```

[Federal Register Volume 79, Number 244 (Friday, December 19, 2014)]
[Proposed Rules]
[Pages 76141-76189]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-29519]

[[Page 76141]]

Vol. 79

Friday,

No. 244

December 19, 2014

Part IV

Department of Energy

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

10 CFR Part 430

Energy Conservation Program: Energy Conservation Standards for 
Residential Dishwashers; Proposed Rule

Federal Register / Vol. 79 , No. 244 / Friday, December 19, 2014 / 
Proposed Rules

[[Page 76142]]

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DEPARTMENT OF ENERGY

10 CFR Part 430

[Docket Number EERE-2014-BT-STD-0021]
RIN 1904-AD24

Energy Conservation Program: Energy Conservation Standards for 
Residential Dishwashers

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

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

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

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

DATES: DOE will accept comments, data, and information regarding this 
notice of proposed rulemaking (NOPR) before and after the public 
meeting, but no later than February 17, 2015. See section VII Public 
Participation for details.
    DOE will hold a public meeting on Thursday, February 5, 2015, 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.

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. Please note that foreign nationals participating in the 
public meeting are subject to advance security screening procedures 
which require advance notice prior to attendance at the public meeting. 
If a foreign national wishes to participate in the public meeting, 
please inform DOE as soon as possible by contacting Ms. Regina 
Washington at (202) 586-1214 or by email: foreignvisit@ee.doe.gov so 
that the necessary procedures can be completed. Please also note that 
those wishing to bring laptops into the Forrestal Building will be 
required to obtain a property pass. Visitors should avoid bringing 
laptops, or allow an extra 45 minutes. Persons can attend the public 
meeting via webinar. For more information, refer to section VII of this 
document (Public Participation).
    Any comments submitted must identify the NOPR for Energy 
Conservation Standards for residential dishwashers, and provide docket 
number EERE-2014-BT-STD-0021 and/or regulatory information number (RIN) 
number 1904-AD24. 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: ResDishwashers2014STD0021@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-5B, 1000 Independence Avenue SW., 
Washington, DC, 20585-0121. If possible, please submit all items on a 
CD. It is not necessary to include printed copies.
    4. Hand Delivery/Courier: Ms. Brenda Edwards, U.S. Department of 
Energy, Building Technologies 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-2014-BT-STD-0021. 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. Bryan Berringer, U.S. Department of Energy, Office of Energy 
Efficiency and Renewable Energy, Building Technologies Program, EE-5B, 
1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: 
(202) 586-0371. Email: dishwashers@ee.Doe.Gov.
    Elizabeth Kohl, U.S. Department of Energy, Office of the General 
Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-
0121. Telephone: (202) 202-586-7796. Email: Elizabeth.Kohl@hq.doe.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Summary of the Proposed Rule
    A. Benefits and Costs to Consumers
    B. Impact on Manufacturers
    C. National Benefits
II. Introduction
    A. Authority
    B. Background
    1. Current Standards
    2. History of Standards Rulemaking for Residential Dishwashers
    3. Residential Dishwasher Test Procedure History
III. General Discussion
    A. Product Classes and Scope of Coverage
    B. Technological Feasibility
    1. General
    2. Maximum Technologically Feasible Levels
    C. Energy Savings
    1. Determination of Savings
    2. Significance of Savings
    D. Economic Justification
    1. Specific Criteria
    a. Economic Impact on Manufacturers and Consumers
    a. Savings in Operating Costs Compared to Increase in Price
    b. Energy Savings
    c. Lessening of Utility or Performance of Products
    d. Impact of Any Lessening of Competition
    e. Need for National Energy Conservation

[[Page 76143]]

    f. Other Factors
    2. Rebuttable Presumption
IV. Methodology and Discussion
    A. Market and Technology Assessment
    1. Scope and Product Classes
    2. Technology Options
    B. Screening Analysis
    1. Screened-Out Technologies
    2. Remaining Technologies
    C. Engineering Analysis
    1. Efficiency Levels
    a. Baseline Efficiency Levels
    b. Higher Energy Efficiency Levels
    2. Manufacturer Production Cost Estimates
    D. Markups Analysis
    E. Energy and Water Use Analysis
    F. Life-Cycle Cost and Payback Period Analysis
    1. Product Cost
    2. Installation Cost
    3. Annual Energy and Water Consumption
    4. Energy Prices
    5. Water and Wastewater Prices
    6. Maintenance and Repair Costs
    7. Product Lifetime
    8. Discount Rates
    9. Base-Case Efficiency Distribution
    10. Inputs to Payback Period Analysis
    11. Rebuttable-Presumption Payback Period
    G. Shipments
    H. National Impact Analysis
    1. National Energy and Water Savings
    a. Forecasted Efficiency in the Base Case and Standards Cases
    2. Net Present Value Analysis
    a. Total Installed Cost per Unit
    I. Consumer Subgroup Analysis
    J. Manufacturer Impact Analysis
    1. Overview
    a. Phase 1, Industry Profile
    b. Phase 2, Industry Cash Flow Analysis
    c. Phase 3, Sub-Group Impact Analysis
    2. GRIM
    a. GRIM Key Inputs
    b. GRIM Scenarios
    3. Manufacturer Interviews
    K. Emissions Analysis
    L. Monetizing Carbon Dioxide and Other Emissions Impacts
    1. Social Cost of Carbon
    a. Monetizing Carbon Dioxide Emissions
    b. Development of Social Cost of Carbon Values
    c. Current Approach and Key Assumptions
    2. Valuation of Other Emissions Reductions
    M. Utility Impact Analysis
    N. Employment Impact Analysis
V. Analytical Results
    A. Trial Standard Levels
    B. Economic Justification and Energy Savings
    1. Economic Impacts on Individual Consumers
    a. Life-Cycle Cost and Payback Period
    b. Consumer Subgroup Analysis
    c. Rebuttable Presumption Payback
    2. Economic Impacts on Manufacturers
    a. Industry Cash Flow Analysis Results
    b. Impacts on Employment
    c. Impacts on Manufacturing Capacity
    d. Impacts on Sub-Groups of Manufacturers
    e. Cumulative Regulatory Burden
    3. National Impact Analysis
    a. Significance of Energy Savings
    b. Net Present Value of Consumer Costs and Benefits
    c. Impacts on Employment
    4. Impact on Utility or Performance of Products
