savings. (Earthjustice, No. 35 at pp. 4-
5) \20\
---------------------------------------------------------------------------

    \19\ U.S. Department of Energy--Office of Energy Efficiency and 
Renewable Energy. Preliminary Technical Support Document (TSD): 
Energy Conservation Program for Certain Commercial and Industrial 
Equipment: Commercial Refrigeration Equipment. Chapter 2. Analytical 
Framework, Comments from Interested Parties, and DOE Responses. 
March 2011. Washington, DC www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0003-0030.
    \20\ A notation in this form provides a reference for 
information that is in the docket of DOE's rulemaking to develop 
energy conservation standards for commercial refrigeration equipment 
(Docket No. EERE-2010-BT-STD-0003), which is maintained at 
www.regulations.gov. This notation indicates that the statement 
preceding the reference is document number 35 in the docket for the 
commercial refrigeration equipment energy conservation standards 
rulemaking, and appears at pages 4-5 of that document.
---------------------------------------------------------------------------

    EPCA defines the phrase ``energy conservation standard'' as a 
performance standard that prescribes a minimum level of energy 
efficiency or a maximum quantity of energy use for a product or as a 
design requirement for a product. (42 U.S.C. 6311(18)(A)-(B)) 
Therefore, based on a clear reading of EPCA, DOE must use either a 
performance standard or a design (prescriptive) requirement in 
prescribing energy conservation standards. It has been DOE's 
longstanding interpretation that the term ``standard'' means either a 
performance standard or a design requirement, and that the plural term 
``standards'' refers to the setting of a collective group of standards 
across all covered equipment or product classes. Thus, it is not DOE's 
interpretation of EPCA that the statute's use of the plural term 
``standards,'' in referring to a collective group of equipment classes, 
grants DOE the authority to set both prescriptive and performance 
standards for a given class within that group. In the case of 
commercial refrigeration equipment, all of the equipment that is the 
subject of this rulemaking is currently covered either by a statutorily 
mandated performance standard or by a performance standard set by DOE 
in the January 2009 final rule. (42 U.S.C. 6313(c)(1)-(4)); 74 FR 1093 
(Jan. 9, 2009). In this rulemaking, DOE is considering amendments to 
these performance standards for commercial refrigeration equipment, and 
is therefore not considering design requirements at this time.
2. January 2009 Final Rule Equipment
    At the April 2011 preliminary analysis public meeting, AHRI stated 
that in 2005 when the legislation that was to become EPACT 2005 was 
drafted, the drafters' intent was not for DOE to start a rulemaking on 
remote cases in 2010. According to AHRI, the drafters' intent was that 
DOE start the rulemaking on self-contained units. AHRI pointed out that 
manufacturers would have to redesign products (those covered by the 
2009 DOE final rule) twice in a 4-year period, first to meet the 2009 
DOE standards in 2012, and then again to meet the 2013 standards in 
2016. AHRI asked DOE to take that into account, a situation AHRI 
described as unprecedented. (AHRI, Public Meeting Transcript, No. 31 at 
pp. 204-05) AHRI elaborated on this situation in its written comment, 
expressing its belief that it is illogical that DOE decided to analyze 
equipment types for which standards exist, but with which manufacturers 
are not yet required to comply. AHRI stated that the intent of Congress 
was never to require DOE to start a rulemaking on this equipment, and 
questioned how DOE could possibly assess whether amended standards are 
appropriate before the January 2009 final rule standards reach the 
stage where manufacturers must comply. AHRI urged DOE to focus on self-
contained refrigerators and freezers with doors in this rulemaking. 
(AHRI, No. 43 at pp. 1-2)
    Similarly, Zero Zone expressed disappointment with the fact that 
the current rulemaking was initiated before the standards compliance 
date of January 1, 2012 specified in the January 2009 final rule. Zero 
Zone went on to state that waiting until after this compliance date to 
initiate a rulemaking would have allowed DOE to determine the accuracy 
of its models and the impacts on industry. (Zero Zone, No. 37 at p. 1)
    The EPACT 2005 amendments to EPCA require DOE to conduct a 
rulemaking to determine whether to amend the standards for commercial 
refrigeration equipment established under 42 U.S.C. 6313(c), which 
covers both the standards prescribed by EPACT

[[Page 55903]]

2005 and the standards set by DOE in the January 2009 final rule. (42 
U.S.C. 6313(c)(6)) If DOE determines that these standards should be 
amended, DOE must publish a final rule establishing such amended 
standards by January 1, 2013. Id. Regarding AHRI's comment, DOE is thus 
compelled by statute to conduct this rulemaking with a scope of 
coverage including the equipment specified in both EPACT 2005 and in 
the January 2009 final rule. In response to Zero Zone's comments 
concerning the burden imposed by amended standards, DOE has considered 
manufacturer impacts in the MIA, as required by 42 U.S.C. 
6295(o)(2)(B)(i)(I) and 6316(e)(1). DOE has also used its manufacturer 
interviews as a forum to discuss and receive feedback on the inputs to 
and accuracy of its models.
3. Normalization Metrics
    In chapter 2 of the preliminary analysis TSD, DOE stated its 
proposal to retain the current normalization metrics for all equipment 
classes and requested comment from interested parties. Traulsen agreed 
with DOE's tentative plan to use cabinet volume as the normalization 
metric for ``appropriate'' equipment, but noted that there are other 
(unspecified) design factors that need to be considered. (Traulsen, No. 
45 at p. 2) Zero Zone stated that evaluation of the normalization 
metrics should take place after the January 2009 final rule compliance 
date. (Zero Zone, No. 37 at p. 4)
    During the NOPR analyses, DOE took into account stakeholder input 
when reviewing normalization metrics for covered equipment. DOE agrees 
with Traulsen that volume is the appropriate normalization metric for 
most self-contained equipment classes. With respect to the comment by 
Zero Zone, the timing of this proceeding made it difficult for 
significant amounts of data on sales and other factors to be acquired 
after the January 2009 final rule compliance date of January 1, 2012. 
DOE took into account information regarding the size and composition of 
the commercial refrigeration equipment market obtained through 
manufacturer interviews, market research publications, and other 
sources during the NOPR stage.
4. Treatment of Blast Chillers, Thawing Cabinets, Prep Tables, Salad 
Bars, and Buffet Tables
    In its written comment, Traulsen expressed concern that DOE may 
inadvertently include equipment such as prep tables, blast chillers, 
and thawing cabinets in standards it develops. (Traulsen, No. 45 at p. 
1) During the ongoing rulemaking, DOE also received several inquiries 
from interested parties regarding the coverage, under current or 
amended energy conservation standards, of salad bars, buffet tables, 
and other refrigerated holding and serving equipment.
    EPCA, in its definition of ``commercial refrigerator, freezer, and 
refrigerator-freezer,'' states that such equipment must display or 
store merchandise or other perishable materials horizontally, 
vertically, or semi-vertically, and must be designed for pull-down 
temperature applications or holding temperature applications, among 
other factors. (42 U.S.C. 6311(9)(A)) Moreover, 42 U.S.C. 6311(9) 
defines ``holding temperature application'' as specifically omitting 
blast chillers or freezers, and specifies that ``pull-down temperature 
application'' refers solely to equipment designed to cool 12 ounce 
beverage cans from 90 to 38[emsp14][deg]F in 12 hours or less. Thus, 
blast chillers and thawing cabinets do not meet the relevant statutory 
definition, and will not be addressed in this rulemaking.
    With regard to prep tables with open bins or trays, salad bars, and 
buffet tables, DOE does not currently have energy conservation 
standards that cover this equipment. DOE notes that some of this 
equipment is designed for the temporary placement of food during 
preparation or service, rather than storage or retailing, and may 
operate very differently from the commercial refrigeration equipment 
considered in this rulemaking. Moreover, DOE's current test procedure 
does not include provisions for testing this type of equipment. For 
example, some types of foodservice equipment (such as salad bars, 
buffet tables, and prep tables) do not have doors, drawers, or openings 
typical of conventional commercial refrigeration equipment. While DOE 
has the authority to set standards for other types of commercial 
refrigeration equipment (42 U.S.C. 6313(c)(5)(B)), this rulemaking is 
not currently considering standards for equipment types other than 
those covered by DOE's existing standards. 10 CFR 431.66
5. Dedicated Remote Condensing Units
    Several stakeholders inquired whether equipment consisting of a 
refrigerated case served by a single, dedicated remote condensing unit 
that serves only that unit would be covered under DOE's proposed 
standards. True Manufacturing (True) stated that smaller units are more 
likely to have such a condensing unit, and that continuous cases \21\ 
are almost exclusively rack condensing systems \22\ due to the energy 
savings gained in the long term by rejecting heat outside of the 
building. (True, Public Meeting Transcript, No. 31 at pp. 268-69) 
Southern Store Fixtures stated that it is very difficult for the 
company to predict whether a given case that it builds will ultimately 
be connected to an individual condensing unit or to a compressor rack. 
(Southern Store Fixtures, Public Meeting Transcript, No. 31 at p. 268) 
Zero Zone commented that 20 to 40 percent of the units it sells are 
served by dedicated condensing units, and that the remainder are served 
by racks, noting that businesses such as convenience stores and dollar 
stores use dedicated condensing units in the interest of simplicity. 
(Zero Zone, Public Meeting Transcript, No. 31 at p. 269) In its written 
comment, Earthjustice referenced Zero Zone's statement that 20 to 40 
percent of remote condensing commercial refrigeration equipment is 
served by dedicated remote condensing units, and stated that because 
there is a significant market share for such equipment, DOE should 
explore standards that address the performance of such units. 
(Earthjustice, No. 35 at p. 4)
---------------------------------------------------------------------------

    \21\ In most supermarket and large food retail settings, 
multiple display cases from a manufacturer are attached together 
into a single continuous lineup without internal partitions; these 
are referred to as ``continuous cases.''
    \22\ Rack condensing systems utilize a ``rack'' of multiple 
compressors and a condenser that serves to deliver liquid 
refrigerant to a number of different pieces of equipment served by 
the single rack. For example, most supermarkets have one or more 
compressor racks to serve their display cases, walk-in coolers and 
freezers, and other equipment.
---------------------------------------------------------------------------

    DOE understands that some stakeholders are concerned that shipments 
of equipment utilizing dedicated remote condensing units may comprise a 
nontrivial portion of the market. However, the DOE test procedure does 
not contain a methodology for testing such condensing units. DOE 
anticipates working with the industry in the future to develop testing 
methodologies that can be used in future commercial refrigeration 
equipment rulemakings. For this current rulemaking, display cases 
connected to dedicated remote condensers will be treated like any other 
piece of remote condensing equipment under the DOE test procedure, with 
the energy of the remote condensing unit calculated as specified in 
AHRI 1200 and added to the measured energy consumption of the display 
case. As there is no industry-accepted method of test for dedicated 
remote condensers, DOE proposes to continue to treat

[[Page 55904]]

equipment utilizing this condensing unit configuration in the same 
manner as all other display cases connected to remote condensers.
    Also, as Southern Store Fixtures noted, it is often difficult or 
impossible for the display case manufacturer to know ahead of time 
whether a given case will be attached to a dedicated remote condensing 
unit or a remote condensing rack by an end user. In some cases, the 
dedicated condensing unit is produced by a separate manufacturer and 
purchased independently. As Zero Zone stated, the majority of remote 
condensing cases are still sold to be connected to a remote condensing 
rack system that serves multiple pieces of equipment. Thus, DOE 
believes that comparing remote condensing cases based on the calculated 
performance of a typical remote condensing rack, in the manner 
prescribed by AHRI 1200, is a consistent way to compare performance of 
remote condensing display cases.
    In chapter 2 of the preliminary analysis TSD, DOE discussed the 
potential of addressing coverage of remote condensers in a separate 
future rulemaking. DOE believes that, should any such action take place 
in the future, such a proceeding would be the appropriate venue in 
which to investigate dedicated remote condensers.
6. Small Units
    Traulsen stated that it believes that smaller units are effectively 
prohibited under current DOE regulations, and that it recognizes that 
legislative change is the proper avenue for resolution of this issue. 
(Traulsen, No. 45 at p. 5)
    DOE understands manufacturer concerns regarding the performance of 
small units, and took steps to account for them in its analyses. In its 
engineering analysis, DOE selected specifications for units that it 
found to be representative of typical, high sales volume models for 
each of the equipment classes directly analyzed. These selections were 
based on market and industry research, and the representative unit 
specifications were presented to manufacturers for their feedback and 
input during manufacturer interviews. The representative units were 
then used as one analysis point in developing the standard-level 
equations for their respective classes. DOE also developed ``offset 
factors'' that form the second analysis point used in developing the 
linear equations that represent the equipment standards. The purpose of 
the offset factor is to account for energy consumption end effects 
inherent in equipment of all sizes so that certain groups of units, 
including small units, would not be disadvantaged by the standard-level 
equations. To understand how the offset accounts for size effects, 
consider the energy consumption of a single lighting fixture--a feature 
common to all sizes of VCT display cases. The development of offset 
factors resulted in energy allowances at zero case volume or TDA, thus 
preventing even the smallest cases from being disadvantaged by the 
standards. The procedure that DOE used to develop the offset factors 
implicitly assumes that small units are relatively less efficient than 
larger units, particularly in the case of the smallest-sized equipment. 
Therefore, DOE believes that its analysis adequately accounts for 
smaller units. A detailed discussion of offset factors can be found in 
chapter 5 of the NOPR TSD.
7. Consideration of Impact of Amended Standards
    Traulsen stated that there are many niches of commercial 
refrigeration equipment that are essential to manufacturers and 
customers, and that setting overly aggressive standards may lead to 
inadvertent equipment design obsolescence. Traulsen thus urged DOE to 
take a conservative approach when setting mandatory standards. 
(Traulsen, No. 45 at p. 1)
    DOE performed an MIA, as required by 42 U.S.C. 6295(o)(2)(B)(i)(I) 
and 6316(e)(1), in which it assessed both the qualitative issues of 
concern to manufacturers and the quantitative potential impacts to the 
commercial refrigeration equipment industry. These impacts were weighed 
and taken into consideration during the selection of the proposed 
standard level in an effort to minimize adverse impacts on the 
industry. DOE also notes it considers the design configurations offered 
in the commercial refrigeration equipment market in its analysis and 
selection of equipment classes. As required by EPCA, DOE does not set 
standards that eliminate equipment designs that deliver unique utility 
or features for consumers. (42 U.S.C. 6295(o)(4) and 6316(e)(1))
8. CO2 Cascade Systems
    Hussmann stated that, in California, Title 24 \23\ allows the use 
of CO2 cascade systems,\24\ and that compliance with both 
Title 24 and amended DOE standards could make development of a 
CO2 cascade system difficult. (Hussmann, Public Meeting 
Transcript, No. 31 at p. 153) True stated that there is no DOE test 
procedure for cascade systems, and that there has been no consideration 
of cascade systems in the standards-setting process. (True, Public 
Meeting Transcript, No. 31 at p. 154)
---------------------------------------------------------------------------

    \23\ ``Title 24'' refers to Title 24, part 6 of the California 
Code of Regulations, and includes California's energy efficiency 
standards for residential and nonresidential buildings. This is 
available at: www.energy.ca.gov/title24/.
    \24\ A cascade system is a type of secondary-loop refrigeration 
cycle that uses a higher-temperature refrigerant to condense the 
secondary refrigerant, in this case carbon dioxide, which is then 
used to cool the refrigerated space.
---------------------------------------------------------------------------

    DOE agrees with True that secondary coolant systems, including 
CO2 cascade systems, are not being addressed in this 
rulemaking, partially due to the lack of an industry-accepted method of 
test for this type of equipment. DOE articulated its rationale in the 
preliminary analysis TSD chapter 2 and maintains the position in this 
notice.
9. Coverage of Existing Cases Undergoing Refurbishments or Retrofits
    During the NOPR analysis period, DOE received a stakeholder inquiry 
as to whether the Department's energy conservation standards apply only 
to new equipment manufactured or imported after the compliance date, or 
to existing equipment undergoing retrofits and refurbishments as well.
    DOE wishes to clarify that energy conservation standards apply only 
to new equipment, and not to previously installed equipment undergoing 
retrofits or refurbishments. As DOE stated in its Certification, 
Compliance and Enforcement final rule published on March 7, 2011, 
manufacturers and private labelers must certify to DOE that any covered 
equipment meets the applicable standard before distributing that 
equipment into U.S. commerce. DOE's authority covers newly manufactured 
equipment and does not extend to rebuilt and refurbished equipment. 76 
FR 12422, 12426 and 12437 (March 7, 2011).
10. Components Shipped as After-Market Additions
    DOE has received inquiries regarding open commercial refrigerated 
display cases that may be shipped with doors to be installed in the 
field. Stakeholders have sought guidance on whether equipment that is 
produced and shipped in this manner would be subject to the standards 
applicable to an open case or subject to the standards applicable to a 
closed case.
    DOE's response to the issue of components shipped as after-market 
additions will be addressed in the on-going test procedure rulemaking.
11. Definition of Hybrid Equipment
    During the NOPR analysis period, DOE received a comment regarding 
the definition of hybrid equipment.

[[Page 55905]]

Specifically, the stakeholder inquired about the proper definition of 
commercial hybrid refrigerator-freezer and the applicable standards.
    DOE's response to the issue of hybrid equipment will be addressed 
in the on-going test procedure rulemaking.
12. Coverage of Commercial Refrigeration Equipment With Drawers
    DOE has received several comments from interested parties regarding 
the coverage of commercial refrigeration equipment units with drawers. 
Specifically, interested parties inquired if commercial refrigeration 
equipment units with drawers were covered under the existing and 
proposed energy conservation standards for commercial refrigeration 
equipment and, so, (1) which equipment families they belong to; and (2) 
what the test procedure requirements are for these units.
    DOE's response to the issue of commercial refrigeration equipment 
with drawers will be addressed in the on-going test procedure 
rulemaking.

B. Test Procedures

    DOE received several comments that pertain only to the test 
procedure rulemaking. DOE responded to these and similar comments in 
the 2012 test procedure final rule. 77 FR 10298, 10300, and 10307 (Feb. 
21, 2012). Specifically, DOE received comments from multiple interested 
parties that many cases are installed with remote lighting controls 
that are operated at the aisle or store level (Southern Store Fixtures, 
Public Meeting Transcript, No. 31 at pp. 190-91, 194; Zero Zone, Public 
Meeting Transcript, No. 31 at p. 196; California Investor Owned 
Utilities, No. 42 at p. 4) and, according to the Northwest Energy 
Efficiency Alliance (NEEA), that cases wired uniquely to receive a 
remote energy management system should receive credit in the DOE test 
procedure. (NEEA, Public Meeting Transcript, No. 31 at p. 195) DOE also 
received comments from interested parties that an accepted test method 
for secondary coolant systems, especially those with two-phase flow, 
had not been developed and validated. (True, Public Meeting Transcript, 
No. 31 at pp. 162-64; Southern Store Fixtures, Public Meeting 
Transcript, No. 31 at pp. 164-65; AHRI, Public Meeting Transcript, No. 
31 at pp. 165-66) Because these comments pertain only to the test 
procedure for commercial refrigeration equipment and not the potential 
standards or analysis discussed in this rulemaking, DOE addressed these 
comments in the 2012 test procedure final rule and has not addressed 
them further here.
    NEEA stated that DOE's efforts to conduct a robust standards 
analysis are hindered by DOE's failure to resolve some test procedure 
issues and the fact that test procedure limitations have resulted in 
the removal of some technologies from consideration. Among these 
issues, according to NEEA, are the inability of the test procedure to 
measure savings from anti-sweat heater controls and the screening out 
of variable-speed and variable-capacity components based on the 
perceived limitations of the test procedure. (NEEA, No. 36 at p. 1)
    DOE recognizes stakeholders' desire that the DOE test procedure 
better measure the performance of variable-speed and variable-capacity 
devices. However, in the 2012 test procedure final rule, DOE stated 
that testing of part-load technologies would significantly increase the 
burden on manufacturers to test and certify equipment and is not 
justified given the minimal efficiency gains achieved by this 
equipment. 77 FR 10308 (Feb. 21, 2012). As such, DOE maintained that 
the fluctuations in refrigeration load experienced by equipment 
undergoing the DOE test procedure are sufficiently representative of 
average use, and that the establishment of additional test requirements 
would impose an undue burden on manufacturers. When evaluating amended 
energy conservation standards, DOE bases its engineering analysis on 
the energy efficiency of a unit as tested by the DOE test procedure. 
DOE has assessed the potential energy savings associated with 
technologies as tested under the test procedure established in DOE's 
2012 test procedure final rule and considered technologies based on the 
factors prescribed by EPCA. (42 U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1))

C. Market and Technology Assessment

    When beginning an energy conservation standards rulemaking, DOE 
develops information that provides an overall picture of the market for 
the equipment concerned, including the purpose of the equipment, the 
industry structure, and market characteristics. This activity includes 
both quantitative and qualitative assessments based primarily on 
publicly available information (e.g., manufacturer specification 
sheets, industry publications) and data submitted by manufacturers, 
trade associations, and other stakeholders. The subjects addressed in 
the market and technology assessment for this rulemaking include: (1) 
Quantities and types of equipment sold and offered for sale; (2) retail 
market trends; (3) equipment covered by the rulemaking; (4) equipment 
classes; (5) manufacturers; (6) regulatory requirements and non-
regulatory programs (such as rebate programs and tax credits); and (7) 
technologies that could improve the energy efficiency of the equipment 
under examination. DOE researched manufacturers of commercial 
refrigeration equipment and made a particular effort to identify and 
characterize small business manufacturers. See chapter 3 of the NOPR 
TSD for further discussion of the market and technology assessment.
1. Equipment Classes
    In evaluating and establishing energy conservation standards, DOE 
generally divides covered equipment into classes by the type of energy 
used, or by capacity or other performance-related feature that 
justifies a different standard for equipment having such a feature. (42 
U.S.C. 6295(q) and 6316(e)(1)) In deciding whether a feature justifies 
a different standard, DOE must consider factors such as the utility of 
the feature to users. Id. DOE normally establishes different energy 
conservation standards for different equipment classes based on these 
criteria.
    Commercial refrigeration equipment can be divided into various 
equipment classes categorized by specific physical and design 
characteristics. These characteristics impact equipment efficiency, 
determine the kind of merchandise that the equipment can be used to 
display, and affect how the customer can access that merchandise. Key 
physical and design characteristics of commercial refrigeration 
equipment are the operating temperature, the presence or absence of 
doors (i.e., closed cases or open cases), the type of doors used 
(transparent or solid), the angle of the door or air curtain \25\ 
(horizontal, semivertical, or vertical), and the type of condensing 
unit (remote condensing or self-contained). The following list shows 
the key characteristics of commercial refrigeration equipment that DOE 
developed as part of the January 2009 final rule (74 FR 1099-1100 (Jan. 
9, 2009)), and used during the Framework and preliminary analysis for 
this rulemaking:
---------------------------------------------------------------------------

    \25\ An air curtain is a continuously moving stream of air, 
driven by fans, which exits on one side of the opening in an open 
refrigerated case and re-enters on the other side via an intake 
grille. The function of the air curtain is to cover the opening in 
the case with this sheet of air, which minimizes the infiltration of 
warmer ambient air into the refrigerated space.
---------------------------------------------------------------------------

1. Operating Temperature
     Medium temperature (38 [deg]F, refrigerators)

[[Page 55906]]

     Low temperature (0 [deg]F, freezers)
     Ice-cream temperature (-15 [deg]F, ice-cream freezers)
2. Door Type
     Equipment with transparent doors
     Equipment with solid doors
     Equipment without doors
3. Orientation (air-curtain or door angle)
     Horizontal
     Semivertical
     Vertical
4. Type of Condensing Unit
     Remote condensing
     Self-contained

    Additionally, because EPCA specifically sets a separate standard 
for refrigerators with a self-contained condensing unit designed for 
pull-down temperature applications and transparent doors, DOE plans to 
create a separate equipment class for this equipment. (42 U.S.C. 
6313(c)(3)) DOE included this equipment in the form of a separate 
family with a single class (PD.SC.M) for the preliminary analysis. A 
total of 49 equipment classes were created, and these are listed in 
chapter 3 of the NOPR TSD using the nomenclature developed in the 
January 2009 final rule. 74 FR 1100 (Jan. 9, 2009).
    During the April 2011 preliminary analysis public meeting and in 
subsequent written comments, a number of stakeholders addressed issues 
related to proposed equipment classes and the inclusion of certain 
types of equipment in the analysis. These topics are discussed in this 
section.
a. Equipment Classification
    Several stakeholders commented on the general equipment 
classification structure used by DOE in the preliminary analysis. 
Traulsen stated that, with respect to the currently defined classes of 
equipment, there are subcategories DOE failed to specify, including 
upright units (1-, 2-, and 3-section; reach-in; pass-through; roll-in; 
and roll-through) and undercounter units (categorized by length in 
inches). (Traulsen, No. 45 at p. 1) On the other hand, Zero Zone 
approved of DOE's proposed equipment classes, as presented in the 
preliminary analysis TSD. (Zero Zone, No. 37 at p. 4) AHRI stated that 
the equipment class nomenclature developed by DOE in the January 2009 
final rule was appropriate. (AHRI, No. 43 at p. 2)
    In response to Traulsen's comment, DOE recognizes that there are 
subcategories of equipment within certain equipment families and 
classes, each with varying geometries. However, DOE believes that the 
equipment classes it has developed and modeled are broad enough to 
account for the variety of equipment incorporated within each of them, 
including the unit types described in Traulsen's comment. In performing 
its engineering analysis, DOE selected representative unit sizes and 
feature sets for modeling so as to best represent a typical unit for 
each given class. Regarding the comments from Zero Zone and AHRI, DOE 
has retained the equipment classes and nomenclature adopted in the 
January 2009 final rule (74 FR 1100 (Jan. 9, 2009)) and used in the 
Framework document and preliminary analysis for this NOPR.
b. Application Temperature Equipment
    DOE received feedback on the subject of application temperature 
equipment \26\ at the April 2011 preliminary analysis public meeting 
and in written comments. NEEA stated that the difference between DOE 
rating temperatures and application temperatures can be significant, 
and commented that allowing manufacturers to demonstrate that equipment 
meets a standard defined by rating temperature by testing at 
(presumably higher) application temperatures would equate to a very 
lenient standard for such equipment. (NEEA, Public Meeting Transcript, 
No. 31 at pp. 26-27) NEEA added that, for such equipment, the 
difference between ambient conditions and internal conditions would be 
much lower than for equipment maintaining a temperature of 38 [deg]F, 
and that daily energy use for this equipment would be lower as well. 
Thus, while NEEA agreed that cabinets should be tested at the lowest 
temperature they can achieve, NEEA stated that, if the standard for 
such cabinets is set equal to the level of energy use of cabinets 
designed to hold 38[emsp14][deg]F, that equipment may be much less 
efficient than what could be cost-effectively possible were separate 
standards set for the equipment. (NEEA, No. 36 at p. 2) NEEA further 
asked why DOE was not proposing to set separate standards for 
application temperature equipment. (NEEA, Public Meeting Transcript, 
No. 31 at pp. 26-27) NEEA stated that, while DOE has dismissed concerns 
regarding application temperature equipment because it is roughly 2 
percent of the market, NEEA has heard from manufacturers that it is a 
growing market segment and added that 2 percent is, in its opinion, a 
nontrivial portion of the market. (NEEA, No. 36 at pp. 1-2)
---------------------------------------------------------------------------

    \26\ Application temperature equipment is equipment that is 
designed to operate at temperatures distinctly different from the 
DOE rating temperatures of 38 [deg]F, 0 [deg]F, and -15 [deg]F. 
Examples include wine chillers and candy cases, which operate in the 
range of 45 to 60 [deg]F.
---------------------------------------------------------------------------

    Moreover, NEEA asserted that DOE failed to acknowledge the 
differences between high-temperature equipment (e.g., floral cases) and 
ice storage cabinets, and suggested two new equipment classes for these 
products: One for equipment with cabinet temperature greater than 
40[emsp14][deg]F and one for ice storage cabinets that can operate 
outdoors and are designed to hold temperatures between 20 and 
30[emsp14][deg]F. (NEEA, No. 36 at p. 2; NEEA, Public Meeting 
Transcript, No. 31 at pp. 26-27) NEEA further opined that ice storage 
cabinets in particular are often used in environments not well 
represented by the test procedure conditions, namely outdoor 
environments. NEEA added that to allow the test procedure to not 
represent the operating conditions of this equipment would violate 42 
U.S.C. 6295(2). (NEEA, No. 36 at pp. 1-2)
    True stated that, during the test procedure public meeting, 
interested parties suggested that the lowest application temperature 
should include ice storage and be in the mid-twenties. (True, Public 
Meeting Transcript, No. 31 at p. 177) Traulsen commented that it did 
not have an issue with testing equipment at internal temperatures that 
are higher than the rating temperatures, such as 50[emsp14][deg]F or 
10[emsp14][deg]F. However, Traulsen expressed concern regarding 
equipment that is designed to run at internal temperatures that are 
lower than the rating temperature, or ambient temperatures that are 
higher than the test ambient temperature. Specifically, Traulsen stated 
that this equipment inherently uses more energy at the design 
conditions (often very high ambient temperatures and relative 
humidities) and may also use more energy at the designated rating 
conditions (the temperature and relative humidity values specified by 
ASHRAE 72-2005) as well. Traulsen provided the examples of a piece of 
equipment designed to hold ice cream at -40[emsp14][deg]F and a unit 
designed for 105[emsp14][deg]F ambient conditions. (Traulsen, No. 45 at 
p. 2)
    In the 2012 test procedure final rule, DOE adopted provisions that 
allow for the testing of commercial refrigeration equipment that cannot 
operate at its prescribed rating temperature at the ``lowest 
application product temperature.'' DOE defined ``lowest application 
product temperature'' as ``the integrated average temperature closest 
to the specified rating temperature for a given piece of equipment 
achievable and repeatable, such that the integrated average temperature 
of a given unit is within 2[emsp14][deg]F of the reported 
lowest application

[[Page 55907]]

product temperature for that basic model.'' DOE also applied this 
provision to all refrigerators, freezers, and ice-cream freezers. 77 FR 
10302 (Feb. 21, 2012).
    DOE maintains that units tested at the lowest application product 
temperature will still be required to meet the applicable energy 
conservation standard based on their equipment class. The required 
standard level will not change based on the different internal 
temperature at which a particular unit is tested. While DOE understands 
that this requirement makes it easier for a small number of units (that 
cannot be tested at the prescribed rating temperatures) to meet the 
current standards, DOE does not believe that establishing separate 
equipment categories for these niche types of equipment would be 
justified because the energy savings achievable with such standards 
would be relatively small. In response to NEEA's suggestion that ice 
chests designed to operate outdoors be tested at alternate ambient 
conditions, DOE notes that its test procedure prescribes only one 
ambient condition. DOE believes this ambient condition is adequately 
representative of the operating conditions for the majority of 
commercial refrigeration equipment. Additionally, DOE has seen no 
evidence that a unit designed to perform at stricter conditions than 
the DOE test procedure (i.e., higher ambient temperature and/or 
humidity) would have difficulty meeting a standard at the conditions 
prescribed in the test procedure.
    In response to NEEA's assertion that application temperature 
equipment is a growing commercial refrigeration equipment market 
segment, DOE has no data to substantiate the assertion. DOE has not 
collected shipments data indicating that such a trend exists, nor have 
manufacturer interviews indicated that this is the case. Application 
temperature equipment represents a niche equipment market, and this 
equipment has been in existence for a long time (e.g., candy cases, 
wine cases, floral cases). DOE has no evidence indicating that this 
market segment will grow disproportionately to other equipment types.
    DOE also agrees with Traulsen that testing these units at a higher 
integrated average temperature does not necessarily mean that the unit 
will use less energy. The variability in energy use and the impact of 
variation in integrated average temperature will vary based on case 
type, geometry, and configuration. This variation would make setting a 
consistent standard for high-temperature or intermediate-temperature 
equipment impractical, because any value chosen would not be 
representative of all cases.
c. Open Cases
    At the April 2011 preliminary analysis public meeting and in 
written comments, numerous stakeholders revisited the issue of DOE's 
proposed decision to retain separate standards for open and closed 
cases. Earthjustice first raised the issue, inquiring about the 
evidence behind DOE's assertion that open cases provide distinct 
utility with respect to features such as unobstructed view and access 
to product, as well as simplified stocking, cleaning, and maintenance. 
Earthjustice continued by stating that it wished to renew its request 
that DOE continue grouping open and doored cases together, adding that 
any determination of utility is required to be based on substantial 
evidence. (Earthjustice, Public Meeting Transcript, No. 31 at pp. 23, 
25) AHRI responded that the distinction between the two types of cases 
was made in the language of EPACT 2005, which was developed through 
negotiations among AHRI and other parties, including advocacy groups. 
(AHRI, Public Meeting Transcript, No. 31 at pp. 24-25) Southern Store 
Fixtures added that open and doored cases are two distinct types of 
equipment with different applications, and that they cannot be combined 
into a single category. Southern Store Fixtures also stated that 
substantial analysis and evidence would have to be provided in order to 
show that there would be no product loss or sales loss as a result of 
moving from open to doored cases. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at pp. 28-29)
    In further discussion at the public meeting, Earthjustice stated 
that it had submitted to DOE a study conducted by ASHRAE,\27\ as well 
as a Swedish study, to support Earthjustice's assertion that product 
sales are unaffected by the presence of door on cases. (Earthjustice, 
Public Meeting Transcript, No. 31 at p. 29) However, Southern Store 
Fixtures stated that it would dispute the ASHRAE study regarding open 
cases, and that it would articulate its argument later. (Southern Store 
Fixtures, Public Meeting Transcript, No. 31 at pp. 29-30) Additionally, 
the Swedish study was retracted from submission due to copyright 
issues.
---------------------------------------------------------------------------

    \27\ Fricke, B.A., and B.R. Becker. Comparison of Vertical 
Display Cases: Energy and Productivity Impacts of Glass Doors Versus 
Open Vertical Display Cases. December 2009. American Society of 
Heating, Refrigerating and Air-Conditioning Engineers, Atlanta, GA. 
Report No. RP-1402. http://rp.ashrae.biz/researchproject.php?rp_id=580
---------------------------------------------------------------------------

    Stakeholders also provided comments regarding the subject of 
metrics of utility. Pacific Gas and Electric (PG&E) stated that, in its 
opinion, sales would be the most obvious metric, along with the ability 
to keep product at the desired temperature. However, PG&E asked that 
DOE elaborate on how it would quantify what constitutes utility. (PG&E, 
Public Meeting Transcript, No. 31 at pp. 30-31) The California Investor 
Owned Utilities (CA IOUs) included a similar request in its written 
comment, asking that DOE clarify what it specifically considers as 
criteria to justify unique utility. CA IOUs also asked that DOE 
continue to assess options that would enable open cases to consume 
amounts of energy similar to those used by equivalent closed cases. (CA 
IOUs, No. 42 at p. 5) Zero Zone, continuing on the subject of utility, 
stated that, in its opinion, there may have been utility differences 
between open and doored cases at one time, but since that time it 
believed the market had changed and this difference no longer exists. 
As a result, Zero Zone supported the comments suggesting that DOE 
combine the open and doored display case classes. (Zero Zone, Public 
Meeting Transcript, No. 31 at p. 32)
    The Appliance Standards Awareness Project (ASAP), while not 
commenting specifically on equipment utility, stated that it believed 
the issue of open versus closed cases is very important from an NES 
perspective, as the preliminary analysis documents showed that open 
cases consume two to three times as much energy as comparable doored 
cases. (ASAP, Public Meeting Transcript, No. 31 at p. 32) CA IOUs 
agreed with DOE's assessment that open, low-temperature vertical and 
semivertical cases represent small portions of the market. Further, it 
pointed out that the California Energy Commission (CEC) is proposing to 
require doors on all upright, low-temperature cases at the State level. 
(CA IOUs, No. 42 at p. 5)
    During the preliminary analysis comment period, Earthjustice 
submitted a detailed comment outlining its position on the issue of 
open cases. Earthjustice expressed its belief that separate standards 
for open cases are neither warranted nor required by EPCA, as well as 
its opinion that such cases provide no capacity or performance features 
justifying separate standards, once again referencing the previously 
submitted ASHRAE and Swedish studies. Implicitly in response to 
statements made by AHRI at the public meeting, Earthjustice added that 
EPACT 2005's codification of standards for equipment with doors does 
not require DOE to maintain separate

[[Page 55908]]

classes for equipment without doors. (Earthjustice, No. 35 at p.1) 
Earthjustice expressed the belief that DOE's intention to adhere to its 
previous stance that the presence or absence of doors on cases affects 
case utility ignores the evidence that has been presented in the form 
of the aforementioned ASHRAE and Swedish sales studies, and that EPCA 
requires DOE's factual conclusions to be supported by substantial 
evidence which, according to Earthjustice, DOE has not provided. 
(Earthjustice, No. 35 at p. 2)
    Earthjustice reiterated its disagreement with DOE's assertion in 
the preliminary analysis that open cases provide utility in the form of 
``unobstructed view of and access to product,'' citing the two sales 
studies that it believed to conclude otherwise. Earthjustice also 
disagreed with DOE's statement that open cases simplify stocking, 
cleaning, and maintenance, questioning how the need to prop a door open 
would impede stocking a case. On the contrary, Earthjustice asserted, 
the presence of doors would reduce warm air infiltration and the 
opportunities for items to fall out of the case onto the store floor, 
thereby reducing stocking burdens and losses due to products damaged 
during stocking. Furthermore, Earthjustice stated that DOE has not 
suggested shorter life cycles for equipment with doors, something it 
believes would be a logical outcome were the presence of doors to 
impair cleaning and maintenance operations. (Earthjustice, No. 35 at p. 
2)
    Earthjustice then presented a legal argument, stating that, in 
maintaining that 42 U.S.C. 6295(o) prevents the merging of equipment 
classes for equipment with and without doors, DOE has misconstrued the 
statutory authority for whether separate classes are required. 
Earthjustice asserted that DOE has, in its preliminary analysis TSD, 
attempted to shift the evidentiary burden onto the stakeholders who 
support equivalent standards for the two equipment types. Earthjustice 
commented that, in dismissing the findings of the ASHRAE study, DOE has 
violated the plain language of EPCA, which requires that a 
preponderance of the evidence must support the position that open cases 
provide a unique feature in order for DOE to conclude that separate 
equipment classes are required. (Earthjustice, No. 35 at pp. 2-3)
    Earthjustice suggested that, should DOE decide not to merge classes 
for open and closed cases, DOE should adopt standards reflecting the 
overlapping applications for the equipment. Earthjustice stated that 
because equipment with doors is economically advantageous on an LCC 
basis, encouraging a shift to equipment with doors will increase the 
monetary savings from this rulemaking. (Earthjustice, No. 35 at p. 3) 
By adopting highly cost-effective standards for equipment with doors as 
well as standards that would result in LCC increases for open cases, 
Earthjustice suggested, DOE could encourage consumers to purchase cases 
with transparent doors. Earthjustice stated that DOE has taken a 
market-transforming approach in the past. Specifically, Earthjustice 
referenced the small electric motors rulemaking (75 FR 10874 (March 9, 
2010)), in which DOE maintained standards for two types of general 
purpose single-phase motors but tailored those standards to encourage 
the market to shift to one of those types. (Earthjustice, No. 35 at p. 
3) Similarly, Earthjustice added, in the rulemaking for commercial 
clothes washers (75 FR 1122 (Jan. 8, 2010)), DOE adopted standards set 
at the max-tech level for top-loading washers, but less aggressive 
standards for front-loading washers, partially to encourage the growth 
of front-loader market share. In conclusion, Earthjustice suggested 
that DOE adopt the max-tech level for equipment without doors and a 
more economically advantageous standard for equipment with doors, thus 
encouraging the market to shift to doored cases. (Earthjustice, No. 35 
at pp. 3-4)
    DOE understands the concern of some stakeholders regarding the 
issue of open cases. While some stakeholders have reiterated their 
previous positions on this topic, DOE does not believe that any new 
data has been presented since the Framework document public meeting 
(May 2010) that would warrant a change in DOE's stance as outlined in 
chapter 2 of the preliminary analysis TSD. DOE maintains that to set 
standards discouraging users from purchasing open cases would violate 
its statutory charge to preserve the availability of features and 
performance characteristics currently on the market. While Earthjustice 
again cited the ASHRAE study and the Swedish study comparing sales from 
open and closed cases, DOE still maintains its position from the 
preliminary analysis. After having reviewed the ASHRAE study, DOE 
believes that because the data were collected only under very specific 
conditions in a controlled environment and with a limited range of 
merchandise types, the data are insufficient to drive a conclusion 
applicable across the broad wide range of open case applications and 
end uses. As one example, DOE points out that neither study includes 
fresh produce and packaged meat products in the analysis of impact on 
product sales, and that these are types of merchandise that 
manufacturers have mentioned as benefiting from the use of open cases.
    Regarding the questions about the definition of utility raised by 
Earthjustice and PG&E, EPCA states that, in setting or amending 
standards, the Secretary must consider, among other factors, any 
lessening of the utility or performance of the covered products likely 
from the imposition of the standard. (42 U.S.C. 6295(o)(2)(B)(i)(IV) 
and 6316(e)(1)) EPCA further states that the Secretary may not 
prescribe an amended or new standard under this section if the 
Secretary finds (and publishes such finding) that interested persons 
have established by a preponderance of the evidence that the standard 
is likely to result in the unavailability in the United States in any 
covered product type (or class) of performance characteristics 
(including reliability), features, sizes, capacities, and volumes that 
are substantially the same as those generally available in the United 
States at the time of the Secretary's finding. (42 U.S.C. 6295(o)(4) 
and 6316(e)(1))
    Thus, while the term ``utility'' is not specifically defined in 
EPCA, it is used in conjunction with the term ``performance''; the 
statute further prohibits DOE from setting standards that result in the 
unavailability of performance characteristics or features from the U.S. 
market. In this case, DOE has determined that customer access to 
product is a distinct performance characteristic or feature in the case 
of commercial refrigeration equipment and believes, based on its 
research and discussions with experts and members of industry, that 
open cases provide more convenient access to products than do closed 
cases, as well as providing other measures of utility, such as ease of 
stocking and cleaning.
    In response to the comment by Earthjustice that DOE violated the 
plain language of EPCA, which requires that a preponderance of the 
evidence must support the position that open cases provide a unique 
feature in order to conclude that separate equipment classes are 
required, DOE refers to the language found at 42 U.S.C. 6295(o)(4) and 
6316(e)(1). This language states that the Secretary may not issue a 
standard if interested persons have established by a preponderance of 
the evidence that the standard is likely to result in the 
unavailability in the United States of any covered product type (or 
class) of performance characteristics (including

[[Page 55909]]

reliability), or features currently available. One statement suggesting 
that the elimination of open cases would have this effect was presented 
at the April 2011 preliminary analysis public meeting, when Southern 
Store Fixtures explicitly stated that open and doored cases are two 
different equipment types, adding that ``substantial analysis and 
evidence would have to be provided'' to ensure that there would be no 
detriment to performance by combining the classes. (Southern Store 
Fixtures, Public Meeting Transcript, No. 31 at pp. 28-29) DOE has 
agreed with this stance in its past and current proceedings, as 
evidenced by the retention of separate equipment types for open and 
closed cases in its analyses. At the commercial refrigeration equipment 
test procedure NOPR public meeting, Coca-Cola, a major purchaser of 
display cases, cited internal studies concluding that the presence of 
doors on displays near registers can decrease sales by 35 to 50 
percent. (Docket No. EERE-2010-BT-TP-0034, Coca-Cola, No. 19 at p. 90) 
These study results stand in contrast to the assertion by Earthjustice 
that the two sales studies it provided show that open cases do not 
provide utility in the form of unobstructed view of and access to 
product. The conflict between the sets of data suggests that, while 
both conclusions may be correct in the specific contexts of the 
respective studies, in some applications the presence of doors on cases 
can adversely affect visibility and access to product. Therefore, 
elimination of open cases from the market would equate to the 
unavailability of this performance characteristic, in direct violation 
of (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 6316(e)(1)).
    In its manufacturer interviews, DOE spoke with several 
manufacturers who provided anecdotal data regarding the utility of open 
cases. They pointed to increased sales due to ``impulse buys,'' stating 
that users of open cases reported generating higher revenues out of 
those cases. Manufacturers also stated that open cases allow for vastly 
easier stocking of high-margin items including produce and meat. The 
ease of stocking these items is particularly important to retailers, 
because open cases are stocked continuously while shoppers are in the 
store, making simultaneous, unobstructed access to the case by both the 
employee and customer an important utility issue. Manufacturers 
reaffirmed during these interviews that unobstructed view of and access 
to product, as well as simplified stocking, as previously referenced by 
DOE, were significant attributes of open cases. Furthermore, the 
manufacturers pointed to better accommodation of non-standard-sized 
merchandise within these cases. The information that DOE has gathered 
regarding market perceptions at conferences and other venues has 
indicated that many grocery store managers and operators strongly 
prefer open cases to closed cases, as they perceive that product 
visibility from a distance is a very strong factor in sales. Engineers 
for large chain grocery stores have stated that their efforts to 
convert even part of the grocery store equipment from open cases to 
closed cases, during store remodeling, have been met with opposition 
from store managers due to their perception that open cases lead to 
higher sales compared to closed cases. This finding is in contrast to 
the statement by Zero Zone that utility differences between open and 
doored cases no longer exist. The statement by Zero Zone also conflicts 
with the internal study data quoted by Coca-Cola, in which that company 
noted a significant loss in sales due to the presence of doors on 
display cases in certain settings. As the result of a collective review 
of the data obtained through its public meetings, manufacturer 
interviews, and conferences, DOE believes that its position of setting 
separate standards for open and closed cases is reasonable and based on 
the distinct performance characteristics of each class, as shown by a 
preponderance of the evidence presented. DOE notes that manufacturers 
did not cite differences in maintenance and cleaning between open and 
closed cases, but DOE believes the other utility and performance 
factors cited, including ease of access to the product, increased 
visibility, and ease of use during operations and maintenance, are 
sufficient to warrant maintenance of two separate equipment classes.
    DOE understands AHRI's statement that the distinction between case 
types was made in the EPACT 2005 language, which set standards for 
closed cases and required DOE to set standards for open cases (42 
U.S.C. 6313(c)), and Earthjustice's response that the codification of 
separate standards does not require DOE to maintain different classes. 
However, DOE is restricted by EPCA from prescribing energy conservation 
standards in any manner that would lessen utility to the customer or 
result in the unavailability of performance characteristics or features 
currently on the market. (42 U.S.C. 6295(o)(2)(B)(IV), 6295(o)(4), and 
6316(e)(1)) Therefore, DOE continues to consider open and doored cases 
to be two distinct equipment types due to the evident performance and 
feature differences between them.
    DOE acknowledges ASAP's statement that open cases have been shown 
to consume more energy than doored cases and CA IOU's assertion that 
open, low-temperature cases comprise a small market share. However, 
independent of these factors, as stated above, DOE is forbidden by EPCA 
from setting standards that would result in the unavailability on the 
market of the performance characteristics and features that open cases 
exhibit. (42 U.S.C. 6295(o)(4) and 6316(e)(1)) Therefore, DOE, through 
its analyses, sought to develop separate proposed standard levels for 
open and closed cases that would result in the maximum economically 
justified and technologically feasible energy savings for the 
respective equipment.
    Regarding Earthjustice's assertion that DOE failed to suggest 
shorter life cycles for commercial refrigeration equipment with doors, 
DOE points out that the replacement of doors is one of the factors 
contributing to repair costs (see chapter 8 of the NOPR TSD). Damage to 
doors does not necessarily shorten the life of the equipment itself.
    With respect to Earthjustice's suggestion that DOE force a market 
shift from open to closed cases by adopting cost-effective standards 
for doored cases but less economically attractive standards for open 
cases, DOE is compelled by EPCA to examine the economic and technical 
justification of all equipment under the same criteria and with the 
same rigor. (42 U.S.C. 6295(o) and 6316(e)(1)) In other words, DOE must 
independently determine the maximum technologically feasible and 
economically justified standard level for each equipment class. 
Therefore, DOE examined all TSLs equally using the same quantitative 
metrics, such as LCC and national NPV, and selected a proposed standard 
level using these criteria. In response to the suggestion that DOE 
adopt a market-transforming approach in which it would intentionally 
shift market share toward doored cases, DOE believes that to do so 
would violate the EPCA provision barring DOE from setting standards 
that result in the lessening of utility or unavailability of 
performance characteristics. (42 U.S.C. 6295(o)(4) and 6316(e)(1)) 
Because DOE has determined that open cases present a unique set of 
performance characteristics and features to the market, to set 
standards eliminating their manufacture and sale would violate 42 
U.S.C. 6295(o)(4) and 6316(e)(1). DOE notes that in the

[[Page 55910]]

rulemakings for small electric motors and commercial clothes washers 
that Earthjustice cited, DOE was careful to set standards such that 
they would not result in the unavailability of features or performance 
characteristics. For example, the commercial clothes washers final 
rule, published by DOE on January 8, 2010, states that the amended 
efficiency levels can be met by either top- or front-loading designs. 
In fact, the clothes washers final rule notes that there were vertical-
axis top-loading and horizontal-axis frontloading washers on the market 
at the time that already met the higher standard. Thus, DOE concluded, 
consumers would have the same range of clothes washer options, 
including features valued by consumers such as door placement, 
capacity, water temperature, and adjustable load sizes. 75 FR 1122, 
1133-34 (Jan. 8, 2010). In the case of commercial refrigeration 
equipment, DOE believes that separate equipment classes are necessary 
to preserve the unique features provided by open refrigerated display 
cases, established by interested parties as discussed above. DOE does 
not believe it would be possible to combine standards classes or 
arbitrarily set more aggressive standards for open cases without 
violating EPCA provisions regarding utility/product availability. (42 
U.S.C. 6295(o)(2)(B) and 6316(e)(1)) As a result, DOE has maintained 
the position regarding utility of open cases that it asserted in the 
January 2009 final rule and in its preliminary analysis and framework 
document. 74 FR 1099 (Jan. 9, 2009).
    DOE understands that there are other options available in the 
market to reduce the energy consumption of open cases, such as 
retrofitting doors to open cases, and that DOE's energy conservation 
standards may not be the only factor related to improving the energy 
efficiency of open cases. DOE believes that, in general, management 
staff of grocery stores is well aware of high energy costs because 
energy costs consistently figure as one of the top five issues in the 
Food Marketing Institute (FMI) Worry Index,\28\ which is obtained 
through surveys of the food retailers regarding the most important 
issues in their businesses that cause them to ``worry.'' Some stores 
have retrofitted their open cases with transparent doors to achieve 
substantial savings in energy costs. DOE also recognizes that the 
market for retrofitting open, multi-deck display cases with transparent 
doors is steadily increasing. In addition, features such as night 
curtains and more-efficient air curtains are also available in the 
market to reduce the energy consumption of open cases.
---------------------------------------------------------------------------

    \28\ FMI Research. The Food Retailing Industry Speaks 2011. 
2011. Food Marketing Institute, Arlington, VA.
---------------------------------------------------------------------------

    In its NOPR analyses, DOE modeled open and closed display cases 
separately, and has included separate proposed standards for the two 
types of equipment in this notice.
d. Service Over Counter Equipment
    AHRI voiced concerns about self-contained service over counter 
(SOC) equipment,\29\ stating that DOE incorrectly determined that SOC 
equipment was covered by EPACT 2005 and that this error resulted in an 
overly stringent standard being applied to the equipment. (AHRI, No. 43 
at p. 2) AHRI commented that it, working with other stakeholders, had 
proposed legislative language that defines SOC equipment and 
establishes minimum standards for that equipment, which is included in 
the Implementation of National Consensus Appliance Agreements Act of 
2011, S. 398, 112th Cong. (2011). AHRI asked that DOE adopt the 
definition of SOC equipment that AHRI had proposed in that legislation, 
and also asked DOE to use TDA as a normalization metric for this 
equipment. (AHRI, No. 43 at p. 2)
---------------------------------------------------------------------------

    \29\ ``Service over counter'' means equipment with sliding or 
hinged doors in the back intended for use by sales personnel for 
loading and retrieving items for sale, and fixed, sliding or hinged 
transparent panels in the front for displaying merchandise. The 
equipment has a height no greater than 66 inches and is intended to 
serve as a counter for transactions between sales personnel and 
customers.
---------------------------------------------------------------------------

    With respect to the statement by AHRI that DOE has incorrectly 
determined that SOC equipment is within the scope of coverage of EPACT 
2005, DOE disagrees, having determined that SOC.SC.M equipment meets 
the statutory definition of a self-contained commercial refrigerator 
with transparent doors in 42 U.S.C. 6311(9)(A). EPCA does not specify 
equipment subsets such as SOC equipment beyond defining the terms 
``commercial refrigerator,'' ``freezer,'' and ``refrigerator-freezer'' 
and ``self-contained condensing unit,'' among other definitions related 
to this equipment. (42 U.S.C. 6311(9)) In December 2009, DOE's Office 
of Hearings and Appeals (OHA) responded to an application for exception 
relief from a manufacturer of SOC equipment. This manufacturer argued 
that it was entitled to relief because its SOC units could not meet the 
EPACT 2005 standards for self-contained equipment with doors. OHA 
responded that DOE did not have jurisdiction to consider such 
exceptions for equipment covered by the statutorily mandated standards. 
(Case No. TEE-0066, Dec. 29, 2009)
    During the preliminary engineering analysis for this rulemaking, 
DOE confirmed that the EPACT 2005 standards for SOC.SC.M (42 U.S.C. 
6313(c)(2)) could not be achieved at even the max-tech level (see 
chapter 2, section 2.2.1.5, of the preliminary analysis TSD). 
Therefore, DOE agrees with AHRI's comment that the standard set by 
EPACT 2005 was too stringent for equipment belonging to equipment class 
SOC.SC.M. Consequently, DOE had excluded SOC.SC.M equipment from the 
preliminary analysis.\30\
---------------------------------------------------------------------------

    \30\ DOE had also excluded SOC.SC.L, a low-shipments-volume 
equipment class, from the preliminary analysis as well, as it too is 
covered under standards prescribed by EPACT 2005 for freezers with 
transparent doors found at 10 CFR 431.66(b). Due to its similarity 
in design, construction, and performance to SOC.SC.M equipment, DOE 
presumed that it too would not be able to meet the standards set by 
EPACT 2005 for self-contained equipment with transparent doors.
---------------------------------------------------------------------------

    In December 2012, during the NOPR analysis for this rulemaking, the 
American Energy Manufacturing Technical Corrections Act (AEMTCA), 
Public Law 112-210 (Dec. 18, 2012) amended EPCA to establish new 
standards for self-contained service over counter medium temperature 
commercial refrigerators. (42 U.S.C. 6313(c)(4)) The amendment reduces 
the stringency of the standard applicable to this equipment. AEMTCA 
prescribed the standard for SOC.SC.M equipment manufactured on or after 
January 1, 2012 as 0.6 x TDA + 1.0, expressed in kilowatt hours per 
day. (42 U.S.C. 6313(c)(4)(A))
    AEMTCA also amended EPCA to direct DOE to determine, within 3 years 
of enactment of the new standard for SOC.SC.M, whether the standard 
should be amended. (42 U.S.C. 6313(c)(4)(B)(1) If DOE determines that 
the standard should be amended, then DOE must issue a final rule 
establishing an amended standard within this same 3-year period. (42 
U.S.C. 6313(c)(4)(B))
    DOE conducted the analysis for this determination of whether to 
amend the standard for equipment class SOC.SC.M as part of this NOPR 
analysis. The analysis was carried out in a manner similar to that of 
all the other equipment classes being analyzed as part of the current 
rulemaking. DOE used the standard established by AEMTCA as the baseline 
efficiency level for equipment class SOC.SC.M.\31\ The results of the 
analysis indicated that if an amendment to the AEMTCA standard for 
equipment

[[Page 55911]]

class SOC.SC.M, based on same criteria established for all the other 
equipment classes of the current rulemaking,\32\ would represent a 
reduction in energy consumption of roughly 30 percent as compared to 
the AEMTCA standard. Based on this result, DOE has proposed an amended 
standard for equipment class SOC.SC.M in this NOPR (see section I and 
section V.A.2).
---------------------------------------------------------------------------

    \31\ This approach is similar to that adopted for all the other 
equipment classes, as explained in section IV.H.1.
    \32\ The criteria for trial standard level selection can be 
found in section V.A.1, and discussion concerning the selection of 
the proposed standard level can be found in section V.C.
---------------------------------------------------------------------------

    In response to AHRI's request that DOE use TDA as a normalization 
metric for this equipment, the January 2009 final rule standards for 
remote condensing SOC equipment were expressed using TDA as a 
normalization metric. 74 FR 1093 (Jan. 9, 2009). As AHRI suggested, DOE 
proposes in this NOPR to continue to use TDA as the normalization 
metric for SOC equipment.
    DOE is also proposing to adopt a new definition of the ``service 
over counter'' equipment family, which is included in this notice. DOE 
based its proposed definition on the definition of self-contained 
service-over-counter refrigerators (SOC.SC.M) found in Paragraph (1) of 
section 4 of AEMTCA. (42 U.S.C. 6313(c)(1)(C)) However, DOE proposes to 
adopt a broader definition of SOC equipment that DOE believes is 
applicable to all of the equipment classes that belong to the SOC 
equipment family, not just the single SOC.SC.M equipment class 
described by the AEMTCA language. The proposed definition can be found 
in section 0 of this NOPR.
2. Technology Assessment
    As part of the market and technology assessment performed for the 
NOPR analysis, DOE developed a comprehensive list of technologies that 
would be expected to improve the energy efficiency of commercial 
refrigeration equipment. Chapter 3 of the NOPR TSD contains a detailed 
description of each technology that DOE identified. Although DOE 
identified a complete list of technologies that improve efficiency, DOE 
only considered in its analysis technologies that would impact the 
efficiency rating of equipment as tested under the DOE test procedure. 
Therefore, DOE excluded several technologies from the analysis during 
the technology assessment because they do not improve the rated 
efficiency of equipment as measured under the specified test procedure. 
Technologies that DOE determined impact the rated efficiency were 
carried through to the screening analysis and are discussed in section 
IV.D.
a. Technologies Applicable to All Equipment
    In the preliminary analysis market and technology assessment, DOE 
listed the following technologies that would be expected to improve the 
efficiency of all equipment: higher efficiency lighting, higher 
efficiency lighting ballasts, remote lighting ballast location, higher 
efficiency expansion valves, higher efficiency evaporator fan motors, 
variable-speed evaporator fan motors and evaporator fan motor 
controllers, higher efficiency evaporator fan blades, increased 
evaporator surface area, low-pressure differential evaporators, 
increased case insulation or improvements, defrost mechanisms, defrost 
cycle controls, vacuum insulated panels, and occupancy sensors for 
lighting controls. Not all of these technologies were considered in the 
preliminary engineering analysis; some were screened out or removed 
from consideration on technical grounds, as described in chapters 3 and 
4 of the NOPR TSD. After the publication of the preliminary analysis, 
DOE received numerous stakeholder comments regarding these 
technologies, discussed below.
Lighting Technologies
    In response to DOE's request for comment, Southern Store Fixtures 
questioned DOE's specification for light-emitting diode (LED) lighting 
because it appeared that LEDs had a lower efficacy in terms of lumens 
per watt compared to T8 fluorescent lighting (the standard baseline 
lighting technology) in DOE's model. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at pp. 59-60) Zero Zone observed that while 
fluorescent lighting is a mature technology, LED lighting is constantly 
evolving. (Zero Zone, Public Meeting Transcript, No. 31 at p. 63) 
Additionally, Southern Store Fixtures suggested that the efficiency of 
the driver powering the LEDs be explicitly considered, as it is a key 
aspect of lighting energy consumption. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at p. 62) True noted that light output from 
LEDs is highly directional, and the additional heat load from the LEDs 
increases the load on the compressor, which is less efficient than the 
lighting system. (True, Public Meeting Transcript, No. 31 at pp. 60-61)
    Regarding the comment by Southern Store Fixtures, the output of LED 
light fixtures used in commercial refrigeration equipment is indeed 
lower in terms of lumens per watt when compared to T8 fluorescent 
bulbs. However, for commercial refrigerated display applications, the 
advantage of LED lighting lies in the directionality of its light 
output. While T8 lighting produces greater output in lumens, much of 
that light is directed toward the ambient space rather than the 
merchandise to be illuminated, and thus is wasted from a product 
merchandising perspective. LED lighting, on the other hand, is very 
directional, and the light can be aimed directly at the product on 
display. This difference allows for more conservative sizing of LED 
fixtures and, as a result, overall power consumption is lower compared 
to T8 fluorescent lamps.
    DOE agrees with the comment by Zero Zone that LED lighting is an 
evolving technology. As a result, DOE has taken efforts to update its 
LED fixture cost estimates throughout the rulemaking process, gathering 
the most current data available from publicly available sources as well 
as from manufacturer interviews. Regarding Southern Store Fixtures' 
concern about driver power, this power consumption is considered in the 
engineering model and is incorporated into the calculation of 
calculated daily energy consumption (CDEC). Similarly, with respect to 
True's comment, the impact of lighting on case heat load, and thus 
compressor power consumption, is accounted for in the engineering model 
through the use of a multiplier to estimate the fraction of light 
produced that is retained inside the case as heat.
Lighting Controls
    In addition to discussing lighting, stakeholders also commented on 
the location of lighting controls. Southern Store Fixtures observed 
that certain operators use central energy management systems to control 
the display case lighting, and asked if this approach would be 
considered instead of just the placement of occupancy sensors in 
individual display cases. The company added that when customers ask 
them to supply a case to be controlled by a central energy management 
system, the lights in the display cases must be wired separately from 
the other energy-consuming components. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at pp. 190-91, 194) Further, Southern Store 
Fixtures pointed out that CEC is considering these central lighting 
systems in its proceedings. (Southern Store Fixtures, Public Meeting 
Transcript, No. 31 at p. 197) Zero Zone stated that it typically wires 
cases with a separate lighting circuit to allow for

[[Page 55912]]

independent lighting control, while NEEA stated that if a case is wired 
differently to interface with centralized controls, it should be 
treated identically to a self-contained set of controls. (Zero Zone, 
Public Meeting Transcript, No. 31 at p. 196; NEEA, Public Meeting 
Transcript, No. 31 at p. 195) CA IOUs supported the manufacturer 
assertion made during the April 2011 preliminary analysis public 
meeting that it is possible to distinguish between cases designed for 
remote energy controls and those that are not. (CA IOUs, No. 42 at p. 
4) For this reason, the CA IOUs suggested that DOE develop a 
calculation to measure energy savings due to the use of such remote 
systems in the test procedure. (CA IOUs, No. 42 at p. 4)
    DOE acknowledges that there are several ways to implement lighting 
controls (e.g., individual case controls, controls for a case lineup, 
storewide energy management systems), and that allowing certain systems 
to be included in calculating energy consumption may set a precedent 
for how DOE defines the boundaries of covered equipment and what 
technologies are allocated energy savings for a piece of equipment in 
the test procedure. For example, cases set up to accept remote control 
systems have a dedicated circuit for lights so that the lights can be 
controlled separately from the rest of the case. However, this lighting 
circuit configuration does not inherently save energy and must be 
paired with an expensive energy management control system, which is 
sold separately from the piece of commercial refrigeration equipment, 
is produced by different manufacturers, and is not integral to the 
commercial refrigeration equipment. In addition, the existence of an 
energy management system does not necessarily mean it will be used with 
commercial refrigeration equipment; for example, energy management 
systems are used in many stores and offices to control room lighting 
and temperature set points.
    DOE acknowledges that remote lighting controls do save energy and 
may be the more commonly used technology to dim or turn off lights. 
However, energy consumption for a piece of commercial refrigeration 
equipment must be determined using the DOE test procedure to measure 
the energy consumption of a representative unit, as shipped to 
customers. Because the remote energy management system is not part of 
the piece of commercial refrigeration equipment as shipped from the 
manufacturer, but rather is a separate piece of equipment supplied by a 
separate manufacturer, remote energy management controls will not be 
considered as an energy conservation feature in this commercial 
refrigeration equipment rulemaking.
Part-Load Technologies
    Stakeholders also submitted comments on the subject of part-load 
and variable-capacity technologies. These are technologies that allow 
the performance of the system components to be varied in response to 
changes in the load placed on them, such as changes due to varying 
ambient conditions or product loading. PG&E requested that DOE clarify 
its stance on part-load technologies, suggesting that there was a 
disparity between the NOPR DOE published on November 24, 2010, which 
proposed amendments to DOE's test procedures for commercial 
refrigeration equipment (November 2010 test procedure NOPR (75 FR 71596 
(Nov. 24, 2010)) and the screening analysis presented in chapter 2 of 
the preliminary analysis TSD. Specifically, in the November 2010 test 
procedure NOPR, DOE stated that the proposed test procedure, which 
relied on AHRI Standard 1200 and ASHRAE Standard 72,\33\ is able to 
capture the energy-saving effects of some part-load technologies. (76 
FR 71601 (Nov. 24, 2010)). Conversely, in the screening analysis in 
chapter 2 of the preliminary analysis TSD, DOE removed some 
technologies from the analysis and stated that their effects could not 
be measured by the steady-state test procedure. PG&E asked DOE to 
clarify its stance and asked that, if DOE determines that the effects 
of these technologies can be measured, to include them in the screening 
and engineering analyses. PG&E later reiterated its desire that DOE be 
consistent in its approach toward technologies that maintain energy 
savings at variable ambient conditions or variable load. (PG&E, Public 
Meeting Transcript, No. 31 at pp. 51-52, 178)
---------------------------------------------------------------------------

    \33\ ANSI/ASHRAE Standard 72-2005. ``Method of Testing 
Commercial Refrigerators and Freezers.'' 2005. American Society of 
Heating, Refrigerating, and Air-Conditioning Engineers, Inc. 
Atlanta, GA.
---------------------------------------------------------------------------

    Similarly, CA IOUs noted a perceived disparity between DOE's 
statement in the preliminary analysis TSD chapter 2, where DOE stated 
that it ``believes that the energy saving potential of these 
technologies is already captured to some degree in the current test 
procedure,'' and chapter 4, where DOE stated that ``[t]echnologies that 
reduce energy use only under transient conditions, such as fluctuations 
in ambient temperature and humidity, periods of product loading, and 
frequent door openings, will not affect the measured CDEC. Therefore, 
DOE removed from consideration these technologies that do not affect or 
do not reduce CDEC during the tests.'' CA IOUs requested clarification 
of DOE's rationale for eliminating those technologies from 
consideration, and also requested that DOE include in its engineering 
analysis all technologies that can be measured in part by the test 
procedure, notably those that save energy at variable load or under 
fluctuating ambient conditions. (CA IOUs, No. 42 at p. 2) NEEA 
expressed its opinion that DOE had not yet adequately justified its 
lack of initiative in examining part-load technologies. (NEEA, No. 36 
at p. 4)
    Stakeholders questioned the ability of the DOE test procedure to 
reflect the performance of part-load technologies. In a written comment 
submitted jointly, ASAP and the Natural Resources Defense Council 
(NRDC) encouraged DOE to consider technologies that improve efficiency 
under part-load conditions in the engineering analysis, stating that 
DOE referenced in its test procedure NOPR the fact that units tested 
using ASHRAE 72, namely those with doors, experience variation in load 
due to the door opening requirements of the test. ASAP and NRDC 
mentioned that there is clearly a variation in refrigeration load 
during the test for this equipment, due to the door opening 
requirement. ASAP and NRDC added that, in its proposed test procedure, 
DOE also referred to transient load variation effects (76 FR 71601 
(Nov. 24, 2010)). ASAP and NRDC stated that, if single-speed 
compressors cycle on and off during the test, there is likely 
opportunity for variable-speed compressors to reduce energy consumption 
by increasing the operating effectiveness of heat exchangers and 
reducing cycling losses. (ASAP and NRDC, No. 34 at pp. 1-2)
    Interested parties also commented that it is important to 
distinguish between steady-state and full-load modes of operation, 
since equipment experiencing relatively constant loads is not 
necessarily operating at full load. ASAP and NRDC stated that if the 
compressor is cycling, this indicates that the equipment is operating 
at part load. ASAP and NRDC continued, stating that if a commercial 
refrigerator or freezer did operate at full load during a test, then it 
would not be able to maintain the necessary case temperature under the 
more extreme conditions that it would likely encounter in the field, 
posing a risk to food safety. Therefore, ASAP and NRDC stated, it is 
likely that manufacturers design equipment to meet a higher load than 
that experienced during a test, and that

[[Page 55913]]

technologies that improve part-load performance could reduce energy 
consumption for both open and doored cases. (ASAP and NRDC, No. 34 at 
p. 2) NEEA expressed a similar viewpoint, commenting that the door 
opening provision in ASHRAE 72 leads to load variation and that, even 
for open cases, it is unlikely that the refrigeration system is 
operating at full capacity during the test period, as this would make 
the system unable to meet load requirements and guarantee food safety 
under more extreme environmental conditions. (NEEA, No. 36 at p. 4) 
NEEA stated that, unless a refrigeration system is sized exactly for 
its operating load, and that load remains constant, there is good 
reason to examine part-load system performance. NEEA added that, since 
most refrigeration systems must perform under a variety of conditions, 
they will operate cyclically, leaving room for more-efficient operation 
during times of lower load. NEEA urged DOE to explore the use of 
variable-speed and variable-capacity components. (NEEA, No. 36 at p. 4)
    DOE received comments regarding the treatment and modeling of 
specific part-load technologies. ASAP stated that, in its proposed 
energy conservation standards for residential refrigerators (75 FR 
59470 (Sept. 27, 2010)), DOE had included variable-speed compressors as 
a design option, and that the residential refrigerators test procedure 
was also a steady-state test. ASAP asked why variable-speed compressors 
were considered for residential refrigerators but not for commercial 
refrigeration equipment. (ASAP, Public Meeting Transcript, No. 31 at p. 
54) NEEA commented that variable-speed condenser fans and condenser fan 
motor controllers could enable improved part-load performance, and that 
screening them out due to test procedure limitations is shortsighted. 
(NEEA, No. 36 at p. 3) NEEA added that high-efficiency expansion valves 
are becoming much more prevalent in refrigeration systems, and that 
they should be included in the analysis. NEEA stated that savings 
associated with high-efficiency expansion valves may arise in 
conjunction with other technologies installed as part of a part-load 
package and that, while these energy savings may be small, this should 
be proven by analysis. (NEEA, No. 36 at p. 3) CA IOUs requested 
clarification on how variable-speed compressors and modulating capacity 
compressors \34\ are covered in this rulemaking. CA IOUs stated that 
such compressor technologies did not appear to have been screened out 
or listed as an option, and appeared to have been included in the 
engineering analysis TSD chapter under the section discussing higher 
efficiency compressors. (CA IOUs, No. 42 at p. 2) Finally, ASAP and 
NRDC stated that the model used in the engineering analysis should be 
able to capture the potential benefits of technologies that improve 
part-load performance and that, if this is not the case, DOE should 
consider a different methodology. (ASAP and NRDC, No. 34 at p. 3)
---------------------------------------------------------------------------

    \34\ Variable-speed compressors are able to control the rate at 
which they operate in order to tailor their performance to varying 
conditions and thus reduce compressor cycling. Modulating capacity 
compressors, most commonly found in larger sizes used in compressor 
racks, allow for the volume of fluid being compressed by the moving 
pistons (and thus the throughput of the compressor) to be changed in 
response to load variations.
---------------------------------------------------------------------------

    After receiving these stakeholder comments, DOE reviewed its 
position on part-load and variable-capacity technologies, as 
articulated in chapter 2 of the preliminary analysis and test procedure 
NOPR publications (75 FR 71601 (Nov. 24, 2010)). DOE agrees there was a 
disparity between the preliminary analysis, in which DOE reiterated its 
position from the January 2009 final rule that part-load technologies 
could not be captured by the steady-state ASHRAE 72 method of test,\35\ 
and the test procedure NOPR, in which DOE stated that the door opening 
and night curtain testing portions of the test would in fact create 
part-load conditions. 75 FR 71601 (Nov. 24, 2010). DOE believes that 
the position presented in the test procedure NOPR is accurate, as the 
variation in operating conditions introduced by door openings and the 
use of night curtains could create an opportunity for part-load 
technologies to produce quantifiable energy impacts. DOE revised its 
position after reviewing the test procedure established in the 2012 
test procedure final rule (77 FR 10292 (Feb. 21, 2012)) and the energy 
consumption profile of equipment observed during testing conducted 
using the DOE test procedure. DOE believes the confusion arose due to 
the way in which the industry refers to the ASHRAE 72 method of test. 
As mentioned above, part load technologies allow a piece of commercial 
refrigeration equipment to respond to changes in refrigeration load 
that occur due to changes in ambient conditions or internal loads on 
the case. The ASHRAE 72 method of test prescribes a single fixed set of 
ambient conditions, so no major changes in refrigeration load are 
intentionally introduced through changes in ambient condition. Thus, 
the ASHRAE 72 method of test is often referred to as steady-state. 
However, as stated in the November 2010 test procedure NOPR, commercial 
refrigeration equipment tested using ASHRAE 72 experiences variation in 
refrigeration load due to door openings, drawing of the night curtain, 
and inherent compressor cycling that occur during the test. 77 FR 10308 
(Feb. 21, 2012). Realizing this, DOE has revised its position and 
agrees with ASAP, NRDC, and NEEA that the nature of the ASHRAE 72 
method of test, while conducted at fixed ambient operating conditions, 
is not strictly thermodynamically steady-state, as evidenced by 
compressor cycling and minor fluctuations in internal temperatures 
throughout the duration of the test. DOE also agrees with these 
stakeholders that the presence of compressor cycling demonstrates that 
commercial refrigeration units generally do not operate at full load 
during the test. From its discussions with manufacturers, DOE 
understands that most equipment can operate at temperatures lower than 
the equipment's given DOE rating temperature, and thus performance at 
the test procedure conditions would likely not constitute full-capacity 
operation.
---------------------------------------------------------------------------

    \35\ U.S. Department of Energy-Office of Energy Efficiency and 
Renewable Energy. Preliminary Technical Support Document (TSD): 
Energy Conservation Program for Certain Commercial and Industrial 
Equipment: Commercial Refrigeration Equipment. Chapter 5, 
Engineering Analysis. March 2011. Washington, DC. 
www.regulations.gov/#!documentDetail;D=EERE-2010-BT-STD-0003-0030.
---------------------------------------------------------------------------

    In response to the stakeholder suggestions that DOE include 
specific part-load technologies in the NOPR analyses, DOE investigated 
the technologies referenced by these commenters. DOE researched the 
state of part-load and variable-capacity technologies such as fan motor 
controllers and variable-speed compressors through available 
manufacturer and component supplier literature, as well as through its 
discussions with manufacturers during interviews. DOE found that that 
many of these part-load technologies had not yet been developed for the 
commercial refrigeration equipment industry to the extent that they 
could be adopted by manufacturers in the near future. For example, 
while variable-speed compressors are indeed, as some stakeholders 
mentioned, prevalent in residential refrigeration applications, their 
availability for commercial application is very limited and is not 
applicable to many equipment types. Some technologies were also removed

[[Page 55914]]

for functional purposes or because of concerns over food safety 
performance. Others were removed from consideration because they would 
not have measurable impacts under the test procedure. Therefore, while 
DOE did not screen out or preclude the analysis of part-load 
technologies, DOE did not utilize any of these technologies explicitly 
as design options in its engineering analysis. For further discussion 
of DOE's examination of these technologies, see chapters 3 through 5 of 
the NOPR TSD.
    DOE reiterates that the design options that it has chosen for this 
particular analysis, and the design paths used in modeling the proposed 
standard levels, do not constitute a prescriptive design requirement. 
In other words, DOE does not claim that the combinations of design 
options presented in the engineering analysis form unique paths for 
achieving higher energy efficiency. Manufacturers are free to utilize 
any design features available to them in order to develop compliant 
units, provided that those units meet all the requirements for testing 
under the DOE test procedure and other applicable regulations. Thus, 
should manufacturers develop part-load features that produce 
quantifiable reductions in energy consumption under the DOE test 
procedure, they are not prohibited from taking advantage of those 
features, even if particular technologies were not modeled in the 
analysis for this rulemaking.
b. Technologies Relevant Only to Equipment With Doors
    In chapter 3 of the preliminary analysis TSD, DOE mentioned three 
technologies that could apply only to doored equipment: anti-fog films, 
anti-sweat heater controllers, and high-performance doors. Not all of 
these technologies were considered in the preliminary engineering 
analysis, as some were screened out or removed from consideration on 
technical grounds. The following sections discuss stakeholder comments 
regarding these technologies.
Anti-Fog Films
    Zero Zone stated that research by Southern California Edison 
indicated that anti-fog films do not allow for the reduction of anti-
sweat heat. (Zero Zone, Public Meeting Transcript, No. 31 at p. 47)
    DOE reviewed the available literature regarding anti-fog films, and 
understands that these films alone do not necessarily eliminate the 
need for anti-sweat heaters under many conditions, including high 
ambient humidity, as they cannot prevent condensation from forming on 
the outside of the case. This shortcoming of anti-fog films can present 
a major problem for customers. Discussions with manufacturers have led 
DOE to believe that alternative improvements in door construction 
provide the capacity to reduce anti-sweat heat without the drawbacks 
mentioned here. Because of these issues, DOE did not consider anti-fog 
films on transparent doors as a design option. For further discussion 
of this subject, see chapter 5 of the NOPR TSD.
Anti-Sweat Heater Controllers
    During the April 2011 preliminary analysis public meeting, Zero 
Zone stated that anti-sweat controllers have the potential to save 
energy because the controllers would allow heaters to be designed with 
extra capacity for more humid climates. (Zero Zone, Public Meeting 
Transcript, No. 31 at p. 53) NEEA, ASAP, and NRDC all suggested DOE 
investigate Zero Zone's comment further, while the CA IOUs noted it may 
be possible to include a calculation method to address the benefit of 
these controllers. (NEEA, No. 36 at p. 3; ASAP and NRDC, No. 34 at p. 
2; CA IOUs, No. 42 at pp. 2-4)
    DOE raised the subject of anti-sweat heater controllers during its 
manufacturer interviews for this NOPR. Several manufacturers agreed 
that, within the context of the test procedure, anti-sweat heater 
controllers will effectively keep the power to anti-sweat heaters at 
the levels necessary for the test conditions. While anti-sweat 
controllers could also modulate the anti-sweat power further in the 
field to account for more or less extreme ambient conditions, a system 
equipped with anti-sweat heater controllers will not likely exhibit 
significantly different performance at test procedure conditions than 
will a unit with anti-sweat heaters tuned for constant 
75[emsp14][deg]F, 55 percent relative humidity conditions. Therefore, 
DOE did not consider anti-sweat heater controllers in the engineering 
analysis, as modeling these devices within the context of the test 
procedure would not yield appreciable energy savings over anti-sweat 
heaters that are properly sized for the test procedure ambient 
conditions. DOE notes that manufacturers that produce cases with anti-
sweat heater controls for higher temperature and humidity environments 
may use anti-sweat heater controllers in the test procedure, however.
High-Performance Doors
    Zero Zone also commented on high-performance doors, stating that 
when they were incentivized in California, retail stores used more 
energy because they had to set their air conditioning to a lower set 
point to avoid condensation. Zero Zone added that high-performance 
doors also sweat under conditions that are less favorable than the 
ASHRAE test conditions, and that DOE should evaluate technologies 
intended to be used for performance under actual conditions, not just 
under ASHRAE 72 test procedure conditions. Zero Zone stated that DOE 
should remove high-performance doors from the analysis. (Zero Zone, No. 
37 at pp. 1 and 3)
    During the NOPR engineering analysis, DOE reviewed its data for all 
design options, including high-performance doors. Transparent door 
performance was discussed at manufacturer interviews during the 
preliminary analysis and NOPR stages of the rulemaking, and the glass 
door designs considered in the engineering analysis are based on door 
models currently available on the market. The performance of these door 
designs was analyzed using Lawrence Berkeley National Laboratory's 
(LBNL's) WINDOW 5 software \36\ in conjunction with the analyses for 
DOE's ongoing energy conservation standards rule for walk-in coolers 
and freezers, an equipment type in which the same models of glass 
display doors are often employed. While it is true that extreme 
conditions could adversely impact glass door performance, as mentioned 
by Zero Zone, the performance of the equipment for this analysis was 
based on the standardized ASHRAE 72 test conditions of 75[deg]F and 55 
percent relative humidity, ambient conditions that have been accepted 
by industry, the ASHRAE working group, and DOE as being generally 
representative of the environments typically encountered by commercial 
refrigeration equipment.
---------------------------------------------------------------------------

    \36\ LBNL's WINDOW 5 software is a program designed for modeling 
the performance of windows, doors, and other fenestration devices.
---------------------------------------------------------------------------

    DOE believes that high-performance doors, such as those offered on 
the market by several door manufacturers and analyzed in this 
rulemaking, have the potential to save significant amounts of energy 
for transparent-door cases. Based on its market research and 
discussions with manufacturers, DOE has concluded that high-performance 
doors meet all the criteria for inclusion in its analysis, and has thus 
considered them as a design option in the engineering analysis.

[[Page 55915]]

c. Technologies Applicable Only to Equipment Without Doors
    In chapter 3 of the preliminary analysis TSD, DOE mentioned two 
technologies, air-curtain design and night curtains, that could 
potentially be used to improve the efficiency of commercial 
refrigeration equipment without doors. Air curtain design was not 
considered in the preliminary engineering analysis, as it was screened 
out and removed from consideration because, according to the 
information available to DOE, advanced air curtain designs are still in 
research and development stages and are not yet available for use in 
the manufacture of commercial refrigeration equipment. The following 
sections address stakeholder comments regarding technologies applicable 
to equipment without doors.
Night Curtains
    At the April 2011 preliminary analysis public meeting and in 
written comments, DOE received numerous comments from stakeholders 
regarding night curtains and their use in equipment without doors. CA 
IOUs agreed with DOE's decision to include night curtains in the 
analysis, but pointed out that such energy savings are only significant 
if the night curtains are properly deployed, and encouraged DOE to 
review and update its assumptions. (CA IOUs, No. 42 at pp. 4-5) Zero 
Zone also commented on the potential of night curtains to conserve 
energy, and stated that this technology should not be included in this 
rulemaking because there is no reasonable way to estimate how it will 
actually be used and because it cannot be used in 24-hour stores. (Zero 
Zone, No. 37 at p. 4) Southern Store Fixtures agreed with respect to 
these operational challenges, and also pointed out that CEC did not 
consider night curtains due to long PBPs, labor costs, and questions 
about the reliability of energy savings. (Southern Store Fixtures, No. 
38 at p. 1; Southern Store Fixtures, Public Meeting Transcript, No. 31 
at p. 42)
    Southern Store Fixtures expressed concern that the use of night 
curtains on open cases could create design and operational challenges, 
potentially resulting in an inefficient case with product temperature 
issues and the potential for noncompliance with food safety 
regulations. (Southern Store Fixtures, No. 38 at p. 1) Southern Store 
Fixtures also noted that major design changes will be needed for cases 
with night curtains. Specifically, the evaporator coil and expansion 
devices currently used in open cases will be significantly oversized 
for use with night curtains; the number of fans needed and airflow 
characteristics will change; and lighting and temperature controls will 
need to be altered in converting a standard open case to accommodate 
night curtains. Cases with night curtains would also, Southern Store 
Fixtures stated, require duplication of controls to be able to operate 
with and without the curtains. (Southern Store Fixtures, No. 38 at p. 
1) In summary, Southern Store Fixtures asserted that these issues would 
require a redesign of an open case for compatibility with night 
curtains and that, when considering the potential energy savings 
associated with the use of a night curtain, DOE should include the cost 
of performing such a redesign in its analysis. (Southern Store 
Fixtures, No. 38 at p. 1)
    During the public meeting, Zero Zone observed that doored and open 
cases have a similar energy profile, and therefore, night curtains 
could be used as a design option for doored equipment as well. (Zero 
Zone, Public Meeting Transcript, No. 31 at pp. 40-41)
    DOE acknowledges that the use of night curtains may not be 
consistent in the field. However, DOE's test procedures and energy 
conservation standards cannot control for equipment application and 
actual end use. Night curtains are an available technology for reducing 
energy consumption in commercial refrigeration equipment and DOE 
believes that including night curtains in its test procedure and energy 
conservation standards would allow manufacturers to take credit for the 
energy savings associated with this technology. In the 2012 test 
procedure final rule, DOE assumed 6 hours as the time period that night 
curtains would be implemented. 77 FR 10310 (Feb. 21, 2012). DOE 
believes that 6 hours conservatively represents the amount of time a 
night curtain would be drawn in a typical, non-24-hour store, when 
accounting for stocking and the fact that not all night curtains can be 
deployed at once. In addition, 6 hours is consistent with field data 
and studies that DOE has identified.37 38 39
---------------------------------------------------------------------------

    \37\ Southern California Edison, Refrigeration and Technology 
and Test Center, Energy Efficiency Division. Effects of the Low 
Emissivity Shields on Performance and Power Use of a Refrigerated 
Display Case. August 1997. Irwindale, CA. www.econofrost.com/acrobat/sce_report_long.pdf.
    \38\ Faramarzi, R. and Woodworth-Szieper, M. Effects of Low-E 
Shields on the Performance and Power Use of a Refrigerated Display 
Case. ASHRAE Transactions. 1999. 105(1).
    \39\ Portland Energy Conservation, Inc. Query of Database of 
GrocerySmart Data. Portland, OR. Received October 18, 2011. Last 
viewed July 23, 2011.
---------------------------------------------------------------------------

    With respect to Zero Zone's concern regarding the use of night 
curtains in 24-hour stores, DOE is not mandating the use of night 
curtains, but is simply accounting for them as one available energy 
efficiency technology. In addition, DOE notes that night curtains may 
be used in 24-hour stores during periods of low customer traffic. DOE 
further acknowledges that accounting for the energy savings associated 
with night curtains on open cases would, by definition, result in the 
setting of a more-stringent standard for open cases. DOE believes such 
a standard may encourage migration to the use of more-efficient doored 
cases for those cases used in contexts where the distinct utility of an 
open case is not required, while preserving the availability of open 
cases.
    Regarding Southern Store Fixtures' comment about the cost-
effectiveness of night curtains, DOE points out that the LCC analysis 
and NIA conducted by DOE are specifically aimed at assessing the cost-
effectiveness of all the design options used to achieve greater energy 
efficiency.
    DOE acknowledges Southern Store Fixtures' concerns regarding the 
costs associated with the need for equipment redesign due to presence 
of night curtains. After discussions with multiple manufacturers, DOE 
did not incorporate additional material costs and redesign costs 
associated with a secondary set of controls because most manufacturers 
do not implement this design according to information that DOE has 
obtained through market research and manufacturer interviews. DOE 
recognizes that individual manufacturers may select different design 
options and incur different conversion costs than those modeled by DOE. 
However, DOE attempts in its analysis to represent the choices most 
likely to be selected by the industry.
    Southern Store Fixtures also commented that use of night curtains 
on open cases could create design and operational challenges that would 
result in inefficient cases with product temperature issues and the 
potential for noncompliance with food safety regulations. (Southern 
Store Fixtures, No. 38 at p. 1) DOE acknowledges that, as with any new 
technology, implementation of night curtains on open cases may require 
slight adjustments to equipment design to ensure the case operates 
efficiently and effectively. During manufacturer interviews for the 
MIA, data was collected by manufacturer (under confidentiality 
agreements) and, in aggregate, DOE's resulting conclusion was that 
night curtains would not result

[[Page 55916]]

in the challenges discussed by Southern Store Fixtures. The prevalence 
of night curtains as retrofit options supports this conclusion as well. 
Thus, DOE believes that modifications can be made that allow open cases 
to be used with night curtains to achieve energy savings and improve 
temperature control, and has accounted for the cost to achieve these 
modifications in the MIA.
    In response to Zero Zone's comment regarding the use of night 
curtains on doored cases, it is DOE's understanding that night curtains 
can be applied to all types of open cases (i.e., vertical, 
semivertical, and horizontal), and that night curtains are most 
effective and commonly used on open cases rather than doored cases. DOE 
was not able to identify any public data regarding the use or potential 
for energy savings of night curtains on doored cases. Lacking a sound 
technical basis for including night curtains on doored cases in its 
analysis, DOE is hesitant to expand the definition of night curtain, as 
established in the 2012 test procedure final rule (77 FR 10296 (Feb. 
21, 2012)), to explicitly include doored cases at this time. On January 
6, 2011, DOE held a public meeting to discuss amendments to the DOE 
test procedure for commercial refrigeration equipment proposed in a 
NOPR DOE published on November 24, 2010. 75 FR 71596. At that January 
2011 test procedure NOPR public meeting, True stated that it had seen 
night curtains implemented on doored cases and that this does save a 
minimal amount of energy, but that these minor savings did not justify 
consideration of night curtains in the DOE test procedure. (Docket No. 
EERE-BT-2010-TP-0034, True, Public Meeting Transcript, No. 19 at pp. 
146-47) DOE agrees with True and believes that use of night curtains on 
doored cases will not significantly impact the daily energy consumption 
of the display case. Therefore, DOE did not incorporate the use of 
night curtains on cases with doors in the 2012 test procedure final 
rule. 77 FR 10297 (Feb. 21, 2012). Because night curtains on doored 
cases cannot be accounted for in the DOE test procedure, they are not 
included as a design option in the energy conservation standards 
analyses.
Strip Curtains
    While not providing specific comments on the included technologies, 
Earthjustice questioned DOE's grounds for not considering strip 
curtains \40\ in the analysis, stating that the criteria for 
considering design options in the analysis should be whether a 
technology is technologically feasible, economically justified, and 
reduces energy consumption, not whether it is currently used by 
manufacturers. (Earthjustice, Public Meeting Transcript, No. 31 at p. 
36) Earthjustice stated that DOE should include strip curtains as a 
design option because these devices can be installed by equipment 
purchasers, and this illustrates the ease and practicality of their 
use. (Earthjustice, No. 35 at p. 4) True stated that manufacturers do 
not install strip curtains at the factory because customers can often 
receive a secondary rebate for installing strip curtains at the point 
of end use. (True, Public Meeting Transcript, No. 31 at p. 40)
---------------------------------------------------------------------------

    \40\ Strip curtains consist of a series of strips of 
transparent, flexible material (usually plastic) that hang down and 
cover the opening of a case without doors. This creates a physical 
barrier that reduces ambient air infiltration into the case while 
still allowing customers and employees to access the product 
contained inside.
---------------------------------------------------------------------------

    While DOE understands that some end users purchase and install 
strip curtains on some open refrigerated display cases, DOE has no 
information as to the prevalence of use of these accessories. DOE has 
concerns that incorporating strip curtains into its analyses, and thus 
potentially into an amended standard, could impose restrictions similar 
to requiring the use of doors. Doing so would compromise one of the 
major utility factors of an open case. Namely, manufacturers have 
reported to DOE that the major utility of an open case is enhanced 
product visibility to the customer and easy access to product. 
Installation of a strip curtain would, by definition, inhibit both of 
these functions. Moreover, on technical grounds, strip curtains could 
potentially interfere with the operation of the existing air curtain in 
cases in which the air curtain is less than vertical. Thus, in response 
to the comment by Earthjustice, the latter issue described above is one 
of technical feasibility, while the former concern, reduction of 
utility, could make the consideration of strip curtains inconsistent 
with the requirements of EPCA. (42 U.S.C. 6295(o)(4) and 6316(e)(1)) 
While some end users may decide to install strip curtains on their own 
accord for their specific applications, DOE does not intend to explore 
their use as applicable to entire equipment classes.
d. Self-Contained Equipment Technologies
    In chapter 3 of the preliminary analysis, DOE listed several 
technologies that are applicable only to the self-contained equipment 
classes. One of the technologies mentioned in the preliminary market 
and technology assessment, but not considered for analysis as a design 
option, was liquid suction heat exchangers (LSHXs).\41\ NEEA commented 
that it did not see a reason for excluding LSHXs from the analysis for 
systems in which they are likely to be used, and that DOE should 
include them to the extent that the test procedure can be structured to 
capture their savings. (NEEA, No. 36 at p. 3) Southern Store Fixtures 
suggested that DOE investigate why CEC decided not to consider LSHXs 
because of potential refrigerant leaks. (Southern Store Fixtures, 
Public Meeting Transcript, No. 31 at p. 44)
---------------------------------------------------------------------------

    \41\ A liquid suction heat exchanger is a device intended to 
further cool the flow of liquid refrigerant entering the expansion 
valve from the condenser using the flow of gaseous refrigerant 
leaving the evaporator. The exchanger provides sub-cooling for the 
entering liquid by super-heating the exiting suction vapor. Hotter 
suction vapor is less susceptible to heat gains in the return piping 
to the compressor.
---------------------------------------------------------------------------

    During the NOPR stage of this rulemaking, DOE further investigated 
the subject of LSHXs as applicable to commercial refrigeration 
equipment. The information obtained by DOE indicated that LSHX 
performance depends on the specific design of a given system, as well 
as other factors, including refrigerant type, operating temperature, 
and ambient conditions. These factors all combine to determine whether 
an LSHX will reduce the energy consumption of a given system; in some 
systems, the use of an LSHX will actually increase energy consumption 
by introducing a greater pressure drop within the refrigeration 
circuit. DOE also heard comments from parties during manufacturer 
interviews and conferences concerning potential reliability and leakage 
issues such as those mentioned by Southern Store Fixtures. Because 
LSHXs may not improve efficiency in all systems and may experience 
reliability issues, DOE did not include LSHXs in its analysis. For more 
discussion of LSHXs, see chapter 3 of the NOPR TSD.

D. Screening Analysis

    DOE uses four screening criteria to determine which design options 
are suitable for further consideration in a standards rulemaking. 
Namely, design options will be removed from consideration if they are 
not technologically feasible; are not practicable to manufacture, 
install, or service; have adverse impacts on product utility or product 
availability; or have adverse impacts on health or

[[Page 55917]]

safety. 10 CFR part 430, subpart C, appendix A, sections (4)(a)(4) and 
(5)(b)
    In written comments submitted following the April 2011 preliminary 
analysis public meeting, Zero Zone stated that DOE was correct in 
screening out a number of technologies, as any technology needs to be 
thoroughly researched and proven reliable before inclusion for 
consideration in a standards rulemaking. Zero Zone cited demand defrost 
as an example of an unproven technology that, if its use were 
encouraged by an energy conservation standard, would produce poor 
results in the field. (Zero Zone, No. 37 at p. 1) DOE agrees with Zero 
Zone's comment, as it is compelled by the screening criteria to ensure 
that any technology considered is feasible to implement; practicable to 
manufacture, install, and service; does not adversely impact utility or 
availability; and would not lead to adverse impacts on health or 
safety.
    Based on all available information, DOE has concluded that: (1) All 
of the efficiency levels discussed in today's notice are 
technologically feasible; (2) equipment at these efficiency levels 
could be manufactured, installed, and serviced on a scale needed to 
serve the relevant markets; (3) these efficiency levels would not force 
manufacturers to use technologies that would adversely affect product 
utility or availability; and (4) these efficiency levels would not 
adversely affect consumer health or safety. Thus, the efficiency levels 
that DOE analyzed and discusses in this notice are all achievable 
through technology options that were ``screened in'' during the 
screening analysis.

E. Engineering Analysis

    The engineering analysis determines the manufacturing costs of 
achieving increased efficiency or decreased energy consumption. DOE 
historically has used the following three methodologies to generate the 
manufacturing costs needed for its engineering analyses: (1) The 
design-option approach, which provides the incremental costs of adding 
to a baseline model design options that will improve its efficiency; 
(2) the efficiency-level approach, which provides the relative costs of 
achieving increases in energy efficiency levels, without regard to the 
particular design options used to achieve such increases; and (3) the 
cost-assessment (or reverse engineering) approach, which provides 
``bottom-up'' manufacturing cost assessments for achieving various 
levels of increased efficiency, based on detailed data as to costs for 
parts and material, labor, shipping/packaging, and investment for 
models that operate at particular efficiency levels.
    As discussed in the Framework document and preliminary analysis, 
DOE conducted the engineering analyses for this rulemaking using a 
design-option approach for commercial refrigeration equipment. The 
decision to use this approach was made due to several factors, 
including the wide variety of equipment analyzed, the lack of numerous 
levels of equipment efficiency currently available in the market, and 
the prevalence of relatively easily implementable energy-saving 
technologies applicable to this equipment. More specifically, DOE 
identified design options for analysis and used a combination of 
industry research and teardown-based cost modeling to determine 
manufacturing costs, then employed numerical modeling to determine the 
energy consumption for each combination of design options employed in 
increased equipment efficiency. DOE selected a set of 24 high-shipment 
classes, referred to as ``primary'' classes, to analyze directly in the 
engineering analysis. Additional details of the engineering analysis 
are available in chapter 5 of the NOPR TSD.
1. Representative Equipment for Analysis
a. Representative Unit Selection
    In performing its engineering analysis, DOE selected representative 
units for each primary equipment class to serve as analysis points in 
the development of cost-efficiency curves. In selecting these units, 
DOE researched the offerings of major manufacturers to select models 
that were generally representative of the typical offerings produced 
within the given equipment class. Unit sizes, configurations, and 
features were based on high-shipment-volume designs prevalent in the 
market. Using this data, a set of specifications was developed defining 
a representative unit for each primary equipment class. These 
specifications include geometric dimensions, quantities of components 
(such as fans), operating temperatures, and other case features that 
are necessary to calculate energy consumption. Modifications to the 
units modeled were made as needed to ensure that those units were 
representative of typical models from industry, rather than a specific 
unit offered by one manufacturer. This process created a representative 
unit for each equipment class with typical characteristics for physical 
parameters (e.g., volume, TDA), and minimum performance of energy-
consuming components (e.g., fans, lighting).
    In its written comment following the preliminary analysis, Traulsen 
stated that DOE's choice of representative unit sizes for self-
contained commercial refrigeration equipment with doors was generally 
suitable, but added that factors such as cabinet sizes, door 
quantities, and door types contribute significantly to overall 
equipment performance. Traulsen cautioned that a failure to factor 
these variables into the analysis could lead to unintended obsolescence 
of models with these features. (Traulsen, No. 45 at p. 2) DOE agrees 
with Traulsen that there are numerous design factors that can influence 
the performance of commercial refrigeration equipment. In selecting 
representative units for analysis, DOE sought unit sizes and 
configurations that generally represented the most commonly sold 
equipment on the market. The geometric features DOE considered included 
unit volume, height, length and width, number of doors, and door 
orientation. DOE avoided considering any features or unit 
configurations that could skew the analysis away from sound 
representation of the majority of units produced within a chosen 
equipment class. As a result, DOE believes that its analysis and 
resulting proposed standards are applicable and extensible to the range 
of covered equipment in each class. In response to Traulsen's concern, 
DOE wishes to point out that it is compelled by statute to avoid the 
elimination of features or utility currently present in equipment on 
the market, and that the obsolescence of specific unique equipment 
types would be included in this provision. (42 U.S.C. 
6295(o)(2)(B)(IV), 6295(o)(4), and 6316(e)(1))
b. Baseline Models
    DOE created a set of baseline design specifications for each 
equipment class analyzed directly in the engineering model. Each set of 
representative baseline unit specifications, when combined with the 
lowest technological level of each design option applicable to the 
given equipment class, defines the energy consumption and cost of the 
lowest efficiency equipment analyzed for that class. DOE established 
baseline specifications by reviewing available manufacturer data for 
equipment manufactured at the time of the analysis, and by selecting 
components and design features that were representative of the most 
basic models being manufactured at the time of the analysis. Chapter 5 
of the NOPR TSD sets forth the specifications that DOE chose for each 
equipment class and

[[Page 55918]]

discusses baseline models in greater detail.
    One complexity involved in developing an engineering baseline was 
due to the timing of the analysis, which was conducted in 2010 and 
2011. Because the analysis was performed in proximity to the January 
2009 final rule compliance date of January 1, 2012 (74 FR 1092 (Jan. 9, 
2009)), and the compliance date for the standards established in EPCA 
of January 1, 2010 (42 U.S.C. 6313(c)(2)-(3)), it was difficult for DOE 
to establish a market baseline reflecting compliance with any specific 
set of standards. In particular, the equipment covered by the January 
2009 final rule was not required to comply with amended standards until 
after the preliminary and NOPR analyses had been performed. As a 
result, DOE retained the engineering baseline and associated 
technologies used in its January 2009 final rule engineering analysis 
and expanded them to accommodate the new equipment classes covered by 
the standards initially established by EPCA. (42 U.S.C. 6313(c)(2)-(3)) 
DOE then added technologies to this baseline to develop its cost-
efficiency curves. As a result, some of the engineering results 
represent units that are below the standard levels for equipment 
currently on the market and subject to the DOE's existing standards. 10 
CFR 431.66 However, in its LCC and other downstream analyses, DOE 
accounted for this fact by utilizing a standards baseline as the 
minimum efficiency level examined, thereby truncating the engineering 
design option levels so that the lowest efficiency point analyzed 
corresponded to the current standard level with which that particular 
piece of equipment would have to comply. The exact procedure is 
described in section IV.H.1, and additional details are provided in 
chapter 8 of NOPR TSD.
2. Design Options
    After conducting the screening analysis and removing from 
consideration technologies that did not warrant inclusion on technical 
grounds, DOE included the remaining technologies as design options in 
the energy consumption model for its NOPR engineering analysis:
     Higher efficiency lighting and occupancy sensors for VOP, 
SVO, and SOC equipment families (horizontal fixtures);
     Higher efficiency lighting and occupancy sensors for VCT 
and PD equipment families (vertical fixtures);
     Improved evaporator coil design;
     Higher efficiency evaporator fan motors;
     Improved case insulation;
     Improved doors for VCT equipment family, low temperature 
and ice-cream temperature (hinged);
     Improved doors for VCT and PD equipment families, medium 
temperature (hinged);
     Improved doors for HCT equipment family, low temperature 
and ice-cream temperature (sliding);
     Improved doors for HCT equipment family, medium 
temperature (sliding);
     Improved doors for SOC equipment family, medium 
temperature (sliding);
     Improved condenser coil design (for self-contained 
equipment only);
     Higher efficiency condenser fan motors (for self-contained 
equipment only);
     Higher efficiency compressors (for self-contained 
equipment only); and
     Night curtains (equipment without doors only).
3. Refrigerants
    For the preliminary analysis, DOE considered two refrigerants, 
hydrofluorocarbons (HFCs) R-134a and R-404a, because these are the 
industry-standard choices for use in the vast majority of commercial 
refrigeration equipment covered by this rulemaking. This selection was 
consistent with the modeling performed in the January 2009 final rule, 
which was based on industry research and stakeholder feedback at that 
time. After the publication of the preliminary analysis, DOE received 
several comments on potential future issues relating to refrigerants 
for this equipment. Emerson noted that possible future EPA actions 
could prohibit certain refrigerants, which would reduce equipment 
efficiency, and suggested that if EPA is going to use total emissions 
as the basis for Significant New Alternatives Policy (SNAP) \42\ 
regulations, then energy efficiency must also be considered by the EPA 
when making those determinations. However, Emerson conceded that the 
discussion of potential action by EPA was speculative at this point. 
(Emerson, Public Meeting Transcript, No. 31 at pp. 48, 157-58) 
Similarly, True observed that EPA proposals could result in the banning 
of R134a and R404a, and that while there are replacements for R134a, it 
would be difficult to replace R404a. (True, Public Meeting Transcript, 
No. 31 at p. 154) However, AHRI remarked that it believed that EPA was 
only considering NRDC's petition for removal of R134a \43\ from the 
list of acceptable substitutes under the SNAP program in the context of 
automotive air-conditioning applications, and that EPA is not currently 
seeking to restrict the use of R134a in the commercial refrigeration 
industry. (AHRI, Public Meeting Transcript, No. 31 at pp. 155-56) True 
also pointed out that the removal of HFCs from remote condensing 
equipment would likely necessitate a total system design and a shift 
toward cascade equipment. (True, Public Meeting Transcript, No. 31 at 
pp. 152-53) However, True stated that 90 percent of its market is for 
self-contained equipment, and that 85 percent of its products could be 
converted to alternative refrigerants with minimal cost increases and 
efficiency losses. (True, Public Meeting Transcript, No. 31 at p. 155)
---------------------------------------------------------------------------

    \42\ SNAP is EPA's program to evaluate and regulate substitutes 
for the ozone-depleting chemicals that are being phased out under 
the stratospheric ozone protection provisions of the Clean Air Act. 
For more information, please see: www.epa.gov/ozone/snap/.
    \43\ In May 2010, the Natural Resources Defense Council 
petitioned the EPA to remove HFC-134a from the list of acceptable 
substitutes under the SNAP program. In February 2011, the EPA 
concluded that NRDC's petition was complete with respect to the end 
use of motor vehicle air conditioners, and expressed its intent to 
begin a rulemaking on the topic. For more information, please see: 
www.epa.gov/ozone/downloads/NRDC_petition_responses.pdf.
---------------------------------------------------------------------------

    Commenters also provided information regarding the performance and 
regulatory status of specific alternative refrigerants. True noted that 
it had tested a large amount of isobutene and propane-driven equipment, 
which exhibited an efficiency gain of 7 to 11 percent in smaller 
equipment. True stated that the use of these alternative refrigerants 
was not overly cost burdensome because of the recent increase in the 
cost of HFC refrigerants, but that they could not be used on larger 
equipment because of SNAP regulations involving refrigerant charge 
levels. (True, Public Meeting Transcript, No. 31 at pp. 151-52, 155) 
However, True added, the need to address flammability concerns in the 
interest of safety could result in significant cost increases for 
certain components. True further stated that the EPA SNAP program's 
discussion of allowing 150-gram charges of propane as a refrigerant in 
self-contained commercial applications would not be a factor that could 
prevent use of these refrigerants, and that propane is not currently 
excluded from use by most building codes. (True, Public Meeting 
Transcript, No. 31 at p. 152, 159) Emerson asked whether building codes 
could be changed to allow for numerous 150-gram charges within a 
supermarket. (Emerson, Public Meeting Transcript, No. 31 at p. 158) 
Coca-Cola mentioned that it had

[[Page 55919]]

selected transcritical \44\ CO2 as an alternative for 
applications in the United States, but could not provide efficiency 
data. (Coca-Cola, Public Meeting Transcript, No. 31 at p. 157) NEEA 
noted that Daikin Industries, Ltd., the world's largest central air 
conditioner manufacturer, was progressing toward using only non-halogen 
refrigerants in its products. (NEEA, Public Meeting Transcript, No. 31 
at p. 161) AHRI encouraged DOE to not assume constant refrigerant 
prices over the analysis period it considers because legislation has 
been introduced that could result in the unavailability of HFC 
refrigerants and lead to significant price increases. (AHRI, No. 43 at 
p. 3)
---------------------------------------------------------------------------

    \44\ A transcritical system is one in which the refrigerant 
changes phase during the course of the refrigeration cycle.
---------------------------------------------------------------------------

    In its written comments, NEEA provided an alternative viewpoint, 
stating that it did not believe refrigerant issues are significant for 
this rulemaking. This is because, according to NEEA, refrigerant issues 
(referring to past phase-outs of CFCs, HCFCs, and other refrigerant 
types used in the past) have been known for almost 20 years. 
Historically, these issues have included the phase-outs of 
chlorofluorocarbons (CFCs) and HFCs in accordance with the Montreal 
Protocol.\45\ Manufacturers have contended with these issues over time, 
and understand the design changes needed to adapt to new refrigerants. 
NEEA added that shifts to different refrigerants will have to be made 
regardless of the course that any one rulemaking takes. Further, NEEA 
pointed to the statements by several manufacturers that a reduction of 
system efficiency due to implementation of new refrigerants should not 
be assumed. NEEA agreed with these manufacturers and suggested that it 
is likely that these parties will resolve refrigerant issues in a way 
that will not compromise efficiency and that will not be cost-
prohibitive. In conclusion, NEEA stated that refrigerant issues are not 
new and that the outcome of the standards-setting process is not likely 
to affect how manufacturers resolve these issues. (NEEA, No. 36 at pp. 
6-7)
---------------------------------------------------------------------------

    \45\ The Montreal Protocol on Substances that Deplete the Ozone 
Layer is an international treaty that was designed to protect the 
ozone layer by phasing out many ozone depleting substances.
---------------------------------------------------------------------------

    While future regulations may cap or eliminate the use of the 
currently prevalent refrigerants, and proposed legislation, such as the 
American Clean Energy and Security Act of 2009,\46\ has included HFC 
phase-downs, DOE does not speculate on the impact of proposed 
legislation in current rulemaking analyses. Additionally, as mentioned 
above, many low global warming potential (GWP) refrigerants, such as 
CO2 and propane, are being introduced to the market, and use 
of these new refrigerants may influence the cost and efficiency of 
equipment. However, DOE is not in a position to predict future trends 
of the refrigerants market or the performance of alternative 
refrigerants, and any analysis conducted at this time would be 
speculative. Consequently, DOE is not considering the potential effects 
of alternative refrigerants or current or future legislation on 
refrigerants within the scope of this rulemaking. Instead, DOE will 
continue to model equipment as currently designed for the U.S. market, 
utilizing the most common HFC refrigerants, R-134A and R-404A, accepted 
and broadly used by the industry. To the extent that there has been 
experience within the industry, domestically or internationally, with 
the use of alternative low-GWP refrigerants, DOE requests any available 
information, specifically cost and efficiency information relating to 
use of alternative refrigerants. DOE acknowledges that there are 
government-wide efforts to reduce emissions of HFCs, and such actions 
are being pursued both through international diplomacy as well as 
domestic actions. DOE, in concert with other relevant agencies, will 
continue to work with industry and other stakeholders to identify safer 
and more sustainable alternatives to HFCs while evaluating energy 
efficiency standards for this equipment.
---------------------------------------------------------------------------

    \46\ Colloquially known as the Waxman-Markey Bill, this 
legislation (H.R. 2454) would have established an emissions cap and 
trade system in the United States. It was passed by the House of 
Representatives in June 2009, but was tabled by the Senate. For more 
information, please see http://thomas.loc.gov/cgi-bin/bdquery/z?d111:H.R.2454:.
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4. Cost Assessment Methodology
    During the preliminary analysis, DOE developed costs for the core 
case structure of the representative units it modeled, based on cost 
estimates performed in the analysis for the January 2009 final rule. 
For more information, see chapter 5 of the preliminary analysis TSD, 
pp. 5-3 to 5-8. DOE also developed costs for the design option levels 
implemented, based on publicly available information and price quotes 
provided during manufacturer interviews. These costs were combined in 
the engineering cost model based on the specifications of a given 
modeled unit in order to yield manufacturer production cost (MPC) 
estimates for each representative unit at each configuration modeled. 
At the preliminary analysis rulemaking stage, DOE's component cost 
estimates were based on data developed from manufacturer interviews, 
estimates from the January 2009 final rule, and publicly available cost 
information. During the NOPR analysis, DOE augmented this information 
with data from physical teardowns of commercial refrigeration equipment 
currently on the market.
    During the development of the engineering analysis for this NOPR, 
DOE interviewed manufacturers to gain insight into the commercial 
refrigeration industry, and to request feedback on the engineering 
analysis methodology, data, and assumptions that DOE used. Based on the 
information gathered from these interviews, along with the information 
obtained through a teardown analysis and public comments, DOE refined 
the engineering cost model. Next, DOE derived manufacturer markups 
using publicly available commercial refrigeration industry financial 
data, in conjunction with manufacturer feedback. The markups were used 
to convert the MPCs into MSPs. Further discussion of the comments 
received and the analytical methodology used is presented in the 
following subsections. For additional detail, see chapter 5 of the NOPR 
TSD.
a. Teardown Analysis
    In the preliminary analysis TSD, DOE expressed its intent to update 
its core case cost estimates, which were at that time developed based 
on estimates from the January 2009 final rule, through performing 
physical teardowns of selected units. These core case costs consist of 
the costs to manufacture the structural members, insulation, shelving, 
wiring, etc., but not the costs associated with the components that 
could directly affect energy consumption, which were considered 
collectively as design options and served as one of many inputs to the 
engineering cost model. DOE first selected representative units for 
physical teardown based on available offerings from the catalogs of 
major manufacturers. DOE selected units that had sizes and feature sets 
similar to those of the representative units modeled in the engineering 
analytical model. DOE selected units for teardown representing each of 
the proposed equipment families, with the exception of the HZO 
family.\47\ The units were

[[Page 55920]]

then disassembled into their base components, and DOE estimated the 
materials, processes, and labor required for the manufacture of each 
individual component. This process is referred to as a ``physical 
teardown.'' Using the data gathered from the physical teardowns, DOE 
characterized each component according to its weight, dimensions, 
material, quantity, and the manufacturing processes used to fabricate 
and assemble it. These component data were then entered into a 
spreadsheet and organized by system and subsystem levels to produce a 
comprehensive bill of materials (BOM) for each unit analyzed through 
the physical teardown process.
---------------------------------------------------------------------------

    \47\ The reason why no HZO units were torn down was that the HZO 
family is the least complex of the equipment classes with respect to 
its construction. DOE felt that there was no additional data which 
could be gained from teardown of this equipment which would not have 
already been captured by the teardowns of other units.
---------------------------------------------------------------------------

    The physical teardowns allowed DOE to identify the technologies, 
designs, and manufacturing techniques that manufacturers incorporated 
into the equipment that DOE analyzed. The result of each teardown was a 
structured BOM, incorporating all materials, components, and fasteners, 
classified as either raw materials or purchased parts and assemblies, 
and characterizing the materials and components by weight, 
manufacturing processes used, dimensions, material, and quantity. The 
BOMs from the teardown analysis were then modified, and the results 
used as one of the inputs to the cost model to calculate the MPC for 
each representative unit modeled. The MPCs resulting from the teardowns 
were then used to develop an industry average MPC for each equipment 
class analyzed. See chapter 5 of the NOPR TSD for more details on the 
teardown analysis.
b. Cost Model
    The cost model for this rulemaking was divided into two parts. The 
first of these was a standalone core case cost model, based on physical 
teardowns, that was used for developing the core case costs for the 24 
directly analyzed equipment classes. This cost model is a spreadsheet 
that converts the materials and components in the BOMs from the 
teardowns units into MPC dollar values based on the price of materials, 
average labor rates associated with manufacturing and assembling, and 
the cost of overhead and depreciation, as determined based on 
manufacturer interviews and DOE expertise. To convert the information 
in the BOMs to dollar values, DOE collected information on labor rates, 
tooling costs, raw material prices, and other factors. For purchased 
parts, the cost model estimates the purchase price based on volume-
variable price quotations and detailed discussions with manufacturers 
and component suppliers. For fabricated parts, the prices of raw metal 
materials (e.g., tube, sheet metal) are estimated based on 5-year 
averages calculated from cost estimates obtained from sources including 
the American Metal Market and manufacturer interviews. The cost of 
transforming the intermediate materials into finished parts is 
estimated based on current industry pricing.
    The function of the cost model described above is solely to convert 
the results of the physical teardown analysis into core case costs. To 
achieve this, components immaterial to the core case cost (lighting, 
compressors, fans, etc.) were removed from the BOMs, leaving the cost 
model to generate values for the core case costs for each of the 
teardown points. Then, these teardown-based core case BOMs were used to 
develop a ``parameterized'' computational cost model, which allows a 
user to virtually manipulate case parameters such as height, length, 
insulation thickness, and number of doors by inputting different 
numerical values for these features to produce new cost estimates. For 
example, a user could start with the teardown data for a two-door case 
and expand the model of the case computationally to produce a cost 
estimate for a three-door case by changing the parameter representing 
the number of doors. This parameterized model, coupled with the design 
specifications chosen for each representative unit modeled in the 
engineering analysis, was used to develop core case MPC cost estimates 
for each of the 24 directly analyzed representative units. These values 
served as one of several inputs to the engineering cost model.
    The engineering analytical model, as implemented by DOE in a 
Microsoft Excel spreadsheet, also incorporated the engineering cost 
model, the second cost modeling tool used in this analysis. In the 
engineering cost model, core case costs developed based on physical 
teardowns were one input, and costs of the additional components 
required for a complete piece of equipment (design options) were 
another input. The two inputs were added together to arrive at an 
overall MPC value for each equipment class. Based on the configuration 
of the system at a given design option level, the appropriate design 
option costs were added to the core case cost to reflect the cost of 
the entire system. Costs for design options were calculated based on 
price quotes from publicly available sources and discussions with 
commercial refrigeration equipment manufacturers. Chapter 5 of the NOPR 
TSD describes DOE's cost model and definitions, assumptions, data 
sources, and estimates.
    Some stakeholders expressed concern with the potential variability 
in prices that served as inputs to the cost model. NEEA suggested that 
using a forecast of materials futures market pricing might be a better 
approach than using a historical average, and Hill Phoenix questioned 
whether the 2009 cost model had been updated, as its cost structure had 
significantly increased since that time. (NEEA, Public Meeting 
Transcript, No. 31 at pp. 85-86; Hill Phoenix, Public Meeting 
Transcript, No. 31 at p. 84) Southern Store Fixtures agreed with Hill 
Phoenix, and noted that it would be advisable to use 2011 costs for 
equipment that complies with the January 2009 final rule, instead of a 
current market baseline. (Southern Store Fixtures, Public Meeting 
Transcript, No. 31 at pp. 86-87)
    Regarding the comments from Hill Phoenix and Southern Store 
Fixtures, DOE has updated all of its cost modeling information. This 
information includes component costs, which were based on public-source 
data and estimates provided during manufacturer interviews, and core 
case costs, which were developed based on DOE's teardown analysis 
performed during the NOPR stage of the rulemaking. In response to 
Southern Store Fixtures' comment that DOE should use 2011 costs in its 
analyses for equipment that complies with the January 2009 final rule, 
DOE believes that materials prices depend on broader market conditions 
and are unlikely to be influenced by equipment that complies with the 
January 2009 final rule. DOE calculates the materials cost based on 
price information gathered from the market, and uses a methodology 
based on the Bureau of Labor Statistics (BLS) Producer Price Indices to 
account for fluctuations in materials prices and processing costs. 
Regarding NEEA's suggestion that using a forecast of materials futures 
market pricing might be preferable to using an historical average, DOE 
believes that such price forecasting is speculative, and therefore DOE 
has continued to use actual prices and averages thereof as the basis 
for its analyses.
c. Manufacturer Production Cost
    Once the cost estimates for all the components of each 
representative unit, including the core case cost and design option 
costs, were finalized, DOE totaled the costs in the engineering cost 
model to calculate the MPC. DOE estimated the MPC at each efficiency