    5. Impact of Any Lessening of Competition
    6. Need of the Nation to Conserve Energy
    7. Summary of National Economic Impacts
    8. Other Factors
    C. Conclusion
    1. Benefits and Burdens of TSLs Considered for Residential 
Dishwashers
    2. Summary of Benefits and Costs (Annualized) of the Standards
VI. Procedural Issues and Regulatory Review
    A. Review Under Executive Orders 12866 and 13563
    B. Review Under the Regulatory Flexibility Act
    C. Review Under the Paperwork Reduction Act
    D. Review Under the National Environmental Policy Act of 1969
    E. Review Under Executive Order 13132
    F. Review Under Executive Order 12988
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999
    I. Review Under Executive Order 12630
    J. Review Under the Treasury and General Government 
Appropriations Act, 2001
    K. Review Under Executive Order 13211
    L. Review Under the Information Quality Bulletin for Peer Review
VII. Public Participation
    A. Attendance at the Public Meeting
    B. Procedure for Submitting Prepared General Statements For 
Distribution
    C. Conduct of the Public Meeting
    D. Submission of Comments
    E. Issues on Which DOE Seeks Comment
VIII. Approval of the Office of the Secretary

I. Summary of the Proposed Rule

    Title III, Part B \1\ of the Energy Policy and Conservation Act of 
1975 (EPCA or the Act), established the Energy Conservation Program for 
Consumer Products Other Than Automobiles. Public Law 94-163 (as 
codified in 42 U.S.C. 6291-6309).\2\ These products include residential 
dishwashers, the subject of today's notice.
---------------------------------------------------------------------------

    \1\ For editorial reasons, upon codification in the U.S. Code, 
Part B was redesignated Part A.
    \2\ All references to EPCA in this document refer to the statute 
as amended through the American Energy Manufacturing Technical 
Corrections Act (AEMTCA), Pub. L. 112-210 (Dec. 18, 2012).
---------------------------------------------------------------------------

    Pursuant to EPCA, any new or amended energy conservation standard 
must be designed to achieve the maximum improvement in energy 
efficiency that is technologically feasible and economically justified. 
(42 U.S.C. 6295(o)(2)(A)) Furthermore, the new or amended standard must 
result in a significant conservation of energy. (42 U.S.C. 
6295(o)(3)(B)) In accordance with these and other statutory provisions 
discussed in this notice, DOE proposes amended energy conservation 
standards for residential dishwashers. The proposed standards, which 
are the maximum annual energy use and maximum per-cycle water 
consumption for each product class, are shown in Table I.1. These 
proposed standards, if adopted, would apply to all products listed in 
Table I.1 and manufactured in, or imported into, the United States on 
or after the date 3 years after the publication of any final rule for 
this rulemaking. For purposes of the analysis conducted in support of 
this proposed rule, DOE used 2016 as the expected year of publication 
of any final standards.

    Table I.1--Proposed Energy Conservation Standards for Residential
                               Dishwashers
                       [Compliance Starting 2019]
------------------------------------------------------------------------
                                    Maximum annual     Maximum per-cycle
          Product class               energy use*      water consumption
------------------------------------------------------------------------
1. Standard (>=8 place settings   234 kilowatt-hours  3.1 gallons per
 plus 6 serving pieces).           per year (kWh/      cycle (gal/
                                   year).              cycle).
2. Compact (year......  3.1 gal/cycle.
 plus 6 serving pieces).
------------------------------------------------------------------------
* Annual energy use, expressed in kilowatt-hours (kWh) per year, is
  calculated as: The sum of the annual standby electrical energy in kWh
  and the product of (1) the representative average dishwasher use
  cycles per year and (2) the sum of machine electrical energy
  consumption per cycle in kWh, the total water energy consumption per
  cycle in kWh, and, for dishwashers having a truncated normal cycle,
  the drying energy consumption divided by 2 in kWh. A truncated normal
  cycle is defined as the normal cycle interrupted to eliminate the
  power-dry feature after the termination of the last rinse option.

A. Benefits and Costs to Consumers

    Table I.2 presents DOE's evaluation of the economic impacts of the 
proposed standards on consumers of residential dishwashers, as measured 
by the average life-cycle cost (LCC) savings and the simple payback 
period (PBP).\3\ The average LCC savings are positive for both the 
standard and compact product classes. The PBP for both product classes 
are also less than the projected

[[Page 76144]]

average lifetime of this product of approximately 15 years.
---------------------------------------------------------------------------

    \3\ The average LCC savings are measured relative to the base-
case efficiency distribution, which depicts the dishwasher market in 
the compliance year (see section IV.F.9). The simple PBP, which is 
designed to compare specific dishwasher efficiency levels, is 
measured relative to the baseline dishwasher (see section IV.C.1.a).

     Table I.2--Impacts of Proposed Energy Conservation Standards on
                  Consumers of Residential Dishwashers
------------------------------------------------------------------------
                                                                Simple
                                                Average LCC    payback
                 Product class                     savings      period
                                                  (2013$)      (years)
------------------------------------------------------------------------
Standard......................................           21          9.0
Compact.......................................            8          4.5
------------------------------------------------------------------------

B. Impact on Manufacturers

    The industry net present value (INPV) is the sum of the discounted 
cash flows to the industry from the base year through the end of the 
analysis period (2014 to 2048). Using a real discount rate of 8.5 
percent, DOE estimates that the INPV for manufacturers of residential 
dishwashers is $586.6 million in 2013$. Under the proposed standards, 
DOE expects that manufacturers may lose up to 34.7 percent of their 
INPV, which is approximately $203.7 million. Additionally, based on its 
analysis of available information, DOE does not expect any plant 
closings or significant loss of employment.