[[Page 55921]]

level considered for each directly analyzed equipment class, from the 
baseline through the max-tech. After incorporating all of the 
assumptions into the cost model, DOE calculated the percentages 
attributable to each element of total production cost (i.e., materials, 
labor, depreciation, and overhead). DOE used these production cost 
percentages in the MIA (see section IV.K). DOE revised the cost model 
assumptions used for the preliminary analysis based on teardown 
analysis, updated pricing, and additional manufacturer feedback, which 
resulted in refined MPCs and production cost percentages. DOE 
calculated the average equipment cost percentages by equipment class. 
Chapter 5 of the NOPR TSD presents DOE's estimates of the MPCs for this 
rulemaking, along with the different percentages attributable to each 
element of the production costs that comprise the total MPC.
d. Cost-Efficiency Relationship
    The result of the engineering analysis is a cost-efficiency 
relationship. DOE created a separate relationship for each input 
capacity associated with each commercial refrigeration equipment class 
examined for this NOPR. DOE also created 24 cost-efficiency curves, 
representing the cost-efficiency relationship for each commercial 
refrigeration equipment class.
    To develop cost-efficiency relationships for commercial 
refrigeration equipment, DOE examined the cost differential to move 
from one design option to the next for manufacturers. DOE used the 
results of teardowns to develop core case costs for the equipment 
classes modeled, and added those results to costs for design options 
developed from publicly available pricing information and manufacturer 
interviews. Additional details on how DOE developed the cost-efficiency 
relationships and related results are available in the chapter 5 of the 
NOPR TSD. Chapter 5 of the NOPR TSD also presents these cost-efficiency 
curves in the form of energy efficiency versus MPC. After the 
publication of the preliminary analysis, several stakeholders provided 
input and feedback regarding DOE's cost estimates, specifically 
regarding insulation costs, LED lighting costs, and DOE's methodology 
for estimating manufacturer overhead in its cost model. The following 
sections address these stakeholder comments and concerns.
Insulation Cost Specifications
    Several stakeholders submitted comments regarding DOE's estimated 
costs and specifications for insulation. Traulsen observed that DOE's 
estimates for the number of foaming fixtures \48\ present in a 
manufacturing facility and units per year are high if they are meant to 
represent the production of a base model by an average manufacturer. 
(Traulsen, No. 45 at p. 4) Zero Zone noted that the material costs for 
increasing foamed-in-place panels are not trivial, and that its foam 
cost associated with adding a half inch of insulation to a five-door 
case is approximately $25. (Zero Zone, No. 37 at p. 3) Zero Zone also 
commented that the engineering costs modeled by DOE do not include any 
redesign costs that are incurred as wall thickness changes, and that 
foamed-in-place sheet metal panels are an integral part of the 
structural design of cases. However, Zero Zone expressed concern that 
the ability of vacuum insulated panels to perform as structural members 
has not been verified and should be validated before vacuum insulated 
panels are included in the analysis. (Zero Zone, No. 37 at p. 3) Zero 
Zone concluded by stating that increased foam panel thickness should be 
dropped from the analysis because DOE had not collected sufficient, 
accurate cost information regarding this design option. (Zero Zone, No. 
37 at p. 3)
---------------------------------------------------------------------------

    \48\ Foaming fixtures are pieces of equipment consisting of 
molds to guide the injection of foamed-in-place insulation so that 
that the foam takes a desired shape once hardened.
---------------------------------------------------------------------------

    DOE considered these comments in revising its implementation of 
improved insulation during the NOPR analyses. Regarding Traulsen's 
statement, DOE based its estimates of costs and specifications on 
discussions with manufacturers and site visits of manufacturing 
facilities and, while DOE understands the variability in manufacturing 
practices and equipment utilization that exists across manufacturers 
and product line offerings, DOE believes those estimates are sound. DOE 
took into account the comment from Zero Zone regarding additional foam 
costs and, in response, accounted for the differential cost of 
additional foam due to changes in wall thickness in its engineering 
analysis for the NOPR. However, regarding Zero Zone's assertion that 
redesign costs are not accounted for in the engineering analysis, the 
engineering model does include an estimate of engineering cost to 
account for the design efforts that must be incurred in developing a 
case with higher wall thickness. DOE has also discussed the 
implementation of vacuum insulated panels with manufacturers, cross-
referenced its data with other rulemaking analyses in which vacuum 
insulated panels were used, and revised its data accordingly. As a 
result, DOE believes that its estimates and assumptions for improved 
insulation are valid, and has retained those design options for the 
NOPR.
Light-Emitting Diode Cost Specifications
    Stakeholders also provided feedback on pricing and performance 
related to DOE's LED specifications in the engineering model. ASAP and 
NRDC stated that DOE should not assume LED prices remain constant 
because LEDs are an emerging technology and will likely experience a 
dramatic price decline in the near future. The comment cited DOE's 2011 
Solid-State Lighting Research and Development (R&D) Multi-Year Program 
Plan (MYPP),\49\ which projects that, between 2010 and 2015, prices of 
some LEDs will decrease by 85 percent, while LED lighting will 
experience a significant increase in efficacy during the same period. 
(ASAP and NRDC, No. 34 at p. 3) These stakeholders added that it is 
important for DOE to capture cost decreases not only during the 
analysis period (2017-2046), but prior to the proposed 2017 compliance 
date for the amended standards considered in this rulemaking as well, 
stating that a price estimate for 2017 will be needed for the LCC 
calculations to be accurate. ASAP and NRDC stated that, according to 
the DOE solid-state lighting documents referenced, if today's LED 
prices are held constant through the 2017 compliance date, the result 
will be a misrepresentation in the LCC of the value of potential LED 
energy savings; as a result, ASAP and NRDC urged DOE to develop cost 
estimates reflecting this price decline. (ASAP and NRDC, No. 34 at p. 
3) NEEA referenced the DOE 2011 MYPP as well, and agreed that it 
believed that DOE is grossly overestimating the future cost of LED 
lighting. (NEEA, No. 36 at pp. 3-4)
---------------------------------------------------------------------------

    \49\ The DOE Solid-State Lighting Research and Development 
Multi-Year Program Plan outlines DOE's research goals and planned 
methodologies with respect to the advancement of solid-state 
lighting technologies in the United States. The complete document is 
available at: http://apps1.eere.energy.gov/buildings/publications/pdfs/ssl/ssl_mypp2011_web.pdf.
---------------------------------------------------------------------------

    DOE agrees with these stakeholders that forecasts of the LED 
lighting industry, including those performed by DOE, suggest that LED 
lighting is an emerging technology that will continue to experience 
significant price decreases in coming years. For this reason, to 
capture the anticipated cost reduction in LED fixtures in the analyses 
for this

[[Page 55922]]

rulemaking, DOE incorporated price projections from its Solid-State 
Lighting Program into its MPC values for the primary equipment classes. 
The price projections for LED case lighting were developed from 
projections developed for the DOE Solid-State Lighting Program 2012 
report, Energy Savings Potential of Solid-State Lighting in General 
Illumination Applications 2010 to 2030 (``the energy savings 
report'').\50\ In the appendix of this report, price projections from 
2010 to 2030 were provided in ($/klm) for LED lamps and LED luminaires. 
DOE analyzed the models used in the Solid-State Lighting Program work 
and determined that the LED luminaire projection would serve as an 
appropriate proxy for a cost projection to apply to refrigerated case 
LEDs.
---------------------------------------------------------------------------

    \50\ Navigant Consulting, Inc., Energy Savings Potential for 
Solid-State Lighting in General Illumination Applications. 2012. 
Prepared for the U.S. Department of Energy--Office of Energy 
Efficiency and Renewable Energy Building Technologies Office, 
Washington, DC.
---------------------------------------------------------------------------

    The price projections presented in the Solid-State Lighting 
Program's energy savings report are based on the DOE's 2011 MYPP. The 
MYPP is developed based on input from manufacturers, researchers, and 
other industry experts. This input is collected by the DOE at annual 
roundtable meetings and conferences. The projections are based on 
expectations dependent on the continued investment into solid-state 
lighting by the DOE.
    DOE incorporated the price projection trends from the energy 
savings report into its engineering analysis by using the data to 
develop a curve of decreasing LED prices normalized to a base year. 
That base year corresponded to the year when LED price data was 
collected for the NOPR analyses of this rulemaking from catalogs, 
manufacturer interviews, and other sources. DOE started with this 
commercial refrigeration equipment-specific LED cost data and then 
applied the anticipated trend from the energy savings report to 
forecast the projected cost of LED fixtures for commercial 
refrigeration equipment at the time of compliance with the proposed 
rule (2017). These 2017 cost figures were incorporated into the 
engineering analysis as comprising the LED cost portions of the MPCs 
for the primary equipment classes. Table IV.1 shows the normalized LED 
price deflators used in this NOPR analysis.

                            Table IV.1--LED Price Deflators Used in the NOPR Analysis
----------------------------------------------------------------------------------------------------------------
                                 Normalized to   Normalized to                     Normalized to   Normalized to
             Year                    2013            2017             Year             2013            2017
----------------------------------------------------------------------------------------------------------------
2010..........................           2.998           5.652  2021............           0.361           0.681
2011..........................           1.799           3.392  2022............           0.335           0.631
2012..........................           1.285           2.423  2023............           0.312           0.588
2013..........................           1.000           1.885  2024............           0.292           0.550
2014..........................           0.819           1.543  2025............           0.274           0.517
2015..........................           0.693           1.306  2026............           0.259           0.488
2016..........................           0.601           1.133  2027............           0.245           0.462
2017..........................           0.530           1.000  2028............           0.232           0.438
2018..........................           0.475           0.895  2029............           0.221           0.417
2019..........................           0.430           0.810  2030............           0.211           0.398
2020..........................           0.393           0.740  2031-2046 *.....           0.211           0.398
----------------------------------------------------------------------------------------------------------------
* DOE did not have data available to project prices beyond 2030. Therefore, for the NOPR analysis, it was
  assumed that the LED prices stay constant after 2030.

    The LCC analysis (section IV.H) was carried out with the 
engineering numbers that account for the 2017 prices of LED luminaires. 
The reduction in price of LED luminaires from 2018 through 2030 was 
taken into account in the NIA (section IV.I). The cost reductions were 
calculated for each year from 2018 through 2030 and subtracted from the 
equipment costs in the NIA. The reduction in lighting maintenance costs 
\51\ due to reduction in LED prices for equipment installed in 2018 to 
2030 were also calculated and appropriately deducted from the lighting 
maintenance costs.
---------------------------------------------------------------------------

    \51\ Discussion related to lighting maintenance costs for 
commercial refrigeration equipment can be found in section IV.H.3, 
and a more detailed explanation can be found in chapter 8 of the 
NOPR TSD.
---------------------------------------------------------------------------

Manufacturer Overhead Costs
    NEEA commented that, in the DOE rulemaking on distribution 
transformers, manufacturers had stated that they do not apply overhead 
to material costs, but to labor costs only, and that the application of 
overhead to both of these cost components can have a major impact on 
MPCs, depending on how much of the product cost is attributed to each 
component. (NEEA, Public Meeting Transcript, No. 31 at pp. 70-71) In 
another comment, NEEA elaborated on this statement, adding that during 
the distribution transformers public meeting, manufacturers stated that 
they do not apply factory overhead rates to the cost of materials, but 
only to labor. NEEA went on to suggest that DOE use this methodology to 
the extent applicable to commercial refrigeration equipment, and adjust 
its cost estimation methods to take this approach into account. (NEEA, 
No. 36 at pp. 4-5)
    In DOE's cost model for commercial refrigeration equipment, the 
following three overhead components are dependent on labor or 
materials: utilities, property tax, and insurance. The cost of 
utilities is a function of equipment costs only (no labor included) and 
is calculated using a ratio derived in the past from U.S. Securities 
and Exchange Commission (SEC) 10-K forms for appliance 
manufacturers.\52\ The ratios for property tax and insurance costs are 
also based on past 10-K form analysis, but are dependent on overall 
unit costs (i.e., cost of goods sold). Altogether, these three 
components represent only about 3 percent of the total cost of a unit, 
so whether they are based on labor and materials or on labor only, they 
are unlikely to have a significant effect on MPCs, especially on an 
incremental cost basis. DOE welcomes suggestions on how to improve its 
methodology and hopes that stakeholders can provide DOE with 
documentation for improved insurance, property tax, and utility 
calculations. In particular, DOE would welcome nationwide data on 
property tax rates based on property, plant, and

[[Page 55923]]

equipment valuations; average power consumption for conditioned as well 
as unconditioned factory spaces; and insurance rates and how they are 
applied.
---------------------------------------------------------------------------

    \52\ A searchable directory of SEC filings is available at: 
www.sec.gov/edgar/searchedgar/companysearch.html.
---------------------------------------------------------------------------

    For the distribution transformers energy conservation standards 
rulemaking, DOE did not apply overhead rates to labor--overhead was 
only applied to direct material production costs. For more details on 
material and labor inputs for distribution transformers, see chapter 5 
of the TSD for the distribution transformers preliminary analysis 
(www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/transformer_preanalysis_ch5.pdf). Furthermore, due to the different 
industries in which distribution transformer and commercial 
refrigeration manufacturers operate, the same cost model may not 
necessarily be applicable to both.
e. Manufacturer Markup
    To account for manufacturers' non-production costs and profit 
margin, DOE applies a non-production cost multiplier (the manufacturer 
markup) to the full MPC. The resulting MSP is the price at which the 
manufacturer can recover all production and non-production costs and 
earn a profit. To meet new or amended energy conservation standards, 
manufacturers often introduce design changes to their product lines 
that result in increased MPCs. Depending on the competitive environment 
for this equipment, some or all of the increased production costs may 
be passed from manufacturers to retailers and eventually to customers 
in the form of higher purchase prices. The MSP should be high enough to 
recover the full cost of the equipment (i.e., full production and non-
production costs) and yield a profit. The manufacturer markup has an 
important bearing on profitability. A high markup under a standards 
scenario suggests manufacturers can readily pass along the increased 
variable costs and some of the capital and equipment conversion costs 
(one-time expenditures) to customers. A low markup suggests that 
manufacturers will not be able to recover as much of the necessary 
investment in plant and equipment.
    To calculate the manufacturer markups, DOE used 10-K reports 
submitted to the SEC by the six publicly owned commercial refrigeration 
equipment companies in the United States. (SEC 10-K reports can be 
found using the search database available at www.sec.gov/edgar/searchedgar/webusers.htm.) The financial figures necessary for 
calculating the manufacturer markup are net sales, costs of sales, and 
gross profit. DOE averaged the financial figures spanning the years 
from 2004 to 2010 \53\ to calculate the markups. For commercial 
refrigeration equipment, to calculate the average gross profit margin 
for the periods analyzed for each firm, DOE summed the gross profit 
earned during all of the aforementioned years and then divided the 
result by the sum of the net sales for those years. DOE presented the 
calculated markups to manufacturers during the manufacturer interviews 
for the NOPR (see section IV.E.4.g). DOE considered manufacturer 
feedback to supplement the calculated markup, and refined the markup to 
better reflect the commercial refrigeration market. DOE developed the 
manufacturer markup by weighting the feedback from manufacturers on a 
market share basis because manufacturers with larger market shares more 
significantly affect the market average. DOE used a constant markup to 
reflect the MSPs of both the baseline equipment and higher efficiency 
equipment. DOE used this approach because amended standards may 
transform high-efficiency equipment, which currently is considered to 
be premium equipment, into baseline equipment. See chapter 5 of the 
NOPR TSD for more details about the manufacturer markup calculation.
---------------------------------------------------------------------------

    \53\ Typically, DOE uses the data for the 5 years preceding the 
year of analysis. However, in this case additional data were 
available up to 2004. Hence, data from 2004 to 2010 were used for 
these calculations.
---------------------------------------------------------------------------

f. Shipping Costs
    The final component of the MSP after the MPC and manufacturer 
markup is the shipping cost associated with moving the equipment from 
the factory to the first point on the distribution chain. During 
interviews, manufacturers stated that the specific party (manufacturer 
or buyer) that incurs that cost for a given shipment may vary based on 
the terms of the sale, the type of account, the manufacturer's own 
business practices, and other factors. However, for consistency, DOE 
includes shipping costs as a component of MSP. In calculating the 
shipping costs for use in its analysis, DOE first gathered estimates of 
the cost to ship a full trailer of manufactured equipment an average 
distance in the United States, generally representative of the distance 
from a typical manufacturing facility to the first point on the 
distribution chain. DOE then used representative unit sizes to 
calculate a volume for each unit. Along with the dimensions of a 
shipping trailer and a loading factor to account for inefficiencies in 
packing, DOE used this cost and volume information to develop an 
average shipping cost for each equipment class directly analyzed.
g. Manufacturer Interviews
    Throughout the rulemaking process, DOE has sought and continues to 
seek feedback and insight from interested parties that would improve 
the information used in its analyses. DOE interviewed manufacturers as 
a part of the NOPR MIA (see section IV.K). During the interviews, DOE 
sought feedback on all aspects of its analyses for commercial 
refrigeration equipment. For the engineering analysis, DOE discussed 
the analytical assumptions and estimates, cost model, and cost-
efficiency curves with manufacturers. DOE considered all of the 
information learned from manufacturers when refining the cost model and 
assumptions. However, DOE incorporated equipment and manufacturing 
process figures into the analysis as averages to avoid disclosing 
sensitive information about individual manufacturers' equipment or 
manufacturing processes. More details about the manufacturer interviews 
are contained in chapter 12 of the NOPR TSD.
5. Energy Consumption Model
    The energy consumption model is the second key analytical model 
used in constructing cost-efficiency curves. This model estimates the 
daily energy consumption, calculated using the DOE test procedure, of 
commercial refrigeration equipment in kilowatt-hours at various 
performance levels using a design-option approach. In this methodology, 
a unit is initially modeled at a baseline level of performance, and 
higher-efficiency technologies, referred to as design options, are then 
implemented and modeled to produce incrementally more-efficient 
equipment designs. The model is specific to the types of equipment 
covered under this rulemaking, but is sufficiently generalized to model 
the energy consumption of all covered equipment classes. DOE developed 
the energy consumption model as a Microsoft Excel spreadsheet.
    For a given equipment class, the model estimates the daily energy 
consumption for the baseline, as well as the energy consumption of 
subsequent levels of performance above the baseline. The model 
calculates each performance level separately. For the baseline level, a 
corresponding cost is calculated using the cost model, which is 
described in section IV.E.4.b. For each level above the baseline, the 
changes in system cost due to the implementation

[[Page 55924]]

of various design options are used to recalculate the cost. 
Collectively, the data from the energy consumption model are paired 
with the cost model data to produce points on cost-efficiency curves 
corresponding to specific equipment configurations. After the 
publication of the preliminary analysis, DOE received numerous 
stakeholder comments regarding the methodology and results of the 
energy consumption model.
a. Energy Consumption Model Results
    Zero Zone noted that, while the overall modeling approach is 
appropriate, the results for the VCT.RC.M class are, in its opinion, 
too restrictive. (Zero Zone, No. 37 at p. 1) Similarly, Traulsen 
believed that DOE's numbers were slightly high for the VCT.SC.L 
equipment class, and that the incremental energy change may have been 
overstated, while the cost was understated, for technologies such as 
LED lighting, high-performance doors, and vacuum insulated panels. 
(Traulsen, No. 45 at p. 4)
    In its analyses for the NOPR stage of this rulemaking, DOE reviewed 
its inputs to the engineering cost model and energy consumption model. 
This included reviewing publicly available data from sources such as 
manufacturer specification sheets and catalogs, as well as 
incorporating information drawn from stakeholder comments and 
manufacturer interviews conducted as part of the MIA process. The 
process included discussion and investigation of specific design 
options, such as the aforementioned LED lighting and vacuum insulated 
panels. DOE has taken efforts to incorporate all available information 
into its models to produce the most accurate results possible. In 
response to the comments by Zero Zone and Traulsen regarding energy 
consumption and cost results for the VCT.RC.M and VCT.SC.L classes, 
respectively, DOE has reviewed and updated its methodologies during the 
NOPR analyses to account for the latest information available, and is 
confident that its current results best reflect this information.
b. Anti-Sweat Heater Power
    Traulsen suggested that DOE investigate whether the anti-sweat 
power consumed by the VCT.SC.L and VCT.SC.I equipment classes can truly 
be zero when high-performance doors are used, and suggested that DOE 
review its data. Traulsen added that it believed that, even with these 
door types, anti-sweat heaters are often still found on the cabinet 
body, especially in low-temperature equipment, which is prone to 
condensation due to conduction. (Traulsen, No. 45 at pp. 6-7)
    In DOE's preliminary engineering analysis, anti-sweat heater power 
values were assigned for each of the transparent door configurations 
based on available data from manufacturer specification sheets and data 
obtained during manufacturer interviews. For medium-temperature doors, 
both commercial refrigeration equipment manufacturer and door 
manufacturer literature indicated that truly energy-free door designs 
with no anti-sweat heat are available on the market. This finding was 
confirmed through discussions with commercial refrigeration equipment 
manufacturers. However, for low- and ice-cream temperature doors, DOE 
has found that, as Traulsen stated, anti-sweat heat is still required, 
at a minimum, on the door frame. Table 5.6.9 of the preliminary 
analysis TSD chapter 5 lists anti-sweat heater powers of 165 and 80 
watts for standard and high-performance doors, respectively, at low and 
ice-cream temperatures. These values are consistent with those that DOE 
has found through its research, and were retained in the NOPR analysis.
c. Evaporator Fan Motor Power
    Zero Zone observed that, while DOE's assumptions regarding motor 
efficiency are valid, the evaporator fan specifications used by DOE for 
freezers of 6 rated watts per fan were flawed because freezer fans are 
generally higher in wattage (i.e., 9 or 12 watts) to increase airflow 
and decrease frost formation. (Zero Zone, No. 37 at p. 2)
    After receiving the comment by Zero Zone, DOE further researched 
evaporator fan motor power values through manufacturer catalogs and 
discussed the subject in manufacturer interviews during the NOPR stage 
of the rulemaking. The data yielded by this effort showed that remote 
condensing freezer cases do utilize evaporator fan motors with rated 
shaft powers generally closer to 9 watts. As a result, DOE updated the 
design specifications for those representative units in its engineering 
model to more accurately reflect the standard design of those units.
d. Condenser Energy Consumption
    Southern Store Fixtures stated that the energy usage of the 
condenser is missing from the energy consumption model diagram 
contained in chapter 5 of the preliminary analysis TSD (Figure 5.6.1).
    Regarding the comment by Southern Store Fixtures, Figure 5.6.1 of 
the preliminary analysis TSD chapter 5 does include a representation of 
the condenser fan motor energy consumption under the category of 
component energy consumption. The energy usage attributed to the 
condenser fan, found in self-contained units, is accounted for in the 
energy consumption model by the compressor duty cycle. For remote 
condensing units, the condenser fan energy consumption is not 
explicitly calculated; instead, remote case compressor energy 
consumption is calculated based on the energy efficiency ratio values 
given in AHRI 1200.
e. Evaporator Coil Design
    Zero Zone expressed concerns about DOE's assumptions regarding 
evaporator coils, and noted that reduced fin spacing \54\ will result 
in coils that do not function well in the field due to excessive frost 
loading. (Zero Zone, No. 37 at p. 2) Zero Zone also observed that the 
improved evaporator coil described in the preliminary analysis TSD for 
the VCT.RC.M and VCT.RC.L equipment classes would raise evaporator 
temperatures to the same level as the discharge air temperature, which 
is not feasible. (Zero Zone, No. 37 at pp. 2-3) Additionally, Zero Zone 
recommended that DOE conduct performance testing before assuming that 
high-performance coils will work in all situations because, Zero Zone 
asserted, DOE failed to address issues with superheat control for these 
advanced coils, namely that as the evaporating temperature becomes 
closer to the return air temperature, the ability of the expansion 
valve to maintain a stable superheat is decreased. (Zero Zone, No. 37 
at p. 3)
---------------------------------------------------------------------------

    \54\ Fin spacing, or fin pitch, refers to the distance between 
the flat fins that are oriented transverse to the direction of 
airflow across a fin-and-tube heat exchanger.
---------------------------------------------------------------------------

    With respect to Zero Zone's comment on reduction of fin spacing, 
DOE confirmed during manufacturer interviews that excessive frost 
loading becomes a concern once fin spacing is reduced below certain 
thresholds. As a result, DOE sought to ensure that its coil models 
reflected coil geometries that are suitable for production and field 
use without incurring such negative secondary effects as increased 
frost buildup. With respect to Zero Zone's second comment involving the 
evaporator coil temperatures, the referenced statement in the 
preliminary analysis TSD was intended to be a single example, and was 
incorrectly presented as applying to all equipment classes. The 
engineering model never utilized evaporator temperatures that

[[Page 55925]]

were physically infeasible or impossible to attain.
    During its NOPR analyses, DOE performed independent modeling of 
evaporator and condenser coils based on physical teardowns of coils 
available on the market, coupled with numerical modeling of the coil 
performance. Design parameters were varied from the baseline, and the 
heat transfer performance of the coils was iteratively analyzed to 
yield higher efficiency coil designs. Cost modeling was utilized to 
produce cost estimates for the baseline and high-performance coil 
designs. This analysis served as the basis for the coil cost and 
performance values input into the engineering model. While DOE was 
unable to perform physical testing of its high-performance coil 
designs, as those designs were solely analytically derived and not 
constructed as prototypes, DOE controlled the parameters of its 
analysis to retain the required conditions for proper system 
performance. DOE believes that this analysis addresses the concerns 
presented by Zero Zone in its comments. For more details on the coil 
modeling process, see chapter 5 of the NOPR TSD.

F. Markups Analysis

    DOE applies multipliers called ``markups'' to the MSP to calculate 
the customer purchase price of the analyzed equipment. These markups 
are in addition to the manufacturer markup (discussed in section 
IV.E.4.e) and are intended to reflect the cost and profit margins 
associated with the distribution and sales of the equipment. DOE 
identified three major distribution channels for commercial 
refrigeration equipment, and markup values were calculated for each 
distribution channel based on industry financial data. The overall 
markup values were then calculated by weighted-averaging the individual 
markups with market share values of the distribution channels. See 
chapter 6 of the NOPR TSD for more details on DOE's methodology for 
markups analysis.
    DOE received a number of comments regarding markups after the 
publication of the preliminary analysis.
1. Baseline and Incremental Markups
    Traulsen stated that, in its experience, the initial markup on 
equipment will be consistent with production costs, and that the 
incremental markups will increase with higher levels of product 
efficiency due to product differentiation. (Traulsen, No. 45 at p. 4) 
However, Traulsen also stated that it did not believe that wholesalers 
differentiate markups based on the technologies inherently present in 
this equipment and that, in its experience, wholesalers/resellers will 
use traditional markup rates regardless of equipment's energy 
efficiency. (Traulsen, No. 45 at p. 7)
    In general, DOE has found that markup values vary over a wide range 
according to general economic outlook, manufacturer brand value, 
inventory levels, manufacturer rebates to distributors based on sales 
volume, newer versions of the same equipment model introduced into the 
market by the manufacturers, and availability of cheaper or more 
technologically advanced alternatives. Based on market data, DOE 
divided distributor costs into: (1) Direct cost of equipment sales; (2) 
labor expenses; (3) occupancy expenses; (4) other operating expenses 
(such as depreciation, advertising, and insurance); and (5) profit. DOE 
assumed that, for higher efficiency equipment only, the ``other 
operating costs'' and ``profit'' scale with MSP, while the remaining 
costs scale the same way as does the MSP of baseline equipment. In 
other words, the remaining costs stay constant irrespective of 
equipment efficiency level. Incremental markups were applied as 
multipliers only to the MSP increments (of higher efficiency equipment 
compared to baseline) and not to the entire MSP. This assumption is in 
line with Traulsen's first comment. Further, while DOE's use of 
separate values for baseline and incremental markup rates will lead to 
higher marked-up values for equipment at higher efficiency levels, the 
rate of markup will be same for all higher efficiency levels, which is 
consistent with Traulsen's second comment.
2. Distribution Channel Market Shares
    True stated that national chains are a major part of the glass-
doored, self-contained equipment market. True stated that it serves 
these via national accounts, adding that the market shares of the 
national accounts channel and the distributor channel that were used 
for the preliminary analysis of this rulemaking should be reversed. 
(True, Public Meeting Transcript, No. 31 at p. 80) NEEA agreed with 
True, stating that DOE had more or less reversed the market shares of 
the distribution channels for glass door and open self-contained 
equipment. NEEA also agreed with other commenters who stated that DOE's 
market channel fractions applied more to specialty and solid-door self-
contained equipment. (NEEA, No. 36 at p. 5) Southern Store Fixtures 
added that it sells many remote condensing units directly to the end 
users, and that it also sells many self-contained units directly to 
supermarket and convenience store chains without using an intermediary. 
(Southern Store Fixtures, Public Meeting Transcript, No. 31 at pp. 80-
81) Traulsen commented that it believed that DOE's distribution channel 
data were reasonably accurate, within plus or minus 10 percent. 
(Traulsen, No. 45 at p. 3)
    DOE agrees with comments from True, NEEA, and Southern Store 
Fixtures regarding market shares for self-contained display cases. 
Consequently, DOE made the distribution channel market shares for all 
display cases (VOP, SVO, HZO, VCT, HCT, SOC, and PD), irrespective of 
self-contained or remote condensing configuration, equal to that of the 
remote condensing equipment market shares that were proposed in the 
preliminary analysis TSD. DOE kept the market shares of VCS and HCS 
equipment families same as the self-contained equipment market shares 
proposed in the preliminary analysis TSD. The distribution channel 
market shares used for this NOPR are shown in Table IV.2. Chapter 6 and 
appendix 6A of the NOPR TSD provide complete details of the methodology 
and data used in the estimation of the markups.

                                 Table IV.2--Distribution Channel Market Shares
----------------------------------------------------------------------------------------------------------------
                                                                     National
                                                                      account       Wholesaler      Contractor
                        Equipment family                              channel         channel         channel
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
VOP, SVO, HZO, VCT, HCT, SOC, and PD............................              70              15              15
VCS and HCS.....................................................              30              60              10
----------------------------------------------------------------------------------------------------------------

[[Page 55926]]

G. Energy Use Analysis

    Several stakeholders commented on DOE's methodology for 
investigating secondary impacts of efficiency improvement, as described 
in the preliminary analysis. Southern Store Fixtures agreed with DOE's 
conclusion that efficiency improvements in self-contained equipment do 
not have a noticeable impact on building heating and cooling loads. 
Southern Store Fixtures further stated that a kitchen area, with 
limited space and limited equipment, differs from larger settings such 
as supermarkets, which contain a large quantity of self-contained 
equipment. Southern Store Fixtures asked whether the impact of large 
numbers of self-contained units on the heating and cooling loads of 
buildings had been investigated. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at pp. 93-94)
    Other stakeholders, however, had questions regarding DOE's methods. 
NRDC asked why only self-contained units were reviewed for secondary 
impacts, and whether any rack-based units had been reviewed. (NRDC, 
Public Meeting Transcript, No. 31 at p. 100) NEEA stated that the 
placement of multiple cases in a supermarket will affect heating, 
ventilation, and air-conditioning (HVAC) loads, and suggested that DOE 
reexamine the subject by modeling the performance of commercial 
refrigeration equipment in a business type other than a restaurant, 
such as a grocery store. NEEA added that restaurants typically have 
high ventilation loads, and opined that, in a space such as a 
supermarket, where the refrigeration loads approximate the ventilation 
loads, DOE's results are inaccurate. NEEA added that mechanical 
engineers use DOE-2 \55\ to model secondary impacts. (NEEA, Public 
Meeting Transcript, No. 31 at pp. 98-100)
---------------------------------------------------------------------------

    \55\ DOE-2 is a widely used and accepted freeware building 
energy analysis program that can predict the energy use and cost for 
different types of buildings. DOE-2 uses a description of the 
building layout, construction, usage, conditioning systems and 
utility rates provided by the user, along with weather data, to 
perform an hourly simulation of the building and to estimate utility 
bills.
---------------------------------------------------------------------------

    NEEA continued, stating that self-contained equipment, because it 
is not perfectly efficient, will emit more heat into its surroundings 
than it absorbs, which could be of benefit in the heating season but 
which is definitely a detriment in the cooling season. While the 
magnitude of these effects will depend on the equipment's geographic 
location, NEEA expressed its belief that DOE should not ignore this 
issue. NEEA added that DOE should quantify the contributions to space 
cooling and heating loads being generated by self-contained equipment 
so that stakeholders can make an informed judgment as to their 
significance. (NEEA, No. 36 at p. 5)
    In response to NRDC's comment regarding modeling rack-based units, 
DOE points to the January 2009 final rule analysis that presents an 
extensive energy use analysis for remote condensing equipment and self-
contained equipment without doors. The analysis was carried out by 
simulating display cases in supermarkets using the DOE-2.2 software 
package. Details of this analysis can be found in chapter 7 of the 
January 2009 final rule TSD (www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/chp_7_cre_energy_final.pdf). Based on 
this energy use analysis, DOE concluded that the overall impact of the 
considered design options had only a minor differential impact on the 
overall HVAC energy consumption of supermarkets. Further, DOE concluded 
that the energy consumption model used in the engineering analysis 
simulated the energy consumption of the various equipment classes with 
adequate accuracy, and therefore DOE used the estimates from the 
engineering analysis for the LCC and subsequent analyses.
    For the current rulemaking, DOE received comments during the May 
2010 Framework document public meeting regarding the proportionally 
larger share of self-contained equipment examined in this rulemaking 
compared to that examined in the January 2009 final rule, and the 
impact of this equipment on building HVAC loads. DOE evaluated the 
impact of self-contained equipment through whole-building simulations 
with a VCT.SC.L freezer in restaurant buildings using the whole-
building energy use simulation tool EnergyPlus, which is the primary 
software tool supported by DOE's Building Technologies Program for 
energy use analysis of buildings. Through these simulations, DOE found 
that the differential impact of efficiency improvements in VCT.SC.L 
equipment on the HVAC loads of restaurant buildings was negligible. 
Since VCT.SC.L energy consumption is one of the highest among the major 
self-contained equipment classes, DOE concluded that the incremental 
impact of efficiency improvements in all self-contained refrigerators 
and freezers on HVAC loads of restaurant buildings is negligible. While 
it is true, as stated in NEEA's comment, that restaurant building 
models have higher ventilation loads than other building models, DOE 
decided, as a matter of policy, that it would not assess the secondary 
impacts of amended standards such as the impacts of improved equipment 
efficiency on building HVAC loads. Therefore, DOE did not pursue this 
matter any further in its NOPR analysis.
    In response to NEEA's comment regarding the equipment's heat 
emitted by self-contained equipment and the geographic location of 
these units, DOE points to chapter 7 of the preliminary analysis TSD 
for complete details of the analysis. The whole-building simulations 
conducted for the preliminary analysis were carried out in 15 different 
climates zones, representing all the major climate zones in the United 
States, with an appropriate weighting factor applied to each climate 
zone. Further, the analysis was carried out over 1 full year (365 
days). The results of the preliminary energy use analysis were obtained 
by averaging the energy consumption of the equipment over 1 full year 
and over all the major climate zones in the United States.
    DOE understands that the presence of many self-contained 
refrigeration units may have a considerable impact on the HVAC loads of 
a business establishment, as stated by Southern Store Fixtures. 
However, DOE reiterates that the objective of its analysis is to assess 
only the differential impact of equipment efficiency improvements, and 
not to assess the impact of total heat output by a self-contained unit. 
Moreover, DOE's energy use analysis is concerned with the impact of 
only one unit of commercial refrigeration equipment. As stated above, 
DOE found that the differential impact of equipment efficiency 
improvements to a VCT.SC.L freezer on the building HVAC loads was 
negligible.
    As a matter of policy, DOE has determined that it will not carry 
out studies to determine the impact of efficiency improvements to 
equipment on building HVAC loads in appliance and commercial equipment 
standards rulemakings.

H. Life-Cycle Cost Analysis

    DOE conducts LCC analysis to evaluate the economic impacts of 
potential amended energy conservation standards on individual 
commercial customers--that is, buyers of the equipment. LCC is defined 
as the total customer cost over the life of the equipment, and consists 
of purchase price, installation costs, and operating costs 
(maintenance, repair, and energy costs). DOE discounts future operating 
costs to the time of purchase and sums them over the expected lifetime 
of the piece of equipment. PBP is defined as

[[Page 55927]]

the estimated amount of time it takes customers to recover the higher 
installed costs of more-efficient equipment through savings in 
operating costs. DOE calculates the PBP by dividing the increase in 
installed costs by the average savings in annual operating costs.
    As part of the engineering analysis, design option levels were 
ordered based on increasing efficiency (i.e., decreasing energy 
consumption) and increasing MSP. For the LCC analysis, DOE chose a 
maximum of eight levels, henceforth referred to as ``efficiency 
levels,'' from the list of engineering design option levels. For 
equipment classes for which fewer than eight design option levels were 
defined in the engineering analysis, all design option levels were 
used. However, for equipment classes where more than eight design 
option levels were defined, DOE selected specific levels to analyze in 
the following manner:
    1. The lowest and highest energy consumption levels provided in the 
engineering analysis were preserved.
    2. If the difference in reported energy consumptions and reported 
manufacturer price between sequential levels was minimal, only the 
higher efficiency level was selected.
    3. If the energy consumption savings benefit between efficiency 
levels relative to the increased cost was very similar across multiple 
sequential levels, an intermediate level was not selected as an 
efficiency level.
    The first efficiency level (Level 1) in each equipment class is the 
least efficient and the least expensive equipment in that class. The 
higher efficiency levels (Level 2 and higher) exhibit progressive 
increases in efficiency and cost from Level 1. The highest efficiency 
level in each equipment class corresponds to the max-tech level. DOE 
treats the efficiency levels as ``candidate standard levels,'' as each 
higher efficiency level represents a potential new standard level.
    The installed cost of equipment to a customer is the sum of the 
equipment purchase price and installation costs. The purchase price 
includes MPC, to which a manufacturer markup and outbound freight cost 
are applied to obtain the MSP. This value is calculated as part of the 
engineering analysis (chapter 5 of the NOPR TSD). DOE then applies 
additional markups to the equipment to account for the markups 
associated with the distribution channels for the particular type of 
equipment (chapter 6 of the NOPR TSD). Installation costs varied by 
State, depending on the prevailing labor rates.
    Operating costs for commercial refrigeration equipment are the sum 
of maintenance costs, repair costs, and energy costs. These costs are 
incurred over the life of the equipment and therefore are discounted to 
the base year (2017, which is the compliance date of any amended 
standards that are established as part of this rulemaking). The sum of 
the installed cost and the operating cost, discounted to reflect the 
present value, is termed the life-cycle cost or LCC.
    Generally, customers incur higher installed costs when they 
purchase higher efficiency equipment, and these cost increments will be 
partially or wholly offset by savings in the operating costs over the 
lifetime of the equipment. Usually, the savings in operating costs are 
due to savings in energy costs because higher efficiency equipment uses 
less energy over the lifetime of the equipment. Often, the LCC of 
higher efficiency equipment is less than lower efficiency equipment. 
LCC savings are calculated for each efficiency level of each equipment 
class.
    The PBP of higher efficiency equipment is obtained by dividing the 
increase in the installed cost by the decrease in annual operating 
cost. In addition to energy costs (calculated using the electricity 
price forecast for the first year), the annual operating cost includes 
annualized maintenance and repair costs. PBP is calculated for each 
efficiency level of each equipment class.
    Apart from MSP, installation costs, and maintenance and repair 
costs, other important inputs for the LCC analysis are markups and 
sales tax, equipment energy consumption, electricity prices and future 
price trends, expected equipment lifetime, and discount rates.
    Many inputs for the LCC analysis are estimated from the best 
available data in the market, and in some cases the inputs are 
generally accepted values within the industry. In general, each input 
value has a range of values associated with it. While single 
representative values for each input may yield an output that is the 
most probable value for that output, such an analysis does not provide 
the general range of values that can be attributed to a particular 
output value. Therefore, DOE carried out the LCC analysis in the form 
of Monte Carlo simulations,\56\ in which certain inputs were expressed 
as a range of values and probability distributions to account for the 
ranges of values that may be typically associated with the respective 
input values. The results, or outputs, of the LCC analysis are 
presented in the form of mean and median LCC savings; percentages of 
customers experiencing net savings, net cost and no impact in LCC; and 
median PBP. For each equipment class, 10,000 Monte Carlo simulations 
were carried out. The simulations were conducted using Microsoft Excel 
and Crystal Ball, a commercially available Excel add-in used to carry 
out Monte Carlo simulations.
---------------------------------------------------------------------------

    \56\ Monte Carlo simulation is, generally, a computerized 
mathematical technique that allows for computation of the outputs 
from a mathematical model based on multiple simulations using 
different input values. The input values are varied based on the 
uncertainties inherent to those inputs. The combination of the input 
values of different inputs is carried out in a random fashion to 
simulate the different probable input combinations. The outputs of 
the Monte Carlo simulations reflect the various outputs that are 
possible due to the variations in the inputs.
---------------------------------------------------------------------------

    LCC savings and PBP are calculated by comparing the installed costs 
and LCC values of standards-case scenarios against those of base-case 
scenarios. The base-case scenario is the scenario in which equipment is 
assumed to be purchased by customers in the absence of the proposed 
energy conservation standards. Standards-case scenarios are scenarios 
in which equipment is assumed to be purchased by customers after the 
amended energy conservation standards, determined as part of the 
current rulemaking, go into effect. The number of standards-case 
scenarios for an equipment class is equal to one less than the total 
number of efficiency levels in that equipment class, since each 
efficiency level above Efficiency Level 1 represents a potential 
amended standard. Usually, the equipment available in the market will 
have a distribution of efficiencies. Therefore, for both base-case and 
standards-case scenarios, in the LCC analysis, DOE assumed a 
distribution of efficiencies in the market, and the distribution was 
assumed to be spread across all efficiency levels in the LCC analysis 
(see NOPR TSD chapter 10).
    Recognizing that each building that uses commercial refrigeration 
equipment is unique, DOE analyzed variability in the LCC and PBP 
results by performing the LCC and PBP calculations for seven types of 
businesses: (1) Supermarkets; (2) wholesaler/multi-line retail stores, 
such as ``big-box stores,'' ``warehouses,'' and ``supercenters''; (3) 
convenience and small specialty stores, such as meat markets and wine, 
beer, and liquor stores; (4) convenience stores associated with 
gasoline stations; (5) full-service restaurants; (6) limited service 
restaurants; and (7) other foodservice businesses, such as caterers and 
cafeterias. Different types of businesses

[[Page 55928]]

face different energy prices and also exhibit differing discount rates 
that they apply to purchase decisions.
    Expected equipment lifetime is another input whose value varies 
over a range. Therefore, DOE assumed a distribution of equipment 
lifetimes that are defined by Weibull survival functions.\57\
---------------------------------------------------------------------------

    \57\ Weibull survival function is a continuous probability 
distribution function that is used to approximate the distribution 
of equipment lifetimes of commercial refrigeration equipment.
---------------------------------------------------------------------------

    Another important factor influencing the LCC analysis is the State 
in which the commercial refrigeration equipment is installed. Inputs 
that vary based on this factor include energy prices and sales tax. At 
the national level, the spreadsheets explicitly modeled variability in 
the inputs for electricity price and markups, using probability 
distributions based on the relative shipments of units to different 
States and business types.
    Detailed descriptions of the methodology used for the LCC analysis, 
along with a discussion of inputs and results, are presented in chapter 
8 and appendices 8A and 8B of the NOPR TSD.
1. Effect of Current Standards
    DOE notes that, beginning January 1, 2012, manufacturers were 
required to comply with the standards set by the January 2009 final 
rule.\58\ 74 FR 1092 (Jan. 9, 2009). DOE concludes that the efficiency 
level of the equipment on the market increased during this time. The 
engineering analysis for this NOPR was first developed in 2011, and 
therefore the engineering design option levels include efficiency 
levels of equipment available in the market in 2011. This means that 
the engineering efficiency levels were built up starting from levels 
which are below the standards set by the January 2009 final rule. These 
levels were included for analytical purposes, solely to represent the 
manner in which manufacturers may have achieved compliance with the 
January 2009 final rule standard levels, and were not considered in the 
development of proposed standard levels. The LCC analysis and NIA 
assume the first year for the analyses as 2017. As noted above, the 
market in 2017 will be different from that in 2011 in terms of 
efficiency distribution of the equipment, mainly due to the effect of 
the standards established by the January 2009 final rule. Therefore, 
the market baseline (from the year 2011) used as the starting point for 
the engineering analysis is not the same as the market baseline in 
2017, when any amended standards prescribed by the current rulemaking 
are scheduled to go into effect.
---------------------------------------------------------------------------

    \58\ DOE extended the compliance date for manufacturers to 
submit certification reports tor commercial refrigeration equipment 
until December 31, 2013. 77 FR 76825 (Dec. 31, 2012). DOE 
emphasizes, however, that the testing and sampling requirements for 
commercial refrigeration equipment are unchanged by this extension.
---------------------------------------------------------------------------

    To estimate the state of the market baseline level in 2017, DOE 
introduced a baseline level termed the ``standards baseline.'' The 
energy consumption of the standards baseline level of an equipment 
class is equal to the standard prescribed by the January 2009 final 
rule for that equipment class. 74 FR 1093 (Jan. 9, 2009). The design 
option levels that are less efficient than the standards baseline were 
disregarded, and the more-efficient design option levels were carried 
forward for downstream analyses. A detailed description of this 
procedure is presented with the aid of an example in chapter 8 of NOPR 
TSD.
    At the April 2011 preliminary analysis public meeting, AHRI asked 
whether DOE intended to update the LCC analysis once the standards set 
in the January 2009 final rule became effective in order to change the 
baseline. (AHRI, Public Meeting Transcript, No. 31 at pp. 99-100)
    The engineering analysis for this NOPR was first developed in 2011, 
and updated with new information as it became available up to the time 
of this publication. However, DOE continued to use in its engineering 
baseline characteristics reflecting the construction of equipment prior 
to required compliance with the standards set by the January 2009 final 
rule. As a result, some of the engineering efficiency levels reflect 
levels which do not correspond to equipment performance currently 
permitted on the market after January 1, 2012. These levels, however, 
are solely used to reflect the manner in which DOE believes 
manufacturers could have attained the 2009 final rule standard levels 
through implementation of design options, and were not used in the 
downstream analysis for the purposes of calculating standard levels 
proposed in this NOPR.
    Consistent with the methodology described above and explained in 
detail in Chapter 8 of the NOPR TSD, DOE developed a ``standards 
baseline'' for use as the starting point for its downstream (LCC and 
PBP, NIA, etc.) analyses. This standards baseline corresponds to the 
lowest efficiency level which would be compliant with current (January 
2009 final rule) standards. From there, higher efficiency levels were 
studied as the basis for developing potential standard levels as 
proposed in today's NOPR. In response to AHRI's comment, DOE used 
updated inputs to the baseline in order to reflect the compliance date 
of the January 2009 final rule standards having passed. This includes 
updates to the non-standards case efficiency distribution and other 
inputs to the downstream analyses. These inputs were updated based on 
the most recent available information for use in conducting the 
analysis described in today's NOPR.
2. Equipment Cost
    To calculate customer equipment costs, DOE multiplied the MSPs 
developed in the engineering analysis by the distribution channel 
markups, described in section IV.F. DOE applied baseline markups to 
baseline MSPs, and incremental markups to the MSP increments associated 
with higher efficiency levels.
3. Installation, Maintenance, and Repair Costs
    Installation cost includes labor, overhead, and any miscellaneous 
materials and parts needed to install the equipment. The installation 
costs may vary from one equipment class to another, but they do not 
vary with efficiency levels within an equipment class. Costs that do 
not vary with efficiency levels do not impact the LCC, PBP, or NIA 
results. DOE retained the nationally representative installation cost 
values from the January 2009 final rule of $2,000 for all remote 
condensing equipment and $750 for all self-contained equipment, and 
simply escalated the values from 2007$ to 2012$, resulting in 2012 
installation costs of $2,299 and $862, respectively.
    True stated that the average glass-doored merchandiser is moved and 
installed twice in its lifetime, and that self-contained, solid-doored 
units, which are used in commercial kitchens, are moved and installed 
in different locations at least three times, on average, during their 
lifetimes. Therefore, True suggested that DOE double or triple its 
estimated installation cost. (True, Public Meeting Transcript, No, 31 
at p. 110)
    Based on the design options for higher efficiency levels, DOE 
determined that installation costs do not vary by efficiency levels 
within a given equipment class. Costs that do not vary with efficiency 
levels do not impact the LCC, PBP, or NIA results. Because doubling or 
tripling of installation costs would not impact the net results, DOE 
did not alter the installation costs for the NOPR analyses based on 
True's comment.

[[Page 55929]]

    Maintenance costs are associated with maintaining the operation of 
the equipment. DOE split the maintenance costs into regular maintenance 
costs and lighting maintenance costs. Regular maintenance activities, 
which include cleaning evaporator and condenser coils, drain pans, 
fans, and intake screens; inspecting door gaskets and seals; 
lubricating hinges; and checking starter panel, control, and defrost 
system operation, were considered to be equivalent for equipment at all 
efficiency levels. Lighting maintenance costs are the costs incurred to 
replace display case lighting at regular intervals in a preventative 
fashion. Because lights and lighting configuration change with 
efficiency levels, lighting maintenance costs vary with efficiency 
levels. As stated in section IV.E.4.d, for efficiency levels that 
incorporate LED lights as a design option, the reduction in LED costs 
beyond 2017 were taken into account when calculating the lighting 
maintenance costs.
    Repair cost is the cost to the customer of replacing or repairing 
failed components. DOE calculated repair costs based on the typical 
failure rate of refrigeration system components, original equipment 
manufacturer (OEM) cost of the components, and an assumed markup value 
to account for labor cost.
a. Maintenance and Repair Costs by Efficiency Level
    Traulsen commented that it agreed with DOE that installation and 
maintenance costs would be flat across all efficiency levels. 
(Traulsen, No. 45 at p. 4) AHRI, however, disagreed with DOE's 
assumption that repair and maintenance costs would not vary with 
efficiency. AHRI stated that the industry's experience has been that 
higher efficiency equipment is more expensive to repair and maintain 
since it uses more sophisticated components. AHRI also added that, if 
repair and maintenance cost data are not available by efficiency level, 
DOE should correlate repair and maintenance cost with equipment cost. 
(AHRI, No. 43 at p. 3)
    DOE does not believe that any design option used in the higher 
efficiency equipment considered in this rulemaking would lead to higher 
costs for regular maintenance activities. Repair costs and lighting 
maintenance costs, on the other hand, have been modeled to be 
proportional to the OEM cost of the components and, consequently, are 
higher for higher efficiency equipment. DOE requested information from 
stakeholders regarding maintenance and repair costs specifically 
related to any of the design options used for this rulemaking, but did 
not receive any such information. Therefore, DOE retained its approach 
of using flat costs for regular maintenance, and costs proportional to 
OEM cost for repair costs and lighting maintenance costs.
    Southern Store Fixtures questioned whether DOE would examine the 
economic impact of night curtains and lighting occupancy sensors on 
equipment cost and operating cost. (Southern Store Fixtures, Public 
Meeting Transcript, No. 31 at pp. 185-86) CA IOUs stated that labor 
costs related to night curtain deployment can be significant. CA IOUs 
urged DOE to review and update its assumptions involving night 
curtains. (CA IOUs, No. 42 at p. 5)
    Equipment costs, which include costs of night curtains and lighting 
occupancy sensors, were covered in the engineering analysis used to 
obtain the MSP (see section IV.E). Based on discussions with 
specialists in display case retrofits who are familiar with lighting 
occupancy sensor installation and setup, DOE concluded that lighting 
occupancy sensors do not increase maintenance costs of commercial 
refrigeration equipment. With respect to repair or replacement costs, 
DOE determined that the manufacturing processes used today produce 
highly reliable products, making the failure of occupancy sensors 
relatively rare. Typically, according to the available data, lighting 
occupancy sensors last nearly 15 years, which is longer than the 
average lifetime of commercial refrigeration equipment. Therefore, DOE 
did not include lighting occupancy sensor repair or replacement costs 
in the LCC analysis.
    DOE believes that the night curtains currently available in the 
market are designed for easy deployment and retraction. In most 
instances, it takes less than 15 seconds per refrigerated display case 
to deploy or retract a night curtain. DOE believes that deployment and 
retraction of night curtains can be easily assimilated into the 
activities associated with store closing or opening operations, and 
will not amount to an added expense. Therefore, DOE did not add labor 
costs for night curtain deployment and retraction to the LCC analysis 
or NIA.
b. Maintenance and Repair Cost Annualization
    Stakeholders provided feedback on DOE's methodology in annualizing 
the costs of equipment maintenance and repair. ASAP stated that 
annualizing lighting maintenance costs results in a present value that 
is greater than it would be if DOE were to model lighting replacement 
costs in the years in which they actually were incurred. (ASAP, Public 
Meeting Transcript, No. 31 at p. 104) NEEA agreed that DOE should try 
to characterize maintenance costs as accurately as possible, modeling 
truly annual costs on an annual basis, and other costs as they occur 
(i.e., as capital equipment costs). NEEA added that it is not 
appropriate to annualize all costs because, while some costs are truly 
annual or biannual, others are periodic maintenance investments and 
should be treated as such. NEEA referenced the fluorescent lamp ballast 
rulemaking (Docket No. EE-2007-BT-STD-0016), in which DOE accounted for 
lamp replacement costs in the years in which they occurred, and urged 
DOE to adopt a similar methodology in this rulemaking. (NEEA, Public 
Meeting Transcript, No. 31 at p. 105, No. 36 at pp. 5-6) ASAP and NRDC 
echoed this stance in their jointly submitted written comment, stating 
that, while it is reasonable to annualize costs that are indeed 
incurred annually or biannually, annualizing costs that only occur in 
certain years could distort the LCC output, resulting in a higher 
present value of annualized costs. ASAP and NRDC also referenced the 
fluorescent ballast rulemaking, and suggested that DOE account for 
costs similarly in this rulemaking's analyses. (ASAP and NRDC, No. 34 
at p. 4) Southern Store Fixtures, however, offered a dissenting 
opinion, adding that it is a common practice in supermarkets to have 
lighting contracts under which a maintenance worker changes the lights 
on a scheduled basis, whether they are broken or not, making lighting 
costs indeed annual. (Southern Store Fixtures, Public Meeting 
Transcript, No. 31 at p. 107)
    DOE has determined that, if the costs of known items occurring at 
predictable intervals are appropriately discounted when annualized, 
there will be no impact on LCC and NIA results, regardless of whether 
or not the costs are annualized. Additionally, in the commercial 
refrigeration equipment analyses, repairs and replacements have been 
modeled as a combination of known, expected items, plus others modeled 
simply as a fraction of failed components that are expected to be 
replaced during equipment lifetime. Such a characterization of 
maintenance and repair costs does not lend itself to specification of a 
particular time, during the equipment lifetime, when such repairs are 
likely to occur. Further, the PBP by its very definition cannot be 
calculated unless the costs are annualized. Finally, if multiple 
explicit

[[Page 55930]]

repair and maintenance line items were tracked individually in the NIA 
model, the size and complexity of the computer model would grow 
exponentially without a commensurate improvement in value. Therefore, 
DOE has retained its conventional approach of annualizing the 
maintenance and repair costs.
c. Maintenance Cost Estimates
    At the April 2011 preliminary analysis public meeting, Coca-Cola 
stated that its largest maintenance cost is condenser cleaning, which 
is much more expensive than lighting maintenance. (Coca-Cola, Public 
Meeting Transcript, No. 31 at p. 109) NEEA commented that, in the case 
of actual maintenance costs, it agreed with Coca-Cola's assertion that 
$35 per year, the maintenance cost presented by DOE in its preliminary 
analysis, is too low based on its intuition regarding the cost of labor 
and travel to maintain equipment. (NEEA, No. 36 at p. 6)
    DOE obtained its annualized maintenance costs for commercial 
refrigeration equipment from RS Means Facilities Maintenance and Repair 
Cost Data.\59\ RS Means data provide estimates of the person-hours, 
labor rates, and materials required to maintain commercial 
refrigeration equipment. While it could be true that an amount of $35 
per year does not reflect travel and other overhead charges, DOE 
believes that the value reflects the cost incurred for labor if the 
maintenance were to be performed by in-house personnel of the business 
establishment. In any case, the actual amount allocated to the regular 
maintenance costs has no effect on the LCC analysis or the NIA because 
maintenance costs do not vary based on efficiency levels in any 
equipment class. DOE believes the higher efficiency design options 
selected for this rulemaking do not result in changes to the regular 
maintenance costs of the commercial refrigeration equipment. Therefore, 
DOE believes that a value of $35 is reasonably representative of the 
regular maintenance costs for self-contained equipment.
---------------------------------------------------------------------------