C. National Benefits \4\
---------------------------------------------------------------------------

    \4\ All monetary values in this section are expressed in 2013 
dollars and are discounted to 2014.
---------------------------------------------------------------------------

    DOE's analyses indicate that the proposed standards would save a 
significant amount of energy. The lifetime savings for residential 
dishwashers purchased in the 30-year period that begins in the year of 
compliance with amended standards (2019-2048) amount to 1.06 
quadrillion Btu (quads) \5\ and 0.24 trillion gallons of water. This is 
a savings of 12 percent relative to the energy use of this product in 
the base case.\6\
---------------------------------------------------------------------------

    \5\ A quad is equal to 10\15\ British thermal units (Btu).
    \6\ The base case assumptions are described in section IV.G.
---------------------------------------------------------------------------

    The cumulative net present value (NPV) of total consumer costs and 
savings of the proposed standards for residential dishwashers ranges 
from $0.23 billion (at a 7-percent discount rate) to $ 2.14 billion (at 
a 3-percent discount rate). This NPV expresses the estimated total 
value of future operating-cost savings minus the estimated increased 
product costs for products purchased in 2019-2048.
    In addition, the proposed standards would have significant 
environmental benefits. The energy savings described above would result 
in cumulative emission reductions (over the same period as for energy 
savings) of 61.9 million metric tons (Mt) \7\ of carbon dioxide 
(CO2), 345.1 thousand tons of methane, 42.9 thousand tons of 
sulfur dioxide (SO2), 126.7 thousand tons of nitrogen oxides 
(NOX), 0.7 thousand tons of nitrous oxide (N2O), 
and 0.1 tons of mercury (Hg).\8\ The cumulative reduction in 
CO2 emissions through 2030 amounts to 14.6 Mt.
---------------------------------------------------------------------------

    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
emissions other than CO2 are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2014 (AEO 2014) Reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2013.
---------------------------------------------------------------------------

    The value of the CO2 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.\9\ The derivation of the SCC values is discussed 
in section IV.L of this notice. Using discount rates appropriate for 
each set of SCC values, DOE estimates the present monetary value of the 
CO2 emissions reduction described above is between $0.4 
billion and $6.1 billion. DOE also estimates the present monetary value 
of the NOX emissions reduction is $0.08 billion at a 7-
percent discount rate and $0.17 billion at a 3-percent discount 
rate.\10\
---------------------------------------------------------------------------

    \9\ Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866. Interagency Working 
Group on Social Cost of Carbon, United States Government. May 2013; 
revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
    \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 residential 
dishwashers.

 Table I.3--Summary of National Economic Benefits and Costs of Proposed
       Energy Conservation Standards for Residential Dishwashers *
------------------------------------------------------------------------
                                           Present value
                Category                   billion 2013$   Discount rate
------------------------------------------------------------------------
                                Benefits
------------------------------------------------------------------------
Operating Cost Savings..................             4.1              7%
                                                     9.2              3%
CO2 Reduction Monetized Value ($12.0/t               0.4              5%
 case) **...............................
CO2 Reduction Monetized Value ($40.5/t               2.0              3%
 case) **...............................
CO2 Reduction Monetized Value ($62.4/t               3.1            2.5%
 case) **...............................
CO2 Reduction Monetized Value ($119/t                6.1              3%
 case) **...............................
NOX Reduction Monetized Value (at $2,684/            0.1              7%
 ton)...................................             0.2              3%
Total Benefits [dagger].................             6.2              7%
                                                    11.4              3%
------------------------------------------------------------------------
                                  Costs
------------------------------------------------------------------------
                                                     3.9              7%
Incremental Installed Costs.............             7.1              3%
------------------------------------------------------------------------
                           Total Net Benefits
------------------------------------------------------------------------
                                                     2.3              7%
Including Emissions Reduction Monetized              4.3              3%
 Value [dagger].........................
------------------------------------------------------------------------
* This table presents the costs and benefits associated with residential
  dishwashers shipped in 2019-2048. These results include benefits to
  consumers which accrue after 2048 from the products purchased in 2019-
  2048. The results account for the incremental variable and fixed costs
  incurred by manufacturers due to the standard, some of which may be
  incurred in preparation for the rule.

[[Page 76145]]

 
** The CO2 values represent global monetized values of the SCC, in
  2013$, in 2015 under several scenarios of the updated SCC values. The
  first three cases use the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The fourth case
  represents the 95th percentile of the SCC distribution calculated
  using a 3% discount rate. The SCC time series used by DOE incorporate
  an escalation factor.
[dagger] Total Benefits for both the 3% and 7% cases are derived using
  the series corresponding to average SCC with 3-percent discount rate.

    The benefits and costs of today's proposed standards, for products 
sold in 2019-2048, can also be expressed in terms of annualized values. 
The annualized monetary values are the sum of (1) the annualized 
national economic value of the benefits from consumer operation of 
products that meet the new or amended standards (consisting primarily 
of operating cost savings from using less energy, minus increases in 
equipment purchase and installation costs, which is another way of 
representing consumer NPV), and (2) the annualized monetary value of 
the benefits of emission reductions, including CO2 emission 
reductions.\11\
---------------------------------------------------------------------------

    \11\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2014. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO2 reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year, that yields the same present value.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 emission reductions provides a useful perspective, two 
issues should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, whereas the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO2 savings are performed with different methods 
that use different time frames for analysis. The national operating 
cost savings is measured for the lifetime of residential dishwashers 
shipped in 2019-2048. The SCC values, on the other hand, reflect the 
present value of some future climate-related impacts resulting from the 
emission of one ton of carbon dioxide in each year. These impacts 
continue well beyond 2100.
    Estimates of annualized benefits and costs of the proposed 
standards are shown in Table I.4. The results under the primary 
estimate are as follows. Using a 7-percent discount rate for benefits 
and costs other than CO2 reduction, for which DOE used a 3-
percent discount rate along with the average SCC series that has a 
value of $40.5/t in 2015, the cost of the standards proposed in today's 
rule is $413million per year in increased equipment costs, while the 
benefits are $437 million per year in reduced equipment operating 
costs, $113 million in CO2 reductions, and $8.37 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $146 million per year. Using a 3-percent discount rate for all 
benefits and costs and the average SCC series that has a value of 
$40.5/t in 2015, the cost of the standards proposed in today's rule is 
$406 million per year in increased equipment costs, while the benefits 
are $529 million per year in reduced operating costs, $113 million in 
CO2 reductions, and $9.95 million in reduced NOX 
emissions. In this case, the net benefit amounts to $246 million per 
year.

                     Table I.4--Annualized Benefits and Costs of Proposed Energy Conservation Standards for Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Million 2013$/year
                                         Discount rate         -----------------------------------------------------------------------------------------
                                                                     Primary estimate *        Low net benefits estimate *  High net benefits estimate *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Operating Cost Savings.........  7%...........................  437.........................  388.........................  506.
                                 3%...........................  529.........................  462.........................  624.
CO[ihel2] Reduction Monetized    5%...........................  34..........................  30..........................  39.
 Value ($12.0/t case)*.
CO[ihel2] Reduction Monetized    3%...........................  113.........................  100.........................  131.
 Value ($40.5/t case)*.
CO[ihel2] Reduction Monetized    2.5%.........................  165.........................  146.........................  191.
 Value ($62.4/t case)*.
CO[ihel2] Reduction Monetized    3%...........................  351.........................  311.........................  406.
 Value ($119/t case)*.
NOX Reduction Monetized Value    7%...........................  8.37........................  7.53........................  9.49.
 (at $2,684/ton).                3%...........................  9.95........................  8.86........................  11.43.
Total Benefits [dagger]........  7% plus CO[ihel2] range......  479 to 796..................  425 to 706..................  555 to 921.
                                 7%...........................  558.........................  496.........................  647.
                                 3% plus CO[ihel2] range......  572 to 890..................  501 to 782..................  674 to 1,041.
                                 3%...........................  652.........................  572.........................  766.
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Consumer Incremental Product     7%...........................  413.........................  468.........................  371.
 Costs.                          3%...........................  406.........................  465.........................  361.

[[Page 76146]]

 
                                                                      Net Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total[dagger]..................  7% plus CO[ihel2] range......  66 to 383...................  -43 to 238..................  183 to 550.
                                 7%...........................  146.........................  28..........................  275.
                                 3% plus CO[ihel2] range......  167 to 484..................  36 to 317...................  313 to 680.
                                 3%...........................  246.........................  106.........................  405.
--------------------------------------------------------------------------------------------------------------------------------------------------------
* This table presents the annualized costs and benefits associated with residential dishwashers shipped in 2019-2048. These results include benefits to
  consumers which accrue after 2048 from the products purchased in 2019-2048. The results account for the incremental variable and fixed costs incurred
  by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits
  Estimates utilize projections of energy prices from the AEO 2014 Reference case, Low Estimate, and High Estimate, respectively. In addition,
  incremental product costs reflect a medium decline rate for projected product prices in the Primary Estimate, a low decline rate for projected product
  prices in the Low Benefits Estimate, and a high decline rate for projected product prices in the High Benefits Estimate. The methods used to derive
  projected price trends are explained in section IV.H.2 of this notice.
** The CO[ihel2] values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The first
  three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th
  percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate. In the
  rows labeled ``7% plus CO[ihel2] range'' and ``3% plus CO[ihel2] range,'' the operating cost and NOX benefits are calculated using the labeled
  discount rate, and those values are added to the full range of CO[ihel2] values.

    DOE has tentatively concluded that the proposed standards represent 
the maximum improvement in energy efficiency that is technologically 
feasible and economically justified, and would result in the 
significant conservation of energy. DOE further notes that products 
achieving these standard levels are already commercially available for 
the product classes covered by today's proposal.\12\ See chapter 10, 
section 10.2 for more discussion of the base case efficiency 
distribution. Based on the analyses described above, DOE has 
tentatively concluded that the benefits of the proposed standards to 
the nation (energy savings, positive NPV of consumer benefits, consumer 
LCC savings, and emission reductions) would outweigh the burdens (loss 
of INPV for manufacturers and LCC increases for some consumers).
---------------------------------------------------------------------------

    \12\ Currently 12.1 percent of the standard product class and 
48.1 percent of the compact product class are at the minimum 
efficiency level.
---------------------------------------------------------------------------

    DOE also considered more and less stringent energy efficiency 
levels as trial standard levels, and is still considering them in this 
rulemaking. However, DOE has tentatively concluded that the proposed 
standard level achieves the maximum improvement in energy efficiency 
that is technologically feasible and economically justified. Based on 
consideration of the public comments DOE receives in response to this 
notice and related information collected and analyzed during the course 
of this rulemaking effort, DOE may adopt energy efficiency levels 
presented in this notice that are either higher or lower than the 
proposed standards, or some combination of level(s) that incorporate 
the proposed standards in part.

II. Introduction

    The following section 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 residential 
dishwashers.

A. Authority

    Title III, Part B of the Energy Policy and Conservation Act of 1975 
(EPCA or the Act), established the Energy Conservation Program for 
Consumer Products Other Than Automobiles. Public Law 94-163 (as 
codified in 42 U.S.C. 6291-6309). The program covers most major 
household appliances (collectively referred to as ``covered 
products''), which includes the types of residential dishwashers that 
are the subject of this rulemaking. (42 U.S.C. 6292(a)(6)) EPCA 
prescribed energy conservation standards for these products (42 U.S.C. 
6295(g)(1) and (10)(A)), and directed DOE to conduct further 
rulemakings to determine whether to amend these standards. (42 U.S.C. 
6295(g)(4) and (10)(B)) In addition, the agency must periodically 
review its already established energy conservation standards for a 
covered product. (42 U.S.C. 6295(m)) Under this requirement, the next 
review that DOE would need to conduct must occur no later than six 
years from the issuance of any final rule establishing or amending a 
standard for a covered product.