    \59\ RS Means Company, Inc. Means Costworks 2010: Facility, 
Maintenance and Repair Cost Data. 2010. Kingston, MA.
---------------------------------------------------------------------------

d. Refrigerant Costs
    Southern Store Fixtures stated that DOE should include refrigerant 
recharge costs in its maintenance cost estimates, because EPA and DOE 
have accepted that there is an 18-percent refrigerant leakage rate 
annually, or at least regularly, for rack systems. (Southern Store 
Fixtures, Public Meeting Transcript, No. 31 at p. 108)
    Costs incurred due to refrigerant leakage do not vary with 
equipment efficiency levels. Therefore, these costs will not affect the 
LCC analysis or NIA results. DOE did not take these costs into account 
for the NOPR analysis.
e. Repair Costs
    Traulsen stated that repair costs would increase commensurate with 
the purchase price of the components to be repaired. This increase, 
Traulsen added, would be consistent with the increase in manufacturing 
cost due to the implementation of a technology. (Traulsen, No. 45 at p. 
4)
    DOE modeled repair costs as directly proportional to the OEM cost 
of the failed components. This approach yields higher repair costs for 
higher efficiency equipment and is consistent with Traulsen's comment.
    Zero Zone stated that it suspected the average lifetime of an LED 
light is less than 5 years, and that the cost to replace one will be 
higher than estimated. This, Zero Zone added, is because LEDs continue 
to evolve and older models are discontinued, meaning that replacement 
of failed LEDs will require a complete relamping to maintain consistent 
product appearance. (Zero Zone, No. 37 at p. 4)
    All major manufacturers of LED lighting solutions for refrigerated 
display cases state that the maintenance-free lifetime for LED lights 
is 50,000 hours, and some of the retailers offer a 5-year warranty. DOE 
did not find any basis for doubting the assumption of a 50,000-hour 
lifetime for LED lights in refrigerated display cases. Recognizing that 
replacement of LED strip lighting in refrigerated display cases 
involves higher labor costs compared to the simple lamp replacement 
process of fluorescent tube lights, DOE applied a retrofit factor 
(multiplier) of 1.4 to the LED lamp cost to account for relamping of 
LED lights in display cases. The results presented in the preliminary 
analysis used the retrofit factor of 1.4, and DOE used the same factor 
for its NOPR analysis.
4. Annual Energy Consumption
    Annual energy consumption of commercial refrigeration equipment is 
obtained from engineering analysis (chapter 5 of the NOPR TSD).
5. Energy Prices
    DOE calculated average commercial electricity prices using the U.S. 
Energy Information Administration's (EIA's) Form EIA-826, ``Database 
Monthly Electric Utility Sales and Revenue Data.'' \60\ DOE calculated 
an average national commercial price by (1) estimating an average 
commercial price for each utility company by dividing the commercial 
revenues by commercial sales; and (2) weighting each utility by the 
number of commercial customers it served in that region, across the 
nation.
---------------------------------------------------------------------------

    \60\ U.S. Energy Information Administration. EIA-826 Sales and 
Revenue Spreadsheets. (Last accessed May 16, 2012). www.eia.doe.gov/cneaf/electricity/page/eia826.html
---------------------------------------------------------------------------

6. Energy Price Projections
    To estimate energy prices in future years for the preliminary 
analysis TSD, DOE multiplied the average regional energy prices 
described above by the forecast of annual average commercial energy 
price indices developed in the Reference Case from AEO2013.\61\ AEO2013 
forecasted prices through 2040. To estimate the price trends after 
2040, DOE assumed the same average annual rate of change in prices as 
from 2031 to 2040.
---------------------------------------------------------------------------

    \61\ The spreadsheet tool that DOE used to conduct the LCC and 
PBP analyses allows users to select price forecasts from either 
AEO's High Economic Growth or Low Economic Growth Cases. Users can 
thereby estimate the sensitivity of the LCC and PBP results to 
different energy price forecasts.
---------------------------------------------------------------------------

7. Equipment Lifetime
    DOE defines lifetime as the age at which a commercial refrigeration 
equipment unit is retired from service. DOE based expected equipment 
lifetime on discussions with industry experts, and concluded that a 
typical lifetime of 10 years is appropriate for most commercial 
refrigeration equipment in large grocery/multi-line stores and 
restaurants. Industry experts believe that operators of small food 
retail stores, on the other hand, tend to use display cases longer. DOE 
used 15 years as the average equipment lifetime for display cases used 
in such retail stores. DOE reflects the uncertainty of equipment 
lifetimes in the LCC analysis for both equipment markets as probability 
distributions, as discussed in section 8.2.3.5 of the TSD.
    Traulsen stated that 10 years is an acceptable estimate for the 
lifetime of self-contained equipment, and that it is not uncommon for 
some applications to have a 20-year lifetime. However, Traulsen added 
that smaller units subject to more frequent human interaction, such as 
undercounter units, would likely have shorter lifetimes, such as 7 
years. Traulsen also stated that price point could indicate potential 
lifetime. (Traulsen, Public Meeting Transcript, No. 31 at p. 4) AHRI 
commented that properly installed and maintained equipment typically 
has a much longer lifetime than the actual

[[Page 55931]]

period of time the end use customers retain it, and that this is 
entirely dependent on the specific business models of and competitive 
demands on different users. However, AHRI added that the 10-year 
lifetime used by DOE is an appropriate average value. (AHRI, No. 43 at 
p. 3) NEEA concurred, stating that it generally agreed with the inputs 
to the Crystal Ball simulations that DOE used. In particular, NEEA 
stated that it was comfortable with the assumed equipment lifetimes and 
distributions thereof, and that, while much of the equipment does 
indeed last longer, at that point the equipment becomes used equipment 
and is not directly applicable to the rulemaking except for purposes of 
estimating shipments. (NEEA, No. 36 at p. 6)
    DOE appreciates the comments previously submitted and welcomes 
further input on the equipment lifetimes for the LCC analysis and NIA.
8. Discount Rates
    In calculating the LCC, DOE applies discount rates to estimate the 
present value of future operating costs to the customers for commercial 
refrigeration equipment. The discount rate is the rate at which future 
expenditures are discounted to establish their present value to the 
customer.\62\ DOE derived the discount rates for the commercial 
refrigeration equipment analysis by estimating the cost of capital for 
a large number of companies similar to those that could purchase 
commercial refrigeration equipment and then sampling them to 
characterize the effect of a distribution of potential customer 
discount rates. The cost of capital is commonly used to estimate the 
present value of cash flows to be derived from a typical company 
project or investment. Most companies use both debt and equity capital 
to fund investments, so their cost of capital is the weighted average 
of the cost to the company of equity and debt financing.
---------------------------------------------------------------------------

    \62\ The LCC analysis estimates the economic impact on the 
individual customer from that customer's own economic perspective in 
the year of purchase and therefore needs to reflect that 
individual's own perceived cost of capital. By way of contrast DOE's 
analysis of national impact requires a societal discount rate. These 
rates used in that analysis are 7 percent and 3 percent, as required 
by OMB Circular A-4, September 17, 2003.
---------------------------------------------------------------------------

    DOE estimated the cost of equity financing by using the Capital 
Asset Pricing Model (CAPM).\63\ The CAPM, among the most widely used 
models to estimate the cost of equity financing, assumes that the cost 
of equity is proportional to the amount of systematic risk associated 
with a company. The cost of equity financing tends to be high when a 
company faces a large degree of systematic risk, and it tends to be low 
when the company faces a small degree of systematic risk.
---------------------------------------------------------------------------

    \63\ Harris, R.S. Applying the Capital Asset Pricing Model. UVA-
F-1456. Available at SSRN: http://ssrn.com/abstract=909893.
---------------------------------------------------------------------------

9. Compliance Date of Standards
    EPCA prescribes that DOE must review and determine whether to amend 
performance-based standards for commercial refrigeration equipment by 
January 1, 2013. (42 U.S.C. 6313(c)(6)(A)) In addition, EPCA requires 
that any amended standards established in this rulemaking must apply to 
equipment that is manufactured on or after 3 years after the final rule 
is published in the Federal Register unless DOE determines, by rule, 
that a 3-year period is inadequate, in which case DOE may extend the 
compliance date for that standard by an additional 2 years. (42 U.S.C. 
6313(c)(6)(C)) Based on these criteria, DOE reasoned due to the 
cumulative regulatory burden of the recently implemented 2009 CRE final 
rule and of the upcoming walk-in cooler and freezer rule, which both 
affect the same industry that the most likely compliance date for 
standards set by this rulemaking would be in 2017. Therefore, DOE 
calculated the LCC and PBP for commercial refrigeration equipment under 
the assumption that compliant equipment would be purchased in 2017. DOE 
seeks comment on whether it should extend the compliance date as 
authorized, and, if so, by how long.
10. Base-Case and Standards-Case Efficiency Distributions
    To accurately estimate the share of affected customers who would 
likely be impacted by a standard at a particular efficiency level, 
DOE's LCC analysis considers the projected distribution of efficiencies 
of equipment that customers purchase under the base case (that is, the 
case without new or amended energy efficiency standards). DOE refers to 
this distribution of equipment efficiencies as a base-case efficiency 
distribution.
    DOE's methodology to estimate market shares of each efficiency 
level within each equipment class is a cost-based method consistent 
with the approaches that were used in the EIA's National Energy 
Modeling System (NEMS) \64\ and in the Canadian Integrated Modeling 
System (CIMS) 65 66 for estimating efficiency choices within 
each equipment class. DOE then extrapolated future scenarios of the 
equipment efficiency for the base case and amended standards cases 
using the same cost-based method. The difference in equipment 
efficiency between the base case and amended standards case was the 
basis for determining the reduction in unit energy consumption 
resulting from amended standards.
---------------------------------------------------------------------------

    \64\ U.S. Energy Information Administration. National Energy 
Modeling System Commercial Model (2004 Version). 2004. Washington, 
DC.
    \65\ The CIMS Model was originally known as the Canadian 
Integrated Modeling System, but as the model is now being applied to 
other countries, the acronym is now used as its proper name.
    \66\ Energy Research Group/M.K. Jaccard & Associates. 
Integration of GHG Emission Reduction Options using CIMS. 2000. 
Vancouver, B.C. www.emrg.sfu.ca/media/publications/
Reports%20for%20Natural%20Resources%20Canada/Rollup.pdf
---------------------------------------------------------------------------

    Traulsen commented that it believed that DOE's estimates of 
shipment-weighted market share are skewed toward the higher performance 
levels. Traulsen added that it believed that DOE has overestimated the 
value that end users place on energy efficiency. (Traulsen, No. 45 at 
p. 7)
    DOE recognizes Traulsen's concern, but at this time has no data to 
more accurately define the market shares by efficiency level within 
each equipment class. No data on shipments by efficiency level of 
either self-contained or remote condensing equipment classes are known 
to DOE or were provided by industry or other stakeholders. Currently, 
there is also no extensive database of available efficiency levels by 
model that could be used to provide a proxy for efficiency levels for 
shipped equipment, an approach that has been used in rulemakings for 
other products when efficiency data on shipped products was lacking. 
The methodology used for this analysis was identical to that used in 
the January 2009 final rule analysis. See chapter 10 of the TSD for the 
January 2009 final rule, available at: www1.eere.energy.gov/buildings/appliance_standards/commercial/pdfs/chp_10_cre_shipmts_final.pdf. 
If the model overstates the share of shipments at higher efficiency 
levels in the base case scenario, it results in analysis erring on the 
side of lower NES and NPV values.
11. Inputs to Payback Period Analysis
    Payback period is the amount of time it takes the customer to 
recover the higher purchase cost of more energy efficient equipment as 
a result of lower operating costs. Numerically, the PBP is the ratio of 
the increase in purchase cost to the decrease in annual operating 
expenditures. This type of calculation is known as a ``simple'' PBP 
because it does not take into account changes in operating cost over 
time or the time

[[Page 55932]]

value of money; that is, the calculation is done at an effective 
discount rate of zero percent. PBPs are expressed in years. PBPs 
greater than the life of the equipment mean that the increased total 
installed cost of the more-efficient equipment is not recovered in 
reduced operating costs over the life of the equipment.
    The inputs to the PBP calculation are the total installed cost to 
the customer of the equipment for each efficiency level and the average 
annual operating expenditures for each efficiency level in the first 
year. The PBP calculation uses the same inputs as the LCC analysis, 
except that electricity price trends and discount rates are not used.
12. Rebuttable-Presumption Payback Period
    Sections 325(o)(2)(B)(iii) and 345(e)(1)(A) of EPCA, (42 U.S.C. 
6295(o)(2)(B)(iii) and 42 U.S.C. 6316(e)(1)(A)), establish a rebuttable 
presumption applicable to commercial refrigeration equipment. The 
rebuttable presumption states that a new or amended standard is 
economically justified if the Secretary finds that the additional cost 
to the consumer of purchasing a product complying with an energy 
conservation standard level will be less than three times the value of 
the energy savings during the first year that the consumer will receive 
as a result of the standard, as calculated under the applicable test 
procedure. This rebuttable presumption test is an alternative way of 
establishing economic justification.
    To evaluate the rebuttable presumption, DOE estimated the 
additional cost of purchasing more-efficient, standards-compliant 
equipment, and compared this cost to the value of the energy saved 
during the first year of operation of the equipment. DOE interprets 
that the increased cost of purchasing standards-compliant equipment 
includes the cost of installing the equipment for use by the purchaser. 
DOE calculated the rebuttable presumption payback period (RPBP), or the 
ratio of the value of the increased installed price above the baseline 
efficiency level to the first year's energy cost savings. When the RPBP 
is less than 3 years, the rebuttable presumption is satisfied; when the 
RPBP is equal to or more than 3 years, the rebuttable presumption is 
not satisfied. Note that this PBP calculation does not include other 
components of the annual operating cost of the equipment (i.e., 
maintenance costs and repair costs).
    While DOE examined the rebuttable-presumption, it also considered 
whether the standard levels considered are economically justified 
through a more detailed analysis of the economic impacts of these 
levels pursuant to 42 U.S.C. 6295(o)(2)(B)(i). The results of this 
analysis served as the basis for DOE to evaluate the economic 
justification for a potential standard level definitively (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification).

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

    The NIA assesses the NES and the NPV of total customer costs and 
savings that would be expected as a result of amended energy 
conservation standards. The NES and NPV are analyzed at specific 
efficiency levels for each equipment class of commercial refrigeration 
equipment. DOE calculates the NES and NPV based on projections of 
annual equipment shipments, along with the annual energy consumption 
and total installed cost data from the LCC analysis. For the NOPR 
analysis, DOE forecasted the energy savings, operating cost savings, 
equipment costs, and NPV of customer benefits for equipment sold from 
2017 through 2046--the year in which the last standards-compliant 
equipment is shipped during the 30-year analysis period.
    DOE evaluates the impacts of the amended standards by comparing 
base-case projections with standards-case projections. The base-case 
projections characterize energy use and customer costs for each 
equipment class in the absence of any amended energy conservation 
standards. DOE compares these projections with projections 
characterizing the market for each equipment class if DOE were to adopt 
an amended standard at specific energy efficiency levels for that 
equipment class. For the standards cases, DOE considered a ``roll-up'' 
scenario, in which DOE assumed that equipment efficiencies that do not 
meet the standard level under consideration would ``roll-up'' to meet 
the amended standard level, and those already above the proposed 
standard level would remain unaffected.
    DOE uses a Microsoft Excel spreadsheet model to calculate the 
energy savings and the national customer costs and savings from each 
TSL. The NOPR TSD and other documentation that DOE provides during the 
rulemaking help explain the models and how to use them, and interested 
parties can review DOE's analyses by interacting with these 
spreadsheets. The NIA spreadsheet model uses average values as inputs 
(as opposed to probability distributions of key input parameters from a 
set of possible values).
    For the current analysis, the NIA used projections of energy prices 
and commercial building starts from the AEO2013 Reference Case. In 
addition, DOE analyzed scenarios that used inputs from the AEO2013 Low 
Economic Growth and High Economic Growth Cases. These cases have lower 
and higher energy price trends, respectively, compared to the Reference 
Case. NIA results based on these cases are presented in chapter 10 of 
the NOPR TSD.
    A detailed description of the procedure to calculate NES and NPV, 
and inputs for this analysis are provided in chapter 10 of the NOPR 
TSD.
1. Shipments
    Complete historical shipments data for commercial refrigeration 
equipment could not be obtained from a single source; therefore, DOE 
used data from multiple sources to estimate historical shipments. The 
major sources were 2005 shipments data provided by ARI as part of its 
comments submitted in response to the January 2009 final rule Framework 
document, ARI 2005 Report (Docket No. EERE-2006-BT-STD-0126, ARI, No. 
7, Exhibit B at p. 1); Commercial Refrigeration Equipment to 2014 by 
Freedonia Group, Inc.\67\; 2008 Size and Shape of Industry by the North 
American Association of Food Equipment Manufacturers; \68\ and Energy 
Savings Potential and R&D Opportunities for Commercial Refrigeration 
prepared by Navigant Consulting, Inc. for DOE.\69\ Exact shipments 
numbers and assumptions have been withheld because some of the sources 
cited above are not public documents and are available only for 
purchase.
---------------------------------------------------------------------------

    \67\ Freedonia Group, Inc. Commercial Refrigeration Equipment to 
2014. 2010. Cleveland, OH. Study 2261. www.freedoniagroup.com/Commercial-Refrigeration-Equipment.html
    \68\ North American Association of Food Equipment Manufacturers. 
2008 Size and Shape of Industry. 2008. Chicago, IL.
    \69\ Navigant Consulting, Inc. Energy Savings Potential and R&D 
Opportunities for Commercial Refrigeration. 2009. Prepared by 
Navigant Consulting, Inc. for the U.S. Department of Energy, 
Washington, DC.
---------------------------------------------------------------------------

    Historical linear feet of shipped units depicts the annual amount 
of commercial refrigeration equipment capacity shipped, and is an 
alternative way to express shipments data. DOE determined the linear 
feet shipped for any given year by multiplying each unit shipped by its 
associated average length, and then summing all the linear footage

[[Page 55933]]

values. Table IV.3 presents the representative equipment class lengths 
used for the conversion of per-unit shipments to linear footage within 
each equipment class.

 Table IV.3--Equipment Linear Dimensions Assumed for Shipments Analysis
------------------------------------------------------------------------
                                  Assumed length
        Equipment class                 ft                 Basis
------------------------------------------------------------------------
VOP.RC.M.......................             10    Average of 8 ft and 12
                                                   ft, manufacturer
                                                   interviews.
VOP.RC.L.......................             10    Average of 8 ft and 12
                                                   ft, manufacturer
                                                   interviews.
VOP.SC.M.......................              4    Baseline equipment
                                                   used for engineering
                                                   analysis.
SVO.RC.M.......................             10    Average of 8 ft and 12
                                                   ft, manufacturer
                                                   interviews.
SVO.SC.M.......................              4    Baseline equipment
                                                   used for engineering
                                                   analysis.
HZO.RC.M.......................             10    Average of 8 ft and 12
                                                   ft, manufacturer
                                                   interviews.
HZO.RC.L.......................             10    Average of 8 ft and 12
                                                   ft, manufacturer
                                                   interviews.
HZO.SC.M.......................              4    Baseline equipment
                                                   used for engineering
                                                   analysis.
HZO.SC.L.......................              4    Baseline equipment
                                                   used for engineering
                                                   analysis.
VCT.RC.M.......................             10    Average of 3-door and
                                                   5-door (30 in. per
                                                   door), manufacturer
                                                   interviews.
VCT.RC.L.......................             10    Average of 3-door and
                                                   5-door (3 in. per
                                                   door), manufacturer
                                                   interviews.
VCT.SC.M.......................              4    Engineering estimate.*
VCT.SC.L.......................              3.5  Average of 1-door and
                                                   2-door freezer.
VCT.SC.I.......................              5    Baseline equipment
                                                   used for engineering
                                                   analysis.
VCS.SC.M.......................              4    Engineering estimate.*
VCS.SC.L.......................              3.5  Average of 1-door and
                                                   2-door freezer.
VCS.SC.I.......................              5    Baseline equipment
                                                   used for engineering
                                                   analysis.
HCT.SC.M.......................              3    Engineering estimate.*
HCT.SC.L.......................              3    Engineering estimate.*
HCT.SC.I.......................              3.4  Baseline equipment
                                                   used for engineering
                                                   analysis.
HCS.SC.M.......................              4    Engineering estimate.*
HCS.SC.L.......................              5    Engineering estimate.*
SOC.RC.M.......................              8    Average of 4 ft, 8 ft,
                                                   12 ft, all common
                                                   equipment lengths.
PD.SC.M........................              2.5  Baseline equipment
                                                   used for engineering
                                                   analysis.
SOC.SC.M.......................              5    Engineering estimate.*
------------------------------------------------------------------------
* For equipment classes that exhibit a wide range of equipment lengths
  in the market, DOE assumed a value for equipment length based on its
  best engineering judgment.

    DOE converted the estimated 2009 shipments data in each equipment 
class to percentages of total shipped linear feet of commercial 
refrigeration equipment for use in the shipments model. This 
established the commercial refrigeration equipment market share 
attributed to each equipment class. DOE calculated the percentage of 
shipped linear footage by dividing the linear footage shipped for each 
equipment class by the overall linear footage shipped for all 
commercial refrigeration equipment covered in this rulemaking.
    Table IV.4 summarizes DOE's estimated division of historical annual 
shipments into new and replacement categories by building type. The 
distributions shown in Table IV.4 result from several discrete steps. 
First, equipment types were identified by the type of business they 
generally serve. For example, vertical open cases with remote 
compressors are associated with large grocers and multi-line retail 
stores. Remote condensing equipment is generally associated with retail 
stores that sell high volumes of perishable goods, while self-contained 
units are associated with foodservice and convenience or small food 
sales stores. When there was no strong association between the building 
type and equipment class, equipment was distributed across broader 
classes. Second, a ratio of new versus replacement equipment was 
developed based on commercial floor space estimates (floor space 
estimates are discussed below). Using the expected useful life of 
commercial refrigeration equipment and commercial floor space stock, 
additions, and retirements, ratios were developed of new versus 
replacement stock for use in this analysis. Using these and related 
factors (e.g., the division of foodservice into the three building 
types--limited service restaurants, full-service restaurants, and 
other), DOE distributed commercial refrigeration equipment shipments 
among building types and new versus replacement shipments, as shown in 
Table IV.4.

Table IV.4--Estimated Distribution of 2009 Linear Feet of Commercial Refrigeration Equipment Shipments Among New
                                            vs. Replacement Equipment
----------------------------------------------------------------------------------------------------------------
                                                                    Replacement                        Total
                          Building type                              (percent)     New (percent)     (percent)
----------------------------------------------------------------------------------------------------------------
Large Grocery/Multi-Line Retail.................................            30.5             8.6            39.1
Small Grocery/Convenience.......................................            14.6             4.1            18.7
Limited Service Restaurants.....................................             9.4             3.3            12.7
Full Service Restaurants........................................             9.8             3.4            13.2
Other...........................................................            12.1             4.2            16.3
                                                                 -----------------------------------------------
    Total.......................................................            76.4            23.6           100.0
----------------------------------------------------------------------------------------------------------------

[[Page 55934]]

    Table IV.5 shows the forecasted square footage of new construction 
used to scale annual new commercial refrigeration equipment shipments. 
As the data in Table IV.5 show, forecasted square footage additions to 
the building stocks vary from year to year, with the first few years of 
the analyzed period exhibiting lower levels of growth due to predicted 
lingering impacts of the U.S. economic recession. The forecasted 
commercial refrigeration equipment shipments therefore show some 
variability as well, tracking the forecasted square footage floor space 
additions. The growth rates over the last 10 years of the AEO2013 
forecast (2031 through 2040) were used to extend the AEO forecast out 
until the year 2046 to develop the full 30-year forecast needed for the 
NIA.

  Table IV.5--AEO2013 Forecast of New Food Sales and Foodservice Square
                                 Footage
------------------------------------------------------------------------
                                            New construction million ft
                                                        \2\
                  Year                   -------------------------------
                                            Foodservice     Food sales
------------------------------------------------------------------------
2009....................................          47.715          34.070
2012....................................          31.455          22.149
2017....................................          49.076          34.496
2020....................................          47.617          33.447
2025....................................          47.522          33.416
2030....................................          53.630          37.836
2035....................................          55.536          39.107
2040....................................          55.814          39.243
                                         -------------------------------
    Annual Growth Factor, 2031-2040.....           2.41%           2.27%
------------------------------------------------------------------------
Source: U.S. Energy Information Administration, Annual Energy Outlook
  2013.

    DOE then estimated the annual linear footage shipped for each of 
the 24 primary equipment classes. The shipments analysis relies on the 
24 primary equipment classes to represent the commercial refrigeration 
equipment market. Table IV.6 shows the fraction of the linear footage 
shipped by each of these 24 equipment classes.

 Table IV.6--Percent of Shipped Linear Feet of Commercial Refrigeration
                                Equipment
------------------------------------------------------------------------
                                                           Percentage of
                     Equipment class                        linear feet
                                                             shipped*
------------------------------------------------------------------------
VOP.RC.M................................................           11.59
VOP.RC.L................................................            0.61
VOP.SC.M................................................            0.82
SVO.RC.M................................................            9.30
SVO.SC.M................................................            1.23
HZO.RC.M................................................            1.43
HZO.RC.L................................................            4.49
HZO.SC.M................................................            0.11
HZO.SC.L................................................            0.22
VCT.RC.M................................................            0.87
VCT.RC.L................................................           12.11
VCT.SC.M................................................            5.46
VCT.SC.L................................................            0.27
VCT.SC.I................................................            0.30
VCS.SC.M................................................           22.11
VCS.SC.L................................................           11.25
VCS.SC.I................................................            0.07
HCT.SC.M................................................            0.07
HCT.SC.L................................................            0.43
HCT.SC.I................................................            0.48
HCS.SC.M................................................            5.01
HCS.SC.L................................................            0.65
SOC.RC.M................................................            2.34
PD.SC.M.................................................            8.58
SOC.SC.M................................................            0.17
------------------------------------------------------------------------
* The percentages in this column do not sum to 100 percent because
  shipments of secondary equipment classes and certain other equipment
  classes that were not analyzed in this rulemaking were not included.

    The amount of new and existing commercial floor space is the main 
driver for commercial refrigeration equipment shipments, and is 
appropriately one of the basic inputs into the shipments model. The 
model divides commercial space into two components: space from new 
construction floor space and space from existing floor space.
    DOE took the projected floor space construction after the year 2009 
from the NEMS projection underlying AEO2013.\70\ DOE extracted annual 
estimates of new floor space additions from an AEO2013 data file 
(kdbout) for the period from 2009 through 2040. As stated earlier, the 
last 10 years of the AEO forecast were used to develop growth rates 
used to extend the forecast to 2046.
---------------------------------------------------------------------------

    \70\ U.S. Energy Information Administration. Annual Energy 
Outlook 2013. Washington, DC. DOE/EIA-0383(2013).
---------------------------------------------------------------------------

    Detailed description of the procedure to calculate future shipments 
is presented in chapter 9 of NOPR TSD. Comments related to shipment 
analysis received during the April 2011 preliminary analysis public 
meeting are listed below, along with DOE's responses to the comments.
a. VOP.RC.L Shipments
    At the April 2011 preliminary analysis public meeting, Southern 
Store Fixtures stated that vertical open freezers represent far less 
than the figure of 1.9 percent of the commercial refrigeration 
equipment shipments that DOE included in the preliminary analysis TSD. 
(Southern Store Fixtures, Public Meeting Transcript, No. 31 at p. 123) 
In a written comment, NEEA referenced this statement by Southern Store 
Fixtures, urging DOE to ensure the accuracy of its shipments data for 
the VOP.RC.L equipment class, but stating that it generally agreed with 
DOE's shipments analysis. (NEEA, No. 36 at p. 6)
    Shipments estimates for VOP.RC.L were not explicitly stated in the 
ARI 2005 Report. DOE assumed that these shipments numbers were likely 
grouped with those of VOP.RC.M. For the preliminary analysis, DOE 
allocated a portion of VOP.RC.M shipments to the VOP.RC.L equipment 
class. In response to the comments from Southern Store Fixtures and 
based on new evidence, DOE reduced the portion of VOP.RC.M shipments 
(obtained from the ARI 2005 Report) that it allocated to the VOP.RC.L 
equipment class.
b. Shipments by End User Type
    Southern Store Fixtures stated that the shipments estimates 
presented in

[[Page 55935]]

the preliminary analysis for new equipment for large supermarkets and 
smaller markets did not appear to reflect the assumption of 10- and 15-
year equipment lifetimes. Specifically, Southern Store Fixtures pointed 
out that the replacement shipment numbers were much higher than the new 
shipments in the small grocery store segment. Southern Store Fixtures 
pointed out that because the equipment life in small grocery stores is 
15 years, compared to 10 years in large grocery stores, the ratio of 
replacement shipments to new shipments for small grocery stores should 
be smaller than the same ratio for large grocery stores. (Southern 
Store Fixtures, Public Meeting Transcript, No. 31 at p. 124)
    Small grocery stores and convenience stores house many self-
contained units. In many stores, self-contained units comprise most of 
the refrigeration load, when the refrigeration from walk-in cold rooms 
is discounted (as it does not belong in the commercial refrigeration 
equipment rulemaking). In the current rulemaking, all self-contained 
units are assumed to have an average lifetime of 10 years. Therefore, 
the ratio of replacement shipments to new shipments in small grocery 
stores and convenience stores is dictated largely by the 10-year 
lifetime of self-contained units, and is relatively less impacted by 
the 15-year lifetime of remote condensing display cases, which form a 
much smaller share of the commercial refrigeration equipment found in 
small grocery and convenience stores. DOE believes that this factor 
explains the apparent discrepancy highlighted in the comment by 
Southern Store Fixtures.
    Traulsen expressed the belief that DOE's values for projected 
shipments for the foodservice building type, as well as its projected 
shipments by equipment class, were low. (Traulsen, No. 45 at p. 4)
    DOE calculated future shipments based on forecasted square footage 
of new construction, obtained from the AEO forecast and historical 
shipments data. The ratio of floor space occupied by commercial 
refrigeration equipment to the total commercial floor space is much 
smaller in foodservice buildings than in food sales buildings such as 
grocery stores. Further, DOE converted the historical shipment numbers 
from number of units into number of linear feet by multiplying the 
number of units by the average linear feet of equipment. Commercial 
refrigeration equipment used in the foodservice industry is 
overwhelmingly dominated by self-contained equipment, which, on an 
average, has a shorter length compared to the remote condensing 
equipment found in grocery stores. A combination of these factors 
results in the shipments numbers (in linear feet) to foodservice 
buildings being much lower than shipments numbers to food sales 
buildings. However, in terms of number of units shipped, the proportion 
of shipments to foodservice buildings is much higher as compared to 
shipments to food sales buildings.
c. Shipments Forecasts
    Traulsen commented that overly aggressive performance standards are 
likely to add costs that will be passed along to the customer, 
resulting in stunted market growth and retention of less-efficient 
units. Traulsen estimated that equipment prices have increased 1-2 
percent based on variable manufacturing cost increases alone as a 
result of the need to comply with the standards set by EPACT 2005. 
(Traulsen, No. 45 at p. 6)
    DOE does not have detailed information on the historical shipments 
data of various types of commercial refrigeration equipment by 
equipment classes. As described in earlier in this section, DOE 
extracted shipments data from certain publications and estimated the 
shipments by equipment class. The ARI 2005 report only contains 
shipments data for the year 2005. With the available shipments data for 
commercial refrigeration equipment, its difficult to determine the 
impact of price increases on future shipments.
    Regarding display cases, which are predominantly used in 
supermarkets and grocery stores, DOE believes that replacement of 
display cases is largely performed during store remodeling, and that 
the major driving factor behind remodeling is the need to improve 
aesthetics. Decisions regarding store remodeling are influenced by many 
factors, including overall future economic outlook and availability of 
capital, and DOE believes that equipment price increases do not figure 
as the major factor. DOE recognizes that, on the other hand, 
foodservice establishments may be more sensitive to equipment prices. 
The equipment that is predominantly used in this sector is composed of 
refrigerators and freezers with solid doors. The MSP increases related 
to the higher efficiency refrigerators and freezers were estimated as 
part of the engineering analysis, and were found to be 6 to 8 percent 
of the baseline MSPs. The effect of amended DOE standards could be that 
foodservice establishments extend the life of their existing equipment. 
DOE expects that this effect will result in a slight dip in shipments 
only in the early years after amended standards go into effect because 
the old equipment will have to be replaced eventually. The effect of 
such a dip will not have a significant impact on the NIA, which is 
carried out over a 30-year period. Extending the life of the existing 
equipment may also result in higher maintenance and repair costs that 
may offset part or all of the apparent customer savings.
    DOE welcomes stakeholder input in this regard, as the information 
currently available to DOE is not sufficient to determine the impact of 
price increases on future shipments of commercial refrigeration 
equipment.
2. Forecasted Efficiency in the Base Case and Standards Cases
    The method for estimating the market share distribution of 
efficiency levels is presented in section IV.H.9, and a detailed 
description can be found in chapter 11 of the NOPR TSD. To estimate 
efficiency trends in the standards cases, DOE uses a ``roll-up'' 
scenario in its standards rulemakings. Under the roll-up scenario, DOE 
assumes that equipment efficiencies in the base case that do not meet 
the standard level under consideration would ``roll up'' to meet the 
new standard level, and equipment efficiencies above the standard level 
under consideration would be unaffected. Table IV.7 shows the shipment-
weighted market shares by efficiency level in the base-case scenario.

                                       Table IV.7--Shipment-Weighted Market Shares by Efficiency Level, Base Case
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Shipment-weighted market shares by efficiency level * **
                                                 -------------------------------------------------------------------------------------------------------
                 Equipment class                    Level 1      Level 2      Level 3      Level 4      Level 5      Level 6      Level 7      Level 8
                                                   (percent)    (percent)    (percent)    (percent)    (percent)    (percent)    (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M........................................         24.3         24.0         23.4         13.4         12.8          2.0           NA           NA
VOP.RC.L........................................         26.0         26.1         23.2         22.4          2.2           NA           NA           NA
VOP.SC.M........................................         19.1         19.0         18.8         18.1         11.3         10.7          3.1           NA

[[Page 55936]]

 
VCT.RC.M........................................         18.8         18.8         15.9         15.5         14.8         14.5          1.7           NA
VCT.RC.L........................................         19.5         20.4         20.0         19.4         19.0          1.8           NA           NA
VCT.SC.M........................................         16.7         17.4         15.5         13.0         12.6         11.7         11.5          1.7
VCT.SC.L........................................         10.5         13.3         16.4         16.2         14.4         14.2         13.1          2.0
VCT.SC.I........................................         16.4         18.1         17.8         15.9         15.5         14.8          1.5           NA
VCS.SC.M........................................         13.1         14.9         15.0         15.0         14.6         14.0         12.6          0.8
VCS.SC.L........................................         12.1         15.1         15.3         15.4         14.3         13.9         13.3          0.6
VCS.SC.I........................................         16.7         16.8         17.4         17.0         16.0         15.4          0.7           NA
SVO.RC.M........................................         24.5         24.5         22.2         13.2         12.6          3.0           NA           NA
SVO.SC.M........................................         19.5         19.5         18.5         18.0         10.8         10.1          3.7           NA
SOC.RC.M........................................         17.7         17.8         17.8         14.5         14.1         12.7          5.4           NA
HZO.RC.M........................................         78.4         21.6           NA           NA           NA           NA           NA           NA
HZO.RC.L........................................         86.2         13.8           NA           NA           NA           NA           NA           NA
HZO.SC.M........................................         25.4         25.4         25.0         21.9          2.4           NA           NA           NA
HZO.SC.L........................................         71.8         28.2           NA           NA           NA           NA           NA           NA
HCT.SC.M........................................         14.8         15.4         15.6         15.7         13.4         12.8         11.0          1.4
HCT.SC.L........................................         12.3         13.3         13.6         15.8         15.6         15.0         13.2          1.2
HCT.SC.I........................................         25.6         25.8         25.1         22.3          1.1           NA           NA           NA
HCS.SC.M........................................         17.2         17.5         17.2         16.8         15.9         13.3          2.1           NA
HCS.SC.L........................................         17.2         17.5         17.2         16.8         16.6         14.5          1.5           NA
PD.SC.M.........................................         14.0         17.2         16.1         15.8         15.3         11.0          9.7          1.0
SOC.SC.M........................................         14.7         15.1         15.1         15.0         12.5         12.1         11.0          4.6
--------------------------------------------------------------------------------------------------------------------------------------------------------
* ``NA'' means that no market share was calculated for this efficiency level. For example, the VOP.RC.M equipment class only had six possible efficiency
  levels, so no market share was allotted to Efficiency Levels 7 and 8.
** Shares may not add to 100 percent exactly due to rounding.

3. National Energy Savings
    For each year in the forecast period, DOE calculates the NES for 
each potential standard level by multiplying the stock of equipment 
affected by the energy conservation standards by the estimated per-unit 
annual energy savings. DOE typically considers the impact of a rebound 
effect, introduced in the energy use analysis, in its calculation of 
NES for a given product. A rebound effect occurs when users operate 
higher efficiency equipment more frequently and/or for longer 
durations, thus offsetting estimated energy savings. However, DOE used 
a rebound factor of 1, or no effect, for commercial refrigeration 
equipment because it is operates 24 hours a day, and therefore there is 
no potential for a rebound effect.
    Major inputs to the calculation of NES are annual unit energy 
consumption, shipments, equipment stock, a site-to-source conversion 
factor, and a full fuel cycle factor.
    The annual unit energy consumption is the site energy consumed by a 
commercial refrigeration unit in a given year. Because the equipment 
classes analyzed represent equipment sold across a range of sizes, 
DOE's ``unit'' in the NES is actually expressed as a linear foot of 
equipment in an equipment class, and not an individual unit of 
commercial refrigeration equipment of a specific size. DOE determined 
annual forecasted shipment-weighted average equipment efficiencies 
that, in turn, enabled determination of shipment-weighted annual energy 
consumption values.
    The commercial refrigeration equipment stock in a given year is the 
total linear footage of commercial refrigeration equipment shipped from 
earlier years (up to 15 years, depending on the type of equipment) that 
is in use in that year. The NES spreadsheet model keeps track of the 
total linear footage of commercial refrigeration units shipped each 
year. For purposes of the NES and NPV analyses conducted for the NOPR, 
DOE assumed that, based on 15-year and 10-year average equipment 
lifetimes, approximately 6.67 and 10 percent, respectively, of the 
existing commercial refrigeration units are retired in each year. DOE 
assumes that, for units shipped in 2046, any units remaining at the end 
of 2060 will be replaced.
    DOE has historically presented NES in terms of primary energy 
savings. In response to the recommendations of a committee on ``Point-
of-Use and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency 
Standards'' appointed by the National Academy of Science, DOE announced 
its intention to use full-fuel-cycle (FFC) measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (August 18, 2011) While DOE stated in that 
notice that it intended to use the Greenhouse Gases, Regulated 
Emissions, and Energy Use in Transportation (GREET) model to conduct 
the analysis, it also said it would review alternative methods, 
including the use of NEMS. After evaluating both models and the 
approaches discussed in the August 18, 2011 notice, DOE published a 
statement of amended policy in the Federal Register in which DOE 
explained its determination that NEMS is a more appropriate tool for 
its FFC analysis and its intention to use NEMS for that purpose. 77 FR 
49701 (August 17, 2012). DOE received one comment, which was supportive 
of the use of NEMS for DOE's FFC analysis.\71\
---------------------------------------------------------------------------

    \71\ Docket ID: EERE-2010-BT-NOA-0028, comment by Kirk 
Lundblade.
---------------------------------------------------------------------------

    The approach used for today's NOPR, and the FFC multipliers that 
were applied, are described in appendix 10D of the NOPR TSD. NES 
results are presented in both primary and FFC savings in section 
V.B.3.a.
4. Net Present Value of Customer Benefit
    The inputs for determining the NPV of the total costs and benefits 
experienced by customers of the commercial refrigeration equipment are: 
(1) total annual installed cost; (2) total

[[Page 55937]]

annual savings in operating costs; and (3) a discount factor. DOE 
calculated net national customer savings for each year as the 
difference between the base-case scenario and standards-case scenarios 
in terms of installation and operating costs. DOE calculated operating 
cost savings over the life of each piece of equipment shipped in the 
forecast period.
    DOE multiplied monetary values in future years by the discount 
factor to determine the present value of costs and savings. DOE 
estimated national impacts using both a 3-percent and a 7-percent real 
discount rate as the average real rate of return on private investment 
in the U.S. economy. These discount rates are used in accordance with 
the Office of Management and Budget (OMB) guidance to Federal agencies 
on the development of regulatory analysis (OMB Circular A-4, September 
17, 2003), and section E, ``Identifying and Measuring Benefits and 
Costs,'' therein. DOE defined the present year as 2013 for the NOPR 
analysis. The 7-percent real value is an estimate of the average 
before-tax rate of return to private capital in the U.S. economy. The 
3-percent real value represents the ``societal rate of time 
preference,'' which is the rate at which society discounts future 
consumption flows to their present.
5. Benefits From Effects of Amended Standards on Energy Prices
    The reduction in electricity consumption associated with amended 
standards for commercial refrigeration equipment could reduce the 
electricity prices charged to customers in all sectors of the economy, 
and thereby reduce electricity expenditures. In chapter 2 of the 
preliminary analysis TSD, DOE explained that, because the power 
industry is a complex mix of fuel and equipment suppliers, electricity 
producers, and distributors, it did not plan to estimate the value of 
potentially reduced electricity costs for all customers associated with 
new or amended standards for refrigeration products.
    For this rulemaking, DOE used NEMS-BT to assess the impacts of the 
reduced need for new electric power plants and infrastructure projected 
to result from amended standards. In NEMS-BT, changes in power 
generation infrastructure affect utility revenue requirements, which in 
turn affect electricity prices. DOE estimated the impact on electricity 
prices associated with each considered TSL. Although the aggregate 
benefits for electricity users are potentially large, there may be 
negative effects on some involved in electricity supply, particularly 
power plant providers and fuel suppliers. DOE has concluded that, at 
present, it should not give significant weighting to this factor 
(aggregate benefit to customers due to reductions in electricity 
prices) in its consideration of the justification of the amended 
standards because there is uncertainty about the extent to which the 
benefits to electricity users from reduced electricity prices would 
represent a transfer from those involved in electricity supply to 
electricity customers. DOE is continuing to investigate the extent to 
which electricity price changes projected to result from amended 
standards represent a net gain to society.

J. Customer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
commercial customers, DOE evaluates the impact on identifiable groups 
(i.e., subgroups) of customers, such as different types of businesses 
that may be disproportionately affected. Based on data from the 2007 
U.S. Economic Census and size standards set by the U.S. Small Business 
Administration (SBA), DOE determined that a majority of convenience 
stores and restaurants fall under the definition of small businesses 
(see chapter 11 of NOPR TSD for details). Small businesses typically 
face higher cost of capital. In general, the lower the cost of 
electricity and higher the cost of capital, the more likely it is that 
an entity would be disadvantaged by the requirement to purchase higher 
efficiency equipment. Table IV.8 and Table IV.9 present average 
commercial electricity prices by business type and discount rates by 
building types, respectively.
    Comparing the small grocery and convenience store category to the 
convenience store with gas station category, both face the same cost of 
capital, but convenience stores with gas stations generally incur lower 
electricity prices. Therefore, convenience stores with gas stations 
were chosen for LCC subgroup analysis in the food-retail segment.
    In the foodservice segment, limited service restaurants and full-
service restaurants have similar electricity price and discount rates, 
with limited service restaurants paying slightly lower electricity 
rates and full-service restaurants facing a slightly higher cost of 
capital. DOE chose to study full-service restaurants for the LCC 
subgroup analysis in the foodservice segment because a higher 
percentage of full-service restaurants tend to be operated by 
independent small business concerns, as compared to a majority of fast-
food restaurants which are owned by or affiliated with national 
restaurant chains.
    DOE estimated the impact on the identified customer subgroups using 
the LCC spreadsheet model. The standard LCC analysis (described in 
section IV.H) includes various types of businesses that use commercial 
refrigeration equipment. For the LCC subgroup analysis, it was assumed 
that the subgroups analyzed do not have access to national commercial 
refrigeration equipment purchasing accounts and, consequently, face a 
higher distribution channel markup. Further, electricity rates and 
discount rates differ among these subgroups. Details of the data used 
for LCC subgroup analysis and results are presented in chapter 11 of 
the NOPR TSD.

                    Table IV.8--Derived Average Commercial Electricity Price by Business Type
----------------------------------------------------------------------------------------------------------------
                                                                                           Ratio of electricity
                                                                Electricity price cents/  price to average price
                         Business type                                    kWh               for all commercial
                                                                                                buildings
----------------------------------------------------------------------------------------------------------------
Grocery store/food market.....................................                  0.07222                    0.910
Convenience store *...........................................                  0.08583                    1.082
Convenience store with gas station............................                  0.07722                    0.973
Multi-line retail **..........................................                  0.07262                    0.915
Limited service restaurant....................................                  0.07962                    1.003
Full service restaurant.......................................                  0.08467                    1.067
Other foodservice.............................................                  0.07664                    0.966
All commercial buildings......................................                  0.07936                    1.000
----------------------------------------------------------------------------------------------------------------
Source: Commercial Buildings Energy Consumption Survey 2003.

[[Page 55938]]

 
This group is assumed to include convenience stores without gas stations, specialty stores (such as meat
  markets), and beer, wine, and liquor stores.
** This group is assumed to include mainly large multi-line retailers and supercenters that sell both grocery
  and non-grocery items.

                                             Table IV.9--Derivation of Real Discount Rates by Building Type
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                        Major chain           Local or non-chain           Governmental
                                                ------------------------------------------------------------------------------   Discount
           Building type description                                        Small frm                 Muni bond                    rate          No.
                                                    WACC *     Percent of   premium **   Percent of      rate      Percent of   (percent)   Obs.[dagger]
                                                  (percent)      stock      (percent)      stock      (percent)      stock
--------------------------------------------------------------------------------------------------------------------------------------------------------
Large Grocery..................................         4.16          100          0.0            0            0            0         4.16            18
Small Grocery & Convenience....................         4.20           50          1.9           50            0            0         5.19             5
Gas Station With Convenience Store.............         4.20           50          1.9           50            0            0         5.19            NA
Multi-Line Retail..............................         4.33          100          0.0            0            0            0         4.33             6
Restaurant--Limited Service....................         5.29           50          1.9           50            0            0         6.29            21
Restaurant--Full Service.......................         5.61           50          1.9           50            0            0         6.62            24
Restaurant--Other Foodservice..................         5.61           25          1.9           25         2.34           50         4.48            NA
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Pacific Northwest National Laboratory (PNNL) Weighted Average Cost of Capital (WACC) calculations applied to firms sampled from the Damodaran
  Online web site (http://pages.stern.nyu.edu/~adamodar/New_Home_Page/papers.html). Assumptions for weighting factors for convenience and foodservice
  reflect lack of reliable data sources. The estimate of inflation used to translate nominal rates to real rates is based on a 40-year (1971-2010)
  average gross domestic product deflator (3.832 percent).
* WACC stands for weighted-average cost of capital. See chapter 8 of the NOPR TSD for additional details.
** Small Firm Premium refers to higher premium paid by smaller firms that face higher risks of loss of invested capital. Source: Small Business
  Administration data on loans between $10,000 and $99,000 compared to AAA Corporate Rates. http://www.sba.gov/advocacy/7540/6282. Data compiled 6/20/
  2013.
[dagger] ``NA'' means no Damodaran observations available.

K. Manufacturer Impact Analysis

1. Overview
    DOE performed an MIA to estimate the financial impact of amended 
energy conservation standards on manufacturers of commercial 
refrigeration equipment and to calculate the impact of such standards 
on employment and manufacturing capacity. The MIA has both quantitative 
and qualitative aspects. The quantitative part of the MIA primarily 
relies on the Government Regulatory Impact Model (GRIM), an industry 
cash-flow model with inputs specific to this rulemaking. The key GRIM 
inputs are data on the industry cost structure, product costs, 
shipments, and assumptions about markups and conversion expenditures. 
The key output is the INPV. Different sets of markup scenarios will 
produce different results. The qualitative part of the MIA addresses 
factors such as equipment characteristics, impacts on particular 
subgroups of manufacturers, and important market and product trends. 
The complete MIA is outlined in chapter 12 of the NOPR TSD.
    DOE conducted the MIA for this rulemaking in three phases. In Phase 
1 of the MIA, DOE prepared a profile of the commercial refrigeration 
equipment industry that includes a top-down cost analysis of 
manufacturers used to derive preliminary financial inputs for the GRIM 
(e.g., sales general and administration (SG&A) expenses; research and 
development (R&D) expenses; and tax rates). DOE used public sources of 
information, including company SEC 10-K filings, corporate annual 
reports, the U.S. Census Bureau's Economic Census, and Hoover's 
reports.
    In Phase 2 of the MIA, DOE prepared an industry cash-flow analysis 
to quantify the impacts of an amended energy conservation standard. In 
general, more-stringent energy conservation standards can affect 
manufacturer cash flow in three distinct ways: (1) by creating a need 
for increased investment; (2) by raising production costs per unit; and 
(3) by altering revenue due to higher per-unit prices and possible 
changes in sales volumes.
    In Phase 3 of the MIA, DOE conducted structured, detailed 
interviews with a representative cross-section of manufacturers. During 
these interviews, DOE discussed engineering, manufacturing, 
procurement, and financial topics to validate assumptions used in the 
GRIM and to identify key issues or concerns. See section IV.K.4 for a 
description of the key issues manufacturers raised during the 
interviews.
    Additionally, in Phase 3, DOE evaluated subgroups of manufacturers 
that may be disproportionately impacted by amended standards, or that 
may not be accurately represented by the average cost assumptions used 
to develop the industry cash-flow analysis. For example, small 
manufacturers, niche players, or manufacturers exhibiting a cost 
structure that largely differs from the industry average could be more 
negatively affected.
    DOE identified one subgroup, small manufacturers, for separate 
impact analyses. DOE applied the small business size standards 
published by the SBA to determine whether a company is considered a 
small business. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 
53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. To be 
categorized as a small business under North American Industry 
Classification System (NAICS) 333415, ``Air-Conditioning and Warm Air 
Heating Equipment and Commercial and Industrial Refrigeration Equipment 
Manufacturing,'' a commercial refrigeration manufacturer and its 
affiliates may employ a maximum of 750 employees. The 750-employee 
threshold includes all employees in a business's parent company and any 
other subsidiaries. Based on this classification, DOE identified at 
least 32 commercial refrigeration equipment manufacturers that qualify 
as small businesses. The commercial refrigeration equipment small 
manufacturer subgroup is discussed in chapter 12 of the NOPR TSD and in 
section VI.B.1 of this notice.

[[Page 55939]]

2. Government Regulatory Impact Model
    DOE uses the GRIM to quantify the changes in the commercial 
refrigeration equipment industry cash flow due to amended standards 
that result in a higher or lower industry value. The GRIM analysis uses 
a standard, annual cash-flow analysis that incorporates manufacturer 
costs, markups, shipments, and industry financial information as 
inputs, and models changes in costs, investments, and manufacturer 
margins that would result from new and amended energy conservation 
standards. The GRIM spreadsheet uses the inputs to arrive at a series 
of annual cash flows, beginning with the base year of the analysis, 
2013 in this case, and continuing to 2046. DOE calculated INPVs by 
summing the stream of annual discounted cash flows during this period. 
For commercial refrigeration equipment manufacturers, DOE used a real 
discount rate of 10 percent. DOE's discount rate estimate was derived 
from industry financials and then modified according to feedback during 
manufacturer interviews.
    The GRIM calculates cash flows using standard accounting principles 
and compares changes in INPV between a base case and various TSLs (the 
standards cases). The difference in INPV between the base case and a 
standards case represents the financial impact of the amended standard 
on manufacturers. As discussed previously, DOE collected the 
information on the critical GRIM inputs from a number of sources, 
including publicly available data and interviews with a number of 
manufacturers (described in the next section). The GRIM results are 
shown in section V.B.2.a. Additional details about the GRIM can be 
found in chapter 12 of the NOPR TSD.
a. Government Regulatory Impact Model Key Inputs
Manufacturer Production Costs
    Manufacturing a higher efficiency product is typically more 
expensive than manufacturing a baseline product due to the use of more 
complex components, which are more costly than baseline components. The 
changes in the MPCs of the analyzed products can affect the revenues, 
gross margins, and cash flow of the industry, making these product cost 
data key GRIM inputs for DOE's analysis.
    In the MIA, DOE used the MPCs for each considered efficiency level 
calculated in the engineering analysis, as described in section IV.C 
and further detailed in chapter 5 of the NOPR TSD. In addition, DOE 
used information from its teardown analysis, described in section 
IV.E.4.a, to disaggregate the MPCs into material, labor, and overhead 
costs. To calculate the MPCs for equipment above the baseline, DOE 
added incremental material, labor, overhead costs from the engineering 
cost-efficiency curves to the baseline MPCs. These cost breakdowns and 
equipment markups were validated with manufacturers during manufacturer 
interviews.
Base-Case Shipments Forecast
    The GRIM estimates manufacturer revenues based on total unit 
shipment forecasts and the distribution of these values by efficiency 
level. Changes in sales volumes and efficiency mix over time can 
significantly affect manufacturer finances. For this analysis, the GRIM 
uses the NIA's annual shipment forecasts derived from the shipments 
analysis from 2013, the base year, to 2046, the end of the analysis 
period. See chapter 9 of the NOPR TSD for additional details.
Product and Capital Conversion Costs
    Amended energy conservation standards will cause manufacturers to 
incur conversion costs to bring their production facilities and product 
designs into compliance. For the MIA, DOE classified these conversion 
costs into two major groups: (1) Product conversion costs and (2) 
capital conversion costs. Product conversion costs are investments in 
research, development, testing, marketing, and other non-capitalized 
costs necessary to make product designs comply with a new or amended 
energy conservation standard. Capital conversion costs are investments 
in property, plant, and equipment necessary to adapt or change existing 
production facilities such that new product designs can be fabricated 
and assembled.
    To evaluate the level of capital conversion expenditures 
manufacturers would likely incur to comply with amended energy 
conservation standards, DOE used manufacturer interviews to gather data 
on the level of capital investment required at each efficiency level. 
DOE validated manufacturer comments through estimates of capital 
expenditure requirements derived from the product teardown analysis and 
engineering model described in section IV.E.4.
    DOE assessed the equipment conversion costs at each level by 
integrating data from quantitative and qualitative sources. DOE 
considered feedback regarding the potential costs of each efficiency 
level from multiple manufacturers to determine conversion costs such as 
R&D expenditures and certification costs. Manufacturer data were 
aggregated to better reflect the industry as a whole and to protect 
confidential information.
    In general, DOE assumes that all conversion-related investments 
occur between the year of publication of the final rule and the year by 
which manufacturers must comply with an amended standard. The 
investment figures used in the GRIM can be found in section V.B.2.a of 
this notice. For additional information on the estimated product 
conversion and capital conversion costs, see chapter 12 of the NOPR 
TSD.
b. Government Regulatory Impact Model Scenarios
Markup Scenarios
    As discussed above, MSPs include direct manufacturing production 
costs (i.e., labor, material, and overhead estimated in DOE's MPCs) and 
all non-production costs (i.e., SG&A, R&D, and interest), along with 
profit. To calculate the MSPs in the GRIM, DOE applied markups to the 
MPCs estimated in the engineering analysis and then added in the cost 
of shipping. Modifying these markups in the standards case yields 
different sets of impacts on manufacturers. For the MIA, DOE modeled 
two standards-case markup scenarios to represent the uncertainty 
regarding the potential impacts on prices and profitability for 
manufacturers following the implementation of amended energy 
conservation standards: (1) A preservation of gross margin percentage 
markup scenario; and (2) a preservation of operating profit markup 
scenario. These scenarios lead to different markups values that, when 
applied to the inputted MPCs, result in varying revenue and cash flow 
impacts.
    Under the preservation of gross margin percentage scenario, DOE 
applied a single uniform ``gross margin percentage'' markup across all 
efficiency levels. As production costs increase with efficiency, this 
scenario implies that the absolute dollar markup will increase as well. 
Based on publicly available financial information for manufacturers of 
commercial refrigeration equipment and comments from manufacturer 
interviews, DOE assumed the non-production cost markup--which includes 
SG&A expenses, R&D expenses, interest, and profit--to be 1.42. Because 
this markup scenario assumes that manufacturers would be able to 
maintain their gross margin percentage markups as production costs 
increase in response to

[[Page 55940]]

an amended energy conservation standard, the scenario represents a high 
bound to industry profitability under an amended energy conservation 
standard.
    In the preservation of operating profit scenario, manufacturer 
markups are set so that operating profit 1 year after the compliance 
date of the amended energy conservation standard is the same as in the 
base case. Under this scenario, as the cost of production and the cost 
of sales go up, manufacturers are generally required to reduce their 
markups to a level that maintains base-case operating profit. The 
implicit assumption behind this markup scenario is that the industry 
can only maintain its operating profit in absolute dollars after 
compliance with the amended standard is required. Therefore, operating 
margin in percentage terms is squeezed (reduced) between the base case 
and standards case. DOE adjusted the manufacturer markups in the GRIM 
at each TSL to yield approximately the same earnings before interest 
and taxes in the standards case in the year after the compliance date 
of the amended standards as in the base case. This markup scenario 
represents a low bound to industry profitability under an amended 
energy conservation standard.
3. Discussion of Comments
    During the April 2011 preliminary analysis public meeting, 
interested parties commented on the assumptions and results of the 
preliminary analysis TSD. Oral and written comments addressed several 
topics, including testing and certification, cumulative regulatory 
burden, small manufacturers, and manufacturer markups.
a. Testing and Certification
    At the public meeting and in written comments, several stakeholders 
expressed concern to DOE regarding the potential burden of testing.
    Traulsen stated that certification, compliance, and enforcement 
(CC&E) is its most significant cost item in terms of internal resources 
in the form of time and direct expenses. Traulsen further explained 
that, with respect to the manufacturer impacts, the three most 
important topics are CC&E, testing burden, and compliance with other 
(unspecified) certifications. (Traulsen, No. 45 at pp. 4-5) NEEA 
expressed the opinion that the most significant issue associated with 
manufacturer impacts is testing and compliance for a wide array of 
equipment offerings, especially given the large number of variations on 
single models. AHRI also stated that the CC&E requirements put in place 
by DOE have the potential to bankrupt the industry due to the excessive 
number of tests required. (AHRI, No. 43 at p. 3) True added that it 
believed there are economies of scale in testing commercial 
refrigeration equipment units. (True, Public Meeting Transcript, No. 31 
at p. 151) True also stated that the testing and regulatory burden, 
including tooling, fixturing, and setup costs imposed on small 
production runs is an issue for large manufacturers as well as small 
manufacturers. (True, Public Meeting Transcript, No. 31 at pp. 206, 
210) NEEA expressed agreement with manufacturers that testing each 
variation would create a significant potential burden, especially on 
small manufacturers. (NEEA, No. 36 at p. 7) In addition, Southern Store 
Fixtures stated that it would be difficult to produce information to 
estimate the compliance testing burden on manufacturers, as the 
certification and compliance requirements had not yet been finalized. 
(Southern Store Fixtures, Public Meeting Transcript, No. 31 at pp. 149-
50) Southern Store Fixtures added that it is impossible to determine 
potential impacts of testing and certification on manufacturers until 
the definition of a basic model is clarified. (Southern Store Fixtures, 
No. 38 at p. 1)
    DOE recognizes industry concerns regarding CC&E testing 
requirements. Although CC&E costs are not directly analyzed in the GRIM 
because they do not vary with different standard levels, the CC&E 
burden is identified as a key issue and as a cumulative regulatory 
burden in the MIA. DOE intends to address these manufacturer concerns 
in ongoing CC&E rulemakings. Moreover, DOE is currently considering 
alternative efficiency determination methods (AEDMs) for commercial 
refrigeration equipment and issued a notice of proposed rulemaking on 
Alternative Efficiency Determination Methods and Alternative Rating 
Methods in May 2012. 77 FR 32038 (May 31, 2012). AEDMs are computer 
modeling tools used to establish a model's efficiency rating in lieu of 
testing. More information about the AEDM rulemaking can be found at: 
www1.eere.energy.gov/buildings/appliance_standards/certification_enforcement.html.
    While the GRIM does not account for DOE certification costs, it 
does account for industry certification (i.e., Underwriters 
Laboratories (UL) and NSF testing) and research and development costs 
in its analysis of product conversion costs, which are associated with 
a change in standards. The change in INPV, the primary output of the 
GRIM, reflects the possible increase in industry certification costs 
and is considered by DOE when proposing a standard.
b. Cumulative Regulatory Burden
    Numerous stakeholders commented on the cumulative regulatory burden 
tied to DOE efficiency standards. Some stakeholders expressed concern 
regarding potential conflicts with other certification programs. 
Traulsen stated that the redundancy of testing required by other 
Federal programs (such as EPA ENERGY STAR[supreg]),\72\ potentially 
involves conflicting criteria, increases cost, and that cross-
references to databases with inconsistent tests, classes, and 
enforcement requirements adds further complications. Traulsen estimated 
that the financial burden associated with meeting both DOE and EPA 
ENERGY STAR requirements has been greater than 0.5 percent of revenue, 
and that it would be beneficial to reconcile the differences between 
DOE and EPA standards. (Traulsen, No. 45 at pp. 5-6) NEEA stated that 
the burden of certifications and associated testing is inherent in the 
manufacturing industry, and that this burden should have little to do 
with the current standards rulemaking. However, NEEA added, any steps 
that can be taken to harmonize test methods and procedures between 
certifications should be taken. (NEEA, No. 36 at p. 7)
---------------------------------------------------------------------------