    Pursuant to EPCA, DOE's energy conservation program for covered 
products consists essentially of four parts: (1) Testing; (2) labeling; 
(3) the establishment of Federal energy conservation standards; and (4) 
certification and enforcement procedures. The Federal Trade Commission 
(FTC) is primarily responsible for labeling, and DOE implements the 
remainder of the 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 
covered product. (42 U.S.C. 6293) Manufacturers of covered products 
must use the prescribed DOE test procedure as the basis for certifying 
to DOE that their products comply with the applicable energy 
conservation standards adopted under EPCA and when making 
representations to the public regarding the energy use or efficiency of 
those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use 
these test procedures to determine whether the products comply with 
standards adopted pursuant to EPCA. Id. The DOE test procedures for 
residential dishwashers currently appear at title 10 of the Code of 
Federal Regulations (CFR) part 430, subpart B, appendix C1 (appendix 
C1).
    DOE must follow specific statutory criteria for prescribing amended 
standards for covered products. As indicated above, any amended 
standard for a covered product must be designed to achieve the maximum 
improvement in energy efficiency that is technologically feasible and

[[Page 76147]]

economically justified. (42 U.S.C. 6295(o)(2)(A)) Furthermore, DOE may 
not adopt any standard that would not result in the significant 
conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not 
prescribe a standard: (1) For certain products, including residential 
dishwashers, 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)) In deciding whether a proposed standard is 
economically justified, DOE must determine whether the benefits of the 
standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make 
this determination after receiving comments on the proposed standard, 
and by considering, to the greatest extent practicable, the following 
seven factors:
    1. The economic impact of the standard on manufacturers and 
consumers of the products subject to the standard;
    2. The savings in operating costs throughout the estimated average 
life of the covered products in the type (or class) compared to any 
increase in the price, initial charges, or maintenance expenses for the 
covered products that are likely to result from the imposition of the 
standard;
    3. The total projected amount of energy, or as applicable, water, 
savings likely to result directly from the imposition of the standard;
    4. Any lessening of the utility or the performance of the covered 
products likely to result from the imposition of the standard;
    5. The impact of any lessening of competition, as determined in 
writing by the Attorney General, that is likely to result from the 
imposition of the standard;
    6. The need for national energy and water conservation; and
    7. Other factors the Secretary of Energy (Secretary) considers 
relevant. (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))
    EPCA, as codified, also contains what is known as an ``anti-
backsliding'' provision, which prevents the Secretary from prescribing 
any amended standard that either increases the maximum allowable energy 
use or decreases the minimum required energy efficiency of a covered 
product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe 
an amended or new standard if interested persons have established by a 
preponderance of the evidence that the standard is likely to result in 
the unavailability in the United States of any covered product type (or 
class) of performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as those generally available in the United States. (42 U.S.C. 
6295(o)(4))
    Further, EPCA, as codified, establishes a rebuttable presumption 
that a standard is economically justified if the Secretary finds that 
the additional cost to the consumer of purchasing a product complying 
with an energy conservation standard level will be less than three 
times the value of the energy savings during the first year that the 
consumer will receive as a result of the standard, as calculated under 
the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))
    Additionally, EPCA specifies requirements when promulgating a 
standard for a type or class of covered product that has two or more 
subcategories. (42 U.S.C. 6295(q)(1)) DOE must specify a different 
standard level than that which applies generally to such type or class 
of products for any group of covered products that have the same 
function or intended use if DOE determines that products within such 
group (A) consume a different kind of energy from that consumed by 
other covered products within such type (or class); or (B) have a 
capacity or other performance-related feature which other products 
within such type (or class) do not have and such feature justifies a 
higher or lower standard. (42 U.S.C. 6294(q)(1)) In determining whether 
a performance-related feature justifies a different standard for a 
group of products, DOE must consider such factors as the utility to the 
consumer of the feature and other factors DOE deems appropriate. Id. 
Any rule prescribing such a standard must include an explanation of the 
basis on which such higher or lower level was established. (42 U.S.C. 
6295(q)(2))
    Federal energy conservation requirements generally supersede State 
laws or regulations concerning energy conservation testing, labeling, 
and standards. (42 U.S.C. 6297(a)-(c)) DOE may, however, grant waivers 
of Federal preemption for particular State laws or regulations, in 
accordance with the procedures and other provisions set forth under 
EPCA. (42 U.S.C. 6297(d))
    Any final rule for new or amended energy conservation standards 
promulgated after July 1, 2010 must also address standby mode and off 
mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts 
a standard for a covered product after that date, it must, if justified 
by the criteria for adoption of standards under EPCA (42 U.S.C. 
6295(o)), incorporate standby mode and off mode energy use into the 
standard, or, if that is not feasible, adopt a separate standard for 
such energy use for that product. (42 U.S.C. 6295(gg)(3)(A)-(B)) DOE's 
current test procedures and standards for residential dishwashers 
address standby mode and off mode energy use. In this rulemaking, DOE 
intends to incorporate such energy use into any amended energy 
conservation standards it adopts in the final rule.
    DOE has also reviewed this regulation pursuant to Executive Order 
(E.O.) 13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). 
E.O. 13563 is supplemental to and explicitly reaffirms the principles, 
structures, and definitions governing regulatory review established in 
E.O. 12866. To the extent permitted by law, agencies are required by 
E.O. 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 E.O. 13563 requires agencies to use the 
best available techniques to quantify anticipated present and future 
benefits and costs as accurately as possible. In its guidance, the 
Office of Information and Regulatory Affairs has emphasized that such 
techniques may include identifying changing future compliance costs 
that might result from technological innovation or anticipated 
behavioral changes. For the reasons stated in the preamble, DOE 
believes that today's NOPR is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized. Consistent 
with E.O. 13563, and the range of impacts analyzed in this rulemaking, 
the energy efficiency

[[Page 76148]]

standards proposed herein by DOE achieve maximum net benefits.

B. Background

1. Current Standards
    In a direct final rule published on May 30, 2012 (hereinafter the 
``May 2012 direct final rule''), DOE prescribed the current energy 
conservation standards for residential dishwashers manufactured on or 
after May 30, 2013. 77 FR 31918. The current standards are set forth in 
Table II.1.

     Table II.1--Federal Energy Efficiency Standards for Residential
                               Dishwashers
------------------------------------------------------------------------
                                                        Per-cycle water
           Product class            Annual energy use  consumption (gal/
                                        (kWh/year)           cycle)
------------------------------------------------------------------------
Standard..........................                307                5.0
Compact...........................                222                3.5
------------------------------------------------------------------------

2. History of Standards Rulemaking for Residential Dishwashers
    The National Appliance Energy Conservation Act of 1987 (NAECA), 
Pub. L. 100-12 (March 17, 1989), amended EPCA and required that 
residential dishwashers be equipped with an option to dry without heat. 
NAECA further required that DOE conduct two cycles of rulemakings to 
determine if amended standards are justified. (42 U.S.C. 6295(g)(1) and 
(4))
    On May 14, 1991, DOE issued a final rule establishing performance 
standards for residential dishwashers to complete the first required 
rulemaking cycle. 56 FR 22250. Compliance with the new standards, 
codified at 10 CFR 430.32(f), was required on May 14, 1994.
    DOE then conducted a second standards rulemaking for residential 
dishwashers. DOE issued an advance notice of proposed rulemaking 
(ANOPR) on November 14, 1994 to consider amending the energy 
conservation standards for residential clothes washers, dishwashers, 
and clothes dryers. 59 FR 56423. Subsequently, DOE published a Notice 
of Availability of the ``Rulemaking Framework for Commercial Clothes 
Washers and Residential Dishwashers, Dehumidifiers, and Cooking 
Products.'' 71 FR 15059 (Mar. 27, 2006). On November 15, 2007, DOE 
published a second ANOPR addressing energy conservation standards for 
these products. 72 FR 64432. On December 19, 2007, Congress enacted 
EISA 2007, which, among other things, established maximum energy and 
water use levels for residential dishwashers manufactured on or after 
January 1, 2010. (42 U.S.C. 6295(g)(10)) DOE codified the statutory 
standards for these products in a final rule published March 23, 2009. 
74 FR 12058.
    The current energy conservation standards for residential 
dishwashers were submitted to DOE by groups representing manufacturers, 
energy and environmental advocates, and consumer groups on September 
25, 2010. This collective set of comments, titled ``Agreement on 
Minimum Federal Efficiency Standards, Smart Appliances, Federal 
Incentives and Related Matters for Specified Appliances'' (the ``Joint 
Petition'' \13\), recommended specific energy conservation standards 
for residential dishwashers that, in the commenters' view, would 
satisfy the EPCA requirements. (42 U.S.C. 6295(o)) DOE conducted its 
rulemaking analyses on multiple residential dishwasher efficiency 
levels, including those suggested in the Joint Petition. In the May 
2012 direct final rule, DOE established energy conservation standards 
for residential dishwashers manufactured on or after May 30, 2013, 
consistent with the levels suggested in the Joint Petition. 77 FR 31918 
(May 30, 2012).
---------------------------------------------------------------------------

    \13\ DOE Docket No. EERE-2011-BT-STD-0060, Comment 1.
---------------------------------------------------------------------------

    DOE is conducting the current energy conservation standards 
rulemaking pursuant to 42 U.S.C. 6295(m), which requires that within 6 
years of issuing any final rule establishing or amending a standard, 
DOE shall publish either a notice of determination that amended 
standards are not needed or a NOPR including new proposed standards. 
Because the current standards were established in the final rule issued 
on May 12, 2012, publication of this notice within the 6-year timeframe 
satisfies these requirements. The rulemaking will consider any 
information not available at the time of the May 2012 direct final 
rule. The definition of the TSLs considered in this NOPR is discussed 
in section V.A of this notice.
3. Residential Dishwasher Test Procedure History
    DOE originally established its test procedure for residential 
dishwashers at Title 10 of CFR, part 430, subpart B, appendix C 
(appendix C) in 1977. 42 FR 39964 (Aug. 8, 1977). In 1983, DOE amended 
the test procedure to revise the representative average-use cycles to 
more accurately reflect consumer use and to address products that use 
120 degrees Fahrenheit ([deg]F) inlet water. 48 FR 9202 (Mar. 3, 1983). 
DOE amended the test procedure again in 1984 to redefine the term 
``water heating dishwasher.'' 49 FR 46533 (Nov. 27, 1984). In 1987, DOE 
amended the test procedure to address models that use 50[deg]F inlet 
water. 52 FR 47549 (Dec. 15, 1987).
    In 2001, DOE revised the test procedure's testing specifications to 
improve testing repeatability, changed the definitions of ``compact 
dishwasher'' and ``standard dishwasher,'' and reduced the average 
number of use cycles per year from 322 to 264. 66 FR 65091, 65095-97 
(Dec. 18, 2001).
    In 2003, DOE again revised the test procedure to more accurately 
measure residential dishwasher efficiency, energy use, and water use. 
The 2003 residential dishwasher test procedure amendments included the 
following revisions: (1) The addition of a method to rate the 
efficiency of soil-sensing products; (2) the addition of a method to 
measure standby power; and (3) a reduction in the average-use cycles 
per year from 264 to 215. 68 FR 51887, 51899-903 (Aug. 29, 2003).
    In 2012, DOE established a new test procedure for residential 
dishwashers in appendix C1. Appendix C1 follows the same general 
procedures as those included in the previously used appendix C, with 
updates to: (1) Revise the provisions for measuring energy consumption 
in standby mode or off mode; (2) add requirements for residential 
dishwashers with water softeners to account for regeneration cycles; 
(3) require an additional preconditioning cycle; (4) include 
clarifications regarding certain definitions, test conditions, and test 
setup; and (5) replace obsolete test load items and soils. 77 FR 65942, 
65982-65987 (Oct. 31, 2012).

[[Page 76149]]

    The current version of the test procedure at 10 CFR 430.23(c) 
includes provisions for determining estimated annual energy use (EAEU), 
estimated annual operating cost (EAOC), and water consumption expressed 
in gal/cycle. Because appendix C is now obsolete, DOE proposes to 
delete it in this rulemaking and re-designate appendix C1 as appendix 
C.