    \72\ ENERGY STAR is a joint program of EPA and DOE that helps 
the Nation save money and protect the environment through energy 
efficient products and practices. More information can be found at: 
www.energystar.gov.
---------------------------------------------------------------------------

    DOE realizes that the cumulative effect of multiple regulations on 
an industry may significantly increase the burden faced by 
manufacturers that need to comply with regulations and certification 
programs from different organizations and levels of government. 
However, DOE notes that certain standards, such as ENERGY STAR, are 
optional for manufacturers.
    AHRI stated that there are several legislative and regulatory 
activities that could significantly burden manufacturers of commercial 
refrigeration equipment, including the DOE CC&E program and the 
upcoming amended energy conservation standards for walk-in coolers and 
freezers. AHRI also added that climate change bills could have a 
significant negative impact on the availability and price of HFC 
refrigerants. (AHRI, No. 43 at p. 4)
    DOE estimates the present value of the total benefits over the 
analysis period (2010-2040) of the EPACT 2005 standards for CRE to be 
$2.3 billion and the costs to be $0.32 billion, in 2012 dollars and 
using a discount rate of 7 percent. DOE estimates the present

[[Page 55941]]

value of total benefits over the analysis period (2012-2042) of the DOE 
2009 standards for CRE to be $3.97 billion and the costs to be $1.52 
billion, in 2012 dollars and using a 7 percent discount rate. 
Additionally, in the energy conservation standard NOPR for walk-in 
coolers and freezers, DOE estimates the net present value of the total 
benefits over the analysis period (2017-2046) to be $21.6 billion and 
the costs to be $3.7 billion, in 2012% and using a discount rate of 7 
percent.
    DOE takes into account the cumulative cost of multiple Federal 
regulations on manufacturers, including CC&E, in the cumulative 
regulatory burden (CRB) section of its analysis. The CRB can be found 
in section V.B.2.e of this document. The CRB review also recognizes the 
additional burden faced by manufacturers that produce both commercial 
refrigeration equipment and walk-in coolers and freezers.
    AHRI also stated that California is currently working on new 
regulations as part of Title 24 that will likely establish new 
prescriptive requirements on commercial refrigeration equipment 
beginning in 2013. AHRI added that other States on the West Coast are 
following California's lead and are likely to implement similar 
regulations in the near future. AHRI suggested that DOE account for 
these developments in its analysis. (AHRI, No. 43 at p. 4) Finally, 
AHRI commented that several States have enacted their own climate 
change legislation, including regulations established by the California 
Air Resources Board (CARB) to limit GHGs and reduce the usage of high 
GWP refrigerants such as HFCs. AHRI stated that CARB will implement 
these regulations in 2011. (AHRI, No. 43 at p. 4)
    According to the California Code of Regulations, title 24, part 6, 
any appliance for which there is a California standard established may 
be installed only if the manufacturer has certified to the CEC, as 
specified in those regulations, that the appliance complies with the 
applicable standard for that appliance. California's appliance 
efficiency regulations require that the MDEC (in kilowatt-hours) for 
commercial refrigerators manufactured on or after January 1, 2010 does 
not exceed the following:
     Refrigerators with solid doors: 0.10V + 2.04
     Refrigerators with transparent doors: 0.12V + 3.34
     Freezers with solid doors: 0.40V + 1.38
     Freezers with transparent doors: 0.75V + 4.10
     Refrigerator/freezers with solid doors: the greater of 
0.27AV-0.71 or 0.70
     Refrigerators with self-condensing unit designed for pull-
down temperature applications: 0.126V + 3.51
    Since these standards are identical to the ones prescribed in EPACT 
2005 and the efficiency levels set by the current rulemaking will 
either exceed or be equivalent to the EPACT 2005 levels, DOE does not 
expect the Title 24 regulations to create a cumulative regulatory 
burden on manufacturers. California also has started a rulemaking 
proceeding to adopt changes to the building energy efficiency standards 
contained in the California Code of Regulations, title 24, part 6, but 
the CEC is currently in the pre-rulemaking stage and any new standards 
will not be published until 2013. DOE has not evaluated the impacts of 
the 2013 rule because any analysis would be speculative in the absence 
of final regulations.
    CARB is currently limiting the in-State use of high-GWP 
refrigerants in non-residential refrigeration systems through its 
Refrigerant Management Program, effective January 1, 2011.\73\ 
According to this new regulation, facilities with refrigeration systems 
that have a refrigerant capacity exceeding 50 pounds must repair leaks 
within 14 days of detection, maintain on-site records of all leak 
repairs, and keep receipts of all refrigerant purchases. The regulation 
applies to any person or company that installs, services, or disposes 
of appliances with high-GWP refrigerants. Refrigeration systems with a 
refrigerant capacity exceeding 50 pounds typically belong to food 
retail operations with remote condensing racks that store refrigerant 
serving multiple commercial refrigeration equipment units within a 
business. However, commercial refrigeration equipment units in food 
retail establishments are usually installed and serviced by 
refrigeration contractors, not manufacturers. As a result, although 
these CARB regulations apply to refrigeration technicians and owners of 
facilities with refrigeration systems, they are unlikely to represent a 
regulatory burden for commercial refrigeration manufacturers.
---------------------------------------------------------------------------

    \73\ California Air Resources Board. Refrigerant Management 
Program Final Regulation. 2011. (Last accessed March 16, 2012.) 
www.arb.ca.gov/cc/reftrack/reftrackrule.html.
---------------------------------------------------------------------------

    The cumulative regulatory burden on manufacturers of commercial 
refrigeration equipment is discussed in further detail in chapter 12 of 
the NOPR TSD.
c. Small Manufacturers
    During the April 2011 preliminary analysis public meeting, Southern 
Store Fixtures stated that the impact of research, development, and 
testing is greater on smaller manufacturers because, while they may 
have the same number of models in their product lines as do larger 
manufacturers, they produce fewer units of each model. (Southern Store 
Fixtures, Public Meeting Transcript, No. 31 at p. 150) Similarly, Zero 
Zone stated that amended standards have large impacts on small 
companies. For example, Zero Zone uses foamed-in-place urethane panels. 
If it were to become necessary to use thicker foam, Zero Zone stated, 
the company could face capital conversion expenditures of roughly 
$250,000. (Zero Zone, Public Meeting Transcript, No. 31 at p. 199)
    DOE agrees that amended standards may have disproportionate impacts 
on smaller manufacturers. As a result, the DOE conducts a small 
business analysis to assess those impacts, the results of which are set 
forth in section VI.B of this notice.
    Stakeholders also commented on DOE's classification of small 
manufacturers. NEEA suggested that DOE review its characterizations of 
small and large manufacturers, as it believed there to be disparities 
between the listed company sizes and market shares in DOE's 
classifications. (NEEA, Public Meeting Transcript, No. 31 at p. 160) 
Emerson stated that manufacturers' sizes should be characterized by 
their operations in the market. According to Emerson, some 
manufacturers are part of larger companies, but the fact that they are 
owned by larger companies does not change the potential for impacts on 
their employment levels or risk of going out of business. (Emerson, 
Public Meeting Transcript, No. 31 at p. 207)
    DOE requested feedback regarding the accuracy of its list of small 
businesses during its interviews with manufacturers. Since the 
publication of the preliminary analysis TSD, DOE has revised the list 
based on responses received from manufacturers. Furthermore, DOE 
understands that manufacturers that are owned by large parent companies 
may not be protected from the potential impacts of amended standards. 
However, in its analysis of small businesses, DOE also takes into 
account that manufacturers that belong to large parent companies are 
more likely to have better access to capital and engineering resources 
than manufacturers that have no parent company or have parent companies

[[Page 55942]]

with a total size of less than 750 employees.
    A detailed discussion of the impact of the proposed standards on 
small manufacturers can be found in chapter 12 of the NOPR TSD.
d. Manufacturer Markup
    Southern Store Fixtures expressed concern that research and 
development was considered part of the manufacturer markup. The company 
also asked whether sales, marketing, and engineering costs were 
included in this markup as well, and suggested that all of these 
expenses should be considered indirect costs instead. (Southern Store 
Fixtures, Public Meeting Transcript, No. 31 at pp. 71-72)
    DOE incorporates all non-production costs, including sales, 
marketing, and R&D, in its manufacturer markup. Although manufacturers' 
accounting practices may vary, DOE uses this standard model to 
approximate the cost structure of the commercial refrigeration industry 
as a whole. A detailed explanation of the manufacturer markup can be 
found in section V.B.2 of this notice and in chapter 5 of the NOPR TSD.
4. Manufacturer Interviews
    DOE interviewed manufacturers representing over 90 percent of food 
retail sales and over 60 percent of foodservice sales. These interviews 
were in addition to those DOE conducted as part of the engineering 
analysis. The information gathered during these interviews enabled DOE 
to tailor the GRIM to reflect the unique financial characteristics of 
the commercial refrigeration industry. All interviews provided 
information that DOE used to evaluate the impacts of potential amended 
energy conservation standards on manufacturer cash flows, manufacturing 
capacities, and employment levels.
    During the manufacturer interviews, DOE asked manufacturers to 
describe their major concerns about this rulemaking. The following 
sections describe the most significant issues identified by 
manufacturers. DOE has also included additional concerns in chapter 12 
of the NOPR TSD.
a. Enforcement
    Interviewed manufacturers expressed concern about the enforcement 
of an amended energy efficiency standard for commercial refrigeration 
equipment. Manufacturers believe that insufficient enforcement will 
lead to market distortions, as companies that make the necessary 
investments to meet amended standards and compliance requirements would 
be at a distinct pricing disadvantage to unscrupulous competitors that 
do not fully comply. The manufacturers requested that DOE take the 
enforcement action necessary to maintain a level playing field and to 
eliminate non-compliant products from the market.
b. Certification and Compliance Costs
    Nearly all manufacturers expressed concern over CC&E costs. In 
particular, confusion over the definition of ``basic model'' and the 
implementation of AEDMs is making it difficult for some manufacturers 
to anticipate their total testing needs and total testing costs.
    Manufacturers are concerned that CC&E requirements for commercial 
refrigeration equipment do not take into account the customized nature 
of the commercial refrigeration equipment industry. Manufacturers 
stated that their industry has a high level of end-user specification 
and low production volumes compared to other industries, such as 
residential refrigeration. As a result, the strictest interpretations 
of the CC&E requirements could lead to hundreds of thousands of tests 
per company. Additional clarification of how basic models and AEDMs 
apply to the commercial refrigeration equipment industry would help 
manufacturers understand the testing investments that will be 
necessary. DOE is aware of the current confusion and continues to work 
with industry to improve the CC&E process and AEDM rules to address 
these concerns.
c. Disproportionate Impact on Small Businesses
    Manufacturers noted that small businesses will be 
disproportionately impacted by certification and compliance 
requirements compared to larger businesses. One manufacturer indicated 
that small and large manufacturers of the same equipment tend to have 
similar numbers of basic models, but large manufacturers offer a 
broader suite of products based on those basic models and have higher 
sales. Therefore, the manufacturer expressed concern that small 
manufacturers will be at a disadvantage because they will need to 
spread both industry certification and conversion costs over a smaller 
number of shipments.
    Also, small manufacturers indicated they have fewer resources with 
which to manage CC&E requirements. As a result, they will be forced to 
focus on compliance rather than on innovation. Small manufacturers 
believe that their large competitors will have greater resources to 
continue innovating while meeting amended energy conservation 
standards.
d. Potential Loss of Product Utility and Decrease in Food Safety
    Manufacturers expressed concern about the potential impact of 
amended energy conservation standards on product performance. 
Specifically, manufacturers serving the foodservice industry were 
concerned about negative impacts on food safety, while manufacturers 
serving the food retail industry were concerned about negative impacts 
on merchandising design.
    One manufacturer of commercial refrigeration equipment for the 
foodservice industry summarized the challenge of amended energy 
conservation standards as ``the design trade-off between product price, 
energy efficiency, and food safety.'' In the foodservice industry, 
refrigeration equipment must maintain safe food temperatures despite 
frequent door openings in challenging environments, such as kitchens 
with high temperatures and high humidity. The infiltration of warm, 
moist air places an additional burden on the refrigeration equipment 
and increases energy usage. Manufacturers expressed concern that more-
efficient equipment would have trouble maintaining food safety in 
extreme, but not uncommon, conditions.
    Manufacturers in the food retail market design their equipment to 
optimally present merchandise. Some manufacturers were concerned that 
amended energy conservation standards would limit their ability to 
tailor their commercial refrigeration equipment for specific 
merchandise. Specifically, manufacturers noted that the highly 
directional light from LED bulbs provides poor light for display case 
applications where the product is presented in multiple layers, such as 
prepared food display cases. Additionally, manufacturers noted that 
higher efficiency designs generally have less airflow (due to reduced 
fan power consumption). They stated that this reduction in airflow 
could result in less desirable presentation of meats and in increased 
icing on products. In general, more-efficient standards limit 
manufacturer options for optimizing the presentation features of 
products. Food retail customers such as supermarkets make purchasing 
decisions based on the various presentation features of commercial 
refrigeration equipment offered by different manufacturers.

L. Employment Impact Analysis

    Employment impacts are one of the factors that DOE considers in 
selecting

[[Page 55943]]

an efficiency standard. Employment impacts include direct and indirect 
impacts. Direct employment impacts are any changes that affect 
employment of commercial refrigeration equipment manufacturers, their 
suppliers, and related service firms. Indirect impacts are those 
changes in employment in the larger economy that occur because of the 
shift in expenditures and capital investment caused by the purchase and 
operation of more-efficient commercial refrigeration equipment. Direct 
employment impacts are analyzed as part of the MIA. Indirect impacts 
are assessed as part of the employment impact analysis.
    Indirect employment impacts from amended commercial refrigeration 
equipment standards consist of the net jobs created or eliminated in 
the national economy, other than in the manufacturing sector being 
regulated, as a consequence of (1) reduced spending by end users on 
electricity; (2) reduced spending on new energy supply by the utility 
industry; (3) increased spending on the purchase price of new 
commercial refrigeration equipment; and (4) the effects of those three 
factors throughout the Nation's economy. DOE expects the net monetary 
savings from amended standards to stimulate other forms of economic 
activity. DOE also expects these shifts in spending and economic 
activity to affect the demand for labor.
    In developing this analysis in the NOPR, DOE estimated indirect 
national employment impacts using an input/output model of the U.S. 
economy, called ImSET (Impact of Sector Energy Technologies), developed 
by DOE's Building Technologies Program. ImSET is an economic analysis 
model that characterizes the interconnections among 188 sectors of the 
economy as national input/output structural matrices, using data from 
the U.S. Department of Commerce's 1997 Benchmark U.S. input/output 
table.\74\ The ImSET model estimates changes in employment, industry 
output, and wage income in the overall U.S. economy resulting from 
changes in expenditures in various sectors of the economy. DOE 
estimated changes in expenditures using the NIA model. ImSET then 
estimated the net national indirect employment impacts that amended 
commercial refrigeration equipment efficiency standards could have on 
employment by sector.
---------------------------------------------------------------------------

    \74\ U.S. Department of Commerce, Bureau of Economic Analysis. 
Benchmark Input-Output Accounts. 1997. U.S. Government Printing 
Office: Washington, DC.
---------------------------------------------------------------------------

    For more details on the employment impact analysis and its results, 
see chapter 16 of the NOPR TSD and section 0 of this notice.

M. Utility Impact Analysis

    The utility impact analysis estimates several important effects on 
the utility industry of the adoption of new or amended standards. For 
this analysis, DOE used the NEMS-BT model to generate forecasts of 
electricity consumption, electricity generation by plant type, and 
electric generating capacity by plant type, that would result from each 
considered TSL. DOE obtained the energy savings inputs associated with 
efficiency improvements to considered products from the NIA. DOE 
conducts the utility impact analysis as a scenario that departs from 
the latest AEO Reference Case. In the analysis for today's rule, the 
estimated impacts of standards are the differences between values 
forecasted by NEMS-BT and the values in the AEO2013 Reference Case. For 
more details on the utility impact analysis, see chapter 15 of the NOPR 
TSD.

N. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of CO2, NOX, sulfur dioxide 
(SO2) and Hg from amended energy conservation standards for 
commercial refrigeration equipment. In addition, DOE estimates 
emissions impacts in production activities (extracting, processing, and 
transporting fuels) that provide the energy inputs to power plants. 
These are referred to as ``upstream'' emissions. Together, these 
emissions account for the full-fuel-cycle (FFC). In accordance with 
DOE's FFC Statement of Policy (76 FR 51282 (Aug. 18, 2011)) 77 FR 49701 
(August 17, 2012), the FFC analysis includes impacts on emissions of 
methane (CH4) and nitrous oxide (N2O), both of 
which are recognized as greenhouse gases.
    DOE conducted the emissions analysis using emissions factors that 
were derived from data in EIA's Annual Energy Outlook 2013 (AEO 2013), 
supplemented by data from other sources. DOE developed separate 
emissions factors for power sector emissions and upstream emissions. 
The method that DOE used to derive emissions factors is described in 
chapter 13 of the NOPR TSD.
    EIA prepares the Annual Energy Outlook using the National Energy 
Modeling System (NEMS). Each annual version of NEMS incorporates the 
projected impacts of existing air quality regulations on emissions. AEO 
2013 generally represents current legislation and environmental 
regulations, including recent government actions, for which 
implementing regulations were available as of December 31, 2012.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States (42 U.S.C. 
7651 et seq.) and the District of Columbia (DC). SO2 
emissions from 28 eastern States and DC were also limited under the 
Clean Air Interstate Rule (CAIR; 70 FR 25162 (May 12, 2005)), which 
created an allowance-based trading program. CAIR was remanded to the 
U.S. Environmental Protection Agency (EPA) by the U.S. Court of Appeals 
for the District of Columbia but it remained in effect. See North 
Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); North Carolina v. EPA, 
531 F.3d 896 (D.C. Cir. 2008). On July 6, 2011, EPA issued a 
replacement for CAIR, the Cross-State Air Pollution Rule (CSAPR). 76 FR 
48208 (Aug. 8, 2011). On August 21, 2012, the DC Circuit issued a 
decision to vacate CSAPR. See EME Homer City Generation, LP v. EPA, 696 
F.3d 7, 38 (D.C. Cir. 2012). The court ordered EPA to continue 
administering CAIR. The AEO 2013 emissions factors used for today's 
NOPR assume that CAIR remains a binding regulation through 2040.\75\
---------------------------------------------------------------------------

    \75\ On December 30, 2011, the DC Circuit stayed the new rules 
while a panel of judges reviews them, and told EPA to continue 
administering CAIR. See EME Homer City Generation, LP v. EPA, Order, 
No. 11-1302, Slip Op. at *2 (D.C. Cir. Dec. 30, 2011). On August 21, 
2012, the DC Circuit issued a decision to vacate CSAPR. See EME 
Homer City Generation, LP v. EPA, No. 11-1302, 2012 WL 3570721 at 
*24 (D.C. Cir. Aug. 21, 2012). The court again ordered EPA to 
continue administering CAIR. AEO2012 had been finalized prior to 
both these decisions, however. DOE understands that CAIR and CSAPR 
are similar with respect to their effect on emissions impacts of 
energy efficiency standards.
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Under existing EPA regulations, any excess SO2 
emissions allowances resulting from the lower electricity demand caused 
by the adoption of a new or amended efficiency standard could be used 
to permit offsetting increases in SO2 emissions by any 
regulated EGU. In past rulemakings, DOE recognized that there was 
uncertainty about the effects of efficiency standards on SO2 
emissions covered by the existing cap-and-trade system, but it 
concluded that negligible reductions in power sector SO2 
emissions would occur as a result of standards.

[[Page 55944]]

    Beginning in 2015, however, SO2 emissions will fall as a 
result of the Mercury and Air Toxics Standards (MATS) for power plants, 
which were announced by EPA on December 21, 2011. 77 FR 9304 (Feb. 16, 
2012). In the final MATS rule, EPA established a standard for hydrogen 
chloride as a surrogate for acid gas hazardous air pollutants (HAP), 
and also established a standard for SO2 (a non-HAP acid gas) 
as an alternative equivalent surrogate standard for acid gas HAP. The 
same controls are used to reduce HAP and non-HAP acid gas; thus, 
SO2 emissions will be reduced as a result of the control 
technologies installed on coal-fired power plants to comply with the 
MATS requirements for acid gas. AEO2013 assumes that, in order to 
continue operating, coal plants must have either flue gas 
desulfurization or dry sorbent injection systems installed by 2015. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Under the MATS, NEMS shows a reduction 
in SO2 emissions when electricity demand decreases (e.g., as 
a result of energy efficiency standards). Emissions will be far below 
the cap that would be established by CAIR, so it is unlikely that 
excess SO2 emissions allowances resulting from the lower 
electricity demand would be needed or used to permit offsetting 
increases in SO2 emissions by any regulated EGU. Therefore, 
DOE believes that efficiency standards will reduce SO2 
emissions in 2015 and beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia. Energy conservation standards are 
expected to have little effect on NOX emissions in those 
States covered by CAIR because excess NOX emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NOX emissions. However, 
standards would be expected to reduce NOX emissions in the 
States not affected by the caps, so DOE estimated NOX 
emissions reductions from the standards considered in today's NOPR for 
these States.
    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps and, as such, DOE's energy conservation 
standards would likely reduce Hg emissions. DOE estimated mercury 
emissions factors based on AEO2013, which incorporates the MATS.
    After the preliminary analysis, two stakeholders provided comments 
pertinent to the emissions analysis. NRDC stated that, given that 
supermarket rack-based commercial refrigeration equipment units have 
leakage rates of 15 to 30 percent and use HFC refrigerants with GWPs in 
the range of 2,000 to 3,400, direct emissions can be as large as the 
indirect emissions due to energy use. NRDC added that DOE or EPA should 
review emissions due to leakage. (NRDC, Public Meeting Transcript, No. 
31 at p. 173) CA IOUs stated that refrigerant emissions and leakage may 
have a significant GWP, and suggested that DOE include in its 
environmental impact analysis estimates of changes in refrigerant 
emissions, and their effects on total GHG emissions and GWP. CA IOUs 
pointed to the CEC analysis as a potential starting point for DOE to 
use in including refrigerants in the environmental impact analysis. (CA 
IOUs, No. 42 at p. 6)
    DOE appreciates the comments by stakeholders regarding the 
emissions analysis of refrigerants. DOE's emission analysis adheres to 
the guidance and methodologies that has been outlined in this section.
    DOE also adds that the design options used for efficiency 
improvement of commercial refrigeration equipment in this rulemaking 
are not expected to impact refrigerant leakage rates. Consequently, the 
proposed standards would not affect refrigerant emissions. If 
stakeholders believe that the proposed standards would lead to an 
increase or a decrease in refrigerant emissions, then supporting 
arguments may be submitted for DOE's consideration during the NOPR 
public meeting or comment period.

O. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of the proposed standards in this NOPR, 
DOE considered the estimated monetary benefits from the reduced 
emissions of CO2 and NOX that are expected to 
result from each of the TSLs considered. In order to make this 
calculation analogous to the calculation of the NPV of customer 
benefit, DOE considered the reduced emissions expected to result over 
the lifetime of equipment shipped in the forecast period for each TSL. 
This section summarizes the basis for the monetary values used for each 
of these emissions and presents the values considered in this NOPR.
    For today's NOPR, DOE is relying on a set of values for the SCC 
that was developed by a Federal interagency process. The basis for 
these values is summarized below, and a more detailed description of 
the methodologies used is provided as an appendix to chapter 14 of the 
NOPR TSD.
1. Social Cost of Carbon
    The SCC is an estimate of the monetized damages associated with an 
incremental increase in carbon emissions in a given year. It is 
intended to include (but is not limited to) changes in net agricultural 
productivity, human health, property damages from increased flood risk, 
and the value of ecosystem services. Estimates of the SCC are provided 
in dollars per metric ton of carbon dioxide. A domestic SCC value is 
meant to reflect the value of damages in the United States resulting 
from a unit change in carbon dioxide emissions, while a global SCC 
value is meant to reflect the value of damages worldwide.
    Under section 1(b) of Executive Order 12866, agencies must, to the 
extent permitted by law, ``assess both the costs and the benefits of 
the intended regulation and, recognizing that some costs and benefits 
are difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs.'' The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the monetized social benefits of 
reducing CO2 emissions into cost-benefit analyses of 
regulatory actions that have small, or ``marginal,'' impacts on 
cumulative global emissions. The estimates are presented with an 
acknowledgement of the many uncertainties involved and with a clear 
understanding that they should be updated over time to reflect 
increasing knowledge of the science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
carbon dioxide emissions, the analyst faces a number of serious 
challenges. A report from the National Research Council \76\

[[Page 55945]]

points out that any assessment will suffer from uncertainty, 
speculation, and lack of information about (1) future emissions of 
GHGs; (2) the effects of past and future emissions on the climate 
system, (3) the impact of changes in climate on the physical and 
biological environment, and (4) the translation of these environmental 
impacts into economic damages. As a result, any effort to quantify and 
monetize the harms associated with climate change will raise serious 
questions of science, economics, and ethics and should be viewed as 
provisional.
---------------------------------------------------------------------------

    \76\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. 2009. National Academies 
Press: Washington, DC.
---------------------------------------------------------------------------

    Despite the serious limits of both quantification and monetization, 
SCC estimates can be useful in estimating the social benefits of 
reducing CO2 emissions. Most Federal regulatory actions can 
be expected to have marginal impacts on global emissions. For such 
policies, the agency can estimate the benefits from reduced (or costs 
from increased) emissions in any future year by multiplying the change 
in emissions in that year by the SCC value appropriate for that year. 
The net present value of the benefits can then be calculated by 
multiplying each of these future benefits by an appropriate discount 
factor and summing across all affected years. This approach assumes 
that the marginal damages from increased emissions are constant for 
small departures from the baseline emissions path, an approximation 
that is reasonable for policies that have effects on emissions that are 
small relative to cumulative global CO2 emissions. For 
policies that have a large (non-marginal) impact on global cumulative 
emissions, there is a separate question of whether the SCC is an 
appropriate tool for calculating the benefits of reduced emissions. 
This concern is not applicable to this notice, however.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate change and its impacts on society improves 
over time. In the meantime, the interagency group will continue to 
explore the issues raised by this analysis and consider public comments 
as part of the ongoing interagency process.
b. Social Cost of Carbon Values Used in Past Regulatory Analyses
    Economic analyses for Federal regulations have used a wide range of 
values to estimate the benefits associated with reducing CO2 
emissions. The model year 2011 Corporate Average Fuel Economy final 
rule, the U.S. Department of Transportation (DOT) used both a 
``domestic'' SCC value of $2 per metric ton of CO2 and a 
``global'' SCC value of $33 per metric ton of CO2 for 2007 
emission reductions (in 2007$), increasing both values at 2.4 percent 
per year. DOT also included a sensitivity analysis at $80 per metric 
ton of CO2.\77\ A 2008 regulation proposed by DOT assumed a 
domestic SCC value of $7 per metric ton of CO2 (in 2006$) 
for 2011 emission reductions (with a range of $0-$14 for sensitivity 
analysis), also increasing at 2.4 percent per year.78 79 A 
regulation for packaged terminal air conditioners and packaged terminal 
heat pumps finalized by DOE in 2008 used a domestic SCC range of $0 to 
$20 per metric ton CO2 for 2007 emission reductions (in 
2007$). 73 FR 58772, 58814 (Oct. 7, 2008) In addition, EPA's 2008 
Advance Notice of Proposed Rulemaking on Regulating Greenhouse Gas 
Emissions Under the Clean Air Act identified what it described as 
``very preliminary'' SCC estimates subject to revision. 73 FR 44354 
(July 30, 2008). EPA's global mean values were $68 and $40 per metric 
ton CO2 for discount rates of approximately 2 percent and 3 
percent, respectively (in 2006$ for 2007 emissions).
---------------------------------------------------------------------------

    \77\ See Average Fuel Economy Standards Passenger Cars and Light 
Trucks Model Year 2011, 74 FR 14196 (March 30, 2009) (Final Rule); 
Final Environmental Impact Statement Corporate Average Fuel Economy 
Standards, Passenger Cars and Light Trucks, Model Years 2011-2015 at 
3-90 (Oct. 2008) (Available at: www.nhtsa.gov/fuel-economy).
    \78\ See Average/fuel Economy Standards, Passenger Cars and 
Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 1008) 
(Proposed Rule); Draft Environmental Impact Statement Corporate 
Average Fuel Economy Standards, Passenger Cars and Light Trucks, 
Model Years 2011-2015 at 3-58 (June 2008) (Available at 
www.nhtsa.gov/fuel-economy).
    \79\ See Average/fuel Economy Standards, Passenger Cars and 
Light Trucks, Model Years 2011-2015, 73 FR 24352 (May 2, 1008) 
(Proposed Rule); Draft Environmental Impact Statement Corporate 
Average Fuel Economy Standards, Passenger Cars and Light Trucks, 
Model Years 2011-2015 at 3-58 (June 2008) (Available at 
www.nhtsa.gov/fuel-economy).
---------------------------------------------------------------------------

    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across Federal agencies, the Administration 
sought to develop a transparent and defensible method, specifically 
designed for the rulemaking process, to quantify avoided climate change 
damages from reduced CO2 emissions. The interagency group 
did not undertake any original analysis. Instead, it combined SCC 
estimates from the existing literature to use as interim values until a 
more comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: global SCC estimates for 2007 (in 2006$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    Since the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
Specially, the group considered public comments and further explored 
the technical literature in relevant fields. The interagency group 
relied on three integrated assessment models commonly used to estimate 
the SCC: the FUND, DICE, and PAGE models. These models are frequently 
cited in the peer-reviewed literature and were used in the last 
assessment of the Intergovernmental Panel on Climate Change. Each model 
was given equal weight in the SCC values that were developed.
    Each model takes a slightly different approach to model how changes 
in emissions result in changes in economic damages. A key objective of 
the interagency process was to enable a consistent exploration of the 
three models, while respecting the different approaches to quantifying 
damages taken by the key modelers in the field. An extensive review of 
the literature was conducted to select three sets of input parameters 
for these models: climate sensitivity, socio-economic and emissions 
trajectories, and discount rates. A probability distribution for 
climate sensitivity was specified as an input into all three models. In 
addition, the interagency group used a range of scenarios for the 
socio-economic parameters and a range of values for the discount rate. 
All other model features were left unchanged, relying on the model 
developers' best estimates and judgments.
    The interagency group selected four sets of SCC values for use in 
regulatory analyses. Three sets of values are based on the average SCC 
from the three IAMs, at discount rates of 2.5, 3, and 5 percent. The 
fourth set, which represents the 95th percentile SCC estimate across 
all three models at a 3-percent discount rate, was included to 
represent higher than expected impacts from temperature change further 
out in the tails of the

[[Page 55946]]

SCC distribution. The values grow in real terms over time. 
Additionally, the interagency group determined that a range of values 
from 7 percent to 23 percent should be used to adjust the global SCC to 
calculate domestic effects,\80\ although preference is given to 
consideration of the global benefits of reducing CO2 
emissions. Table IV.10 presents the values in the 2010 interagency 
group report,\81\ which is reproduced in appendix 14A of the NOPR TSD.
---------------------------------------------------------------------------

    \80\ It is recognized that this calculation for domestic values 
is approximate, provisional, and highly speculative. There is no a 
priori reason why domestic benefits should be a constant fraction of 
net global damages over time.
    \81\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government, February 2010. www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf.

                     Table IV.10--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                        [In 2007 dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for today's notice were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\82\ Table IV.11 
shows the updated sets of SCC estimates in 5-year increments from 2010 
to 2050. The full set of annual SCC estimates between 2010 and 2050 is 
reported in appendix 14A of the TSD. The central value that emerges is 
the average SCC across models at the 3 percent discount rate. However, 
for purposes of capturing the uncertainties involved in regulatory 
impact analysis, the interagency group emphasizes the importance of 
including all four sets of SCC values.
---------------------------------------------------------------------------

    \82\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866. Interagency 
Working Group on Social Cost of Carbon, United States Government. 
May 2013. http://www.whitehouse.gov/sites/default/files/omb/inforeg/social_cost_of_carbon_for_ria_2013_update.pdf

                     Table IV.11--Annual SCC Values from 2013 Interagency Report, 2010-2050
                                        [in 2007 dollars per metric ton]
----------------------------------------------------------------------------------------------------------------
                                                                           Discount rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       Percentile
----------------------------------------------------------------------------------------------------------------
2010............................................              11              33              52              90
2015............................................              12              38              58             109
2020............................................              12              43              65             129
2025............................................              14              48              70             144
2030............................................              16              52              76             159
2035............................................              19              57              81             176
2040............................................              21              62              87             192
2045............................................              24              66              92             206
2050............................................              27              71              98             221
----------------------------------------------------------------------------------------------------------------

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable since they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 2009 National 
Research Council report mentioned above points out that there is 
tension between the goal of producing quantified estimates of the 
economic damages from an incremental ton of carbon and the limits of 
existing efforts to model these effects. There are a number of concerns 
and problems that should be addressed by the research community, 
including research programs housed in many of the Federal agencies 
participating in the interagency process to estimate the SCC. The 
interagency group intends to periodically review and reconsider those 
estimates to reflect increasing knowledge of the science and economics 
of climate impacts, as well as improvements in modeling.
    The interagency group intends to periodically review and reconsider 
those estimates to reflect increasing knowledge of the science and 
economics of climate impacts, as well as improvements in modeling.

[[Page 55947]]

    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report adjusted to 2012$ using the GDP price deflator. 
For each of the four sets of SCC values, the values for emissions in 
2015 were $12.9, $40.8, $62.2, and $117 per metric ton avoided \83\ 
(values expressed in 2012$). DOE derived values after 2050 using the 
relevant growth rates for the 2040-2050 period in the interagency 
update.
---------------------------------------------------------------------------

    \83\ The interagency report presents SCC values through 2050. 
DOE derived values after 2050 using the 3-percent per year 
escalation rate used by the interagency group.
---------------------------------------------------------------------------

    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the four cases. To 
calculate a present value of the stream of monetary values, DOE 
discounted the values in each of the four cases using the specific 
discount rate that had been used to obtain the SCC values in each case.
2. Valuation of Other Emissions Reductions
    DOE investigated the potential monetary benefit of reduced 
NOX emissions from the potential standards it considered. As 
noted above, DOE has taken into account how new or amended energy 
conservation standards would reduce NOX emissions in those 
22 States not affected by emissions caps. DOE estimated the monetized 
value of NOX emissions reductions resulting from each of the 
TSLs considered for today's NOPR based on estimates found in the 
relevant scientific literature. Available estimates suggest a very wide 
range of monetary values per ton of NOX from stationary 
sources, ranging from $468 to $4,809 per ton in 2012$).\84\ In 
accordance with OMB guidance, \85\ DOE calculated a range of monetary 
benefits using each of the economic values for NOX and real 
discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \84\ For additional information, refer to U.S. Office of 
Management and Budget, Office of Information and Regulatory Affairs, 
2006 Report to Congress on the Costs and Benefits of Federal 
Regulations and Unfunded Mandates on State, Local, and Tribal 
Entities, Washington, DC.
    \85\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

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

P. Regulatory Impact Analysis

    DOE prepared a regulatory impact analysis (RIA) for this 
rulemaking, which is described in chapter 16 of the NOPR TSD. The RIA 
is subject to review by OIRA in the OMB. The RIA consists of (1) a 
statement of the problem addressed by this regulation and the mandate 
for Government action; (2) a description and analysis of policy 
alternatives to this regulation; (3) a qualitative review of the 
potential impacts of the alternatives; and (4) the national economic 
impacts of the proposed standard.
    The RIA assesses the effects of feasible policy alternatives to 
amended commercial refrigeration equipment standards and provides a 
comparison of the impacts of the alternatives. DOE evaluated the 
alternatives in terms of their ability to achieve significant energy 
savings at reasonable cost, and compared them to the effectiveness of 
the proposed rule.
    DOE identified the following major policy alternatives for 
achieving increased commercial refrigeration equipment efficiency:

 No new regulatory action
 commercial customer tax credits
 commercial customer rebates
 voluntary energy efficiency targets
 bulk government purchases
 early replacement
    DOE qualitatively evaluated each alternative's ability to achieve 
significant energy savings at reasonable cost and compared it to the 
effectiveness of the proposed rule. DOE assumed that each alternative 
policy would induce commercial customers to voluntarily purchase at 
least some higher efficiency equipment at any of the TSLs. In contrast 
to a standard at one of the TSLs, the adoption rate of the alternative 
non-regulatory policy cases may not be 100 percent, which would result 
in lower energy savings than a standard. The following paragraphs 
discuss each policy alternative. (See chapter 17 of the NOPR TSD for 
further details.)
    No new regulatory action: The case in which no regulatory action is 
taken for commercial refrigeration equipment constitutes the base case 
(or no action) scenario. By definition, no new regulatory action yields 
zero energy savings and an NPV of zero dollars.
    Commercial customer tax credits: Customer tax credits are 
considered a viable non-regulatory market transformation program. From 
a customer perspective, the most important difference between rebate 
and tax credit programs is that a rebate can be obtained quickly, 
whereas receipt of tax credits is delayed until income taxes are filed 
or a tax refund is provided by the Internal Revenue Service (IRS). From 
a societal perspective, tax credits (like rebates) do not change the 
installed cost of the equipment, but rather transfer a portion of the 
cost from the customer to taxpayers as a whole. DOE, therefore, assumed 
that equipment costs in the customer tax credits scenario were 
identical to the NIA base case. The change in the NES and NPV is a 
result of the change in the efficiency distributions that results from 
lowering the prices of higher efficiency equipment.
    Commercial customer rebates: Customer rebates cover a portion of 
the difference in incremental product price between products meeting 
baseline efficacy levels and those meeting higher efficacy levels, 
resulting in a higher percentage of customers purchasing more-
efficacious models and decreased aggregated energy use compared to the 
base case. Although the rebate program reduces the total installed cost 
to the customer, it is financed by tax revenues. Therefore, from a 
societal perspective, the installed cost at any efficiency level does 
not change with the rebate program; rather, part of the cost is 
transferred from the customer to taxpayers as a whole. Consequently, 
DOE assumed that equipment costs in the rebates scenario were identical 
to the NIA base case. The change in the NES and NPV is a result of the 
change in the efficiency distributions that results as a consequence of 
lowering the prices of higher efficiency equipment.
    Voluntary energy efficiency targets: While it is possible that 
voluntary programs for equipment would be effective, DOE lacks a 
quantitative basis to determine how effective such a program might be. 
As noted previously, broader economic and social considerations are in 
play than simple economic return to the equipment purchaser. DOE lacks 
the data necessary to quantitatively project the degree to which 
voluntary programs for more expensive, higher efficiency equipment 
would modify the market.
    Bulk government purchases and early replacement incentive programs: 
DOE also considered, but did not analyze, the potential of bulk 
government purchases and early replacement incentive programs as 
alternatives to the proposed standards. Bulk government purchases would 
have a very limited impact on improving the overall market efficiency 
of commercial refrigeration equipment because they would be a 
negligible part of the total equipment sold in the market. In the case 
of replacement incentives, several policy options exist to promote 
early replacement, including a direct national program of customer 
incentives, incentives paid to utilities to promote an early 
replacement program,

[[Page 55948]]

market promotions through equipment manufacturers, and replacement of 
government-owned equipment. In considering early replacements, DOE 
estimates that the energy savings realized through a one-time early 
replacement of existing stock equipment does not result in energy 
savings commensurate to the cost to administer the program. 
Consequently, DOE did not analyze this option in detail.

V. Analytical Results

A. Trial Standard Levels

1. Trial Standard Level Formulation Process and Criteria
    DOE selected between five and eight efficiency levels for all but 
three equipment classes for the LCC analysis and NIA; the three 
exceptions were the HZO.RC.M, HZO.RC.L, and HZO.SC.L equipment classes, 
which had only two efficiency levels each, including the baseline 
efficiency levels.\86\ For all equipment classes, the first efficiency 
level is the baseline efficiency level. Based on the results of the LCC 
analysis and NIA, DOE selected five TSLs above the baseline level for 
each equipment class for the NOPR stage of this rulemaking. TSL 5 was 
selected at the max-tech level for all equipment classes. TSL 4 was 
chosen so as to group the efficiency levels with the highest energy 
savings combined with a positive customer NPV at a 7-percent discount 
rate. ``Customer NPV'' is the NPV of future savings obtained from the 
NIA. It provides a measure of the benefits only to the customers of the 
commercial refrigeration equipment, and does not account for the net 
benefits to the Nation. The net benefits to the Nation also include 
monetized values of emissions reductions in addition to the customer 
NPV. TSL 3 was chosen to represent the group of efficiency levels with 
the highest customer NPV at a 7-percent discount rate. While the 
selection of TSL 4 and TSL 3 were based on customer NPV, the proposed 
standard levels were selected on the basis of net social benefits. TSL 
2 and TSL 1 were selected to provide intermediate efficiency levels 
that fill the gap between the baseline efficiency level and TSL 3. For 
the HZO.RC.M, HZO.RC.L, and HZO.SC.L equipment classes, there is only 
one efficiency level above baseline. While TSL 5 was associated with 
the max-tech level for these three equipment classes, TSLs 1 through 4 
did not have corresponding efficiency levels that satisfied TSL 
formulation criteria. Therefore, the baseline efficiency level was 
assigned to TSL 1 through TSL 4 for each of these three equipment 
classes. Table V.1 shows the mapping between TSLs and efficiency 
levels.
---------------------------------------------------------------------------

    \86\ As explained in section IV.H.1, the baseline efficiency 
levels for equipment classes HZO.RC.M, HZO. RC.L and HZO.SC.L were 
set by their respective standards baseline values. The latest 
amended standards for these equipment classes were specified by the 
January 2009 final rule. DOE could identify only one design option 
(vacuum insulated panels) that could increase the efficiency of 
these equipment classes above the standards baseline. Therefore, 
apart from the baseline efficiency levels (standard baseline 
levels), there was only one additional efficiency level for each of 
these three equipment classes.

                                                                      Table V.1--Mapping Between TSLs and Efficiency Levels
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Intermediate level *      Intermediate level **           Max NPV ***          Max eff. lvl with pos-           Max-tech
                                                            ---------------------------------------------------------------------------------       NPV [dagger]       -------------------------
         Equipment class                   Baseline                                                                                          --------------------------
                                                                       TSL 1                      TSL 2                      TSL 3                      TSL 4                     TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 5.................  Level 6.
VOP.RC.L........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 4.................  Level 5.
VOP.SC.M........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 6.................  Level 7.
VCT.RC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 6.................  Level 7.
VCT.RC.L........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 5.................  Level 6.
VCT.SC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 7.................  Level 8.
VCT.SC.L........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 7.................  Level 8.
VCT.SC.I........................  Level 1..................  Level 3..................  Level 5..................  Level 6..................  Level 6.................  Level 7.
VCS.SC.M........................  Level 1..................  Level 3..................  Level 5..................  Level 7..................  Level 7.................  Level 8.
VCS.SC.L........................  Level 1..................  Level 3..................  Level 5..................  Level 6..................  Level 7.................  Level 8.
VCS.SC.I........................  Level 1..................  Level 3..................  Level 5..................  Level 6..................  Level 6.................  Level 7.
SVO.RC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 5.................  Level 6.
SVO.SC.M........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 6.................  Level 7.
SOC.RC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 6.................  Level 7.
HZO.RC.M [dagger]...............  Level 1..................  Level 1..................  Level 1..................  Level 1..................  Level 1.................  Level 2.
HZO.RC.L [dagger]...............  Level 1..................  Level 1..................  Level 1..................  Level 1..................  Level 1.................  Level 2.
HZO.SC.M........................  Level 1..................  Level 2..................  Level 2..................  Level 3..................  Level 4.................  Level 5.
HZO.SC.L [dagger]...............  Level 1..................  Level 1..................  Level 1..................  Level 1..................  Level 1.................  Level 2.
HCT.SC.M........................  Level 1..................  Level 3..................  Level 5..................  Level 6..................  Level 7.................  Level 8.
HCT.SC.L........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 7.................  Level 8.
HCT.SC.I........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 4.................  Level 5.
HCS.SC.M........................  Level 1..................  Level 2..................  Level 3..................  Level 4..................  Level 5.................  Level 7.
HCS.SC.L........................  Level 1..................  Level 4..................  Level 5..................  Level 6..................  Level 6.................  Level 7.
PD.SC.M.........................  Level 1..................  Level 2..................  Level 2..................  Level 3..................  Level 7.................  Level 8.
SOC.SC.M........................  Level 1..................  Level 3..................  Level 4..................  Level 5..................  Level 7.................  Level 8.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``Level'' stands for ``Efficiency Level.''
* TSL 1 was generally chosen as one level below TSL 2, but in some cases an even lower efficiency level was chosen if the Level immediately below TSL 2 had an NPV value that was close to the
  NPV value of TSL 2.
** TSL 2 was generally chosen as one level below TSL 3, but in some cases an even lower efficiency level was chosen if the Level immediately below TSL 3 had an NPV value that was close to the
  NPV value of TSL 3.
*** Efficiency level that has the highest NPV at a 7-percent discount rate.
[dagger] Highest efficiency level with a positive NPV at a 7-percent discount rate.
[Dagger] TSLs 1 through 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L do not satisfy the criteria for the corresponding TSL selection. See explanation in section V.A.1. TSLs 1
  through 4 were assigned to the baseline efficiency level for all three equipment classes.

[[Page 55949]]

2. Trial Standard Level Equations
    Because of the equipment size variation within each equipment class 
and the use of daily energy consumption as the efficiency metric, DOE 
developed a methodology to express efficiency standards in terms of a 
normalizing metric. DOE used two normalizing metrics that were used for 
all equipment classes: (1) Volume (V) and (2) TDA. The use of these two 
normalization metrics allows for the development of the standard in the 
form of a linear equation that can be used to represent the entire 
range of equipment sizes within a given equipment class. DOE retained 
the respective normalization metric (TDA or volume) previously used in 
the EPACT 2005 or the January 2009 final rule standards for each 
covered equipment class. (42 U.S.C. 6313(c)(2)-(3)); 74 FR 1093 (Jan. 
9, 2009). Additionally, in its January 2009 final rule, DOE developed 
offset factors as a method to adjust the energy efficiency requirements 
for smaller equipment in each equipment class analyzed. These offset 
factors, which form the y-intercept on a plot of each standard level 
equation (representing a fictitious case of zero volume or zero TDA), 
accounted for certain components of the refrigeration load (such as 
conduction end effects) that remain constant even when equipment sizes 
vary. These constant loads affect smaller cases disproportionately. The 
offset factors were intended to approximate these constant loads and 
provide a fixed end point in an equation that describes the 
relationship between energy consumption and the corresponding 
normalization metric. 74 FR 1,118-19 (Jan. 9, 2009). The standard level 
equations prescribed by EPACT 2005 also contained similar fixed parts 
not multiplied by the volume metric and which correspond to these 
offset factors. (42 U.S.C. 6313(c)(2)) In this NOPR, DOE modified the 
January 2009 final rule (74 FR 1,118-19 (Jan. 9, 2009)) and EPACT 2005 
offset factors at each TSL to reflect the proportional changes in 
energy consumption for each equipment class, as modeled in the 
engineering analysis. See chapter 5 of the NOPR TSD for further details 
and discussion of offset factors.
    For the equipment classes covered under this rulemaking, the 
standards equation at each TSL is proposed in the form of MDEC (in 
kilowatt-hours per day), normalized by a volume (V) or TDA metric, with 
an offset factor added to that value. These equations take the form:

MDEC = A x TDA + B (for equipment using TDA as a normalizing metric)
or
MDEC = A x V + B (for equipment using volume as a normalizing metric)
    For equipment classes directly analyzed in the engineering 
analysis, offset factor B was calculated for each class (see chapter 5 
of the NOPR TSD for discussion of offset factors). The slope, A, was 
derived based on the offset factor, B, and the CDEC of the 
representative unit modeled in the engineering analysis for that 
equipment class is presented in Table V.2. The standards equations may 
be used to prescribe the MDEC for equipment of different sizes within 
the same equipment class. Chapter 9 of the NOPR TSD explains the 
methodology used for selecting TSLs and developing the coefficients 
shown in Table V.3.

  Table V.2--CDEC Values by TSL for Representative Units Analyzed in the Engineering Analysis for Each Primary
                                                 Equipment Class
----------------------------------------------------------------------------------------------------------------
                                                            CDEC Values by TSL kWh/day
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           46.84           44.33           35.71           35.51           35.06
VOP.RC.L........................          106.22          101.03          100.51          100.51           98.87
VOP.SC.M........................           30.03           29.60           26.70           26.62           26.46
VCT.RC.M........................           15.56            8.10            6.26            5.97            5.49
VCT.RC.L........................           31.13           30.58           30.29           30.29           28.85
VCT.SC.M........................            7.56            4.08            3.24            2.97            2.68
VCT.SC.L........................           13.48           13.30           12.44           12.09           11.57
VCT.SC.I........................           17.45           16.36           16.14           16.14           15.37
VCS.SC.M........................            2.36            2.17            1.81            1.81            1.39
VCS.SC.L........................            7.26            6.75            6.66            6.56            5.71
VCS.SC.I........................           18.24           17.79           17.64           17.64           16.53
SVO.RC.M........................           36.11           33.85           27.71           27.57           27.26
SVO.SC.M........................           25.74           25.36           23.29           23.24           23.12
SOC.RC.M........................           25.62           24.97           20.43           20.15           19.93
HZO.RC.M........................           14.43           14.43           14.43           14.43           14.17
HZO.RC.L........................           33.10           33.10           33.10           33.10           32.22
HZO.SC.M........................           14.76           14.76           14.60           14.49           14.26
HZO.SC.L........................           30.12           30.12           30.12           30.12           29.91
HCT.SC.M........................            1.87            0.84            0.75            0.67            0.49
HCT.SC.L........................            4.11            1.77            1.70            1.57            1.18
HCT.SC.I........................            3.22            3.07            2.86            2.86            2.13
HCS.SC.M........................            0.65            0.60            0.56            0.50            0.25
HCS.SC.L........................            1.61            1.46            1.27            1.27            0.74
PD.SC.M.........................            3.90            3.90            2.23            1.64            1.42
SOC.SC.M........................           27.04           26.80           22.02           21.70           21.41
----------------------------------------------------------------------------------------------------------------

                                                  Table V.3--Equations Representing the Standards at Each TSL for All Primary Equipment Classes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  Trial standard levels for primary equipment classes analyzed
        Equipment class        -----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Baseline                    TSL 1                      TSL 2                      TSL 3                      TSL 4                      TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VCT.RC.L......................  0.56 x TDA + 2.61          0.45 x TDA + 2.08          0.44 x TDA + 2.05          0.43 x TDA + 2.03          0.43 x TDA + 2.03          0.41 x TDA + 1.93
VOP.RC.M......................  0.82 x TDA + 4.07          0.8 x TDA + 3.99           0.76 x TDA + 3.78          0.61 x TDA + 3.04          0.61 x TDA + 3.03          0.6 x TDA + 2.99

[[Page 55950]]

 
SVO.RC.M......................  0.83 x TDA + 3.18          0.82 x TDA + 3.16          0.77 x TDA + 2.96          0.63 x TDA + 2.42          0.63 x TDA + 2.41          0.62 x TDA + 2.38
HZO.RC.L......................  0.57 x TDA + 6.88          0.57 x TDA + 6.88          0.57 x TDA + 6.88          0.57 x TDA + 6.88          0.57 x TDA + 6.88          0.55 x TDA + 6.7
HZO.RC.M......................  0.35 x TDA + 2.88          0.35 x TDA + 2.88          0.35 x TDA + 2.88          0.35 x TDA + 2.88          0.35 x TDA + 2.88          0.34 x TDA + 2.83
VCT.RC.M......................  0.22 x TDA + 1.95          0.21 x TDA + 1.87          0.11 x TDA + 0.97          0.08 x TDA + 0.75          0.08 x TDA + 0.72          0.07 x TDA + 0.66
VOP.RC.L......................  2.27 x TDA + 6.85          2.23 x TDA + 6.72          2.12 x TDA + 6.39          2.11 x TDA + 6.36          2.11 x TDA + 6.36          2.07 x TDA + 6.26
SOC.RC.M......................  0.51 x TDA + 0.11          0.5 x TDA + 0.11           0.49 x TDA + 0.11          0.4 x TDA + 0.09           0.39 x TDA + 0.08          0.39 x TDA + 0.08
VOP.SC.M......................  1.74 x TDA + 4.71          1.7 x TDA + 4.61           1.68 x TDA + 4.54          1.51 x TDA + 4.1           1.51 x TDA + 4.09          1.5 x TDA + 4.06
SVO.SC.M......................  1.73 x TDA + 4.59          1.67 x TDA + 4.42          1.64 x TDA + 4.35          1.51 x TDA + 4.            1.5 x TDA + 3.99           1.5 x TDA + 3.97
HZO.SC.L......................  1.92 x TDA + 7.08          1.92 x TDA + 7.08          1.92 x TDA + 7.08          1.92 x TDA + 7.08          1.92 x TDA + 7.08          1.91 x TDA + 7.03
HZO.SC.M......................  0.77 x TDA + 5.55          0.77 x TDA + 5.54          0.77 x TDA + 5.54          0.76 x TDA + 5.48          0.75 x TDA + 5.44          0.74 x TDA + 5.35
HCT.SC.I......................  0.56 x TDA + 0.43          0.55 x TDA + 0.42          0.52 x TDA + 0.4           0.49 x TDA + 0.37          0.49 x TDA + 0.37          0.36 x TDA + 0.28
VCT.SC.I......................  0.67 x TDA + 3.29          0.56 x TDA + 2.77          0.53 x TDA + 2.6           0.52 x TDA + 2.56          0.52 x TDA + 2.56          0.5 x TDA + 2.44
VCS.SC.I......................  0.38 x V + 0.88            0.36 x V + 0.84            0.35 x V + 0.82            0.35 x V + 0.81            0.35 x V + 0.81            0.33 x V + 0.76
VCT.SC.M......................  0.12 x V + 3.34            0.1 x V + 2.74             0.05 x V + 1.48            0.04 x V + 1.17            0.04 x V + 1.07            0.03 x V + 0.97
VCT.SC.L......................  0.53 x V + 2.92            0.25 x V + 1.35            0.24 x V + 1.33            0.23 x V + 1.25            0.22 x V + 1.21            0.21 x V + 1.16
VCS.SC.M......................  0.06 x V + 1.31            0.03 x V + 0.69            0.03 x V + 0.64            0.03 x V + 0.53            0.03 x V + 0.53            0.02 x V + 0.41
VCS.SC.L......................  0.21 x V + 0.72            0.14 x V + 0.48            0.13 x V + 0.44            0.13 x V + 0.44            0.13 x V + 0.43            0.11 x V + 0.38
HCT.SC.M......................  0.06 x V + 1.73            0.05 x V + 1.42            0.02 x V + 0.63            0.02 x V + 0.57            0.02 x V + 0.51            0.01 x V + 0.38
HCT.SC.L......................  0.36 x V + 1.98            0.29 x V + 1.57            0.12 x V + 0.68            0.12 x V + 0.65            0.11 x V + 0.6             0.08 x V + 0.45
HCS.SC.M......................  0.03 x V + 0.54            0.02 x V + 0.49            0.02 x V + 0.45            0.02 x V + 0.41            0.02 x V + 0.37            0.01 x V + 0.18
HCS.SC.L......................  0.2 x V + 0.69             0.15 x V + 0.53            0.14 x V + 0.48            0.12 x V + 0.42            0.12 x V + 0.42            0.07 x V + 0.24
PD.SC.M.......................  0.13 x V + 3.51            0.07 x V + 1.98            0.07 x V + 1.98            0.04 x V + 1.13            0.03 x V + 0.83            0.03 x V + 0.72
SOC.SC.M......................  0.6 x TDA + 1.0            0.4 x TDA + 0.67           0.4 x TDA + 0.66           0.33 x TDA + 0.54          0.32 x TDA + 0.53          0.32 x TDA + 0.53
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition to the 24 primary equipment classes analyzed, DOE 
evaluating existing and potentially amended standards for 23 secondary 
equipment classes of commercial refrigeration equipment covered in this 
rulemaking that were not directly analyzed in the engineering analysis. 
DOE's approach to evaluating standards for these secondary equipment 
classes involves extension multipliers developed using the engineering 
results for the primary equipment classes analyzed and a set of 
matched-pair analyses performed during the January 2009 final rule 
analysis.\87\ In addition, DOE believes that standards for certain 
primary equipment classes can be directly applied to similar secondary 
equipment classes. Chapter 5 of the NOPR TSD discusses the development 
of the extension multipliers.
---------------------------------------------------------------------------

    \87\ The matched-pair analyses compared calculated energy 
consumption levels for pieces of equipment with similar designs but 
one major construction or operational difference; for example, 
vertical open remote condensing cases operating at medium and low 
temperatures. The relationships between these sets of units were 
used to determine the effect of the design or operational difference 
on applicable equipment. For more information, please see chapter 5 
of the 2009 final rule TSD, which can be found at http://www.regulations.gov/#!documentDetail;D=EERE-2006-STD-0126-0058.
---------------------------------------------------------------------------

    Using the extension multiplier approach, DOE developed an 
additional set of TSLs and associated equations for the secondary 
equipment classes, as shown in Table V.4. The TSLs shown in Table V.4 
do not necessarily satisfy the criteria spelled out in section V.A. DOE 
is presenting the standards equations developed for each TSL for all 47 
equipment classes to allow interested parties to better review the 
ramifications of each TSL across the range of equipment sizes on the 
market.