III. General Discussion

A. Product Classes and Scope of Coverage

    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that 
justifies a different standard. In making a determination whether a 
performance-related feature justifies a different standard, DOE must 
consider such factors as the utility to the consumer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q))
    Existing energy conservation standards divide residential 
dishwashers into two product classes based on capacity (i.e., the 
number of place settings and serving pieces that can be loaded in the 
product as specified in American National Standards Institute (ANSI)/
Association of Home Appliance Manufacturers (AHAM) Standard DW-1-2010, 
Household Electric Dishwashers):
     Standard (capacity equal to or greater than eight place 
settings plus six serving pieces); and
     Compact (capacity less than eight place settings plus six 
serving pieces).
    In this NOPR, DOE proposes to maintain the existing standard and 
compact product classes for residential dishwashers. Based on a survey 
of products available on the market, DOE determined that compact 
residential dishwashers provide unique utility by means of their 
countertop or drawer configurations.

B. Technological Feasibility

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

C. Energy Savings

1. Determination of Savings
    For each TSL, DOE projected energy savings from the residential 
dishwashers that are the subject of this rulemaking purchased in the 
30-year period that begins in the expected year of compliance with any 
amended standards (2019-2048).\14\ The savings are measured over the 
entire lifetime of residential dishwashers purchased in the 30-year 
analysis period.\15\ DOE quantified the energy savings attributable to 
each TSL as the difference in energy consumption between each standards 
case and the base case. The base case represents a projection of energy 
consumption in the absence of amended mandatory efficiency standards, 
and it considers market forces and policies that affect demand for more 
efficient products.
---------------------------------------------------------------------------

    \14\ DOE also presents a sensitivity analysis that considers 
impacts for products shipped in a 9-year period.
    \15\ 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 
in the 30-year period. DOE has modified its presentation of national 
energy savings consistent with the approach used for its national 
economic analysis.
---------------------------------------------------------------------------

    DOE used its national impact analysis (NIA) spreadsheet model to 
estimate energy savings from amended standards for the products that 
are the subject of this rulemaking. The NIA spreadsheet model 
(described in section IV.H of this NOPR) 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) most recent Annual Energy 
Outlook (AEO). The AEO used for this rulemaking is AEO 2014.
    DOE has begun to also estimate full-fuel-cycle (FFC) energy 
savings, as discussed in DOE's statement of policy and notice of policy 
amendment. 76 FR 51281 (Aug. 18, 2011), as amended at 77 FR 49701 (Aug. 
17, 2012). The FFC metric includes the energy consumed in extracting, 
processing, and transporting primary fuels (i.e., coal, natural gas, 
petroleum fuels), and thus presents a more complete picture of the 
impacts of energy efficiency standards. DOE's evaluation of FFC savings 
resulted in part by the National Academy of Science's (NAS) report on 
FFC measurement approaches for DOE's Appliance Standards Program.\16\ 
The FFC methodology estimates how much additional energy, and in turn 
how many tons of emissions, may be displaced if the estimated quantity 
of energy was not consumed by the residential dishwashers covered in 
this rulemaking. For more information on

[[Page 76150]]

FFC energy savings, see section IV.H.1 of this NOPR.
---------------------------------------------------------------------------

    \16\ ``Review of Site (Point-of-Use) and Full-Fuel-Cycle 
Measurement Approaches to DOE/EERE Building Appliance Energy- 
Efficiency Standards,'' (Academy report) was completed in May 2009 
and included five recommendations. A copy of the study can be 
downloaded at: http://www.nap.edu/catalog.php?record_id=12670.
---------------------------------------------------------------------------

2. Significance of Savings
    To adopt more-stringent standards for a covered product, DOE must 
determine that such action would result in ``significant'' energy 
savings. (42 U.S.C. 6295(o)(3)(B)) Although the term ``significant'' is 
not defined in the Act, the U.S. Court of Appeals, in Natural Resources 
Defense Council v. Herrington, 768 F.2d 1355, 1373 (D.C. Cir. 1985), 
indicated that Congress intended ``significant'' energy savings in the 
context of EPCA to be savings that were not ``genuinely trivial.'' The 
energy savings for today's proposed standards (presented in section 
V.B.3.a of this notice) are nontrivial, and, therefore, DOE considers 
them ``significant'' within the meaning of section 325 of EPCA.

D. Economic Justification

1. Specific Criteria
    EPCA provides seven factors to be evaluated in determining whether 
a potential energy conservation standard is economically justified. (42 
U.S.C. 6295(o)(2)(B)(i)) The following sections discuss how DOE has 
addressed each of those seven factors in this rulemaking.
a. Economic Impact on Manufacturers and Consumers
    In determining the impacts of a potential amended standard on 
manufacturers, DOE conducts a manufacturer impact analysis (MIA), as 
discussed in section IV.J of this notice. DOE first uses an annual 
cash-flow approach to determine the quantitative impacts. This step 
includes both a short-term assessment--based on the cost and capital 
requirements during the period between when a regulation is issued and 
when entities must comply with the regulation--and a long-term 
assessment over a 30-year period. The industry-wide impacts analyzed 
include INPV, which values the industry on the basis of expected future 
cash flows; cash flows by year; changes in revenue and income; and 
other measures of impact, as appropriate. Second, DOE analyzes and 
reports the impacts on different types of manufacturers, including 
impacts on small manufacturers. Third, DOE considers the impact of 
standards on domestic manufacturer employment and manufacturing 
capacity, as well as the potential for standards to result in plant 
closures and loss of capital investment. Finally, DOE takes into 
account cumulative impacts of various DOE regulations and other 
regulatory requirements on manufacturers.
    For individual consumers, measures of economic impact include the 
changes in LCC and PBP associated with new or amended standards. These 
measures are discussed further in the following section. For consumers 
in the aggregate, DOE also calculates the national net present value of 
the economic impacts applicable to a particular rulemaking. DOE also 
evaluates the LCC impacts of potential standards on identifiable 
subgroups of consumers that may be affected disproportionately by a 
national standard.
a. Savings in Operating Costs Compared To Increase in Price
    EPCA requires DOE to consider the savings in operating costs 
throughout the estimated average life of the covered product compared 
to any increases in the price of the covered product that are likely to 
result from the imposition of the standard. (42 U.S.C. 