                                                 Table V.4--Equations Representing the Standards at Each TSL for All Secondary Equipment Classes
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Trial standard levels for secondary equipment classes analyzed
        Equipment class        -----------------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Baseline                    TSL 1                      TSL 2                      TSL 3                      TSL 4                      TSL 5
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.I......................  2.89 x TDA + 8.7           2.83 x TDA + 8.54          2.69 x TDA + 8.12          2.68 x TDA + 8.08          2.68 x TDA + 8.08          2.63 x TDA + 7.95
SVO.RC.L......................  2.27 x TDA + 6.85          2.23 x TDA + 6.72          2.12 x TDA + 6.39          2.11 x TDA + 6.36          2.11 x TDA + 6.36          2.07 x TDA + 6.26
SVO.RC.I......................  2.89 x TDA + 8.7           2.83 x TDA + 8.54          2.69 x TDA + 8.12          2.68 x TDA + 8.08          2.68 x TDA + 8.08          2.63 x TDA + 7.95
HZO.RC.I......................  0.72 x TDA + 8.74          0.72 x TDA + 8.74          0.72 x TDA + 8.74          0.72 x TDA + 8.74          0.72 x TDA + 8.74          0.7 x TDA + 8.5
VOP.SC.L......................  4.37 x TDA + 11.82         4.27 x TDA + 11.57         4.21 x TDA + 11.4          3.8 x TDA + 10.29          3.79 x TDA + 10.26         3.77 x TDA + 10.2
VOP.SC.I......................  5.55 x TDA + 15.02         5.43 x TDA + 14.69         5.35 x TDA + 14.48         4.83 x TDA + 13.06         4.81 x TDA + 13.03         4.78 x TDA + 12.95
SVO.SC.L......................  4.34 x TDA + 11.51         4.18 x TDA + 11.09         4.12 x TDA + 10.93         3.78 x TDA + 10.04         3.77 x TDA + 10.01         3.76 x TDA + 9.96
SVO.SC.I......................  5.52 x TDA + 14.63         5.31 x TDA + 14.09         5.23 x TDA + 13.88         4.8 x TDA + 12.75          4.79 x TDA + 12.72         4.77 x TDA + 12.65
HZO.SC.I......................  2.44 x TDA + 9.0           2.44 x TDA + 9.0           2.44 x TDA + 9.0           2.44 x TDA + 9.0           2.44 x TDA + 9.0           2.42 x TDA + 8.93
SOC.RC.L......................  1.08 x TDA + 0.22          1.05 x TDA + 0.23          1.02 x TDA + 0.22          0.84 x TDA + 0.18          0.83 x TDA + 0.18          0.82 x TDA + 0.18
SOC.RC.I......................  1.26 x TDA + 0.26          1.23 x TDA + 0.27          1.2 x TDA + 0.26           0.98 x TDA + 0.21          0.97 x TDA + 0.21          0.96 x TDA + 0.21
SOC.SC.I......................  1.76 x TDA + 0.36          1.72 x TDA + 0.37          1.68 x TDA + 0.36          1.37 x TDA + 0.3           1.35 x TDA + 0.29          1.34 x TDA + 0.29
VCT.RC.I......................  0.66 x TDA + 3.05          0.52 x TDA + 2.44          0.51 x TDA + 2.39          0.51 x TDA + 2.37          0.51 x TDA + 2.37          0.48 x TDA + 2.26
HCT.RC.M......................  0.16 x TDA + 0.13          0.16 x TDA + 0.12          0.15 x TDA + 0.12          0.14 x TDA + 0.11          0.14 x TDA + 0.11          0.1 x TDA + 0.08
HCT.RC.L......................  0.34 x TDA + 0.26          0.33 x TDA + 0.26          0.32 x TDA + 0.24          0.3 x TDA + 0.23           0.3 x TDA + 0.23           0.22 x TDA + 0.17
HCT.RC.I......................  0.4 x TDA + 0.31           0.39 x TDA + 0.3           0.37 x TDA + 0.29          0.35 x TDA + 0.27          0.35 x TDA + 0.27          0.26 x TDA + 0.2
VCS.RC.M......................  0.11 x V + 0.26            0.11 x V + 0.24            0.1 x V + 0.24             0.1 x V + 0.24             0.1 x V + 0.24             0.1 x V + 0.22
VCS.RC.L......................  0.23 x V + 0.54            0.22 x V + 0.51            0.22 x V + 0.5             0.21 x V + 0.5             0.21 x V + 0.5             0.2 x V + 0.46
VCS.RC.I......................  0.27 x V + 0.63            0.26 x V + 0.6             0.25 x V + 0.58            0.25 x V + 0.58            0.25 x V + 0.58            0.23 x V + 0.54
HCS.SC.I......................  0.38 x V + 0.88            0.36 x V + 0.84            0.35 x V + 0.82            0.35 x V + 0.81            0.35 x V + 0.81            0.33 x V + 0.76
HCS.RC.M......................  0.11 x V + 0.26            0.11 x V + 0.24            0.1 x V + 0.24             0.1 x V + 0.24             0.1 x V + 0.24             0.1 x V + 0.22
HCS.RC.L......................  0.23 x V + 0.54            0.22 x V + 0.51            0.22 x V + 0.5             0.21 x V + 0.5             0.21 x V + 0.5             0.2 x V + 0.46
HCS.RC.I......................  0.27 x V + 0.63            0.26 x V + 0.6             0.25 x V + 0.58            0.25 x V + 0.58            0.25 x V + 0.58            0.23 x V + 0.54

[[Page 55951]]

 
SOC.SC.L*.....................  0.75 x V + 4.10            0.84 x TDA + 1.4           0.83 x TDA + 1.39          0.68 x TDA + 1.14          0.67 x TDA + 1.12          0.66 x TDA + 1.11
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Equipment class SOC.SC.L was inadvertently grouped under the category self-contained commercial freezers with transparent doors in the standards prescribed by EPCA, as amended by EPACT 2005.
  (42 U.S.C. 6313(c)(2)) The baseline expression is thus given by the expression 0.75 x V + 4.10, which is the current standard for SOC.SC.L equipment. A similar anomaly (of inadvertent
  classification under a different equipment category) for SOC.SC.M equipment was corrected by the standard established by AEMTCA (see section IV.C.1.d for a detailed discussion). (42 U.S.C.
  6313(c)(4)) However, no such corrective action has been prescribed for standards for SOC.SC.L equipment. In establishing a new standard for SOC.SC.M equipment, AEMTCA also changed the
  normalization metric from volume (V) to total display area (TDA). Accordingly, DOE is proposing the amended standards for SOC.SC.M equipment with TDA as the normalization metric (see Table
  V.3), DOE derives the proposed standards for secondary equipment classes based on the proposed standard of a primary equipment that has similar characteristics as the secondary equipment
  class under consideration (see chapter 5 of the NOPR TSD for details). For the equipment class SOC.SC.L, the proposed standards were derived from the proposed standards for equipment class
  SOC.SC.M. Since the proposed standards for SOC.SC.M are in terms of TDA, the proposed standards for SOC.SC.L equipment have also been specified in terms of TDA. Therefore, while the baseline
  expression has been shown with V as the normalization metric, the expressions for TSLs 1 through 5 have been shown in terms of TDA. This change of normalization metric for equipment class
  SOC.SC.L is consistent with the legislative intent, evident in AEMTCA, for equipment class SOC.SC.M.

B. Economic Justification and Energy Savings

1. Economic Impacts on Commercial Customers
a. Life-Cycle Cost and Payback Period
    Customers affected by new or amended standards usually incur higher 
purchase prices and lower operating costs. DOE evaluates these impacts 
on individual customers by calculating the LCC and the PBP associated 
with the TSLs. The results of the LCC analysis for each TSL were 
obtained by comparing the installed and operating costs of the 
equipment in the base-case scenario (scenario with no amended energy 
conservation standards) against the standards-case scenarios at each 
TSL. The energy consumption values for both the base-case and 
standards-case scenarios were calculated based on the DOE test 
procedure conditions specified in the 2012 test procedure final rule. 
77 FR 10292, 10318-21 (Feb 21, 2012) The DOE test procedure adopted an 
industry-accepted test method and has been widely accepted as a 
reasonably accurate representation of the conditions to which a vast 
majority of the equipment covered in this rulemaking is subjected 
during actual use. Using the approach described in section IV.H, DOE 
calculated the LCC savings and PBPs for the TSLs considered in this 
NOPR. The LCC analysis was carried out in the form of Monte Carlo 
simulations. Consequently, the results of LCC analysis are distributed 
over a range of values, as opposed to a single deterministic value. DOE 
presents the mean or median values, as appropriate, calculated from the 
distributions of results.
    Table V.5 through Table V.29 show the results of LCC analysis for 
each equipment class. Each table presents the important results of the 
LCC analysis, including mean LCC, mean LCC savings, median PBP, and 
distribution of customer impacts in the form of percentages of 
customers who experience net cost, no impact, or net benefit.
    All of the equipment classes have negative LCC savings values at 
TSL 5. Negative average LCC savings imply that, on average, customers 
experience an increase in LCC of the equipment as a consequence of 
buying equipment associated with that particular TSL. TSL 5 is 
associated with the max-tech level for all the equipment classes. 
Vacuum insulated panel technology is the design option associated with 
the max-tech efficiency levels for all equipment classes. The cost 
increments associated with vacuum insulated panels are considerably 
high, and the increase in LCC indicates that this design option may not 
be economically justified.
    The mean LCC savings associated with TSL 4 are all either positive 
values or zero (in the case of equipment classes HZO.RC.M, HZO.RC.L, 
and HZO.SC.L) for all equipment classes, and the non-zero values range 
from $9 to $1,494. The mean LCC savings at all lower TSL levels are 
also positive. This implies that, on average, all the equipment classes 
show either no change in LCC or a decrease in LCC for TSL 1 through TSL 
4. A comparison of LCC savings between TSL 4 and TSL 3, across all 
equipment classes, shows that the LCC savings associated with TSL 3 are 
either greater than or equal to the LCC savings associated with TSL 4. 
LCC savings are equal in cases in which both TSLs are associated with 
the same efficiency level.
    As described in section IV.I.2, DOE used a ``roll-up'' scenario in 
this rulemaking. Under the roll-up scenario, DOE assumes that the 
market shares of the efficiency levels (in the base case) that do not 
meet the standard level under consideration would be ``rolled up'' into 
(meaning ``added to'') the market share of the efficiency level at the 
standard level under consideration, and the market shares of efficiency 
levels that are above the standard level under consideration would 
remain unaffected. Customers, in the base-case scenario, who buy the 
equipment at or above the TSL under consideration would be unaffected 
if the amended standard were to be set at that TSL. Customers, in the 
base-case scenario, who buy equipment below the TSL under consideration 
would be affected if the amended standard were to be set at that TSL. 
Among these affected customers, some may benefit from lower LCC of the 
equipment and some may incur net cost due to higher LCC, depending on 
the inputs to LCC analysis such as electricity prices, discount rates 
and markups. DOE's results clearly indicate that only a small 
percentage of customers may benefit from an amended standard that is 
set at TSL 5. At TSL 4, the percentage of customers who experience net 
benefits or no impacts ranges from 59 to 100 percent. At TSL 3, a 
larger percentage of customers experience net benefits or no impacts as 
compared to TSL 4. At TSLs 1 and 2, almost all customers experience 
either net benefits or no impacts.
    For most of the equipment classes, the median PBPs for TSL 5 are 
greater than the average lifetime of the equipment, indicating that a 
majority of customers may not be able to recover the higher equipment 
installed costs through savings in operating costs throughout the life 
of the equipment. The median PBP values for TSL 4 range from 0.96 years 
to 6.40 years. The average lifetime of a majority of the commercial 
refrigeration equipment under consideration is 10 years. Therefore, PBP 
results for TSL 4 indicate that, in general, the majority of customers 
will be able to recover the increased purchase costs associated with 
equipment that is compliant with TSL 4 through operating cost savings 
within the lifetime of the equipment.

[[Page 55952]]

                                                              Table V.5--Summary LCC and PBP Results for VOP.RC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          17,095           9,490          20,618          30,108             236               0              76              24            1.73
2...............................................          16,180           9,633          19,849          29,482             743               0              52              48            1.77
3...............................................          13,033          10,823          17,364          28,187           1,789               0              28              72            3.77
4...............................................          12,962          10,898          17,303          28,201           1,494              11              15              74            3.91
5...............................................          12,798          14,006          17,162          31,168         (1,669)              90               2               8           11.76
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.6--Summary LCC and PBP Results for VOP.RC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          38,770          10,099          39,184          49,282             537               0              74              26            1.11
2...............................................          36,877          10,511          37,520          48,031           1,517               0              48              52            2.03
3...............................................          36,685          10,594          37,356          47,950           1,130               0              25              75            2.22
4...............................................          36,685          10,594          37,356          47,950           1,130               0              25              75            2.22
5...............................................          36,088          15,667          36,847          52,513         (3,693)              98               2               0           18.30
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.7--Summary LCC and PBP Results for VOP.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          10,960           4,650          15,471          20,120             171               0              62              38            1.61
2...............................................          10,804           4,693          15,314          20,008             227               0              43              57            2.17
3...............................................           9,747           5,183          14,180          19,364             815               0              25              75            4.12
4...............................................           9,718           5,234          14,147          19,381             691              11              14              75            4.39
5...............................................           9,660           6,293          14,079          20,373           (377)              77               3              20           11.37
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.8--Summary LCC and PBP Results for VCT.RC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that Experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  Operating Cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           5,679          12,070          11,800          23,870             175               0              81              19            1.23
2...............................................           2,955          12,669           9,411          22,081           1,864               0              62              38            2.42
3...............................................           2,285          12,819           8,809          21,629           1,759               0              46              54            2.43
4...............................................           2,177          12,929           8,715          21,644           1,108              26              16              57            2.70
5...............................................           2,005          16,537           8,560          25,097         (2,509)              94               2               4           13.09
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.9--Summary LCC and PBP Results for VCT.RC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          11,362          13,756          17,581          31,337           1,357               0              60              40            1.30
2...............................................          11,161          13,836          17,401          31,237           1,005               0              40              60            1.51
3...............................................          11,056          13,887          17,311          31,198             798               0              21              79            1.64
4...............................................          11,056          13,887          17,311          31,198             798               0              21              79            1.64
5...............................................          10,531          18,626          16,840          35,466         (3,624)              97               2               1           15.75
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

[[Page 55953]]

                                                              Table V.10--Summary LCC and PBP Results for VCT.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period, years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           2,758           4,594           5,261           9,855             566               0              83              17            0.86
2...............................................           1,488           4,849           3,916           8,764           1,364               0              66              34            1.73
3...............................................           1,182           4,999           3,583           8,582           1,122               0              51              49            2.21
4...............................................           1,082           5,088           3,489           8,578             641              27              13              60            2.54
5...............................................             979           6,362           3,377           9,739           (596)              74               2              24            8.13
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.11--Summary LCC and PBP Results for VCT.SC.L Equipment Class
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           4,921           6,101           8,222          14,323           4,186               0              76              24            0.58
2...............................................           4,853           6,120           8,150          14,270           2,523               0              60              40            0.61
3...............................................           4,541           6,271           7,811          14,082           1,984               0              44              56            0.83
4...............................................           4,411           6,364           7,692          14,056           1,343               7              15              78            0.96
5...............................................           4,222           8,077           7,486          15,562           (343)              74               2              24            3.65
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.12--Summary LCC and PBP Results for VCT.SC.I Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           6,370           6,383          10,160          16,543             572               0              65              35            0.86
2...............................................           5,972           6,558           9,733          16,292             486               1              32              68            1.74
3...............................................           5,891           6,612           9,644          16,256             432               1              16              83            1.97
4...............................................           5,891           6,612           9,644          16,256             432               1              16              83            1.97
5...............................................           5,609           8,883           9,332          18,215         (1,592)              95               1               3           13.21
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.13--Summary LCC and PBP Results for VCS.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................             863           3,386           2,122           5,508             279               0              72              28            0.78
2...............................................             793           3,406           2,070           5,476             163               0              42              58            0.98
3...............................................             659           3,484           1,967           5,451             132               7              13              80            1.75
4...............................................             659           3,484           1,967           5,451             132               7              13              80            1.75
5...............................................             507           4,771           1,837           6,608         (1,042)              99               1               0           14.11
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.14--Summary LCC and PBP Results for VCS.SC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           2,649           3,673           3,829           7,501             525               0              73              27            0.55
2...............................................           2,463           3,735           3,671           7,405             329               0              42              58            0.91
3...............................................           2,432           3,751           3,651           7,402             268               5              28              68            1.00
4...............................................           2,394           3,776           3,630           7,405             221              20              14              66            1.15
5...............................................           2,084           5,505           3,366           8,871         (1,274)              97               1               2           10.54
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

[[Page 55954]]

                                                              Table V.15--Summary LCC and PBP Results for VCS.SC.I Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           6,657           4,148           7,526          11,674             237               0              67              33            0.80
2...............................................           6,492           4,218           7,392          11,610             177               0              32              68            2.07
3...............................................           6,438           4,243           7,357          11,600             153               3              16              81            2.42
4...............................................           6,438           4,243           7,357          11,600             153               3              16              81            2.42
5...............................................           6,034           6,535           7,013          13,548         (1,819)              99               1               0           27.19
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.16--Summary LCC and PBP Results for SVO.RC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          13,179           8,341          16,821          25,161              74               0              75              25            1.31
2...............................................          12,355           8,547          16,098          24,645             552               0              51              49            2.64
3...............................................          10,114           9,455          14,347          23,802           1,217               0              29              71            4.34
4...............................................          10,065           9,517          14,304          23,821           1,008              13              16              72            4.50
5...............................................           9,949          11,511          14,202          25,713         (1,015)              85               3              12           11.60
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.17--Summary LCC and PBP Results for SVO.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
9,396...........................................           3,885          12,744          16,629             324               0              61              39            1.97           9,396
9,255...........................................           3,914          12,600          16,514             335               0              43              57            2.06           9,255
8,501...........................................           4,314          11,866          16,180             588               0              25              75            4.43           8,501
8,481...........................................           4,359          11,843          16,202             492              12              14              75            4.75           8,481
8,439...........................................           5,049          11,796          16,844           (202)              69               4              27           10.36           8,439
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.18--Summary LCC and PBP Results for SOC.RC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           9,353          12,766          15,106          27,872             118               0              82              18            1.25
2...............................................           9,115          12,799          14,906          27,704             226               0              64              36            1.44
3...............................................           7,455          13,343          13,511          26,854             998               0              47              53            3.31
4...............................................           7,356          13,570          13,443          27,012             495              29              18              53            4.41
5...............................................           7,274          15,050          13,372          28,423           (982)              89               5               6          11.88
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.19--Summary LCC and PBP Results for HZO.RC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           5,267           8,056           8,916          16,972              NA              NA              NA              NA              NA
2...............................................           5,267           8,056           8,916          16,972              NA              NA              NA              NA              NA
3...............................................           5,267           8,056           8,916          16,972              NA              NA              NA              NA              NA
4...............................................           5,267           8,056           8,916          16,972              NA              NA              NA              NA              NA
5...............................................           5,173           9,406           8,837          18,243         (1,271)              78              22               0          161.23
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``NA'' stands for not applicable. TSLs 1 through 4 are at the baseline efficiency level. Therefore, the LCC savings, distribution of customer impacts and PBP are shown as ``NA.''

[[Page 55955]]

 
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.20--Summary LCC and PBP Results for HZO.RC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          12,082           8,895          14,989          23,884              NA              NA              NA              NA              NA
2...............................................          12,082           8,895          14,989          23,884              NA              NA              NA              NA              NA
3...............................................          12,082           8,895          14,989          23,884              NA              NA              NA              NA              NA
4...............................................          12,082           8,895          14,989          23,884              NA              NA              NA              NA              NA
5...............................................          11,759          11,301          14,718          26,019         (2,135)              86              14               0           83.78
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``NA'' stands for not applicable. TSLs 1 through 4 are at the baseline efficiency level. Therefore, the LCC savings, distribution of customer impacts and PBP are shown as ``NA.''
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.21--Summary LCC and PBP Results for HZO.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           5,388           2,343           7,055           9,399               9               0              75              25            1.89
2...............................................           5,388           2,343           7,055           9,399               9               0              75              25            1.89
3...............................................           5,330           2,356           6,999           9,354              49               0              49              51            2.42
4...............................................           5,289           2,405           6,954           9,358              29              19              24              57            6.40
5...............................................           5,206           3,340           6,862          10,202           (822)              98               2               0           55.78
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.22--Summary LCC and PBP Results for HZO.SC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................          10,994           3,691          13,891          17,582              NA              NA              NA              NA              NA
2...............................................          10,994           3,691          13,891          17,582              NA              NA              NA              NA              NA
3...............................................          10,994           3,691          13,891          17,582              NA              NA              NA              NA              NA
4...............................................          10,994           3,691          13,891          17,582              NA              NA              NA              NA              NA
5...............................................          10,916           4,251          13,804          18,056           (474)              72              28               0           73.62
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
``NA'' stands for not applicable. TSLs 1 through 4 are at the baseline efficiency level. Therefore, the LCC savings, distribution of customer impacts and PBP are shown as ``NA.''
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.23--Summary LCC and PBP Results for HCT.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................             683           2,057           1,685           3,742             107               0              70              30            0.69
2...............................................             305           2,161           1,263           3,423             359               0              38              62            2.24
3...............................................             275           2,175           1,236           3,411             307               0              25              75            2.42
4...............................................             244           2,220           1,200           3,420             254              18              12              70            3.08
5...............................................             181           2,812           1,127           3,939           (294)              89               1              10           12.26
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.24--Summary LCC and PBP Results for HCT.SC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           1,499           2,240           2,336           4,576             217               0              75              26            0.53

[[Page 55956]]

 
2...............................................             667           2,337           1,589           3,926             791               0              61              39            1.00
3...............................................             647           2,344           1,574           3,918             571               0              45              55            1.05
4...............................................             572           2,403           1,513           3,916             369              23              14              63            1.47
5...............................................             432           3,204           1,385           4,590           (355)              76               1              23            7.15
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.25--Summary LCC and PBP Results for HCT.SC.I Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           1,174           2,331           1,991           4,322              22               0              74              26            0.88
2...............................................           1,121           2,346           1,953           4,299              35               0              49              51            2.39
3...............................................           1,045           2,391           1,889           4,279              42               2              23              75            4.28
4...............................................           1,045           2,391           1,889           4,279              42               2              23              75            4.28
5...............................................             776           3,461           1,663           5,124           (811)              99               1               0           27.99
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.26--Summary LCC and PBP Results for HCS.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................             238           1,951             972           2,924              23               0              83              17            0.50
2...............................................             220           1,957             959           2,916              19               0              65              35            1.64
3...............................................             203           1,964             948           2,912              17               1              48              51            2.54
4...............................................             183           1,979             937           2,916               9              29              31              40            4.28
5...............................................              90           2,490             857           3,347           (423)              98               2               0           34.05
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.27--Summary LCC and PBP Results for HCS.SC.L Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected            % of Customers that experience**             Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................             588           1,988           1,284           3,272              75               0              50              50            0.86
2...............................................             534           2,003           1,244           3,246              81               0              33              67            1.36
3...............................................             464           2,046           1,184           3,231              81               2              16              82            2.57
4...............................................             464           2,046           1,184           3,231              81               2              16              82            2.57
5...............................................             271           2,681           1,020           3,700           (401)              98               2               0           14.98
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

                                                              Table V.28--Summary LCC and PBP Results for PD.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of Customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           1,423           3,002           2,926           5,927           1,010               0              86              14            0.53
2...............................................           1,423           3,002           2,926           5,927           1,010               0              86              14            0.53
3...............................................             815           3,121           2,322           5,444             934               0              69              31            1.10
4...............................................             597           3,348           2,112           5,460             310              41              11              48            2.27
5...............................................             517           4,347           2,031           6,379           (638)              86               1              13            7.61
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

[[Page 55957]]

                                                              Table V.29--Summary LCC and PBP Results for SOC.SC.M Equipment Class*
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost, all customers 2012$                           Life-cycle cost savings
                                                                 ----------------------------------------------------------------------------------------------------------------
                                                   Annual energy                                                     Affected             % of customers that experience              Median
                       TSL                          consumption                     Discounted                      customers'   ------------------------------------------------     payback
                                                      kWh/yr      Installed cost  operating cost        LCC           average                                                      period years
                                                                                                                   savings 2012$     Net cost        No impact      Net benefit
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
1...............................................           9,869          12,314          14,364          26,678             646               0              70              30            1.12
2...............................................           9,783          12,339          14,301          26,640             466               0              55              45            1.24
3...............................................           8,039          12,883          12,863          25,747           1,242               0              40              60            2.35
4...............................................           7,920          13,110          12,777          25,887             740              25              16              60            2.99
5...............................................           7,814          14,591          12,687          27,277           (735)              80               5              16            7.42
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** Percentages may not add up to 100 percent due to rounding.

b. Life-Cycle Cost Subgroup Analysis
    As described in section IV.J, DOE estimated the impact of potential 
amended efficiency standards for commercial refrigeration equipment, at 
each TSL, on two customer subgroups, one belonging to the foodservice 
sector and one to the food-retail sector. For the small business 
segment in the foodservice sector, full-service restaurants were chosen 
as the representative subgroup, and for the food-retail sector, 
convenience stores with gas stations were chosen as the representative 
subgroup. DOE carried out two LCC subgroup analyses by using the LCC 
spreadsheet described in chapter 8 of the NOPR TSD, but with certain 
modifications. The input for business type was fixed to the identified 
subgroup, which ensured that the discount rates and electricity price 
rates associated with only that subgroup were selected in the Monte 
Carlo simulations (see chapter 8 of the NOPR TSD). The discount rate 
was further increased by applying the small firm premium to the WACC 
(See Table IV.9 for details). Another major modification to the LCC 
analysis was an added assumption that the subgroups do not have access 
to national accounts, which results in higher distribution channel 
markups for the subgroups, leading to higher equipment purchase prices. 
Apart from these changes, all other inputs for LCC subgroup analysis 
are same as those in the LCC analysis described in chapter 8 of the 
NOPR TSD.
    The results for the small business subgroup in the foodservice 
sector (Table V.30, Table V.31, and Table V.32) are presented only for 
the self-contained equipment classes because full-service restaurants 
that are small businesses generally do not use remote condensing 
equipment. Table V.30 presents the comparison of mean LCC savings for 
the small business subgroup in foodservice sector (full-service 
restaurants) with the national average values (LCC savings results from 
chapter 8 of the NOPR TSD). For all TSLs in all equipment classes, the 
LCC savings for the small business subgroup are lower than the national 
average values. Table V.31 presents the percentage change in LCC 
savings compared to national average values for self-contained 
equipment. For many of the equipment classes in Table V.31, the 
percentage decrease in LCC savings is less than 15 percent. Equipment 
classes that show a substantial decrease in LCC savings, compared to 
national average values, are VOP.SC.M, VCT.SC.M, VCT.SC.L, VCT.SC.I, 
SVO.SC.M, HZO.SC.M, HCT.SC.I and PD.SC.M, which belong to the 
classification of self-contained display type equipment. It is uncommon 
to find display type equipment in small full-service restaurants. An 
overwhelming majority of commercial refrigeration equipment in small 
restaurants is composed of solid door refrigerators and freezers that 
are used for food storage in the kitchen. The solid-door equipment (VCS 
and HCS) exhibits a relatively smaller percentage decrease in LCC 
savings. In any case, the value of LCC savings at TSL 4 is positive for 
all equipment classes as shown in Table V.30. Therefore, even though 
the LCC savings for small business subgroup in foodservice sector are 
lower than the national average values, they are still positive, 
implying that small businesses still save money over the equipment 
lifetime at TSL 4. Table V.32 presents the comparison of median PBPs 
for the small business subgroup in the foodservice sector with national 
median values (median PBPs from chapter 8 of the NOPR TSD). The PBP 
values are higher for the small business subgroup in all cases, which 
is consistent with the decrease in LCC savings.
    Table V.33 presents the comparison of mean LCC savings for the 
small business subgroup in the food-retail sector (convenience stores 
with gasoline stations) with the national average values (LCC savings 
results from chapter 8 of the NOPR TSD) at each TSL. This comparison 
shows mixed results, with higher LCC savings for the subgroup in some 
instances and lower LCC savings in others. The higher LCC savings for 
the subgroup are exhibited in the case of large display cases such as 
VOP.RC.M, VOP.RC.L, VCT.RC.M, VCT.RC.L, SVO.RC.M, and SOC.RC.M. This 
equipment is predominantly used in large grocery stores, where the 
average lifetime of the equipment was assumed to be 10 years, while the 
average lifetime of this equipment in convenience stores with gas 
stations was assumed to be 15 years (see chapter 8 of the NOPR TSD for 
discussion of equipment lifetime assumptions). In general, the longer 
the equipment lifetime, the lower the LCC values because of a longer 
available timeframe to offset the initial cost increases by savings in 
energy costs. Because the large display type equipment is predominantly 
used in larger grocery and multi-line retail stores, the national 
average values show lower LCC savings compared to the LCC savings of 
the subgroup. Self-contained equipment, on the other hand, was assumed 
to have a 10-year average lifetime in all businesses. For self-
contained equipment, the subgroup LCC savings were lower than the 
national average LCC savings with the exception of the HCT.SC.L cases.
    Table V.34 presents the percentage change in LCC savings of the 
customer subgroup in the food-retail sector compared to national 
average values at each TSL. For a majority of equipment classes that 
show a decrease in LCC savings for the subgroup, the percentage 
decrease in LCC savings is less than 15 percent. Equipment classes that 
show a substantial decrease in LCC savings, compared to national 
average values, are VOP.SC.M, SVO.SC.M, HZO.SC.M, HCT.SC.M, HCT.SC.I, 
and HSC.SC.M. Among these, the equipment classes that show decrease in 
LCC saving of greater than 15 percent at TSL 4 are VOP.SC.M (27 
percent), SVO.SC.M (26 percent), HZO.SC.M (38 percent), HCT.SC.M (21 
percent), HCT.SC.I (17 percent), and HCS.SC.M (15 percent). Even though 
the percentage decrease in

[[Page 55958]]

LCC savings for these equipment classes may appear to be high, the 
absolute value of decrease in LCC savings is small when compared to the 
total LCC for each equipment class. Table V.35 presents the comparison 
of median PBPs for small business subgroup in the foodservice sector 
with national median values (median PBPs from chapter 8 of the NOPR 
TSD) at each TSL. The PBP values are higher in the small business 
subgroup in all instances, including instances in which the LCC savings 
for the subgroup are higher than national average values. This is an 
expected outcome because the PBP values are obtained by dividing the 
increase in equipment installed cost by the first year savings in 
operating costs, and are not affected by the higher average lifetime of 
the equipment in the convenience stores with gas stations.

          Table V.30--Comparison of Mean LCC Savings for the Small Business Subgroup in the Foodservice Sector With the National Average Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                     Mean LCC savings 2012$**
             Equipment class*                         Category           -------------------------------------------------------------------------------
                                                                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.SC.M.................................  Small Business...............         $157.27         $205.50         $690.22         $576.21       ($586.43)
                                           All Business Types...........          170.78          227.17          814.91          691.27        (376.52)
VCT.SC.M.................................  Small Business...............          421.59          960.34          752.15          405.47        (954.55)
                                           All Business Types...........          566.18        1,363.60        1,122.14          641.05        (595.52)
VCT.SC.L.................................  Small Business...............        3,127.24        1,879.37        1,433.25          941.77        (906.58)
                                           All Business Types...........        4,186.06        2,522.67        1,984.45        1,342.84        (343.16)
VCT.SC.I.................................  Small Business...............          414.02          310.26          261.24          261.24      (2,036.01)
                                           All Business Types...........          572.05          486.28          431.88          431.88      (1,591.87)
VCS.SC.M.................................  Small Business...............          272.26          158.67          125.72          125.72      (1,079.78)
                                           All Business Types...........          278.84          162.88          131.80          131.80      (1,042.03)
VCS.SC.L.................................  Small Business...............          511.64          318.96          259.10          213.08      (1,326.22)
                                           All Business Types...........          524.52          329.33          267.81          220.83      (1,274.03)
VCS.SC.I.................................  Small Business...............          231.08          170.13          146.54          146.54      (1,884.22)
                                           All Business Types...........          236.77          176.83          152.69          152.69      (1,818.87)
SVO.SC.M.................................  Small Business...............          296.25          305.21          486.70          397.67        (356.12)
                                           All Business Types...........          324.33          334.89          587.90          491.99        (201.61)
HZO.SC.M.................................  Small Business...............            8.16            8.16           44.26           18.90        (925.33)
                                           All Business Types...........            8.85            8.85           48.60           28.78        (821.57)
HZO.SC.L [dagger]........................  Small Business...............              NA              NA              NA              NA        (532.72)
                                           All Business Types...........              NA              NA              NA              NA        (473.71)
HCT.SC.M.................................  Small Business...............           99.52          323.44          274.76          219.49        (385.92)
                                           All Business Types...........          106.59          359.48          307.26          253.60        (293.54)
HCT.SC.L.................................  Small Business...............          209.05          754.27          544.14          344.36        (458.19)
                                           All Business Types...........          217.19          790.53          571.07          368.92        (354.75)
HCT.SC.I.................................  Small Business...............           21.15           32.20           35.19           35.19        (926.07)
                                           All Business Types...........           21.83           34.69           42.48           42.48        (811.31)
HCS.SC.M.................................  Small Business...............           22.47           18.59           16.03            7.99        (436.55)
                                           All Business Types...........           23.07           19.18           16.66            8.68        (422.79)
HCS.SC.L.................................  Small Business...............           72.79           78.72           76.67           76.67        (422.16)
                                           All Business Types...........           74.69           80.97           80.72           80.72        (400.63)
PD.SC.M..................................  Small Business...............          815.04          815.04          729.72          187.05        (861.56)
                                           All Business Types...........        1,009.53        1,009.53          933.59          310.43        (637.94)
SOC.SC.M.................................  Small Business...............          625.01          449.27        1,149.04          651.93        (959.99)
                                           All Business Types...........          646.15          466.47        1,241.60          739.75        (735.33)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Only self-contained equipment have been shown for this subgroup analysis because the remote condensing equipment is not generally used by small full-
  service restaurants.
** Values in parentheses are negative values. Negative percentage values imply decrease in LCC savings and positive percentage values imply increase in
  LCC savings.
[dagger] TSLs 1 through 4 for equipment class HZO.SC.L are associated with the baseline efficiency level. Hence, the LCC savings are shown as ``NA''.

   Table V.31--Percentage Change in Mean LCC Savings for the Small Business Subgroup in the Foodservice Sector
                                       Compared to National Average Values
----------------------------------------------------------------------------------------------------------------
                                      TSL 1**         TSL 2**         TSL 3**         TSL 4**         TSL 5**
   Equipment class* (percent)        (percent)       (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
VOP.SC.M........................             (8)            (10)            (15)            (17)            (56)
VCT.SC.M........................            (26)            (30)            (33)            (37)            (60)
VCT.SC.L........................            (25)            (26)            (28)            (30)           (164)
VCT.SC.I........................            (28)            (36)            (40)            (40)            (28)
VCS.SC.M........................             (2)             (3)             (5)             (5)             (4)
VCS.SC.L........................             (2)             (3)             (3)             (4)             (4)
VCS.SC.I........................             (2)             (4)             (4)             (4)             (4)
SVO.SC.M........................             (9)             (9)            (17)            (19)            (77)
HZO.SC.M........................             (8)             (8)             (9)            (34)            (13)
HZO.SC.L[Dagger]................              NA              NA              NA              NA            (12)
HCT.SC.M........................             (7)            (10)            (11)            (13)            (31)

[[Page 55959]]

 
HCT.SC.L........................             (4)             (5)             (5)             (7)            (29)
HCT.SC.I........................             (3)             (7)            (17)            (17)            (14)
HCS.SC.M........................             (3)             (3)             (4)             (8)             (3)
HCS.SC.L........................             (3)             (3)             (5)             (5)             (5)
PD.SC.M.........................            (19)            (19)            (22)            (40)            (35)
SOC.SC.M........................             (3)             (4)             (7)            (12)            (31)
----------------------------------------------------------------------------------------------------------------
* Only self-contained equipment have been shown for this subgroup analysis because the remote condensing
  equipment is not generally used by small full-service restaurants.
** Values in parentheses are negative values. Negative percentage values imply decrease in LCC savings and
  positive percentage values imply increase in LCC savings.
[dagger] This value is high because of change of sign from subgroup value to national average value.
[Dagger] TSLs 1 through 4 for equipment class HZO.SC.L are associated with the baseline efficiency level. Hence,
  the percentage changes in LCC savings are shown as ``NA''.
`0%' means the value is in between -0.5% and 0.5%.

         Table V.32--Comparison of Median Payback Periods for the Small Business Subgroup in the Foodservice Sector With National Median Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Median payback period years
             Equipment class*                         Category           -------------------------------------------------------------------------------
                                                                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.SC.M.................................  Small Business...............            1.77            2.38            4.52            4.81           12.46
                                           All Business Types...........            1.61            2.17            4.12            4.39           11.37
VCT.SC.M.................................  Small Business...............            0.89            1.77            2.27            2.61            8.34
                                           All Business Types...........            0.86            1.73            2.21            2.54            8.13
VCT.SC.L.................................  Small Business...............            0.60            0.63            0.85            0.99            3.76
                                           All Business Types...........            0.58            0.61            0.83            0.96            3.65
VCT.SC.I.................................  Small Business...............            0.93            1.89            2.14            2.14           14.34
                                           All Business Types...........            0.86            1.74            1.97            1.97           13.21
VCS.SC.M.................................  Small Business...............            0.74            0.94            1.68            1.68           13.51
                                           All Business Types...........            0.78            0.98            1.75            1.75           14.11
VCS.SC.L.................................  Small Business...............            0.53            0.87            0.96            1.10           10.11
                                           All Business Types...........            0.55            0.91            1.00            1.15           10.54
VCS.SC.I.................................  Small Business...............            0.77            1.99            2.32            2.32           26.08
                                           All Business Types...........            0.80            2.07            2.42            2.42           27.19
SVO.SC.M.................................  Small Business...............            2.15            2.25            4.83            5.17           11.30
                                           All Business Types...........            1.97            2.06            4.43            4.75           10.36
HZO.SC.M.................................  Small Business...............            2.07            2.07            2.64            6.98           60.83
                                           All Business Types...........            1.89            1.89            2.42            6.40           55.78
HZO.SC.L**...............................  Small Business...............              NA              NA              NA              NA           80.27
                                           All Business Types...........              NA              NA              NA              NA           73.62
HCT.SC.M.................................  Small Business...............            0.77            2.49            2.69            3.43           13.64
                                           All Business Types...........            0.69            2.24            2.42            3.08           12.26
HCT.SC.L.................................  Small Business...............            0.58            1.10            1.15            1.61            7.83
                                           All Business Types...........            0.53            1.00            1.05            1.47            7.15
HCT.SC.I.................................  Small Business...............            0.96            2.60            4.67            4.67           30.57
                                           All Business Types...........            0.88            2.39            4.28            4.28           27.99
HCS.SC.M.................................  Small Business...............            0.48            1.57            2.42            4.06           32.56
                                           All Business Types...........            0.50            1.64            2.54            4.28           34.05
HCS.SC.L.................................  Small Business...............            0.82            1.30            2.47            2.47           14.38
                                           All Business Types...........            0.86            1.36            2.57            2.57           14.98
PD.SC.M..................................  Small Business...............            0.53            0.53            1.11            2.28            7.63
                                           All Business Types...........            0.53            0.53            1.10            2.27            7.61
SOC.SC.M.................................  Small Business...............            1.14            1.26            2.40            3.06            7.59
                                           All Business Types...........            1.12            1.24            2.35            2.99            7.42
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Only self-contained equipment have been shown for this subgroup analysis because the remote condensing equipment is not generally used by small full-
  service restaurants.
** TSLs 1 through 4 for equipment class HZO.SC.L are associated with the baseline efficiency level. Hence, the payback period is shown as ``NA.''

[[Page 55960]]

            Table V.33--Comparison of LCC Savings for the Small Business Subgroup in the Food-Retail Sector With the National Average Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      Mean LCC savings 2012$*
             Equipment class                          Category           -------------------------------------------------------------------------------
                                                                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.................................  Small Business...............         $295.31         $927.25       $2,347.11       $1,970.10     ($1,528.98)
                                           All Business Types...........          235.92          743.00        1,788.85        1,493.72      (1,668.79)
VOP.RC.L.................................  Small Business...............          668.10        1,899.69        1,421.70        1,421.70      (3,855.19)
                                           All Business Types...........          537.27        1,516.59        1,129.51        1,129.51      (3,692.90)
VOP.SC.M.................................  Small Business...............          145.72          187.71          608.29          503.17        (655.21)
                                           All Business Types...........          170.78          227.17          814.91          691.27        (376.52)
VCT.RC.M.................................  Small Business...............          205.12        2,200.61        2,074.57        1,313.23      (2,663.30)
                                           All Business Types...........          175.23        1,864.44        1,758.73        1,108.13      (2,508.61)
VCT.RC.L.................................  Small Business...............        1,586.15        1,177.93          937.97          937.97      (3,902.43)
                                           All Business Types...........        1,357.25        1,004.72          797.91          797.91      (3,624.20)
VCT.SC.M.................................  Small Business...............          535.27        1,264.79        1,024.79          574.38        (784.35)
                                           All Business Types...........          566.18        1,363.60        1,122.14          641.05        (595.52)
VCT.SC.L.................................  Small Business...............        3,980.86        2,396.41        1,864.97        1,248.55        (602.09)
                                           All Business Types...........        4,186.06        2,522.67        1,984.45        1,342.84        (343.16)
VCT.SC.I.................................  Small Business...............          529.93          430.30          375.53          375.53      (1,881.48)
                                           All Business Types...........          572.05          486.28          431.88          431.88      (1,591.87)
VCS.SC.M.................................  Small Business...............          271.17          157.63          124.30          124.30      (1,081.39)
                                           All Business Types...........          278.84          162.88          131.80          131.80      (1,042.03)
VCS.SC.L.................................  Small Business...............          510.86          318.22          258.09          211.59      (1,328.25)
                                           All Business Types...........          524.52          329.33          267.81          220.83      (1,274.03)
VCS.SC.I.................................  Small Business...............          230.24          169.16          145.08          145.08      (1,886.42)
                                           All Business Types...........          236.77          176.83          152.69          152.69      (1,818.87)
SVO.RC.M.................................  Small Business...............           89.01          674.27        1,544.54        1,286.98        (949.64)
                                           All Business Types...........           73.77          551.98        1,216.77        1,008.46      (1,015.16)
SVO.SC.M.................................  Small Business...............          285.37          292.93          449.78          364.68        (387.03)
                                           All Business Types...........          324.33          334.89          587.90          491.99        (201.61)
SOC.RC.M.................................  Small Business...............          147.25          280.43        1,278.84          670.29        (960.27)
                                           All Business Types...........          118.36          226.26          997.89          494.51        (982.21)
HZO.RC.M**...............................  Small Business...............            0.00            0.00            0.00            0.00      (1,384.63)
                                           All Business Types...........            0.00            0.00            0.00            0.00      (1,271.24)
HZO.RC.L**...............................  Small Business...............            0.00            0.00            0.00            0.00      (2,306.30)
                                           All Business Types...........            0.00            0.00            0.00            0.00      (2,134.96)
HZO.SC.M.................................  Small Business...............            8.05            8.05           43.45           17.89        (927.01)
                                           All Business Types...........            8.85            8.85           48.60           28.78        (821.57)
HZO.SC.L**...............................  Small Business...............            0.00            0.00            0.00            0.00        (533.60)
                                           All Business Types...........            0.00            0.00            0.00            0.00        (473.71)
HCT.SC.M.................................  Small Business...............           93.73          299.66          253.49          199.55        (407.29)
                                           All Business Types...........          106.59          359.48          307.26          253.60        (293.54)
HCT.SC.L.................................  Small Business...............          249.39          906.61          655.15          425.64        (366.23)
                                           All Business Types...........          217.19          790.53          571.07          368.92        (354.75)
HCT.SC.I.................................  Small Business...............           21.15           32.20           35.19           35.19        (926.07)
                                           All Business Types...........           21.83           34.69           42.48           42.48        (811.31)
HCS.SC.M.................................  Small Business...............           22.48           18.44           15.75            7.40        (437.16)
                                           All Business Types...........           23.07           19.18           16.66            8.68        (422.79)
HCS.SC.L.................................  Small Business...............           72.46           78.02           75.98           75.98        (423.21)
                                           All Business Types...........           74.69           80.97           80.72           80.72        (400.63)
PD.SC.M..................................  Small Business...............        1,026.80        1,026.80          945.24          299.03        (744.27)
                                           All Business Types...........        1,009.53        1,009.53          933.59          310.43        (637.94)
SOC.SC.M.................................  Small Business...............          619.20          444.70        1,138.70          643.60        (967.59)
                                           All Business Types...........          646.15          466.47        1,241.60          739.75        (735.33)
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** TSLs 1 through 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are associated with the baseline efficiency level. Hence, the LCC savings are
  shown as ``NA.''

   Table V.34--Percentage Change in Mean LCC Savings for the Small Business Subgroup in the Food Retail Sector
                                       Compared to National Average Values
----------------------------------------------------------------------------------------------------------------
                                      TSL 1*          TSL 2*          TSL 3*          TSL 4*          TSL 5*
         Equipment class             (percent)       (percent)       (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................              25              25              31              32               8
VOP.RC.L........................              24              25              26              26             (4)
VOP.SC.M........................            (15)            (17)            (25)            (27)            (74)
VCT.RC.M........................              17              18              18              19             (6)
VCT.RC.L........................              17              17              18              18             (8)
VCT.SC.M........................             (5)             (7)             (9)            (10)            (32)
VCT.SC.L........................             (5)             (5)             (6)             (7)            (75)

[[Page 55961]]

 
VCT.SC.I........................             (7)            (12)            (13)            (13)            (18)
VCS.SC.M........................             (3)             (3)             (6)             (6)             (4)
VCS.SC.L........................             (3)             (3)             (4)             (4)             (4)
VCS.SC.I........................             (3)             (4)             (5)             (5)             (4)
SVO.RC.M........................              21              22              27              28               6
SVO.SC.M........................            (12)            (13)            (23)            (26)            (92)
SOC.RC.M........................              24              24              28              36               2
HZO.RC.M [dagger]...............              NA              NA              NA              NA             (9)
HZO.RC.L [dagger]...............              NA              NA              NA              NA             (8)
HZO.SC.M........................             (9)             (9)            (11)            (38)            (13)
HZO.SC.L[dagger]................              NA              NA              NA              NA            (13)
HCT.SC.M........................            (12)            (17)            (17)            (21)            (39)
HCT.SC.L........................              15              15              15              15             (3)
HCT.SC.I........................             (3)             (7)            (17)            (17)            (14)
HCS.SC.M........................             (3)             (4)             (5)            (15)             (3)
HCS.SC.L........................             (3)             (4)             (6)             (6)             (6)
PD.SC.M.........................               2               2               1             (4)            (17)
SOC.SC.M........................             (4)             (5)             (8)            (13)            (32)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values. Negative percentage values imply decrease in LCC savings and
  positive percentage values imply increase in LCC savings.
[dagger] TSLs 1 through 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are associated with the
  baseline efficiency level. Hence, the LCC savings are zero and the decrease in LCC savings are shown as
  ``NA.''
`0%' implies the value is in between -0.5 and 0.5.

       Table V.35--Comparison of Median Payback Periods for the Small Business Subgroup in the Food-Retail Sector With the National Median Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                    Median payback period years
             Equipment class                          Category           -------------------------------------------------------------------------------
                                                                               TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M.................................  Small Business...............            1.78            1.83            3.88            4.02           12.09
                                           All Business Types...........            1.73            1.77            3.77            3.91           11.76
VOP.RC.L.................................  Small Business...............            1.15            2.10            2.30            2.30           18.90
                                           All Business Types...........            1.11            2.03            2.22            2.22           18.30
VOP.SC.M.................................  Small Business...............            1.95            2.65            5.02            5.34           13.84
                                           All Business Types...........            1.61            2.17            4.12            4.39           11.37
VCT.RC.M.................................  Small Business...............            1.28            2.51            2.53            2.80           13.61
                                           All Business Types...........            1.23            2.42            2.43            2.70           13.09
VCT.RC.L.................................  Small Business...............            1.35            1.57            1.71            1.71           16.40
                                           All Business Types...........            1.30            1.51            1.64            1.64           15.75
VCT.SC.M.................................  Small Business...............            0.98            1.95            2.49            2.87            9.17
                                           All Business Types...........            0.86            1.73            2.21            2.54            8.13
VCT.SC.L.................................  Small Business...............            0.65            0.68            0.93            1.09            4.12
                                           All Business Types...........            0.58            0.61            0.83            0.96            3.65
VCT.SC.I.................................  Small Business...............            1.02            2.08            2.35            2.35           15.75
                                           All Business Types...........            0.86            1.74            1.97            1.97           13.21
VCS.SC.M.................................  Small Business...............            0.79            1.01            1.79            1.79           14.45
                                           All Business Types...........            0.78            0.98            1.75            1.75           14.11
VCS.SC.L.................................  Small Business...............            0.56            0.93            1.03            1.18           10.80
                                           All Business Types...........            0.55            0.91            1.00            1.15           10.54
VCS.SC.I.................................  Small Business...............            0.82            2.12            2.48            2.48           27.85
                                           All Business Types...........            0.80            2.07            2.42            2.42           27.19
SVO.RC.M.................................  Small Business...............            1.36            2.74            4.49            4.66           12.01
                                           All Business Types...........            1.31            2.64            4.34            4.50           11.60
SVO.SC.M.................................  Small Business...............            2.29            2.40            5.18            5.55           12.12
                                           All Business Types...........            1.97            2.06            4.43            4.75           10.36
SOC.RC.M.................................  Small Business...............            1.28            1.48            3.41            4.54           12.24
                                           All Business Types...........            1.25            1.44            3.31            4.41           11.88
HZO.RC.M*................................  Small Business...............            0.00            0.00            0.00            0.00          166.41
                                           All Business Types...........            0.00            0.00            0.00            0.00          161.23
HZO.RC.L*................................  Small Business...............            0.00            0.00            0.00            0.00           86.47
                                           All Business Types...........            0.00            0.00            0.00            0.00           83.78
HZO.SC.M.................................  Small Business...............            2.14            2.14            2.74            7.23           62.97
                                           All Business Types...........            1.89            1.89            2.42            6.40           55.78
HZO.SC.L*................................  Small Business...............            0.00            0.00            0.00            0.00           83.02
                                           All Business Types...........            0.00            0.00            0.00            0.00           73.62
HCT.SC.M.................................  Small Business...............            0.80            2.60            2.81            3.58           14.23
                                           All Business Types...........            0.69            2.24            2.42            3.08           12.26

[[Page 55962]]

 
HCT.SC.L.................................  Small Business...............            0.59            1.12            1.17            1.65            8.01
                                           All Business Types...........            0.53            1.00            1.05            1.47            7.15
HCT.SC.I.................................  Small Business...............            0.96            2.60            4.67            4.67           30.57
                                           All Business Types...........            0.88            2.39            4.28            4.28           27.99
HCS.SC.M.................................  Small Business...............            0.51            1.68            2.60            4.39           34.88
                                           All Business Types...........            0.50            1.64            2.54            4.28           34.05
HCS.SC.L.................................  Small Business...............            0.88            1.40            2.63            2.63           15.35
                                           All Business Types...........            0.86            1.36            2.57            2.57           14.98
PD.SC.M..................................  Small Business...............            0.58            0.58            1.22            2.50            8.40
                                           All Business Types...........            0.53            0.53            1.10            2.27            7.61
SOC.SC.M.................................  Small Business...............            1.23            1.36            2.58            3.28            8.13
                                           All Business Types...........            1.12            1.24            2.35            2.99            7.42
--------------------------------------------------------------------------------------------------------------------------------------------------------
* TSLs 1 through 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are associated with the baseline efficiency level. Hence, the payback period
  is shown as ``NA.''

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of commercial refrigeration 
equipment. The following section describes the expected impacts on 
manufacturers at each TSL. Chapter 12 of the NOPR TSD explains the 
analysis in further detail.
a. Industry Cash-Flow Analysis Results
    The following tables depict the financial impacts (represented by 
changes in INPV) of amended energy standards on manufacturers as well 
as the conversion costs that DOE estimates manufacturers would incur 
for all equipment classes at each TSL. To evaluate the range of cash 
flow impacts on the commercial refrigeration industry, DOE modeled two 
different scenarios using different assumptions for markups that 
correspond to the range of anticipated market responses to amended 
standards.
    To assess the lower (less severe) end of the range of potential 
impacts, DOE modeled a preservation of gross margin percentage markup 
scenario, in which a uniform ``gross margin percentage'' markup was 
applied across all potential efficiency levels. In this scenario, DOE 
assumed that a manufacturer's absolute dollar markup would increase as 
production costs increase in the amended standards case. Manufacturers 
have indicated that it is optimistic to assume that they would be able 
to maintain the same gross margin percentage markup as their production 
costs increase in response to an amended efficiency standard, 
particularly at higher TSLs. To assess the higher (more severe) end of 
the range of potential impacts, DOE modeled the preservation of 
operating profit markup scenario, which assumes that manufacturers 
would be able to earn the same operating margin in absolute dollars in 
the amended standards case as in the base case. Table V.36 and Table 
V.37 show the potential INPV impacts for commercial refrigeration 
equipment manufacturers at each TSL: Table V.36 reflects the lower 
bound of impacts and Table V.37 represents the upper bound.
    Each of the modeled scenarios results in a unique set of cash flows 
and corresponding industry values at each TSL. In the following 
discussion, the INPV results refer to the difference in industry value 
between the base case and each potential amended standards case that 
results from the sum of discounted cash flows from the base year 2013 
through 2046, the end of the analysis period. To provide perspective on 
the short-run cash flow impact, DOE includes in the discussion of the 
results below a comparison of free cash flow between the base case and 
the standards case at each TSL in the year before amended standards 
take effect.

        Table V.36--Manufacturer Impact Analysis for Commercial Refrigeration Equipment--Preservation of Gross Margin Percentage Markup Scenario*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                            Units            Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  2012$ Millions......         1,162.0         1,158.4         1,146.9         1,135.7         1,116.1         1,136.5
Change in INPV....................  2012$ Millions......  ..............           (3.6)          (15.2)          (26.3)          (45.9)          (25.5)
                                    (%).................  ..............          (0.31)          (1.30)          (2.26)          (3.95)          (2.20)
Product Conversion Costs..........  2012$ Millions......  ..............             8.0             9.9            10.5            11.2            68.0
Capital Conversion Costs..........  2012$ Millions......  ..............  ..............            18.4            42.9            76.3           252.4
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Conversion Costs........  2012$ Millions......  ..............             8.0            28.3            53.4            87.5           320.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

[[Page 55963]]

           Table V.37--Manufacturer Impact Analysis for Commercial Refrigeration Equipment--Preservation of Operating Profit Markup Scenario*
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial standard level
                                            Units            Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV..............................  2012$ Millions......         1,162.0         1,155.2         1,135.6         1,102.8         1,069.4           646.0
Change in INPV....................  2012$ Millions......  ..............           (6.8)          (26.4)          (59.2)          (92.6)         (516.0)
                                    (%).................  ..............          (0.58)          (2.27)          (5.09)          (7.97)         (44.41)
Product Conversion Costs..........  2012$ Millions......  ..............             8.0             9.9            10.5            11.2            68.0
Capital Conversion Costs..........  2012$ Millions......  ..............  ..............            18.4            42.9            76.3           252.4
                                   ---------------------------------------------------------------------------------------------------------------------
    Total Conversion Costs........  2012$ Millions......  ..............             8.0            28.3            53.4            87.5           320.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.

    At TSL 1, DOE estimates impacts on INPV for commercial 
refrigeration equipment manufacturers to range from -$6.8 million to -
$3.6 million, or a change in INPV of -0.58 percent to -0.31 percent. At 
this potential standard level, industry free cash flow is estimated to 
decrease by approximately 2.85 percent to $89.6 million, compared to 
the base-case value of $92.2 million in the year before the compliance 
date (2016).
    DOE anticipates no capital conversion costs at TSL 1 because 
manufacturers would be able to make simple component swaps to meet the 
efficiency levels for each equipment class at this TSL. However, small 
product conversion costs may be incurred in order to incorporate the 
new components in existing designs.
    At TSL 2, DOE estimates impacts on INPV for commercial 
refrigeration equipment manufacturers to range from -$26.4 million to -
$15.2 million, or a change in INPV of -2.27 percent to -1.30 percent. 
At this potential standard level, industry free cash flow is estimated 
to decrease by approximately 12.48 percent to $80.7 million, compared 
to the base-case value of $92.2 million in the year before the 
compliance date (2016).
    At TSL 2, DOE expects mild impacts on the industry. While capital 
conversion costs ramp up to $18.4 million for the industry, these costs 
are entirely accounted for by the VOP.RC.L and VCT.RC.L equipment 
classes. This is due to the potential need for foam insulation that is 
a half-inch thicker to meet a standard set at this level. Product 
conversion costs also slightly increase as design options that require 
new UL or NSF certification are incorporated. Detailed discussion can 
be found in chapter 12 of NOPR TSD.
    At TSL 3, DOE estimates impacts on INPV for commercial 
refrigeration equipment manufacturers to range from -$59.2 million to -
$26.3 million, or a change in INPV of -5.09 percent to -2.26 percent. 
At this potential standard level, industry free cash flow is estimated 
to decrease by approximately 24.65 percent to $69.5 million, compared 
to the base-case value of $92.2 million in the year before the 
compliance date (2016).
    DOE expects mild, though slightly higher, conversion costs at TSL 
3. The majority of the capital conversion costs are associated with the 
potential need for additional foam insulation for high-volume products, 
such as VCS.SC.M, which accounts for approximately 27 percent of total 
shipments, and for VCS.SC.L, which accounts for approximately16 
percent. In total, DOE expects 8 of the 24 equipment classes to require 
new production equipment due to higher standards at this level.
    At TSL 4, DOE estimates impacts on INPV for commercial 
refrigeration equipment manufacturers to range from -$92.6 million to -
$45.9 million, or a change in INPV of -7.97 percent to -3.95 percent. 
At this proposed standard level, industry free cash flow is estimated 
to decrease by approximately 41.19 percent to $54.2 million, compared 
to the base-case value of $92.2 million in the year before the 
compliance date (2016).
    At TSL 4, the drop in INPV is largely driven by continued increases 
in conversion costs. The increase in conversion costs is caused by the 
need for new tooling to accommodate additional foam insulation. At TSL 
4, DOE expects 18 of the 24 equipment classes to require new production 
equipment due to higher standards.
    At TSL 5, DOE estimates impacts on INPV for commercial 
refrigeration equipment manufacturers to range from -$516.0 million to 
-$25.5 million, or a change in INPV of -44.41 percent to 2.20 percent. 
At this potential standard level, industry free cash flow is estimated 
to decrease by approximately 147.31 percent to -$43.6 million, compared 
to the base-case value of $92.2 million in the year before the 
compliance date (2016).
    A substantial increase in conversion costs are expected at TSL 5 
due to the possible need for vacuum insulated panel technology required 
to meet a standard at TSL 5. Vacuum insulated panels are not currently 
used by any commercial refrigeration equipment manufacturers, and the 
production of vacuum insulated panels would require processes different 
from those used to produce standard foam panels. Therefore, high R&D 
investments may be necessary to redesign commercial refrigeration 
equipment cases. It is possible that substantial new equipment would be 
necessary to produce vacuum insulated panels for commercial 
refrigeration equipment applications. Current panel production 
equipment that cannot be used to produce vacuum insulated panels would 
be retired before it reaches the end of its useful life and would 
become a stranded asset.
b. Impacts on Direct Employment
    To quantitatively assess the impacts of amended energy conservation 
standards on employment, DOE used the GRIM to estimate the domestic 
labor expenditures and number of employees in the base case and at each 
TSL from 2013 through 2046. DOE used statistical data from the U.S. 
Census Bureau's 2011 Annual Survey of Manufacturers (ASM), the results 
of the engineering analysis, the commercial refrigeration equipment 
shipments forecast, and interviews with manufacturers to determine the 
inputs necessary to calculate industry-wide labor expenditures and 
domestic employment levels. Labor expenditures related to manufacturing 
of the product are a function of the labor intensity of the product, 
the sales volume, and an assumption that wages remain fixed in

[[Page 55964]]

real terms over time. The total labor expenditures in each year are 
calculated by multiplying the MPCs by the labor percentage of MPCs.
    The total labor expenditures in the GRIM were then converted to 
domestic production employment levels by dividing production labor 
expenditures by the annual payment per production worker (production 
worker hours times the labor rate found in the U.S. Census Bureau's 
2011 ASM). The estimates of production workers in this section cover 
workers, including line supervisors who are directly involved in 
fabricating and assembling a product within the OEM facility. Workers 
performing services that are closely associated with production 
operations, such as materials handling tasks using forklifts, are also 
included as production labor. DOE's estimates only account for 
production workers who manufacture the specific products covered by 
this rulemaking.

                      Table V.38--Potential Changes in the Number of Commercial Refrigeration Equipment Production Workers in 2017
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       Trial Standard Level*
                                                             Base case   -------------------------------------------------------------------------------
                                                                                 1               2               3               4               5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2017                3,672           3,672           3,672           3,672           3,672           3,925
 (assuming no changes in production locations)..........
Range of Potential Changes in Domestic Production         ..............     -3,672 to 0     -3,672 to 0     -3,672 to 0     -3,672 to 0   -3,672 to 253
 Workers in 2017 **.....................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Numbers in parentheses are negative numbers.
** DOE presents a range of potential employment impacts, where the lower range represents the scenario in which all domestic manufacturers move
  production to other countries.

    The employment impacts shown in Table V.38 represent the potential 
production employment changes that could result following the 
compliance date of an amended energy conservation standard. The upper 
end of the results in the table estimates the maximum increase in the 
number of production workers after the implementation of new energy 
conservation standards and it assumes that manufacturers would continue 
to produce the same scope of covered products within the United States. 
The lower end of the range indicates the total number of U.S. 
production workers in the industry who could lose their jobs if all 
existing production were moved outside of the United States. Though 
manufacturers stated in interviews that shifts in production to foreign 
countries is unlikely, the industry did not provide enough information 
for DOE fully quantify what percentage of the industry would move 
production at each evaluated standard level.
    The majority of design options analyzed in the engineering analysis 
require manufacturers to purchase more-efficient components from 
suppliers. These components do not require significant additional labor 
to assemble. A key component of a commercial refrigeration equipment 
unit that requires fabrication labor by the commercial refrigeration 
equipment manufacturer is the shell of the unit, which needs to be 
formed and foamed in. Although this activity may require new production 
equipment if thicker insulation is needed to meet higher efficiency 
levels, the process of building the panels would essentially remain the 
same, and therefore require no additional labor costs. As a result, 
labor needs are not expected to increase as the amended energy 
conservation standard increases from baseline to TSL 4.
    At TSL 5, the introduction of hybrid vacuum insulation panels may 
lead to greater labor requirements. In general, the production and 
handling of hybrid VIPs will require more labor than the production of 
standard panels. This is due to the delicate nature of VIPs and the 
additional labor necessary to embed them into a hybrid panel. The 
additional labor and handling associated with hybrid panels account for 
the increase in labor at the max-tech trial standard level.
    DOE notes that the employment impacts discussed here are 
independent of the employment impacts to the broader U.S. economy, 
which are documented in the Employment Impact Analysis, chapter 16 of 
the TSD.
c. Impacts on Manufacturing Capacity
    According to the majority of commercial refrigeration equipment 
manufacturers interviewed, amended energy conservation standards will 
not significantly affect manufacturers' production capacities. Any 
necessary redesign of commercial refrigeration equipment would not 
change the fundamental assembly of the equipment, but manufacturers do 
anticipate some potential for minor changes to tooling. The most 
significant of these would come as a result of any redesigns performed 
to accommodate additional foam insulation thickness. Additionally, most 
of the design options being evaluated are already available on the 
market as product options. Thus, DOE believes manufacturers would be 
able to maintain manufacturing capacity levels and continue to meet 
market demand under amended energy conservation standards.
d. Impacts on Subgroups of Manufacturers
    Small manufacturers, niche equipment manufacturers, and 
manufacturers exhibiting a cost structure substantially different from 
the industry average could be affected disproportionately. As discussed 
in section IV.K, using average cost assumptions to develop an industry 
cash-flow estimate is inadequate to assess differential impacts among 
manufacturer subgroups.
    For commercial refrigeration equipment, DOE identified and 
evaluated the impact of amended energy conservation standards on one 
subgroup: small manufacturers. The SBA defines a ``small business'' as 
having 750 employees or less for NAICS 333415, ``Air-Conditioning and 
Warm Air Heating Equipment and Commercial and Industrial Refrigeration 
Equipment Manufacturing.'' Based on this definition, DOE identified 32 
manufacturers in the commercial refrigeration equipment industry that 
are small businesses.
    For a discussion of the impacts on the small manufacturer subgroup, 
see the regulatory flexibility analysis in section VI.B of this notice 
and chapter 12 of the NOPR TSD.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of recent or impending regulations 
may

[[Page 55965]]

have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and lead companies 
to abandon product lines or markets with lower expected future returns 
than competing products. For these reasons, DOE conducts an analysis of 
cumulative regulatory burden as part of its rulemakings pertaining to 
appliance efficiency.
    During previous stages of this rulemaking, DOE identified a number 
of requirements in addition to amended energy conservation standards 
for commercial refrigeration equipment. The following section briefly 
addresses comments DOE received with respect to cumulative regulatory 
burden and summarizes other key related concerns that manufacturers 
raised during interviews.
Certification, Compliance, and Enforcement Rule
    Multiple manufacturers have expressed concerns about the CC&E 
burdens for commercial refrigeration equipment. Traulsen stated that 
CC&E is the most significant cost item in terms of internal resources 
in the form of time and direct expenses. (Traulsen, No. 45 at pp. 4-5) 
NEEA expressed the opinion that the most significant issue associated 
with manufacturer impacts is testing and compliance for a wide array of 
equipment offerings, especially considering the large number of 
variations on single models. NEEA also agreed with manufacturers that 
testing each variation would create a significant potential burden, 
especially on small manufacturers. (NEEA, No. 36 at p. 7) AHRI stated 
that the CC&E requirements put in place by DOE have the potential to 
bankrupt the industry due to the excessive number of tests required. 
(AHRI, No. 43 at p. 3) In addition, Southern Store Fixtures stated that 
it would be difficult to produce information to estimate the compliance 
testing burden on manufacturers, as the certification and compliance 
requirements had not yet been finalized. (Southern Store Fixtures, 
Public Meeting Transcript, No. 31 at pp. 149-50) Southern Store 
Fixtures added that it is impossible to determine potential impacts of 
testing and certification on manufacturers until the issue of basic 
model is clarified. (Southern Store Fixtures, No. 38 at p. 1)
    DOE understands that testing and certification requirements may 
have a significant impact on manufacturers, and the CC&E burden is 
identified as a key issue in the MIA. DOE also understands that CC&E 
requirements can be particularly onerous for manufacturers producing 
low volume or highly customized commercial refrigeration equipment. As 
a result, DOE is conducting a rulemaking to expand AEDM coverage and 
has issued a proposed rule to permit the application of AEDMs for 
commercial refrigeration equipment. 77 FR 32038 (May 31, 2012). More 
information about the AEDM rulemaking can be found at: 
www1.eere.energy.gov/buildings/appliance_standards/certification_enforcement.html.
EPA and ENERGY STAR
    Some stakeholders also expressed concern regarding potential 
conflicts with other certification programs. Traulsen stated that 
redundancy of testing given other Federal programs (such as EPA ENERGY 
STAR), where there may be conflicting criteria, increases cost, and 
that cross-references to other databases with inconsistent tests, 
classes, and enforcement adds further complications. Traulsen estimated 
that the financial impact of meeting DOE and EPA ENERGY STAR 
requirements has been greater than 0.5 percent of revenue, and stated 
that it would be beneficial to reconcile the differences between DOE 
and EPA standards. (Traulsen, No. 45 at pp. 5-6) NEEA stated that the 
burden of certifications and associated testing is inherent in the 
manufacturing industry, and that this burden should have little to do 
with the standards rulemaking. However, NEEA added, any steps that can 
be taken to harmonize test methods and procedures between 
certifications should be taken. (NEEA, No. 36 at p. 7)
    DOE realizes that the cumulative effect of several regulations on 
an industry may significantly increase the burden faced by 
manufacturers that need to comply with multiple regulations and 
certification programs from different organizations and levels of 
government. However, DOE notes that certain standards, such as ENERGY 
STAR, are optional for manufacturers. Harmonizing of test methods and 
procedures is not part of the energy conservation standards rulemaking. 
In its test procedure rulemaking, which culminated in the publication 
of the February 2012 test procedure final rule (77 FR 10292 (Feb. 21, 
2012)), DOE attempted to set the test procedure in such a way so as to 
maximize the similarities between the DOE test procedure and the test 
procedure required for ENERGY STAR certification.
Other Federal Regulations
    AHRI stated that there are several legislative and regulatory 
activities that could significantly burden manufacturers of commercial 
refrigeration equipment, including the upcoming amended energy 
conservation standards for walk-in coolers and freezers. AHRI also 
added that climate change bills that could be presented before Congress 
could have significant negative impact on the availability and price of 
HFC refrigerants. (AHRI, No. 43 at p. 4)
    DOE recognizes the additional burden faced by manufacturers that 
produce both commercial refrigeration equipment and walk-in coolers and 
freezers. Companies that produce a wide range of regulated equipment 
may be faced with more capital and equipment design development 
expenditures than competitors with a narrower scope of production. 
However, DOE cannot consider the quantitative impacts of amended 
standards that have not yet been finalized, such as those for walk-ins. 
Likewise, DOE cannot consider the impacts of potential climate change 
bills because any potential impacts would be speculative in the absence 
of finalized legislation.
State Regulations
    AHRI stated that California is currently working on new regulations 
as part of Title 24 that will likely establish new prescriptive 
requirements on commercial refrigeration equipment beginning in 2013. 
Additionally, AHRI added, other States on the West Coast are following 
California's lead and are likely to implement similar regulations in 
the near future. Finally, AHRI commented that several States have 
enacted their own climate change legislation, including regulations 
established by CARB to limit GHGs and reduce the usage of high-GWP 
refrigerants such as HFCs. AHRI stated that CARB will implement these 
regulations in 2011. (AHRI, No. 43 at p. 4)
    According to the latest California Code of Regulations, title 24, 
part 6, any appliance for which there is a California energy 
conservation standard established in the California Appliance 
Efficiency Regulations may be installed only if the manufacturer has 
certified to the CEC, as specified in those regulations, that the 
appliance complies with the applicable standard for that appliance. The 
Commission's appliance efficiency regulations require that the

[[Page 55966]]

MDEC (in kilowatt-hours) for commercial refrigerators manufactured on 
or after January 1, 2010 does not exceed the following:
     Refrigerators with solid doors: 0.10V + 2.04
     refrigerators with transparent doors: 0.12V + 3.34
     freezers with solid doors: 0.40V + 1.38
     freezers with transparent doors: 0.75V + 4.10
     refrigerator/freezers with solid doors: the greater of 
0.27AV-0.71 or 0.70
     refrigerators with self-condensing unit designed for pull-
down temperature applications: 0.126V + 3.51
    Since these standards are identical to the ones prescribed in EPACT 
2005, and the efficiency levels set by the current rulemaking will 
either exceed or be equivalent to the EPACT 2005 levels, DOE does not 
expect the Title 24 regulations to create a cumulative regulatory 
burden on manufacturers. California has started a rulemaking proceeding 
to adopt changes to the building energy efficiency standards contained 
in the California Code of Regulations, title 24, part 6, but the CEC is 
currently in the pre-rulemaking stage and amended standards will not be 
published until 2013.
    Further, CARB is currently limiting the in-State use of high-GWP 
refrigerants in non-residential refrigeration systems through its 
Refrigerant Management Program, effective January 1, 2011.\88\ 
According to this new regulation, facilities with refrigeration systems 
that have a refrigerant capacity exceeding 50 pounds must repair leaks 
within 14 days of detection, maintain on-site records of all leak 
repairs, and keep receipts of all refrigerant purchases. The regulation 
applies to any person or company that installs, services, or disposes 
of appliances with high-GWP refrigerants. Refrigeration systems with a 
refrigerant capacity exceeding 50 pounds typically belong to food 
retail operations with remote condensing racks that store refrigerant 
serving multiple commercial refrigeration equipment units within a 
business. However, commercial refrigeration equipment units in food 
retail are usually installed and serviced by refrigeration contractors, 
not manufacturers. As a result, although these CARB regulations do 
apply to refrigeration technicians and owners of facilities with 
refrigeration systems, they are unlikely to represent a regulatory 
burden for commercial refrigeration manufacturers.
---------------------------------------------------------------------------

    \88\ California Air Resources Board. Refrigerant Management 
Program Final Regulation. 2011. Cal. Code Regs. tit. 17, Sec.  
95386. (Last accessed March 16, 2012.) www.arb.ca.gov/cc/reftrack/reftrackrule.html.
---------------------------------------------------------------------------

    DOE discusses these and other requirements, and includes the full 
details of the cumulative regulatory burden analysis, in chapter 12 of 
the NOPR TSD.
3. National Impact Analysis
a. Amount and Significance of Energy Savings
    DOE estimated the NES by calculating the difference in annual 
energy consumption for the base-case scenario and standards-case 
scenario at each TSL for each equipment class and summing up the annual 
energy savings for all equipment purchased in 2017-2046. The energy 
consumption calculated in the NIA is source energy, taking into account 
losses in the generation and transmission of electricity as discussed 
in section IV.I.
    Table V.39 presents the NES for all equipment classes at each TSL 
and the sum total of NES for each TSL and Table V.40 presents estimated 
FFC energy savings for each considered TSL. The total NES progressively 
increases from 0.236 quads at TSL 1 to 1.278 quads at TSL 5. Table V.41 
presents the energy savings at each TSL for each equipment class in the 
form of percentage of the cumulative energy use of the equipment stock 
in the base case scenario.

           Table V.39--Cumulative National Primary Energy Savings for Equipment Purchased in 2017-2046
----------------------------------------------------------------------------------------------------------------
                                                                      Quads *
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.007           0.045           0.238           0.244           0.257
VOP.RC.L........................           0.001           0.005           0.006           0.006           0.009
VOP.SC.M........................           0.001           0.003           0.017           0.018           0.019
VCT.RC.M........................           0.000           0.007           0.009           0.009           0.010
VCT.RC.L........................           0.061           0.071           0.078           0.078           0.121
VCT.SC.M........................           0.011           0.057           0.074           0.081           0.092
VCT.SC.L........................           0.005           0.005           0.006           0.007           0.008
VCT.SC.I........................           0.001           0.003           0.003           0.003           0.005
VCS.SC.M........................           0.047           0.064           0.111           0.111           0.176
VCS.SC.L........................           0.042           0.064           0.068           0.076           0.144
VCS.SC.I........................           0.000           0.000           0.000           0.000           0.001
SVO.RC.M........................           0.002           0.029           0.139           0.142           0.150
SVO.SC.M........................           0.004           0.006           0.021           0.022           0.023
SOC.RC.M........................           0.001           0.002           0.017           0.019           0.020
HZO.RC.M........................               -               -               -               -           0.001
HZO.RC.L........................               -               -               -               -           0.009
HZO.SC.M........................           0.000           0.000           0.000           0.000           0.000
HZO.SC.L........................               -               -               -               -           0.000
HCT.SC.M........................           0.000           0.000           0.000           0.000           0.001
HCT.SC.L........................           0.001           0.004           0.004           0.005           0.006
HCT.SC.I........................           0.000           0.000           0.001           0.001           0.005
HCS.SC.M........................           0.001           0.001           0.002           0.004           0.013
HCS.SC.L........................           0.001           0.001           0.002           0.002           0.005
PD.SC.M.........................           0.047           0.047           0.105           0.157           0.181
SOC.SC.M........................           0.000           0.000           0.002           0.002           0.002
                                 -------------------------------------------------------------------------------

[[Page 55967]]

 
    Net NES.....................           0.233           0.416           0.905           0.985           1.257
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 through 4 for the equipment classes HZO.RC.M, HZO.RC.L, and
  HZO.SC.L are associated with the baseline efficiency level.
* A value of 0.000 means NES values are less than 0.0005 quads.

       Table V.40--Cumulative National Full-Fuel-Cycle Energy Savings for Equipment Purchased in 2017-2046
----------------------------------------------------------------------------------------------------------------
                                                                      Quads *
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.007           0.046           0.242           0.248           0.262
VOP.RC.L........................           0.001           0.005           0.006           0.006           0.009
VOP.SC.M........................           0.001           0.003           0.018           0.018           0.019
VCT.RC.M........................           0.000           0.007           0.009           0.009           0.010
VCT.RC.L........................           0.062           0.072           0.079           0.079           0.123
VCT.SC.M........................           0.011           0.058           0.075           0.083           0.094
VCT.SC.L........................           0.005           0.006           0.006           0.007           0.008
VCT.SC.I........................           0.001           0.003           0.003           0.003           0.005
VCS.SC.M........................           0.048           0.065           0.112           0.112           0.179
VCS.SC.L........................           0.043           0.065           0.070           0.077           0.146
VCS.SC.I........................           0.000           0.000           0.000           0.000           0.001
SVO.RC.M........................           0.002           0.030           0.141           0.144           0.152
SVO.SC.M........................           0.004           0.006           0.022           0.022           0.023
SOC.RC.M........................           0.001           0.002           0.018           0.019           0.020
HZO.RC.M........................               -               -               -               -           0.001
HZO.RC.L........................               -               -               -               -           0.009
HZO.SC.M........................           0.000           0.000           0.000           0.000           0.000
HZO.SC.L........................               -               -               -               -           0.000
HCT.SC.M........................           0.000           0.000           0.000           0.000           0.001
HCT.SC.L........................           0.001           0.004           0.004           0.005           0.006
HCT.SC.I........................           0.000           0.000           0.001           0.001           0.005
HCS.SC.M........................           0.001           0.001           0.002           0.004           0.013
HCS.SC.L........................           0.001           0.001           0.002           0.002           0.005
PD.SC.M.........................           0.048           0.048           0.106           0.159           0.184
SOC.SC.M........................           0.000           0.000           0.002           0.002           0.002
                                 -------------------------------------------------------------------------------
    Net NES.....................           0.236           0.422           0.920           1.001           1.278
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 through 4 for the equipment classes HZO.RC.M, HZO.RC.L, and
  HZO.SC.L are associated with the baseline efficiency level.
* A value of 0.000 means NES values are less than 0.0005 quads.

     Table V.41--Cumulative Energy Savings by TSL for Each Equipment Class Expressed as a Percentage of Cumulative Base-Case Energy Usage of the New
                                             Commercial Refrigeration Equipment Stock Purchased in 2017-2046
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       TSL Savings as percent of total base-case energy use
                                                            Total base-  -------------------------------------------------------------------------------
                     Equipment class                        case energy        TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
                                                           use  quads *      (percent)       (percent)       (percent)       (percent)       (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
VOP.RC.M................................................           1.606               0               3              15              15              16
VOP.RC.L................................................           0.203               0               3               3               3               4
VOP.SC.M................................................           0.231               1               1               8               8               8
VCT.RC.M................................................           0.027               1              25              33              35              39
VCT.RC.L................................................           1.198               5               6               7               7              10
VCT.SC.M................................................           0.235               5              25              32              35              40
VCT.SC.L................................................           0.036              15              15              18              19              22
VCT.SC.I................................................           0.047               3               6               7               7              10
VCS.SC.M................................................           0.472              10              14              24              24              38
VCS.SC.L................................................           0.720               6               9              10              11              20
VCS.SC.I................................................           0.012               1               3               3               3               8
SVO.RC.M................................................           0.990               0               3              14              15              15
SVO.SC.M................................................           0.300               1               2               7               7               8
SOC.RC.M................................................           0.173               0               1              10              11              12
HZO.RC.M................................................           0.066               0               0               0               0               1
HZO.RC.L................................................           0.475               0               0               0               0               2
HZO.SC.M................................................           0.015               0               0               1               1               2

[[Page 55968]]

 
HZO.SC.L................................................           0.063               0               0               0               0               0
HCT.SC.M................................................           0.001               5              40              43              48              57
HCT.SC.L................................................           0.012               6              33              33              38              50
HCT.SC.I................................................           0.017               1               3               7               7              27
HCS.SC.M................................................           0.026               2               5               8              14              49
HCS.SC.L................................................           0.010               8              13              21              21              48
PD.SC.M.................................................           0.401              12              12              27              40              46
SOC.SC.M................................................           0.014               3               3              13              13              14
    Totals..............................................           7.349               3               6              13              14              17
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Energy use of the entire commercial refrigeration equipment stock in the base-case scenario in 2017-2046 plus the energy use of the surviving stock of
  equipment in 2047-2060 for equipment purchased in 2017-2046.
`-' represents zero energy savings, since TSLs 1 through 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are associated with the baseline
  efficiency level.

    Circular A-4 requires agencies to present analytical results, 
including separate schedules of the monetized benefits and costs that 
show the type and timing of benefits and costs. Circular A-4 also 
directs agencies to consider the variability of key elements underlying 
the estimates of benefits and costs. For this rulemaking, DOE undertook 
a sensitivity analysis using nine rather than 30 years of product 
shipments. The choice of a 9-year period is a proxy for the timeline in 
EPCA for the review of certain energy conservation standards and 
potential revision of and compliance with such revised standards.\89\ 
We would note that the review timeframe established in EPCA generally 
does not overlap with the product lifetime, product manufacturing 
cycles or other factors specific to commercial refrigeration equipment. 
Thus, this information is presented for informational purposes only and 
is not indicative of any change in DOE's analytical methodology. The 
primary and full-fuel cycle NES results based on a 9-year analysis 
period are presented in Table V.42 and Table V.43, respectively. The 
impacts are counted over the lifetime of products purchased in 2017-
2025.
---------------------------------------------------------------------------

    \89\ EPCA requires DOE to review its standards at least once 
every 6 years (42 U.S.C. 6295(m)(1), 6316(e)), and requires, for 
certain products, a 3-year period after any new standard is 
promulgated before compliance is required, except that in no case 
may any new standards be required within 6 years of the compliance 
date of the previous standards. (42 U.S.C. 6295(m)(4), 
6316(e)).While adding a 6-year review to the 3-year compliance 
period sums to 9 years, DOE notes that it may undertake reviews at 
any time within the 6-year period, and that the 3 year compliance 
date may be extended to 5 years. A 9-year analysis period may not be 
appropriate given the variability that occurs in the timing of 
standards reviews and the fact that, for some consumer products, the 
period following establishment of a new or amended standard before 
which compliance is required is 5 years rather than 3 years.

                Table V.42--Cumulative National Primary Energy Savings for 9-Year Analysis Period
                                       [Equipment purchased in 2017-2025]
----------------------------------------------------------------------------------------------------------------
                                                                      quads*
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.001           0.009           0.049           0.050           0.053
VOP.RC.L........................           0.000           0.001           0.001           0.001           0.002
VOP.SC.M........................           0.000           0.001           0.004           0.004           0.004
VCT.RC.M........................           0.000           0.001           0.002           0.002           0.002
VCT.RC.L........................           0.012           0.015           0.016           0.016           0.025
VCT.SC.M........................           0.002           0.012           0.015           0.017           0.019
VCT.SC.L........................           0.001           0.001           0.001           0.001           0.002
VCT.SC.I........................           0.000           0.001           0.001           0.001           0.001
VCS.SC.M........................           0.010           0.013           0.023           0.023           0.036
VCS.SC.L........................           0.009           0.013           0.014           0.016           0.030
VCS.SC.I........................           0.000           0.000           0.000           0.000           0.000
SVO.RC.M........................           0.000           0.006           0.029           0.029           0.031
SVO.SC.M........................           0.001           0.001           0.004           0.004           0.005
SOC.RC.M........................           0.000           0.000           0.004           0.004           0.004
HZO.RC.M........................               -               -               -               -           0.000
HZO.RC.L........................               -               -               -               -           0.002
HZO.SC.M........................           0.000           0.000           0.000           0.000           0.000
HZO.SC.L........................               -               -               -               -           0.000
HCT.SC.M........................           0.000           0.000           0.000           0.000           0.000
HCT.SC.L........................           0.000           0.001           0.001           0.001           0.001
HCT.SC.I........................           0.000           0.000           0.000           0.000           0.001
HCS.SC.M........................           0.000           0.000           0.000           0.001           0.003
HCS.SC.L........................           0.000           0.000           0.000           0.000           0.001
PD.SC.M.........................           0.010           0.010           0.021           0.032           0.037

[[Page 55969]]

 
SOC.SC.M........................           0.000           0.000           0.000           0.000           0.000
                                 -------------------------------------------------------------------------------
    Net NES.....................           0.048           0.085           0.185           0.202           0.258
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 through 4 for the equipment classes HZO.RC.M, HZO.RC.L, and
  HZO.SC.L are associated with the baseline efficiency level.
* A value of 0.000 means NES values are less than 0.0005 quads.

            Table V.43 Cumulative Full Fuel Cycle National Energy Savings for 9-Year Analysis Period
                                       [Equipment purchased in 2017-2025]
----------------------------------------------------------------------------------------------------------------
                                                                      quads*
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.001           0.009           0.050           0.051           0.054
VOP.RC.L........................           0.000           0.001           0.001           0.001           0.002
VOP.SC.M........................           0.000           0.001           0.004           0.004           0.004
VCT.RC.M........................           0.000           0.001           0.002           0.002           0.002
VCT.RC.L........................           0.013           0.015           0.016           0.016           0.025
VCT.SC.M........................           0.002           0.012           0.015           0.017           0.019
VCT.SC.L........................           0.001           0.001           0.001           0.001           0.002
VCT.SC.I........................           0.000           0.001           0.001           0.001           0.001
VCS.SC.M........................           0.010           0.013           0.023           0.023           0.037
VCS.SC.L........................           0.009           0.013           0.014           0.016           0.030
VCS.SC.I........................           0.000           0.000           0.000           0.000           0.000
SVO.RC.M........................           0.000           0.006           0.029           0.030           0.031
SVO.SC.M........................           0.001           0.001           0.004           0.005           0.005
SOC.RC.M........................           0.000           0.000           0.004           0.004           0.004
HZO.RC.M........................               -               -               -               -           0.000
HZO.RC.L........................               -               -               -               -           0.002
HZO.SC.M........................           0.000           0.000           0.000           0.000           0.000
HZO.SC.L........................               -               -               -               -           0.000
HCT.SC.M........................           0.000           0.000           0.000           0.000           0.000
HCT.SC.L........................           0.000           0.001           0.001           0.001           0.001
HCT.SC.I........................           0.000           0.000           0.000           0.000           0.001
HCS.SC.M........................           0.000           0.000           0.000           0.001           0.003
HCS.SC.L........................           0.000           0.000           0.000           0.000           0.001
PD.SC.M.........................           0.010           0.010           0.022           0.033           0.038
SOC.SC.M........................           0.000           0.000           0.000           0.000           0.000
                                 -------------------------------------------------------------------------------
    Net NES.....................           0.048           0.087           0.189           0.205           0.262
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 through 4 for the equipment classes HZO.RC.M, HZO.RC.L, and
  HZO.SC.L are associated with the baseline efficiency level.
* A value of 0.000 means NES values are less than, 0.0005 quads.

b. Net Present Value of Customer Costs and Benefits
    DOE estimated the cumulative NPV to the Nation of the total savings 
for the customers that would result from potential standards at each 
TSL. In accordance with OMB guidelines on regulatory analysis (OMB 
Circular A-4, section E, September 17, 2003), DOE calculated NPV using 
both a 7-percent and a 3-percent real discount rate. The 7-percent rate 
is an estimate of the average before-tax rate of return on private 
capital in the U.S. economy, and reflects the returns on real estate 
and small business capital, including corporate capital. DOE used this 
discount rate to approximate the opportunity cost of capital in the 
private sector because recent OMB analysis has found the average rate 
of return on capital to be near this rate. In addition, DOE used the 3-
percent rate to capture the potential effects of amended standards on 
private consumption. This rate represents the rate at which society 
discounts future consumption flows to their present value. It can be 
approximated by the real rate of return on long-term government debt 
(i.e., yield on Treasury notes minus annual rate of change in the 
Consumer Price Index), which has averaged about 3 percent on a pre-tax 
basis for the last 30 years.
    Table V.44 and Table V.45 show the customer NPV results for each of 
the TSLs DOE considered for commercial refrigeration equipment at both 
7-percent and 3-percent discount rates. In each case, the impacts cover 
the expected lifetime of equipment purchased in 2017-2046. Detailed NPV 
results are presented in chapter 10 of the NOPR TSD.
    The NPV results at a 7-percent discount rate were negative for all 
equipment classes at TSL 5. This is consistent with the results of LCC 
analysis results for TSL 5, which showed significant increase in LCC 
and significantly high PBPs that were greater than the average 
equipment lifetimes. Efficiency levels for TSL 4 were chosen to 
correspond to the highest efficiency level with a positive NPV at a 7-
percent discount rate for each equipment class.

[[Page 55970]]

Similarly, the criteria for choice of efficiency levels for TSL 3, TSL 
2, and TSL 1 were such that the NPV values for all the equipment 
classes show positive values. The criterion for TSL 3 was to select 
efficiency levels with the highest NPV at a 7-percent discount rate. 
Consequently, the total NPV for commercial refrigeration equipment is 
highest for TSL 3, with a value of $1.705 billion (2012$) at a 7-
percent discount rate. TSL 4 shows the second highest total NPV, with a 
value of $1.606 billion (2012$) at a 7-percent discount rate. TSL 2 and 
TSL 1 have a total NPV lower than TSL 4, while TSL 5 has a negative 
total NPV of $6.735 billion (2012$).

                           Table V.44--Net Present Value at a 7-Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                Billion 2012$ * **
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.016           0.099           0.466           0.461         (0.466)
VOP.RC.L........................           0.002           0.013           0.014           0.014         (0.062)
VOP.SC.M........................           0.003           0.005           0.027           0.025         (0.041)
VCT.RC.M........................           0.001           0.013           0.017           0.017         (0.060)
VCT.RC.L........................           0.141           0.155           0.161           0.161         (1.170)
VCT.SC.M........................           0.026           0.120           0.136           0.129         (0.340)
VCT.SC.L........................           0.014           0.014           0.015           0.015         (0.016)
VCT.SC.I........................           0.003           0.004           0.005           0.005         (0.042)
VCS.SC.M........................           0.113           0.135           0.153           0.153         (1.720)
VCS.SC.L........................           0.105           0.138           0.139           0.135         (1.084)
VCS.SC.I........................           0.000           0.001           0.001           0.001         (0.011)
SVO.RC.M........................           0.004           0.057           0.245           0.240         (0.231)
SVO.SC.M........................           0.008           0.012           0.029           0.027         (0.037)
SOC.RC.M........................           0.001           0.004           0.039           0.031         (0.056)
HZO.RC.M........................               -               -               -               -         (0.039)
HZO.RC.L........................               -               -               -               -         (0.229)
HZO.SC.M........................           0.000           0.000           0.000           0.000         (0.007)
HZO.SC.L........................               -               -               -               -         (0.006)
HCT.SC.M........................           0.000           0.001           0.001           0.001         (0.003)
HCT.SC.L........................           0.002           0.009           0.010           0.009         (0.016)
HCT.SC.I........................           0.000           0.001           0.001           0.001         (0.039)
HCS.SC.M........................           0.001           0.002           0.003           0.001         (0.166)
HCS.SC.L........................           0.002           0.002           0.003           0.003         (0.021)
PD.SC.M.........................           0.119           0.119           0.237           0.176         (0.872)
SOC.SC.M........................           0.001           0.001           0.004           0.003         (0.003)
                                 -------------------------------------------------------------------------------
    Sum Total...................           0.561           0.905           1.705           1.606         (6.735)
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 to 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are
  associated with the baseline efficiency level.
* A value of $0.000 means NES values are less than 0.001 billion 2012$.
** Values in parentheses are negative values.

                           Table V.45--Net Present Value at a 3-Percent Discount Rate
----------------------------------------------------------------------------------------------------------------
                                                                Billion 2012$ * **
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.037           0.233           1.144           1.140         (0.549)
VOP.RC.L........................           0.005           0.030           0.032           0.032         (0.104)
VOP.SC.M........................           0.006           0.012           0.070           0.068         (0.053)
VCT.RC.M........................           0.001           0.031           0.041           0.041         (0.100)
VCT.RC.L........................           0.327           0.363           0.383           0.383         (2.017)
VCT.SC.M........................           0.059           0.283           0.331           0.326         (0.524)
VCT.SC.L........................           0.031           0.032           0.035           0.035         (0.020)
VCT.SC.I........................           0.007           0.011           0.012           0.012         (0.071)
VCS.SC.M........................           0.259           0.316           0.398           0.398         (2.976)
VCS.SC.L........................           0.239           0.323           0.329           0.327         (1.837)
VCS.SC.I........................           0.001           0.001           0.002           0.002         (0.018)
SVO.RC.M........................           0.008           0.137           0.615           0.608         (0.249)
SVO.SC.M........................           0.018           0.028           0.078           0.074         (0.043)
SOC.RC.M........................           0.003           0.010           0.093           0.079         (0.078)
HZO.RC.M........................               -               -               -               -         (0.071)
HZO.RC.L........................               -               -               -               -         (0.411)
HZO.SC.M........................           0.000           0.000           0.000           0.000         (0.013)
HZO.SC.L........................               -               -               -               -         (0.012)
HCT.SC.M........................           0.000           0.002           0.002           0.002         (0.004)
HCT.SC.L........................           0.004           0.022           0.022           0.022         (0.023)
HCT.SC.I........................           0.001           0.002           0.003           0.003         (0.066)
HCS.SC.M........................           0.003           0.005           0.007           0.006         (0.292)
HCS.SC.L........................           0.004           0.006           0.007           0.007         (0.034)
PD.SC.M.........................           0.270           0.270           0.551           0.494         (1.406)

[[Page 55971]]

 
SOC.SC.M........................           0.002           0.002           0.009           0.008         (0.003)
                                 -------------------------------------------------------------------------------
    Sum Total...................           1.285           2.118           4.165           4.067        (10.972)
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 to 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are
  associated with the baseline efficiency level.
* A value of $0.000 means NES values are less than 0.001 billion 2012$.
** Values in parentheses are negative values.

    The NPV results based on the aforementioned 9-year analysis period 
are presented in Table V.46 and Table V.47. The impacts are counted 
over the lifetime of products purchased in 2017-2025. As mentioned 
previously, this information is presented for informational purposes 
only and is not indicative of any change in DOE's analytical 
methodology or decision criteria.

              Table V.46--Net Present Value at a 7-Percent Discount Rate for 9-Year Analysis Period
                                       [Equipment purchased in 2017-2025]
----------------------------------------------------------------------------------------------------------------
                                                            billion 2012$ * ** [dagger]
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.008           0.039           0.154           0.150         (0.294)
VOP.RC.L........................           0.001           0.005           0.005           0.005         (0.032)
VOP.SC.M........................           0.001           0.002           0.008           0.007         (0.025)
VCT.RC.M........................           0.000           0.005           0.006           0.006         (0.031)
VCT.RC.L........................           0.054           0.059           0.060           0.060         (0.583)
VCT.SC.M........................           0.011           0.045           0.049           0.044         (0.182)
VCT.SC.L........................           0.005           0.005           0.006           0.006         (0.009)
VCT.SC.I........................           0.001           0.002           0.002           0.002         (0.021)
VCS.SC.M........................           0.043           0.051           0.049           0.049         (0.858)
VCS.SC.L........................           0.041           0.051           0.051           0.047         (0.548)
VCS.SC.I........................           0.000           0.000           0.000           0.000         (0.005)
SVO.RC.M........................           0.003           0.021           0.078           0.075         (0.151)
SVO.SC.M........................           0.003           0.004           0.008           0.007         (0.024)
SOC.RC.M........................           0.001           0.002           0.014           0.009         (0.032)
HZO.RC.M........................               -               -               -               -         (0.019)
HZO.RC.L........................               -               -               -               -         (0.111)
HZO.SC.M........................           0.000           0.000           0.000         (0.000)         (0.004)
HZO.SC.L........................               -               -               -               -         (0.003)
HCT.SC.M........................           0.000           0.000           0.000           0.000         (0.001)
HCT.SC.L........................           0.001           0.004           0.004           0.003         (0.009)
HCT.SC.I........................           0.000           0.000           0.000           0.000         (0.019)
HCS.SC.M........................           0.001           0.001           0.001           0.000         (0.082)
HCS.SC.L........................           0.001           0.001           0.001           0.001         (0.011)
PD.SC.M.........................           0.047           0.047           0.090           0.049         (0.455)
SOC.SC.M........................           0.000           0.000           0.001           0.001         (0.002)
                                 -------------------------------------------------------------------------------
    Sum Total...................           0.221           0.343           0.586           0.521         (3.509)
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 to 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are
  associated with the baseline efficiency level.
* A value of $0.000 means NES values are less than 0.001 billion 2012$.
** Values in parentheses are negative values.
[dagger] The impacts were calculated over the lifetime of the equipment purchased in 2017-2025.

              Table V.47--Net Present Value at a 3-Percent Discount Rate for 9-Year Analysis period
                                       [Equipment purchased in 2017-2025]
----------------------------------------------------------------------------------------------------------------
                                                            Billion 2012$ * ** [dagger]
         Equipment class         -------------------------------------------------------------------------------
                                       TSL 1           TSL 2           TSL 3           TSL 4           TSL 5
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................           0.013           0.063           0.267           0.263         (0.330)
VOP.RC.L........................           0.001           0.008           0.008           0.008         (0.040)
VOP.SC.M........................           0.002           0.003           0.015           0.014         (0.028)
VCT.RC.M........................           0.001           0.008           0.010           0.010         (0.039)
VCT.RC.L........................           0.088           0.096           0.099           0.099         (0.753)
VCT.SC.M........................           0.017           0.073           0.083           0.077         (0.222)
VCT.SC.L........................           0.008           0.009           0.009           0.009         (0.011)
VCT.SC.I........................           0.002           0.003           0.003           0.003         (0.027)

[[Page 55972]]

 
VCS.SC.M........................           0.069           0.082           0.090           0.090         (1.111)
VCS.SC.L........................           0.064           0.083           0.084           0.080         (0.702)
VCS.SC.I........................           0.000           0.000           0.000           0.000         (0.007)
SVO.RC.M........................           0.004           0.036           0.138           0.135         (0.166)
SVO.SC.M........................           0.005           0.007           0.016           0.014         (0.027)
SOC.RC.M........................           0.001           0.003           0.023           0.017         (0.038)
HZO.RC.M........................               -               -               -               -         (0.025)
HZO.RC.L........................               -               -               -               -         (0.147)
HZO.SC.M........................           0.000           0.000           0.000         (0.000)         (0.005)
HZO.SC.L........................               -               -               -               -         (0.004)
HCT.SC.M........................           0.000           0.000           0.000           0.000         (0.002)
HCT.SC.L........................           0.001           0.006           0.006           0.006         (0.011)
HCT.SC.I........................           0.000           0.000           0.001           0.001         (0.025)
HCS.SC.M........................           0.001           0.001           0.002           0.001         (0.107)
HCS.SC.L........................           0.001           0.001           0.002           0.002         (0.014)
PD.SC.M.........................           0.074           0.074           0.145           0.102         (0.568)
SOC.SC.M........................           0.001           0.001           0.002           0.002         (0.002)
                                 -------------------------------------------------------------------------------
    Sum Total...................           0.352           0.558           1.003           0.934         (4.410)
----------------------------------------------------------------------------------------------------------------
`-' represents zero energy savings, since TSLs 1 to 4 for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L are
  associated with the baseline efficiency level.
* A value of $0.000 means NES values are less than 0.001 billion 2012$.
** Values in parentheses are negative values.
[dagger] The impacts were calculated over the lifetime of the equipment purchased in 2017-2025.

c. Employment Impacts
    In addition to the direct impacts on manufacturing employment 
discussed in section V.B.2, DOE develops general estimates of the 
indirect employment impacts of proposed standards on the economy. As 
discussed above, DOE expects energy amended conservation standards for 
commercial refrigeration equipment to reduce energy bills for 
commercial customers, and the resulting net savings to be redirected to 
other forms of economic activity. DOE also realizes that these shifts 
in spending and economic activity by commercial refrigeration equipment 
owners could affect the demand for labor. Thus, indirect employment 
impacts may result from expenditures shifting between goods (the 
substitution effect) and changes in income and overall expenditure 
levels (the income effect) that occur due to the imposition of amended 
standards. These impacts may affect a variety of businesses not 
directly involved in the decision to make, operate, or pay the utility 
bills for commercial refrigeration equipment. To estimate these 
indirect economic effects, DOE used an input/output model of the U.S. 
economy using U.S. Department of Commerce, Bureau of Economic Analysis 
(BEA) and BLS data (as described in section IV.L of this notice; see 
chapter 16 of the NOPR TSD for more details).
    Customers who purchase more-efficient equipment pay lower amounts 
towards utility bills, which results in job losses in the electric 
utilities sector. However, in the input/output model, the dollars saved 
on utility bills are re-invested in economic sectors that create more 
jobs than are lost in the electric utilities sector. Thus, the proposed 
amended energy conservation standards for commercial refrigeration 
equipment are likely to slightly increase the net demand for labor in 
the economy. However, the net increase in jobs might be offset by 
other, unanticipated effects on employment. Neither the BLS data nor 
the input/output model used by DOE includes the quality of jobs. As 
shown in Table V.48, DOE estimates that net indirect employment impacts 
from a proposed commercial refrigeration equipment amended standard are 
small relative to the national economy.

            Table V.48--Net Short-Term Change in Employment*
------------------------------------------------------------------------
Trial standard level             2017                      2021
------------------------------------------------------------------------
1...................  35 to 38.................  198 to 201
2...................  53 to 61.................  345 to 354
3...................  74 to 108................  719 to 749
4...................  60 to 105................  760 to 801
5...................  (728) to (363)...........  130 to 504
------------------------------------------------------------------------
* Values in parentheses are negative values.

4. Impact on Utility or Performance of Equipment
    In performing the engineering analysis, DOE considers design 
options that would not lessen the utility or performance of the 
individual classes of equipment. (42 U.S.C. 6295(o)(2)(B)(i)(IV) and 
6316(e)(1)) As presented in the screening analysis (chapter 4 of the 
NOPR TSD), DOE eliminates from consideration any design options that 
reduce the utility of the equipment. For this notice, DOE concluded 
that none of the efficiency levels proposed for commercial 
refrigeration equipment reduce the utility or performance of the 
equipment.
5. Impact of Any Lessening of Competition
    EPCA directs DOE to consider any lessening of competition likely to 
result from amended standards. It directs the Attorney General to 
determine in writing the impact, if any, of any lessening of 
competition likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and 6316(e)(1)) To assist the Attorney General in 
making such a determination, DOE provided the Department of Justice 
(DOJ) with copies of this notice and the TSD for review. During MIA 
interviews, domestic manufacturers indicated that foreign manufacturers 
have begun to enter the commercial refrigeration equipment industry, 
but not in significant numbers. Manufacturers also stated that

[[Page 55973]]

consolidation has occurred among commercial refrigeration equipment 
manufacturers in recent years. Interviewed manufacturers believe that 
these trends may continue in this market even in the absence of amended 
standards.
    DOE does not believe that amended standards would result in 
domestic firms moving their production facilities outside the United 
States. The majority of commercial refrigeration equipment is 
manufactured in the United States and, during interviews, manufacturers 
in general indicated they would modify their existing facilities to 
comply with amended energy conservation standards.
6. Need of the Nation to Conserve Energy
    An improvement in the energy efficiency of the equipment subject to 
today's NOPR is likely to improve the security of the Nation's energy 
system by reducing overall demand for energy. Reduced electricity 
demand may also improve the reliability of the electricity system. 
Reductions in national electric generating capacity estimated for each 
considered TSL are reported in chapter 14 of the NOPR TSD.
    Energy savings from amended standards for commercial refrigeration 
equipment could also produce environmental benefits in the form of 
reduced emissions of air pollutants and GHGs associated with 
electricity production. Table V.49 provides DOE's estimate of 
cumulative emissions reductions projected to result from the TSLs 
considered in this rule. The table includes both power sector emissions 
and upstream emissions. The upstream emissions were calculated using 
the multipliers discussed in section IV.N. DOE reports annual 
CO2, NOX, SO2, NO2, 
CH4 and Hg emissions reductions for each TSL in chapter 15 
of the NOPR TSD. As discussed in Section IV.N DOE also did not include 
NOX emission reduction from power plants in States subject 
to CAIR because an amended energy conservation standard would not 
affect the overall level of NOX emissions in those States 
due to the emission caps mandated by CAIR.

 Table V.49--Cumulative Emissions Reduction Estimated for Commercial Refrigeration Equipment TSLs for Equipment
                                             Purchased in 2017-2046
----------------------------------------------------------------------------------------------------------------
                                                                        TSL
                                 -------------------------------------------------------------------------------
                                         1               2               3               4               5
----------------------------------------------------------------------------------------------------------------
                                                Primary Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           12.22           21.83           47.55           51.77           66.05
NOX (thousand tons).............            9.05           16.18           35.23           38.36           48.93
Hg (tons).......................            0.03            0.05            0.10            0.11            0.14
N2O (thousand tons).............            0.26            0.47            1.02            1.11            1.42
CH4 (thousand tons).............            1.53            2.73            5.95            6.48            8.27
SO2 (thousand tons).............           16.39           29.28           63.78           69.43           88.58
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......            0.73            1.31            2.85            3.10            3.96
NOX (thousand tons).............           10.08           18.01           39.23           42.71           54.49
Hg (tons).......................           0.000           0.001           0.002           0.002           0.002
N2O (thousand tons).............            0.01            0.01            0.03            0.03            0.04
CH4 (thousand tons).............           61.23          109.39          238.27          259.41          330.92
SO2 (thousand tons).............            0.16            0.28            0.61            0.67            0.85
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......           12.95           23.14           50.41           54.88           70.01
NOX (thousand tons).............           19.14           34.19           74.46           81.07          103.42
Hg (tons).......................            0.03            0.05            0.10            0.11            0.14
N2O (thousand tons).............            0.27            0.48            1.05            1.15            1.46
CH4 (thousand tons).............           62.76          112.13          244.22          265.89          339.19
SO2 (thousand tons).............           16.55           29.56           64.39           70.10           89.43
----------------------------------------------------------------------------------------------------------------

    As part of the analysis for this NOPR, DOE estimated monetary 
benefits likely to result from the reduced emissions of CO2 
and NOX that DOE estimated for each of the TSLs considered. 
As discussed in section IV.O for CO2, DOE used values for 
the SCC developed by an interagency process. The interagency group 
selected four sets of SCC values for use in regulatory analyses. Three 
sets are based on the average SCC from three integrated assessment 
models, at discount rates of 2.5 percent, 3 percent, and 5 percent. The 
fourth set, which represents the 95th-percentile SCC estimate across 
all three models at a 3-percent discount rate, is included to represent 
higher-than-expected impacts from temperature change further out in the 
tails of the SCC distribution. The four SCC values for CO2 
emissions reductions in 2015, expressed in 2012$, are $12.9/ton, $40.8/
ton, $62.2/ton, and $117.0/ton. These values for later years are higher 
due to increasing emissions-related costs as the magnitude of projected 
climate change increase.
    Table V.50 presents the global value of CO2 emissions 
reductions at each TSL. DOE calculated domestic values as a range from 
7 percent to 23 percent of the global values, and these results are 
presented in chapter 14 of the NOPR TSD.

[[Page 55974]]

Table V.50--Global Present Value of CO2 Emissions Reduction for Potential Standards for Commercial Refrigeration
                                                    Equipment
----------------------------------------------------------------------------------------------------------------
                                                                       SCC Scenario*
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% Discount
                                             5% Discount       3% Discount      2.5% Discount      rate, 95th
                                            rate, average     rate, average     rate, average      percentile
----------------------------------------------------------------------------------------------------------------
                                                                       million 2012$
----------------------------------------------------------------------------------------------------------------
                                                Primary Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................              68.6             335.1             546.1           1,013.7
2.......................................             122.6             598.7             975.6           1,811.1
3.......................................             266.9           1,304.1           2,124.9           3,944.8
4.......................................             290.6           1,419.8           2,313.4           4,294.8
5.......................................             370.7           1,811.2           2,951.2           5,478.8
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................               4.0              20.0              32.6              60.6
2.......................................               7.2              35.7              58.3             108.3
3.......................................              15.8              77.8             126.9             236.0
4.......................................              17.1              84.7             138.1             256.9
5.......................................              21.9             108.1             176.2             327.7
----------------------------------------------------------------------------------------------------------------
                                                 Total Emissions
----------------------------------------------------------------------------------------------------------------
1.......................................              72.6             355.1             578.7           1,074.4
2.......................................             129.8             634.4           1,033.8           1,919.5
3.......................................             282.7           1,381.9           2,251.8           4,180.7
4.......................................             307.8           1,504.5           2,451.6           4,551.7
5.......................................             392.6           1,919.2           3,127.4           5,806.5
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.9, $40.8, $62.2 and
  $117.0 per metric ton (2012$).

    DOE is well aware that scientific and economic knowledge about the 
contribution of CO2 and other GHG emissions to changes in 
the future global climate and the potential resulting damages to the 
world economy continues to evolve rapidly. Thus, any value placed in 
this NOPR on reducing CO2 emissions is subject to change. 
DOE, together with other Federal agencies, will continue to review 
various methodologies for estimating the monetary value of reductions 
in CO2 and other GHG emissions. This ongoing review will 
consider the comments on this subject that are part of the public 
record for this NOPR and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this NOPR the most 
recent values and analyses resulting from the ongoing interagency 
review process.
    DOE also estimated a range for the cumulative monetary value of the 
economic benefits associated with NOX emission reductions 
anticipated to result from amended commercial refrigeration equipment 
standards. Estimated monetary benefits for CO2 and 
NOX emission reductions are detailed in chapter 14 of the 
NOPR TSD. Table V.51 presents the present value of cumulative 
NOX emissions reductions for each TSL calculated using the 
average dollar-per-ton values and 7-percent and 3-percent discount 
rates.

   Table V.51--Present Value of NOX Emissions Reduction for Potential
            Standards for Commercial Refrigeration Equipment
------------------------------------------------------------------------
                TSL                  3% Discount rate   7% Discount rate
------------------------------------------------------------------------
                                                million 2012$
------------------------------------------------------------------------
                            Primary Emissions
------------------------------------------------------------------------
1.................................               12.0                5.6
2.................................               21.4               10.0
3.................................               46.6               21.7
4.................................               50.7               23.6
5.................................               64.7               30.1
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.................................               13.4                6.2
2.................................               24.0               11.0
3.................................               52.3               24.0
4.................................               56.9               26.1
5.................................               72.6               33.3

[[Page 55975]]

 
                             Total Emissions
------------------------------------------------------------------------
1.................................               25.4               11.7
2.................................               45.4               21.0
3.................................               98.9               45.7
4.................................              107.6               49.8
5.................................              137.3               63.5
------------------------------------------------------------------------

    The NPV of the monetized benefits associated with emission 
reductions can be viewed as a complement to the NPV of the customer 
savings calculated for each TSL considered in this NOPR. Table V.52 
presents the NPV values that result from adding the estimates of the 
potential economic benefits resulting from reduced CO2 and 
NOX emissions in each of four valuation scenarios to the NPV 
of consumer savings calculated for each TSL considered in this 
rulemaking, at both a 7-percent and a 3-percent discount rate. The 
CO2 values used in the table correspond to the four 
scenarios for the valuation of CO2 emission reductions 
discussed above.

  Table V.52--Commercial Refrigeration Equipment TSLs: Net Present Value of Consumer Savings Combined With Net Present Value of Monetized Benefits From
                                                            CO2 and NOX Emissions Reductions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Consumer NPV at 3% discount rate added with:
                                                     ---------------------------------------------------------------------------------------------------
                         TSL                            SCC Value of $12.9/      SCC Value of $40.8/      SCC Value of $62.2/      SCC Value of $117.0/
                                                       metric ton CO2\*\ and    metric ton CO2\*\ and    metric ton CO2\*\ and    metric ton CO2\*\ and
                                                        low value for NOX**     medium value for NOX**   medium value for NOX**    high value for NOX**
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 billion 2012$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................                    1.362                    1.665                    1.889                    2.406
2...................................................                    2.256                    2.798                    3.197                    4.120
3...................................................                    4.466                    5.646                    6.516                    8.526
4...................................................                    4.394                    5.679                    6.626                    8.815
5...................................................                 (10.555)                  (8.916)                  (7.708)                  (4.916)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 Consumer NPV at 7% Discount Rate added with:
                                                     ---------------------------------------------------------------------------------------------------
TSL                                                     SCC Value of $12.9/      SCC Value of $40.8/      SCC Value of $62.2/      SCC Value of $117.0/
                                                      metric ton CO2* and Low    metric ton CO2* and      metric ton CO2* and      metric ton CO2* and
                                                          Value for NOX**       Medium Value for NOX**   Medium Value for NOX**    High Value for NOX**
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 billion 2012$
--------------------------------------------------------------------------------------------------------------------------------------------------------
1...................................................                    0.636                    0.928                    1.151                    1.657
2...................................................                    1.038                    1.560                    1.959                    2.862
3...................................................                    1.996                    3.133                    4.002                    5.969
4...................................................                    1.922                    3.160                    4.107                    6.248
5...................................................                  (6.331)                  (4.752)                  (3.544)                  (0.813)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Parentheses indicate negative values.*
* These label values represent the global SCC in 2015, in 2012$. The present values have been calculated with scenario-consistent discount rates.
** Low Value corresponds to $468 per ton of NOX emissions. Medium Value corresponds to $2,639 per ton of NOX emissions. High Value corresponds to $4,809
  per ton of NOX emissions.

    Although adding the value of customer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. customer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
the SCC are performed with different methods that use quite different 
time frames for analysis. The national operating cost savings is 
measured for the lifetime of products shipped in 2017-2046. The SCC 
values, on the other hand, reflect the present value of future climate-
related impacts resulting from the emission of one metric ton of 
CO2 in each year. These impacts continue well beyond 2100.
7. Other Factors
    EPCA allows the Secretary, in determining whether a proposed 
standard is economically justified, to consider any other factors that 
the Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII) 
and 6316(e)(1)) DOE considered LCC impacts on identifiable groups of 
customers, such as customers of different business types, who may be 
disproportionately affected by any amended national energy conservation 
standard level. DOE also considered the reduction in generation 
capacity that could result from the imposition of any amended national 
energy conservation standard level.
    DOE carried out a RIA, as described in section IV.P, to study the 
impact of certain non-regulatory alternatives that may encourage 
customers to purchase

[[Page 55976]]

higher efficiency equipment and, thus, achieve NES. The two major 
alternatives identified by DOE are customer rebates and customer tax 
credits. DOE surveyed the various rebate programs available in the 
United States. Typically, rebates are offered for grocery stores that 
retrofit their display cases with energy efficiency components such as 
LED lamps, electronically commutated motor (ECM) fan motors, night 
curtains, and higher efficiency doors. Based on comparison with the 
incremental MSP values obtained from the engineering analysis, DOE 
chose to model a scenario in which customers are offered, as rebates, 
60 percent of the incremental equipment installed cost. The value of 60 
percent is very high compared to most rebate programs and was chosen to 
represent the maximum possible rebate scenario.
    For the tax credits scenario, DOE did not find a suitable program 
by which to model the scenario. Therefore, DOE used a 5-percent/10-
percent tax credit scenario. DOE first calculated the MSP increments 
over baseline for each TSL for each equipment class. For TSLs that had 
an increase in MSP between 10 and 15 percent over the baseline MSP, DOE 
applied a 5-percent tax credit, where the amount of tax credit was 
equal to 5 percent of the MSP of the higher efficiency equipment. For 
TSLs that had increase of 15 percent or more in MSP values over the 
baseline MSP, DOE applied a 10-percent tax credit. This type of tax 
credit scenario is an attempt to approximate a model in which the tax 
credits are proportional to the magnitude of efficiency improvement 
with the implicit assumption that the magnitude of the increase in MSP 
is proportional to the magnitude of increase in energy efficiency.
    Table V.53 and Table V.54 show the NES and NPV, respectively, for 
the non-regulatory alternatives analyzed. For comparison, the table 
includes the results of the NES and NPV for TSL 4, the proposed energy 
conservation standard. Energy savings are expressed in quads in terms 
of primary or source energy, which includes generation and transmission 
losses from electricity utility sector.

     Table V.53--Cumulative Primary Energy Savings of Non-Regulatory
     Alternatives Compared to the Proposed Standards for Commercial
                       Refrigeration Equipment \*\
------------------------------------------------------------------------
                                                          Cumulative NES
                   Policy Alternatives                         Quads
------------------------------------------------------------------------
No new regulatory action................................               0
Customer tax credits....................................           0.151
Customer rebates........................................           0.198
Voluntary energy efficiency targets**...................              NA
Early replacement**.....................................              NA
Proposed standards (TSL 4)..............................           0.985
------------------------------------------------------------------------
\*\ Chapter 17 of the TSD describes the inputs and their respective
  sources for the RIA.
\**\ Analysis of two non-regulatory alternatives: voluntary energy
  efficiency targets and early replacement were not performed as DOE
  expected minimal potential benefits as discussed in Chapter 17 of the
  TSD.

  Table V.54--Cumulative NPV of Non-Regulatory Alternatives Compared to
      the Proposed Standards for Commercial Refrigeration Equipment
------------------------------------------------------------------------
                                           Cumulative Net Present Value
                                                   billion 2012$
           Policy Alternatives           -------------------------------
                                            7% Discount     3% Discount
------------------------------------------------------------------------
No new regulatory action................               0               0
Customer tax credits....................           0.257           0.489
Customer rebates........................           0.055           0.122
Voluntary energy efficiency targets*....              NA              NA
Early replacement*......................              NA              NA
Proposed standards (TSL 4)..............           1.606           4.067
------------------------------------------------------------------------
\*\ Analysis of two non-regulatory alternatives: voluntary energy
  efficiency targets and early replacement, were not performed as DOE
  expected minimal potential benefits as discussed in Chapter 17 of the
  TSD.

    As shown above, none of the policy alternatives DOE examined would 
achieve close to the amount of energy or monetary savings that could be 
realized under the proposed amended standard. Also, implementing either 
tax credits or customer rebates would incur initial and/or 
administrative costs that were not considered in this analysis.

C. Proposed Standard

    DOE recognizes that when it considers proposed standards, it is 
subject to the EPCA requirement that any new or amended energy 
conservation standard for any type (or class) of covered product be 
designed to achieve the maximum improvement in energy efficiency that 
the Secretary determines is technologically feasible and economically 
justified. (42 U.S.C. 6295(o)(2)(A) and 6316(e)(1)) In determining 
whether a proposed standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens 
to the greatest extent practicable, in light of the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i) and 
6316(e)(1)) The new or amended standard must also result in a 
significant conservation of energy. (42 U.S.C. 6295(o)(3)(B) and 
6316(e)(1))
    DOE considered the impacts of potential standards at each TSL, 
beginning with the maximum technologically feasible level, to determine 
whether that level met the evaluation criteria. If the max-tech level 
was not justified, DOE then considered the next most efficient level 
and undertook the same evaluation until it reached the highest 
efficiency level that is both technologically feasible and economically 
justified and saves a significant amount of energy.
    DOE discusses the benefits and/or burdens of each TSL in the 
following sections. DOE bases its discussion on quantitative analytical 
results for each TSL, including NES, NPV (discounted at 7 and 3 
percent), emission reductions, INPV, LCC, and customers' installed 
price increases. Beyond the quantitative results, DOE also considers 
other burdens and benefits that affect economic justification, 
including how technological feasibility, manufacturer costs, and 
impacts on competition may affect the economic results presented.
    Table V.55, Table V.56, Table V.57 and Table V.58 present a summary 
of the results of DOE's quantitative analysis for each TSL. In addition 
to the quantitative results presented in the tables, DOE also considers 
other burdens and benefits that affect

[[Page 55977]]

economic justification of certain customer subgroups that are 
disproportionately affected by the proposed standards. Section V.B.7 
presents the estimated impacts of each TSL for these subgroups.

                            Table V.55--Summary of Results for Commercial Refrigeration Equipment TSLs: National Impacts \*\
--------------------------------------------------------------------------------------------------------------------------------------------------------
              Category                        TSL 1                   TSL 2                  TSL 3                  TSL 4                   TSL5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Cumulative National Energy Savings 2017 through 2060
                                                                          quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
Undiscounted values................  0.236.................  0.422.................  0.920................  1.001................  1.278
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Cumulative NPV of Customer Benefits 2017 through 2060
                                                                      2012$ billion
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate...................  $1.285................  $2.118................  $4.165...............  $4.067...............  ($10.972)
7% discount rate...................  $0.561................  $0.905................  $1.705...............  $1.606...............  ($6.735)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Industry Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Change in Industry NPV (2012$        (3.6) to (6.8)........  (15.2) to (26.4)......  (26.3) to (59.2).....  (45.9) to (92.6).....  (25.5) to (516.0)
 million).
Change in Industry NPV (%).........  (0.58) to (0.31)......  (2.27) to (1.30)......  (5.09) to (2.26).....  (7.97) to (3.95).....  (44.41) to (2.20)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Cumulative Emissions Reductions 2017 through 2060
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (MMt)**........................  12.95.................  23.14.................  50.41................  54.88................  70.01
NOX (kt)**.........................  19.14.................  34.19.................  74.46................  81.07................  103.42
Hg (t)**...........................  0.03..................  0.05..................  0.10.................  0.11.................  0.14
N2O (kt)**.........................  0.27..................  0.48..................  1.05.................  1.15.................  1.46
N2O (kt CO2eq)**...................  80.56.................  143.92................  313.48...............  341.29...............  435.39
CH4 (kt)**.........................  62.76.................  112.13................  244.22...............  265.89...............  339.19
CH4 (kt CO2eq) \**\................  1,568.96..............  2,803.13..............  6,105.43.............  6,647.15.............  8,479.71
SO2 (kt) \**\......................  16.55.................  29.56.................  64.39................  70.10................  89.43
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Monetary Value of Cumulative Emissions Reductions 2017 through 2060 [dagger]
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO2 (2012$ million)................  73 to 1,074...........  130 to 1,919..........  283 to 4,181.........  308 to 4,552.........  393 to 5,807
NOX--3% discount rate (2012$         4.5 to 46.3...........  8.1 to 82.7...........  17.5 to 180.2........  19.1 to 196.2........  24.4 to 250.2
 million).
NOX--7% discount rate (2012$         2.1 to 21.4...........  3.7 to 38.2...........  8.1 to 83.3..........  8.8 to 90.7..........  11.3 to 115.7
 million).
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Employment Impacts
--------------------------------------------------------------------------------------------------------------------------------------------------------
Net Change in Indirect Domestic      198 to 201............  345 to 354............  719 to 749...........  760 to 801...........  130 to 504
 Jobs by 2021.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ Values in parentheses are negative values.
\**\ ``MMt'' stands for million metric tons; ``kt'' stands for kilotons; ``t'' stands for tons. CO2eq is the quantity of CO2 that would have the same
  global warming potential (GWP)
[dagger] Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions.

          Table V.56--Summary of Results for Commercial Refrigeration Equipment TSLs: Mean LCC Savings
----------------------------------------------------------------------------------------------------------------
         Equipment class               TSL 1           TSL 2           TSL 3           TSL 4           TSL5
----------------------------------------------------------------------------------------------------------------
                                                Mean LCC Savings*
                                                      2012$
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................         $235.92         $743.00       $1,788.85       $1,493.72     ($1,668.79)
VOP.RC.L........................          537.27        1,516.59        1,129.51        1,129.51      (3,692.90)
VOP.SC.M........................          170.78          227.17          814.91          691.27        (376.52)
VCT.RC.M........................          175.23        1,864.44        1,758.73        1,108.13      (2,508.61)
VCT.RC.L........................        1,357.25        1,004.72          797.91          797.91      (3,624.20)
VCT.SC.M........................          566.18        1,363.60        1,122.14          641.05        (595.52)
VCT.SC.L........................        4,186.06        2,522.67        1,984.45        1,342.84        (343.16)
VCT.SC.I........................          572.05          486.28          431.88          431.88      (1,591.87)
VCS.SC.M........................          278.84          162.88          131.80          131.80      (1,042.03)
VCS.SC.L........................          524.52          329.33          267.81          220.83      (1,274.03)

[[Page 55978]]

 
VCS.SC.I........................          236.77          176.83          152.69          152.69      (1,818.87)
SVO.RC.M........................           73.77          551.98        1,216.77        1,008.46      (1,015.16)
SVO.SC.M........................          324.33          334.89          587.90          491.99        (201.61)
SOC.RC.M........................          118.36          226.26          997.89          494.51        (982.21)
HZO.RC.M**......................            0.00            0.00            0.00            0.00      (1,271.24)
HZO.RC.L**......................            0.00            0.00            0.00            0.00      (2,134.96)
HZO.SC.M........................            8.85            8.85           48.60           28.78        (821.57)
HZO.SC.L**......................            0.00            0.00            0.00            0.00        (473.71)
HCT.SC.M........................          106.59          359.48          307.26          253.60        (293.54)
HCT.SC.L........................          217.19          790.53          571.07          368.92        (354.75)
HCT.SC.I........................           21.83           34.69           42.48           42.48        (811.31)
HCS.SC.M........................           23.07           19.18           16.66            8.68        (422.79)
HCS.SC.L........................           74.69           80.97           80.72           80.72        (400.63)
PD.SC.M.........................        1,009.53        1,009.53          933.59          310.43        (637.94)
SOC.SC.M........................          646.15          466.47        1,241.60          739.75        (735.33)
----------------------------------------------------------------------------------------------------------------
* Values in parentheses are negative values.
** ``NA'' means ``not applicable,'' because for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L, TSLs 1
  through 4 are associated with the baseline efficiency level.

        Table V.57--Summary of Results for Commercial Refrigeration Equipment TSLs: Median Payback Period
----------------------------------------------------------------------------------------------------------------
         Equipment class               TSL 1           TSL 2           TSL 3           TSL 4           TSL5
----------------------------------------------------------------------------------------------------------------
                                              Median Payback Period
                                                      years
----------------------------------------------------------------------------------------------------------------
VOP.RC.M........................            1.73            1.77            3.77            3.91           11.76
VOP.RC.L........................            1.11            2.03            2.22            2.22           18.30
VOP.SC.M........................            1.61            2.17            4.12            4.39           11.37
VCT.RC.M........................            1.23            2.42            2.43            2.70           13.09
VCT.RC.L........................            1.30            1.51            1.64            1.64           15.75
VCT.SC.M........................            0.86            1.73            2.21            2.54            8.13
VCT.SC.L........................            0.58            0.61            0.83            0.96            3.65
VCT.SC.I........................            0.86            1.74            1.97            1.97           13.21
VCS.SC.M........................            0.78            0.98            1.75            1.75           14.11
VCS.SC.L........................            0.55            0.91            1.00            1.15           10.54
VCS.SC.I........................            0.80            2.07            2.42            2.42           27.19
SVO.RC.M........................            1.31            2.64            4.34            4.50           11.60
SVO.SC.M........................            1.97            2.06            4.43            4.75           10.36
SOC.RC.M........................            1.25            1.44            3.31            4.41           11.88
HZO.RC.M*.......................            0.00            0.00            0.00            0.00          161.23
HZO.RC.L*.......................            0.00            0.00            0.00            0.00           83.78
HZO.SC.M........................            1.89            1.89            2.42            6.40           55.78
HZO.SC.L*.......................            0.00            0.00            0.00            0.00           73.62
HCT.SC.M........................            0.69            2.24            2.42            3.08           12.26
HCT.SC.L........................            0.53            1.00            1.05            1.47            7.15
HCT.SC.I........................            0.88            2.39            4.28            4.28           27.99
HCS.SC.M........................            0.50            1.64            2.54            4.28           34.05
HCS.SC.L........................            0.86            1.36            2.57            2.57           14.98
PD.SC.M.........................            0.53            0.53            1.10            2.27            7.61
SOC.SC.M........................            1.12            1.24            2.35            2.99            7.42
----------------------------------------------------------------------------------------------------------------
* ``NA'' means ``not applicable,'' because for equipment classes HZO.RC.M, HZO.RC.L, and HZO.SC.L, TSLs 1
  through 4 are associated with the baseline efficiency level.

Table V.58--Summary of Results for Commercial Refrigeration Equipment TSLs: Distribution of Customer LCC Impacts
----------------------------------------------------------------------------------------------------------------
            Category                  TSL 1*          TSL 2*          TSL 3*          TSL 4*          TSL 5*
----------------------------------------------------------------------------------------------------------------
VOP.RC.M:
    Net Cost (%)................               0               0               0              11              90
    No Impact (%)...............              76              52              28              15               2
    Net Benefit (%).............              24              48              72              74               8
VOP.RC.L:
    Net Cost (%)................               0               0               0               0              98
    No Impact (%)...............              74              48              25              25               2
    Net Benefit (%).............              26              52              75              75               0
VOP.SC.M:
    Net Cost (%)................               0               0               0              11              77

[[Page 55979]]

 
    No Impact (%)...............              62              43              25              14               3
    Net Benefit (%).............              38              57              75              75              20
VCT.RC.M:
    Net Cost (%)................               0               0               0              26              94
    No Impact (%)...............              81              62              46              16               2
    Net Benefit (%).............              19              38              54              57               4
VCT.RC.L:
    Net Cost (%)................               0               0               0               0              97
    No Impact (%)...............              60              40              21              21               2
    Net Benefit (%).............              40              60              79              79               1
VCT.SC.M:
    Net Cost (%)................               0               0               0              27              74
    No Impact (%)...............              83              66              51              13               2
    Net Benefit (%).............              17              34              49              60              24
VCT.SC.L:
    Net Cost (%)................               0               0               0               7              74
    No Impact (%)...............              76              60              44              15               2
    Net Benefit (%).............              24              40              56              78              24
VCT.SC.I:
    Net Cost (%)................               0               1               1               1              95
    No Impact (%)...............              65              32              16              16               1
    Net Benefit (%).............              35              68              83              83               3
VCS.SC.M:
    Net Cost (%)................               0               0               7               7              99
    No Impact (%)...............              72              42              13              13               1
    Net Benefit (%).............              28              58              80              80               0
VCS.SC.L:
    Net Cost (%)................               0               0               5              20              97
    No Impact (%)...............              73              42              28              14               1
    Net Benefit (%).............              27              58              68              66               2
VCS.SC.I:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               3               3              99
    No Impact (%)...............              67              32              16              16               1
    Net Benefit (%).............              33              68              81              81               0
SVO.RC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              13              85
    No Impact (%)...............              75              51              29              16               3
    Net Benefit (%).............              25              49              71              72              12
SVO.SC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              12              69
    No Impact (%)...............              61              43              25              14               4
    Net Benefit (%).............              39              57              75              75              27
SOC.RC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              29              89
    No Impact (%)...............              82              64              47              18               5
    Net Benefit (%).............              18              36              53              53               6
HZO.RC.M:**                       ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................              NA              NA              NA              NA              78
    No Impact (%)...............              NA              NA              NA              NA              22
    Net Benefit (%).............              NA              NA              NA              NA               0
HZO.RC.L:**                       ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................              NA              NA              NA              NA              86
    No Impact (%)...............              NA              NA              NA              NA              14
    Net Benefit (%).............              NA              NA              NA              NA               0
HZO.SC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              19              98
    No Impact (%)...............              75              75              49              24               2
    Net Benefit (%).............              25              25              51              57               0
HZO.SC.L:**                       ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................              NA              NA              NA              NA              72
    No Impact (%)...............              NA              NA              NA              NA              28
    Net Benefit (%).............              NA              NA              NA              NA               0
HCT.SC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              18              89
    No Impact (%)...............              70              38              25              12               1
    Net Benefit (%).............              30              62              75              70              10
HCT.SC.L:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              23              76
    No Impact (%)...............              75              61              45              14               1
    Net Benefit (%).............              26              39              55              63              23
HCT.SC.I:                         ..............  ..............  ..............  ..............  ..............

[[Page 55980]]

 
    Net Cost (%)................               0               0               2               2              99
    No Impact (%)...............              74              49              23              23               1
    Net Benefit (%).............              26              51              75              75               0
HCS.SC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               1              29              98
    No Impact (%)...............              83              65              48              31               2
    Net Benefit (%).............              17              35              51              40               0
HCS.SC.L:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               2               2              98
    No Impact (%)...............              50              33              16              16               2
    Net Benefit (%).............              50              67              82              82               0
PD.SC.M:                          ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              41              86
    No Impact (%)...............              86              86              69              11               1
    Net Benefit (%).............              14              14              31              48              13
SOC.SC.M:                         ..............  ..............  ..............  ..............  ..............
    Net Cost (%)................               0               0               0              25              80
    No Impact (%)...............              70              55              40              16               5
    Net Benefit (%).............              30              45              60              60              16
----------------------------------------------------------------------------------------------------------------
* Values have been rounded to the nearest integer. Therefore, some of the percentages may not add up to 100.
** ``NA'' means ``not applicable''; because for equipment classes HZO.RC.M, HZO.RC.L and HZO.SC.L, TSLs 1
  through 4 are associated with the baseline efficiency level.

    DOE also notes that the economics literature provides a wide-
ranging discussion of how consumers trade off upfront costs and energy 
savings in the absence of government intervention. Much of this 
literature attempts to explain why consumers appear to undervalue 
energy efficiency improvements. This undervaluation suggests that 
regulation that promotes energy efficiency can produce significant net 
private gains (as well as producing social gains by, for example, 
reducing pollution). There is evidence that consumers undervalue future 
energy savings as a result of (1) a lack of information; (2) a lack of 
sufficient salience of the long-term or aggregate benefits; (3) a lack 
of sufficient savings to warrant delaying or altering purchases (e.g., 
an inefficient ventilation fan in a new building or the delayed 
replacement of a water pump); (4) excessive focus on the short term, in 
the form of inconsistent weighting of future energy cost savings 
relative to available returns on other investments; (5) computational 
or other difficulties associated with the evaluation of relevant 
tradeoffs; and (6) a divergence in incentives (e.g., renter versus 
building owner, builder versus home buyer). Other literature indicates 
that with less than perfect foresight and a high degree of uncertainty 
about the future, consumers may trade off these types of investments at 
a higher than expected rate between current consumption and uncertain 
future energy cost savings.
    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an amended energy conservation 
standard, DOE has posted a paper that discusses the issue of consumer 
welfare impacts of appliance energy efficiency standards, and potential 
enhancements to the methodology by which these impacts are defined and 
estimated in the regulatory process.\90\ DOE is committed to developing 
a framework that can support empirical quantitative tools for improved 
assessment of the consumer welfare impacts of appliance standards. DOE 
welcomes comments on information and methods to better assess the 
potential impact of energy conservation standards on consumer choice 
and methods to quantify this impact in its regulatory analysis in 
future rulemakings.
---------------------------------------------------------------------------

    \90\ Sanstad, A. Notes on the Economics of Household Energy 
Consumption and Technology Choice. 2010. Lawrence Berkeley National 
Laboratory, Berkeley, CA. www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

    TSL 5 corresponds to the max-tech level for all the equipment 
classes and offers the potential for the highest cumulative energy 
savings. The estimated energy savings from TSL 5 is 1.2784 quads of 
energy. DOE projects a net negative NPV for customers with estimated 
increased costs valued at $6.735 billion at a 7-percent discount rate. 
Estimated emissions reductions are 70.0 MMt of CO2, and up 
to 103.4 kt of NOX, and 89.4 kt of SO2. DOE also 
projects a decrease in Hg emissions of up to 0.14 tons. The 
CO2 emissions have a value of up to $5.8 billion and the 
NOX emissions have a value of $115.7 million at a 7-percent 
discount rate.
    For TSL 5 the mean LCC savings for all equipment classes are 
negative, implying an increase in LCC, with the increase ranging from 
$202 for the SVO.SC.M equipment class to $3,693 for the VOP.RC.L 
equipment class.
    At TSL 5, manufacturers may expect diminished profitability due to 
large increases in product costs, capital investments in equipment and 
tooling, and expenditures related to engineering and testing. The 
projected change in INPV ranges from a decrease of $516.0 million to a 
decrease of $25.5 million based on DOE's manufacturer markup scenarios. 
The upper bound of -$25.5 million is considered an optimistic scenario 
for manufacturers because it assumes manufacturers can fully pass on 
substantial increases in equipment costs. DOE recognizes the risk of 
large negative impacts on industry if manufacturers' expectations 
concerning reduced profit margins are realized. TSL 5 could reduce 
commercial refrigeration equipment INPV by up to 44.41 percent if 
impacts reach the lower bound of the range.
    After carefully considering the analyses results and weighing the 
benefits and burdens of TSL 5, DOE finds that the benefits to the 
Nation from TSL 5, in the form of energy savings and emissions 
reductions, including environmental and monetary benefits, are small 
compared to the

[[Page 55981]]

burdens, in the form of a decrease of $6.735 billion in customer NPV 
and a decrease of up to 44.41 percent in INPV. DOE concludes that the 
burdens of TSL 5 outweigh the benefits and, therefore, does not find 
TSL 5 to be economically justifiable. DOE is not proposing to adopt TSL 
5 in this notice.
    TSL 4 corresponds to the highest efficiency level, in each 
equipment class, with a positive NPV at a 7-percent discount rate. The 
estimated energy savings for equipment purchased in 2017-2046 is 1.001 
quads of energy, an amount DOE deems significant. At TSL 4, DOE 
projects an increase in customer NPV of $1.606 billion at a 7-percent 
discount rate; estimated emissions reductions of 54.88 MMt of 
CO2; up to 81.1 kt of NOX, 0.11 in Hg and 70.1 kt 
of SO2. The monetary value of these emissions was estimated 
to be up to $4.55 billion for CO2 and up to $90.7 million 
for NOX at a 7-percent discount rate.
    At TSL 4, the mean LCC savings vary from $8.68 for HCS.SC.M to 
$1,493.72 for VOP.RC.M, which implies that on an average customers will 
experience a decrease in LCC. For equipment classes HZO.RC.M, HZO.RC.L, 
and HZO.SC.L, TSL 4 is associated with the baseline level because these 
equipment classes have only one efficiency level above baseline and 
each of those higher efficiency levels yields a negative NPV. 
Therefore, there are no efficiency levels that satisfy the criteria 
used for selection of TSLs 1 through 4. DOE is not proposing to amend 
the standards for these three equipment classes.
    At TSL 4, the projected change in INPV ranges from a decrease of 
$92.6 million to a decrease of $45.9 million. At TSL 4, DOE recognizes 
the risk of negative impacts if manufacturers' expectations concerning 
reduced profit margins are realized. If the lower bound of the range of 
impacts is reached, as DOE expects, TSL 4 could result in a net loss of 
7.97 percent in INPV for commercial refrigeration equipment 
manufacturers.
    DOE contrasted the benefits and burdens of TSL 4 with those of TSL 
3 because even though TSL 4 has higher energy savings than TSL 3, the 
customer NPV values at TSL 3 are higher than at TSL 4. The estimated 
energy savings at TSL 3 is 0.920 quads of energy, whereas at TSL 4 the 
energy savings are higher by about 9 percent at 1.001 quads. At TSL 3, 
DOE projects an increase in customer NPV of $1.705 billion at a 7-
percent discount rate, whereas at TSL 4 the customer NPV is lower by 
about 6 percent at $1.606 billion, with the actual difference amounting 
to approximately $99 million. Estimated emissions reductions at TSL 3 
are 50.41 MMt of CO2 as opposed to 54.88 MMt at TSL 4, and 
up to 74.46 kt of NOX at TSL 3 as compared to 81.07 kt at 
TSL 4. The monetary value of the CO2 emissions reductions 
was estimated to be up to $4.18 billion at TSL 3 compared to $4.55 
billion at TSL 4, and NOX emission reductions at a 7-percent 
discount rate were valued at up to $83.3 million at TSL 3 compared to 
$90.7 million at TSL 4.
    To facilitate a direct comparison between the benefits of TSL 3 
versus those of TSL4, DOE evaluated the net social benefits of TSL 3 
and TSL 4 by combining the customer NPV values with monetized emissions 
reductions. While Table V.55 provides a range of monetized values for 
CO2 and NOX emissions reductions, DOE calculated 
certain intermediate values here for the purpose of net benefits 
calculation. The monetized CO2 emissions reduction values 
were calculated at $40.8 per ton in 2012$ and the monetized 
NOX emissions reductions were calculated at an intermediate 
value of $2,639 per ton in 2012$. These monetized emissions reduction 
values were added to the customer NPV at a 7-percent discount rate to 
obtain a value of 3.133 billion at TSL 3. At TSL 4, the net benefit 
value of $3.160 billion is higher than that at TSL 3.
    After careful consideration of the analyses results, weighing the 
benefits and burdens of TSL 4, and comparing them to those of TSL 3, 
DOE believes that setting the standards for commercial refrigeration 
equipment at TSL 4 represents the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
TSL 4 is technologically feasible because the technologies required to 
achieve these levels already exist in the current market. TSL 4 is 
economically justified because the benefits to the Nation in the form 
of energy savings, customer NPV at 3 percent and at 7 percent, and 
emissions reductions outweigh the costs associated with reduced INPV.
    Therefore, DOE has decided to propose the adoption of amended 
energy conservation standards for commercial refrigeration equipment at 
TSL 4. DOE specifically seeks comment on the magnitude of the estimated 
decline in INPV at TSL 4 compared to the baseline, and whether this 
impact could risk industry consolidation. DOE also specifically 
requests comment on whether DOE should adopt TSL 5, and in particular 
whether, compared to TSL 4, TSL 5's higher energy savings outweigh its 
lower NPV benefits and higher manufacturer impacts. DOE may reexamine 
this level depending on the nature of the information it receives 
during the comment period and adjust its final levels in response to 
that information.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' 58 FR 51735 (Oct. 4, 1993), requires each agency to identify 
the problem that it intends to address, including, where applicable, 
the failures of private markets or public institutions that warrant new 
agency action, as well as to assess the significance of that problem. 
The problems that today's standards address are as follows:
    1. There is a lack of consumer information and/or information 
processing capability about energy efficiency opportunities in the 
commercial refrigeration equipment market.
    2. There is asymmetric information (one party to a transaction has 
more and better information than the other) and/or high transactions 
costs (costs of gathering information and effecting exchanges of goods 
and services).
    3. There are external benefits resulting from improved energy 
efficiency of commercial refrigeration equipment that are not captured 
by the users of such equipment. These benefits include externalities 
related to environmental protection and energy security that are not 
reflected in energy prices, such as reduced emissions of GHGs.
    In addition, DOE has determined that today's regulatory action is 
an ``economically significant regulatory action'' under section 3(f)(1) 
of Executive Order 12866. Accordingly, section 6(a)(3) of the Executive 
Order requires that DOE prepare an RIA on today's rule and that OIRA in 
OMB review this rule. DOE presented to OIRA for review the draft rule 
and other documents prepared for this rulemaking, including the RIA, 
and has included these documents in the rulemaking record. The 
assessments prepared pursuant to Executive Order 12866 can be found in 
the TSD for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). 
Executive Order 13563 is supplemental to and explicitly reaffirms the 
principles, structures, and definitions governing regulatory review 
established in Executive Order 12866. To the extent permitted by law, 
agencies

[[Page 55982]]

are required by Executive Order 13563 to: (1) Propose or adopt a 
regulation only upon a reasoned determination that its benefits justify 
its costs (recognizing that some benefits and costs are difficult to 
quantify); (2) tailor regulations to impose the least burden on 
society, consistent with obtaining regulatory objectives, taking into 
account, among other things, and to the extent practicable, the costs 
of cumulative regulations; (3) select, in choosing among alternative 
regulatory approaches, those approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity); (4) to the 
extent feasible, specify performance objectives, rather than specifying 
the behavior or manner of compliance that regulated entities must 
adopt; and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, ORIA has emphasized that such techniques may include 
identifying changing future compliance costs that might result from 
technological innovation or anticipated behavioral changes. For the 
reasons stated in the preamble, DOE believes that today's NOPR is 
consistent with these principles, including the requirement that, to 
the extent permitted by law, benefits justify costs and that net 
benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires 
preparation of a final regulatory flexibility analysis (FRFA) for any 
rule that by law must be proposed for public comment, unless the agency 
certifies that the rule, if promulgated, will not have a significant 
economic impact on a substantial number of small entities. As required 
by Executive Order 13272, ``Proper Consideration of Small Entities in 
Agency Rulemaking'' 67 FR 53461 (Aug. 16, 2002), DOE published 
procedures and policies on February 19, 2003 to ensure that the 
potential impacts of its rules on small entities are properly 
considered during the rulemaking process. 68 FR 7990. DOE has made its 
procedures and policies available on the Office of the General 
Counsel's Web site (http://energy.gov/gc/office-general-counsel ).
1. Description and Estimated Number of Small Entities Regulated
    For the manufacturers of commercial refrigeration equipment, the 
SBA has set a size threshold, which defines those entities classified 
as ``small businesses'' for the purposes of the statute. DOE used the 
SBA's small business size standards to determine whether any small 
entities would be subject to the requirements of the rule. 65 FR 30836, 
30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) 
and codified at 13 CFR part 121. The size standards are listed by NAICS 
code and industry description and are available at: http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. Commercial 
refrigeration equipment manufacturing is classified under NAICS 333415, 
``Air-Conditioning and Warm Air Heating Equipment and Commercial and 
Industrial Refrigeration Equipment Manufacturing.'' The SBA sets a 
threshold of 750 employees or less for an entity to be considered as a 
small business for this category.
    During its market survey, DOE used available public information to 
identify potential small manufacturers. DOE's research involved 
industry trade association membership directories (including AHRI), 
public databases (e.g., AHRI Directory,\91\ the SBA Database \92\), 
individual company Web sites, and market research tools (e.g., Dunn and 
Bradstreet reports \93\ and Hoovers reports)\94\ to create a list of 
companies that manufacture or sell products covered by this rulemaking. 
DOE also asked stakeholders and industry representatives if they were 
aware of any other small manufacturers during manufacturer interviews 
and at DOE public meetings. DOE reviewed publicly available data and 
contacted select companies on its list, as necessary, to determine 
whether they met the SBA's definition of a small business manufacturer 
of covered commercial refrigeration equipment. DOE screened out 
companies that do not offer products covered by this rulemaking, do not 
meet the definition of a ``small business,'' or are foreign owned.
---------------------------------------------------------------------------

    \91\ See www.ahridirectory.org/ahriDirectory/pages/home.aspx.
    \92\ See http://dsbs.sba.gov/dsbs/search/dsp_dsbs.cfm.
    \93\ See www.dnb.com/.
    \94\ See www.hoovers.com/.
---------------------------------------------------------------------------

    DOE identified 54 companies selling commercial refrigeration 
equipment products in the United States. Nine of the companies are 
foreign-owned firms. Of the remaining 45 companies, about 70 percent 
(32 companies) are small domestic manufacturers. DOE contacted eight 
domestic commercial refrigeration equipment manufacturers for 
interviews and all eight companies accepted. Of these eight companies, 
four were small businesses.
2. Description and Estimate of Compliance Requirements
    The 32 identified domestic manufacturers of commercial 
refrigeration equipment that qualify as small businesses under the SBA 
size standard account for approximately 26 percent of commercial 
refrigeration equipment shipments.\95\ While some small businesses have 
significant market share (e.g., Continental has a 4-percent market 
share for foodservice commercial refrigeration)\95\, the majority of 
small businesses have less than a 1-percent market share. These smaller 
firms often specialize in designing custom products and servicing niche 
markets.
---------------------------------------------------------------------------

    \95\ 32nd Annual Portrait of the U.S. Appliance Industry. 
Appliance Magazine. September 2009. 66(7).
---------------------------------------------------------------------------

    At the proposed level, the average small manufacturer is expected 
to face capital conversion costs that are more than triple the average 
annual capital expenditures, and product conversion costs that are 80% 
of annual R&D spending, as shown in Table VI.1. At the proposed level, 
the conversion costs are driven by the incorporation of thicker 
insulation into case designs. The thicker cases design may necessitate 
the purchase of new jigs for production. Manufacturer estimates of the 
cost of a new jig ranged from $50,000 to $300,000 in 2011, depending on 
the jig design. In addition to the cost of jigs, changes in case 
thickness may require product redesign due to changes in the interior 
volume of the equipment and may require new industry certifications.
    The proposed standard could cause small manufacturers to be at a 
disadvantage relative to large manufacturers. The capital conversion 
costs represent a smaller percentage of annual capital expenditures for 
large manufacturers than for small manufacturers. The capital 
conversion costs are 60 percent of annual capital expenditures for an 
average large manufacturer, while capital conversion costs are 423 
percent of annual capital expenditures for an average small 
manufacturer. Small manufacturers may have greater difficulty obtaining 
credit, or may obtain less favorable terms than larger competitors when 
financing the equipment necessary to meet an amended standard.

[[Page 55983]]

    Additionally, small manufacturers may be disproportionately 
affected by equipment conversion costs. Product redesign and industry 
certification costs tend to be fixed and do not scale with sales 
volume. For each equipment platform, small businesses must make 
equipment redesign investments that are similar to their large 
competitors. However, small manufacturer costs are spread over a much 
lower volume of units, making cost recovery more difficult.
    Manufacturers indicated that many design options evaluated in the 
engineering analysis (e.g., higher efficiency lighting, motors, and 
compressors) would force them to purchase more expensive components. 
Due to smaller purchasing volumes, small manufacturers typically pay 
higher prices for components, while their large competitors receive 
volume discounts. At the proposed standard, small businesses will 
likely have greater increases in component costs than large businesses 
and will thus be at a pricing disadvantage.
    Small firms would likely be at a disadvantage relative to larger 
firms in meeting an amended energy conservation standard for commercial 
refrigeration equipment. The small businesses face disadvantages in 
terms of access to capital, the cost of product redesigns, and pricing 
for key components. As a result, DOE could not certify that the 
proposed standards would not have a significant impact on a significant 
number of small businesses.
    To estimate how small manufacturers would be potentially impacted, 
DOE used the market share of small manufacturers to estimate the annual 
revenue, earnings before interest and tax (EBIT), R&D expense, and 
capital expenditures for a typical small manufacturer. DOE then 
compared these costs to the required capital and product conversion 
costs at each TSL for both an average small manufacturer (Table VI.1) 
and an average large manufacturer (Table VI.2). In the following 
tables, TSL 4 represents the proposed standard.

  Table VI.1--Comparison of an Average Small Commercial Refrigeration Equipment Manufacturer's Conversion Costs to Annual Expenses, Revenue, and Profit
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Capital conversion cost
                                                         as a percentage of    Product conversion cost   Total conversion cost    Total conversion cost
                         TSL                               annual capital         as a percentage of       as a percentage of       as a percentage of
                                                            expenditures          annual R&D expense         annual revenue            annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1...............................................                        0                        0                        0                        0
TSL 2...............................................                      102                       71                        5                       63
TSL 3...............................................                      238                       76                       10                      119
TSL 4...............................................                      423                       80                       17                      196
TSL 5...............................................                     1400                      489                       62                      717
--------------------------------------------------------------------------------------------------------------------------------------------------------

  Table VI.2--Comparison of an Average Large Commercial Refrigeration Equipment Manufacturer's Conversion Costs to Annual Expenses, Revenue, and Profit
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Capital conversion cost
                                                         as a percentage of    Product conversion cost   Total conversion cost    Total conversion cost
                         TSL                               annual capital         as a percentage of       as a percentage of       as a percentage of
                                                            expenditures          annual R&D expense         annual revenue            annual EBIT
--------------------------------------------------------------------------------------------------------------------------------------------------------
TSL 1...............................................                        0                        0                        0                        0
TSL 2...............................................                       15                       10                        1                        9
TSL 3...............................................                       34                       11                        1                       17
TSL 4...............................................                       60                       11                        2                       28
TSL 5...............................................                      200                       70                        9                      102
--------------------------------------------------------------------------------------------------------------------------------------------------------

3. Duplication, Overlap, and Conflict With Other Rules and Regulations
    DOE is not aware of any rules or regulations that duplicate, 
overlap, or conflict with the rule being proposed today.
4. Significant Alternatives to the Rule
    The primary alternatives to the proposed rule are the TSLs other 
than the one proposed today, TSL 4. DOE explicitly considered the role 
of manufacturers, including small manufacturers, in its selection of 
TSL 4 rather than TSL 5. Though TSL 5 results in greater energy savings 
for the country, the standard would place excessive burdens on 
manufacturers. Chapter 12 of the NOPR TSD contains additional 
information about the impact of this rulemaking on manufacturers.
    In addition to the other TSLs being considered, the NOPR TSD 
includes an RIA. For commercial refrigeration equipment, the RIA 
discusses the following policy alternatives: (1) No change in standard; 
(2) customer rebates; (3) customer tax credits; (4) manufacturer tax 
credits; and (5) early replacement. While these alternatives may 
mitigate to some varying extent the economic impacts on small entities 
compared to the amended standards, DOE determined that the energy 
savings of these regulatory alternatives would be at least five times 
smaller than those that would be expected to result from adoption of 
the proposed amended standard levels. Thus, DOE rejected these 
alternatives and is proposing to adopt the amended standards set forth 
in this rulemaking. (See chapter 17 of the NOPR TSD for further detail 
on the policy alternatives DOE considered.)
    However, DOE seeks comment and, in particular, data on the impacts 
of this rulemaking on small businesses. (See Issue 10 under ``Issues on 
Which DOE Seeks Comment'' in section VII.E of this NOPR.)

C. Review Under the Paperwork Reduction Act

    Manufacturers of commercial refrigeration equipment must certify to 
DOE that their products comply with any applicable energy conservation 
standards. In certifying compliance, manufacturers must test their 
products according to the DOE test procedures for commercial 
refrigeration equipment, including any amendments adopted for those 
test procedures. DOE has

[[Page 55984]]

established regulations for the certification and recordkeeping 
requirements for all covered consumer products and commercial 
equipment, including commercial refrigeration equipment. 76 FR 12422 
(March 7, 2011). The collection-of-information requirement for the 
certification and recordkeeping is subject to review and approval by 
OMB under the Paperwork Reduction Act (PRA). This requirement has been 
approved by OMB under OMB Control Number 1910-1400. Public reporting 
burden for the certification is estimated to average 20 hours per 
response, including the time for reviewing instructions, searching 
existing data sources, gathering and maintaining the data needed, and 
completing and reviewing the collection of information.
    Notwithstanding any other provision of the law, no person is 
required to respond to, nor shall any person be subject to a penalty 
for failure to comply with, a collection of information subject to the 
requirements of the PRA, unless that collection of information displays 
a currently valid OMB Control Number.

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
(42 U.S.C. 4321 et seq.) DOE has determined that the proposed rule fits 
within the category of actions included in Categorical Exclusion (CX) 
B5.1 and otherwise meets the requirements for application of a CX. See 
10 CFR part 1021, appendix B, B5.1(b); 1021.410(b) and appendix B, 
B(1)-(5). The proposed rule fits within the category of actions because 
it is a rulemaking that establishes energy conservation standards for 
consumer products or industrial equipment, and for which none of the 
exceptions identified in CX B5.1(b) apply. Therefore, DOE has made a CX 
determination for this rulemaking, and DOE does not need to prepare an 
Environmental Assessment or Environmental Impact Statement for this 
proposed rule. DOE's CX determination for this proposed rule is 
available at http://cxnepa.energy.gov/.

E. Review Under Executive Order 13132

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

F. Review Under Executive Order 12988

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

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) 
requires each Federal agency to assess the effects of Federal 
regulatory actions on State, local, and Tribal governments and the 
private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). 
For a proposed regulatory action likely to result in a rule that may 
cause the expenditure by State, local, and Tribal governments, in the 
aggregate, or by the private sector of $100 million or more in any one 
year (adjusted annually for inflation), section 202 of UMRA requires a 
Federal agency to publish a written statement that estimates the 
resulting costs, benefits, and other effects on the national economy. 
(2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to 
develop an effective process to permit timely input by elected officers 
of State, local, and Tribal governments on a proposed ``significant 
intergovernmental mandate,'' and requires an agency plan for giving 
notice and opportunity for timely input to potentially affected small 
governments before establishing any requirements that might 
significantly or uniquely affect small governments. On March 18, 1997, 
DOE published a statement of policy on its process for 
intergovernmental consultation under UMRA. 62 FR 12820. DOE's policy 
statement is also available at http://energy.gov/gc/office-general-counsel.
    Although today's proposed rule does not contain a Federal 
intergovernmental mandate, it may require expenditures of $100 million 
or more on the private sector. Specifically, the proposed rule will 
likely result in a final rule that could require expenditures of $100 
million or more. Such expenditures may include: (1) Investment in 
research and development and in capital expenditures by commercial 
refrigeration equipment manufacturers in the years between the final 
rule and the compliance date for the new standards; and (2) incremental 
additional expenditures by customers to purchase higher efficiency 
commercial refrigeration equipment, starting at the compliance date for 
the applicable standard.
    Section 202 of UMRA authorizes a Federal agency to respond to the 
content requirements of UMRA in any other statement or analysis that 
accompanies the 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

[[Page 55985]]

Executive Order 12866. The SUPPLEMENTARY INFORMATION section of this 
NOPR and the ``Regulatory Impact Analysis'' section of the NOPR TSD for 
this proposed rule respond to those requirements.
    Under section 205 of UMRA, DOE is obligated to identify and 
consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(d), 
(f), and (o), 6313(e), and 6316(a), today's proposed rule would 
establish energy conservation standards for commercial refrigeration 
equipment that are designed to achieve the maximum improvement in 
energy efficiency that DOE has determined to be both technologically 
feasible and economically justified. A full discussion of the 
alternatives considered by DOE is presented in the ``Regulatory Impact 
Analysis'' section of the TSD for today's proposed rule.

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

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

I. Review Under Executive Order 12630

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

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

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

K. Review Under Executive Order 13211

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

L. Review Under the Information Quality Bulletin for Peer Review

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

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this notice. If 
you plan to attend the public meeting, please notify Ms. Brenda Edwards 
at (202) 586-2945 or Brenda.Edwards@ee.doe.gov. Please note that 
foreign nationals visiting DOE Headquarters are subject to advance 
security screening procedures. Any foreign national wishing to 
participate in the meeting should advise DOE as soon as possible by 
contacting Ms. Edwards to initiate the necessary procedures. Please 
also note that those wishing to bring laptops into the Forrestal 
Building will be required to obtain a property pass. Visitors should 
avoid bringing laptops, or allow an extra 45 minutes.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at: www1.eere.energy.gov/buildings/appliance_standards/product.aspx/productid/52. Participants

[[Page 55986]]

are responsible for ensuring their systems are compatible with the 
webinar software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

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

C. Conduct of the Public Meeting

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

D. Submission of Comments

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

[[Page 55987]]

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

E. Issues on Which DOE Seeks Comment

    Although DOE welcomes comments on any aspect of this proposal, DOE 
is particularly interested in receiving comments and views of 
interested parties concerning the following issues.
1. Primary and Secondary Equipment Classes
    In the January 2009 final rule analysis, DOE selected 15 
``primary'' classes to analyze directly in its engineering analyses, 
and designated the remaining 23 classes as ``secondary'' classes, for 
which standards were developed based on the primary class results. 
These designations were based on shipment-volume data coupled with 
input from stakeholders during that rulemaking process. As this 
rulemaking seeks to review and potentially amend standards for the 38 
total equipment classes examined in the January 2009 final rule, DOE 
retained those primary and secondary class designations in its 
analyses. Additionally, equipment for which EPACT 2005 directly set 
standards was incorporated into the scope of this rulemaking. DOE 
treated all of these equipment classes previously covered by EPACT 2005 
standards as primary classes. DOE seeks comment regarding its 
designation of primary and secondary equipment classes.
2. Design Option and Core Case Costs
    During the NOPR analyses, DOE performed physical teardowns on a 
selection of units currently on the market. From the bills of materials 
and cost model developed using this teardown data, DOE calculated an 
estimate of the manufacturer production cost of the core case assembly 
for each of the primary equipment classes in the engineering analysis. 
DOE also developed estimates of the costs for components that affect 
energy consumption, namely those it considered as design options. These 
estimates were obtained from a combination of sources, including 
publicly available prices from vendors and confidential estimates 
provided by manufacturers. This price data was aggregated for use in 
the engineering analysis. DOE seeks comment and data regarding the 
manufacturer production costs for commercial refrigeration equipment 
cases and components and the technological feasibility of applying 
technologies identified in the engineering analysis to meeting the 
proposed standards.
3. Offset Factors
    In its January 2009 final rule, DOE developed offset factors as a 
way to adjust the energy efficiency requirements for smaller equipment 
in each equipment class analyzed. These offset factors accounted for 
certain components of the refrigeration load (such as conduction end 
effects) that remain constant when equipment size varies and thus 
affect smaller cases disproportionately. The offset factors were 
intended to approximate these constant loads and provide a fixed end 
point, corresponding to a zero-volume or zero-TDA case, in an equation 
that describes the relationship between energy consumption and the 
corresponding TDA or volume metric. Similarly, the EPACT 2005 standards 
also contained values that did not vary with unit volume and which 
served a similar purpose. In developing standard level equations for 
the proposed amended standards, DOE scaled the existing offset factors 
by the ratio of the amount of energy consumption allowed by the 
existing standards for a given representative unit and the energy use 
calculated in the engineering analysis at each TSL. This adjustment of 
the offset factors ensures that neither larger nor smaller units are 
disadvantaged by these proposed standards. DOE seeks comment on its 
methodology for developing offset factors for the standard level 
equations presented in this NOPR.
4. Extension of Standards
    In its January 2009 final rule, DOE developed a quantitative method 
for applying the standards developed for its primary equipment classes 
to the remaining, secondary classes. This approach involved extension 
multipliers created using results from the analysis of the primary 
equipment classes and a set of focused matched-pair analyses. 
Additionally, DOE applied standards developed for certain primary 
equipment classes directly to other similar secondary classes. In this 
rulemaking, DOE retained the extension multipliers from the January 
2009 final rule and reapplied them to the equipment classes from that 
rulemaking for which DOE is proposing amended standards. DOE believes 
that the relationship between the performances of various types of 
equipment is still adequately modeled by the use of those multipliers. 
DOE's approach in developing extension multipliers in the 2009 
rulemaking and its rationale for retaining them in this rulemaking are 
discussed in detail in section 5.9 of the NOPR TSD. DOE seeks comment 
on its approach to extending the results of the engineering analysis to 
secondary equipment classes. Specifically, DOE requests comment on 
whether the assumptions underlying its development and application of 
extension multipliers are appropriate, or whether there are additional 
differences between related equipment classes that DOE should take into 
account.
5. Types of Refrigerant Analyzed
    DOE based its analysis on refrigeration equipment using R404A and 
R134a, HFC refrigerants widely used in the commercial refrigeration 
industry. DOE received comments regarding the consideration of 
refrigerants with lower GWP due to possible shifts in the marketplace 
toward these refrigerants and notes that a number of lower-GWP 
alternatives are available for use within certain portions of the 
commercial refrigeration sector.\96\ The use of alternative 
refrigerants could be impacting to Climate Change and the environment. 
DOE requests comment on the extent of the current use or likely future 
use of lower-GWP refrigerants,

[[Page 55988]]

and asks manufacturers to submit data related to the ability of 
equipment (either existing or redesigned) using these refrigerants to 
meet the proposed standard. DOE seeks input as to the impacts of 
alternative refrigerants to the refrigeration system in this 
rulemaking.
---------------------------------------------------------------------------

    \96\ For an overview of lower-GWP alternatives available to 
certain sections of the commercial refrigeration equipment sector, 
please see http://www.epa.gov/ozone/downloads/EPA_HFC_ComRef.pdf
---------------------------------------------------------------------------

6. Distribution Channel Market Shares and Markups
    DOE has revised the distribution channel market shares for some of 
the equipment classes based on comments received during April 2011 
preliminary analysis public meeting. The markup values associated with 
each distribution channel have been updated based on currently 
available industry profit data. DOE welcomes comment on the assumptions 
and values used for the markups analysis.
7. Market Shares of Efficiency Levels
    DOE seeks comments on the market shares of efficiency levels used 
for this NOPR analysis. DOE is currently using a model to predict the 
market share of efficiency levels. According to commenters, the 
calculated market shares are biased toward the higher efficiency 
levels. However, DOE has cited lack of data as the primary reason for 
its lack of more accurate numbers. DOE welcomes information from 
stakeholders that would aid DOE in improving upon the numbers for 
market shares of efficiency levels.
8. Maintenance and Repair Costs at Higher Efficiency Levels.
    Currently, DOE assumes no increase in regular maintenance costs at 
higher efficiency levels contemplated in the proposed rule. Lighting 
maintenance and repair costs are estimated based on OEM costs; they 
vary with higher efficiency levels. DOE welcomes stakeholder input and 
additional information to improve upon these estimates with respect to 
maintenance and repair costs. Data pertaining to cost increases 
specifically associated with the design options considered in this 
rulemaking would be greatly appreciated.
9. Impact of Amended Standards on Future Shipments
    Currently, DOE assumes that future shipments of commercial 
refrigeration equipment will not be affected by amended standards. 
While DOE has cited strong reasons to believe that this assumption is 
true for display cases, the assumption may not be entirely true in the 
case of equipment used in the foodservice industry. While there may be 
a small effect in the initial years of amended standards, DOE does not 
have data for the commercial refrigeration industry to obtain a 
reasonably accurate estimate of this effect. DOE welcomes stakeholder 
input and estimates on the effect of amended standards on future 
commercial refrigeration equipment shipments. DOE also welcomes input 
and data on the demand elasticity estimates used in the analysis.
10. Learning Impacts on Price Forecast for Future Shipments
    Currently, DOE projects future prices by subtracting the cost 
reductions associated with learning effects from the cost associated 
with the amended standards. DOE analyzes learning effects using PPI, a 
quantity adjusted index of wholesale prices, as a proxy for price of 
commercial refrigerators. DOE is seeking input, and price data that 
could be used in place of PPI. Also DOE is seeking input on the 
magnitude of the price data and the cause of those price changes.
11. Product Attributes
    DOE requests comment on whether there are features or attributes of 
the more energy-efficient commercial refrigerators that manufacturers 
would produce to meet the standards in this proposed rule that might 
affect how they would be used by different customer categories (e.g., 
refrigeration in grocery stores or restaurants). One example of such an 
effect might be that grocers or restaurant operators would change 
where, how, and how long food items would be stored or displayed. DOE 
requests comment specifically on how any such effects should be weighed 
in the choice of standards for these refrigerators for the final rule.
12. Analytical Timeline
    For this rulemaking, DOE analyzed the effects of this proposal 
assuming that the commercial refrigerators would be available to 
purchase for 30 years and undertook a sensitivity analysis using 9 
years rather than 30 years of product shipments. The choice of a 30-
year period of shipments is consistent with the DOE analysis for other 
products and commercial equipment. The choice of a 9-year period is a 
proxy for the timeline in EPCA for the review of certain energy 
conservation standards and potential revision of and compliance with 
such revised standards. We are seeking input, information and data on 
whether there are ways to refine the analytic timeline further.
13. Equipment Lifetime
    DOE defines lifetime as the age at which a commercial refrigeration 
equipment unit is retired from service. DOE based expected equipment 
lifetime on discussions with industry experts and concluded that a 
typical lifetime of 10 years is appropriate for most commercial 
refrigeration equipment in large grocery/multi-line stores and 
restaurants. Operators of small food retail stores, on the other hand, 
tend to use display cases longer. DOE used 15 years as the average 
equipment lifetime for display cases used in such retail stores. DOE 
welcomes further input on the average equipment lifetimes for the LCC 
analysis and NIA.
14. Small Businesses
    During the Framework and preliminary analysis public meetings, DOE 
received many comments regarding the potential impacts of amended 
energy conservation standards on small business manufacturers of 
commercial refrigeration equipment. In its market and technology 
assessment and manufacturer impact analysis research, DOE developed a 
list of companies falling under its classification of small businesses, 
and sought specific feedback regarding potentially disproportionate 
impacts of amended standards on these businesses. DOE incorporated this 
feedback into its analyses for the NOPR and has presented its results 
in this notice and the technical support document. However, DOE seeks 
comment and, in particular, data, in its efforts to quantify the 
impacts of this rulemaking on small business manufacturers. In 
addition, DOE seeks comment on any disproportionate impacts of amended 
standards on any particular customer groups, such as small businesses 
that are small grocery, convenience stores, and restaurants.
15. Update to Social Cost of Carbon Values
    DOE solicits comment on the application of the new SCC values used 
to determine the social benefits of CO2 emissions reductions 
over the rulemaking analysis period. The rulemaking analysis period 
covers from 2017 to 2046 plus an additional 15 years to account for the 
lifetime of the equipment purchased between 2017 and 2046. In 
particular, the agency solicits comment on the agency's derivation of 
SCC values after 2050 where the agency applied the average annual 
growth rate of the SCC estimates in 2040-2050 associated with each of 
the four sets of values.
16. Cumulative Regulatory Burdens
    The agency seeks input on the cumulative regulatory burden that may 
be imposed on industry either from recently implemented rulemakings for

[[Page 55989]]

this product class or other rulemakings that affect the same industry.
17. Compliance Date
    Pursuant to EPCA, any amended standards established in this 
rulemaking must apply to equipment that is manufactured on or after 3 
years after the final rule is published in the Federal Register unless 
DOE determines, by rule, that a 3-year period is inadequate, in which 
case DOE may extend the compliance date for that standard by an 
additional 2 years. DOE proposes to provide 3 years for compliance with 
this standard, but seeks comment on whether it should consider a longer 
compliance date as authorized, and, if so, by how much.

VIII. Approval of the Office of the Secretary

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

List of Subjects in 10 CFR Part 431

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

    Issued in Washington, DC, on August 29, 2013.
Mike Carr,
Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE proposes to amend 
part 431 of chapter II of title 10, of the Code of Federal Regulations, 
as set forth below:

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

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

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

0
2. Section 431.62 is amended by adding in alphabetical order a 
definition for ``service over counter,'' to read as follows:

Sec.  431.62  Definitions concerning commercial refrigerators, freezers 
and refrigerator-freezers.

* * * * *
    Service over counter means equipment with sliding or hinged doors 
in the back intended for use by sales personnel for loading and 
retrieving items for sale and fixed, sliding or hinged transparent 
panels in the front for displaying merchandise. The equipment has a 
height no greater than 66 inches and is intended to serve as a counter 
for transactions between sales personnel and customers.
* * * * *
0
3. Section 431.66 is amended by:
0
a. Revising paragraph (a)(3);
0
b. Revising paragraph (b) introductory text;
0
c. Revising paragraph (c);
0
d. Revising paragraph (d) introductory text; and
0
c. Adding paragraph (e).
    The revisions and addition read as follows:

Sec.  431.66  Energy conservation standards and their effective dates.

    (a) * * *
    (3) For the purpose of paragraph (d) of this section, the term 
``TDA'' means the total display area (ft\2\) of the case, as defined in 
ARI Standard 1200-2006, appendix D (incorporated by reference, see 
Sec.  431.63). For the purpose of paragraph (e) of this section, the 
term ``TDA'' means the total display area (ft\2\) of the case, as 
defined in AHRI Standard 1200 (I-P)-2010, appendix D (incorporated by 
reference, see Sec.  431.63).
    (b) Each commercial refrigerator, freezer, and refrigerator-freezer 
with a self-contained condensing unit designed for holding temperature 
applications manufactured on or after January 1, 2010 and before [date 
3 years after date of publication of the final rule in the Federal 
Register] shall have a daily energy consumption (in kilowatt-hours per 
day) that does not exceed the following:
* * * * *
    (c) Each commercial refrigerator with a self-contained condensing 
unit designed for pull-down temperature applications and transparent 
doors manufactured on or after January 1, 2010 and before [date 3 years 
after date of publication of the final rule in the Federal Register] 
shall have a daily energy consumption (in kilowatt-hours per day) of 
not more than 0.126V + 3.51.
    (d) Each commercial refrigerator, freezer, and refrigerator-freezer 
with a self-contained condensing unit and without doors; commercial 
refrigerator, freezer, and refrigerator-freezer with a remote 
condensing unit; and commercial ice-cream freezer manufactured on or 
after January 1, 2012 and before [date 3 years after date of 
publication of the final rule in the Federal Register] shall have a 
daily energy consumption (in kilowatt-hours per day) that does not 
exceed the levels specified:
* * * * *
    (e) Each commercial refrigerator, freezer, and refrigerator-freezer 
with a self-contained condensing unit designed for holding temperature 
applications and with solid or transparent doors; commercial 
refrigerator with a self-contained condensing unit designed for pull-
down temperature applications and with transparent doors; commercial 
refrigerator, freezer, and refrigerator-freezer with a self-contained 
condensing unit and without doors; commercial refrigerator, freezer, 
and refrigerator-freezer with a remote condensing unit; and commercial 
ice-cream freezer manufactured on or after [date 3 years after date of 
publication of the final rule in the Federal Register], shall have a 
daily energy consumption (in kilowatt-hours per day) that does not 
exceed the levels specified:
    (1) For equipment other than hybrid equipment, refrigerator/
freezers, or wedge cases:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                         Maximum daily
       Equipment category           Condensing unit      Equipment family       Rating temp.        Operating      Equipment class    energy consumption
                                     configuration                                 [deg]F         temp.  [deg]F      designation*           kWh/day
--------------------------------------------------------------------------------------------------------------------------------------------------------
Remote Condensing Commercial      Remote (RC)........  Vertical Open (VOP)  38 (M).............            >=32  VOP.RC.M...........  0.61 x TDA + 3.03
 Refrigerators and Commercial                                               0 (L)..............             =32  SVO.RC.M...........  0.63 x TDA + 2.41
                                                        (SVO).              0 (L)..............             =32  HZO.RC.M...........  0.35 x TDA + 2.88
                                                        (HZO).              0 (L)..............             =32  VCT.RC.M...........  0.08 x TDA + 0.72
                                                        Transparent (VCT).  0 (L)..............             =32  HCT.RC.M...........  0.14 x TDA + 0.11
                                                        Transparent (HCT).  0 (L)..............             =32  VCS.RC.M...........  0.1 x V + 0.24
                                                        Solid (VCS).        0 (L)..............             =32  HCS.RC.M...........  0.1 x V + 0.24
                                                        Solid (HCS).        0 (L)..............             =32  SOC.RC.M...........  0.39 x TDA + 0.08
                                                        Counter (SOC).      0 (L)..............             =32  VOP.SC.M...........  1.51 x TDA + 4.09
 Refrigerators and Commercial                                               0 (L)..............             =32  SVO.SC.M...........  1.5 x TDA + 3.99
                                                        (SVO).              0 (L)..............             =32  HZO.SC.M...........  0.75 x TDA + 5.44
                                                        (HZO).              0 (L)..............             =32  VCT.SC.M...........  0.04 x V + 1.07
 Refrigerators and Commercial                           Transparent (VCT).  0 (L)..............             =32  VCS.SC.M...........  0.03 x V + 0.53
                                                        Solid (VCS).        0(L)...............             =32  HCT.SC.M...........  0.02 x V + 0.51
                                                        Transparent (HCT).  0 (L)..............             =32  HCS.SC.M...........  0.02 x V + 0.37
                                                        Solid (HCS).        0 (L)..............             =32  SOC.SC.M...........  0.32 x TDA + 0.53
                                                        Counter (SOC).      0 (L)..............             =32  PD.SC.M............  0.03 x V + 0.83
 Refrigerators with Transparent
 Doors for Pull-Down Temperature
 Applications.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Commercial Ice-Cream Freezers...  Remote (RC)........  Vertical Open (VOP)  -15 (I)............          pre>
```