6295(o)(2)(B)(i)(II)) DOE conducts this comparison in its LCC and PBP 
analysis.
    The LCC is the sum of the purchase price of a product (including 
its installation) and the operating expense (including energy, 
maintenance, and repair expenditures) discounted over the lifetime of 
the product. To account for uncertainty and variability in specific 
inputs, such as product lifetime and discount rate, DOE uses a 
distribution of values, with probabilities attached to each value. For 
its analysis, DOE assumes that consumers will purchase the covered 
products in the first year of compliance with amended standards.
    The LCC savings for the considered efficiency levels are calculated 
relative to a base case that reflects projected market trends in the 
absence of amended standards. DOE's LCC and PBP analysis is discussed 
in further detail in section IV.F of this NOPR.
b. Energy Savings
    Although significant conservation of energy is a separate statutory 
requirement for adopting an energy conservation standard, EPCA requires 
DOE, in determining the economic justification of a standard, to 
consider the total projected energy savings that are expected to result 
directly from the standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) As 
discussed in section IV.H.1 of this NOPR, DOE uses the NIA spreadsheet 
to project national energy savings.
c. Lessening of Utility or Performance of Products
    In establishing classes of products, and in evaluating design 
options and the impact of potential standard levels, DOE evaluates 
standards that would not lessen the utility or performance of the 
considered products. (42 U.S.C. 6295(o)(2)(B)(i)(IV)) Based on data 
from internal testing and the availability of products on the market, 
DOE has determined that the standards proposed in this NOPR would not 
reduce the utility or performance of the products under consideration 
in this rulemaking.
d. Impact of Any Lessening of Competition
    EPCA directs DOE to consider the impact of any lessening of 
competition, as determined in writing by the Attorney General, that is 
likely to result from a proposed standard. (42 U.S.C. 
6295(o)(2)(B)(i)(V)) It also directs the Attorney General to determine 
the impact, if any, of any lessening of competition likely to result 
from a proposed standard and to transmit such determination to the 
Secretary within 60 days of the publication of a proposed rule, 
together with an analysis of the nature and extent of the impact. (42 
U.S.C. 6295(o)(2)(B)(ii)) DOE will transmit a copy of this proposed 
rule to the Attorney General with a request that the Department of 
Justice (DOJ) provide its determination on this issue. DOE will address 
the Attorney General's determination in the final rule.
e. Need for National Energy Conservation
    In evaluating the need for national energy conservation, DOE 
expects that the energy savings from the proposed standards are likely 
to provide improvements to the security and reliability of the nation's 
energy system. Reductions in the demand for electricity also may result 
in reduced costs for maintaining the reliability of the nation's 
electricity system. DOE conducts a utility impact analysis to estimate 
how standards may affect the nation's needed power generation capacity.
    The proposed standards also are likely to result in environmental 
benefits in the form of reduced emissions of air pollutants and 
greenhouse gases associated with energy production. DOE reports the 
emissions impacts from today's standards, and from each TSL it 
considered, in section V.B.6 of this NOPR. DOE also reports estimates 
of the economic value of emissions reductions resulting from the 
considered TSLs, as discussed in section IV.L of this NOPR.
f. Other Factors
    EPCA allows the Secretary of Energy, in determining whether a 
standard is economically justified, to consider any other factors that 
the Secretary deems to

[[Page 76151]]

be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VII))
2. Rebuttable Presumption
    EPCA creates a rebuttable presumption that an energy conservation 
standard is economically justified if the additional cost to the 
consumer of a product that meets the standard is less than three times 
the value of the first year's savings in energy (and water, if 
applicable) resulting from the standard, as calculated under the 
applicable DOE test procedure. (42 U.S.C. 6295(o)(2)(B)(iii)) DOE's LCC 
and PBP analyses generate values used to calculate the effects that 
proposed energy conservation standards would have on the payback period 
for consumers. These analyses include, but are not limited to, the 3-
year payback period contemplated under the rebuttable-presumption test. 
In addition, DOE routinely conducts the required economic analysis that 
considers the full range of impacts to consumers, manufacturers, the 
nation, and the environment. (42 U.S.C. 6295(o)(2)(B)(i)) The results 
of this analysis serve as the basis for DOE's evaluation of the 
economic justification for a potential standard level (thereby 
supporting or rebutting the results of any preliminary determination of 
economic justification). The rebuttable presumption payback calculation 
is discussed in section IV.F.11 of this proposed rule.

IV. Methodology and Discussion

    DOE used two spreadsheet tools to estimate the impact of this NOPR. 
The first spreadsheet calculates LCCs and PBPs of potential new energy 
conservation standards. The second provides shipments forecasts and 
then calculates impacts of potential energy efficiency standards on 
national energy savings and net present value. The two spreadsheets are 
available online at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=106. The Department also 
assessed manufacturer impacts, largely through use of the Government 
Regulatory Impact Model (GRIM).
    Additionally, DOE estimated the impacts on utilities and the 
environment of energy conservation standards for residential 
dishwashers. DOE used a version of EIA's National Energy Modeling 
System (NEMS) for the utility and environmental analyses. The NEMS 
model simulates the energy sector of the U.S. economy. EIA uses NEMS to 
prepare its Annual Energy Outlook, a widely known baseline energy 
forecast for the United States. For more information on NEMS, refer to 
The National Energy Modeling System: An Overview, DOE/EIA-0581 (98) 
(Feb.1998), available at: http://www.eia.gov/oiaf/aeo/overview/.
    The version of NEMS used for appliance standards analysis, which 
makes minor modifications to the AEO version, is called NEMS-BT.\17\ 
NEMS-BT accounts for the interactions among the various energy supply 
and demand sectors and the economy as a whole.
---------------------------------------------------------------------------

    \17\ EIA approves the use of the name ``NEMS'' to describe only 
an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the 
model as used here. (BT stands for DOE's Building Technologies 
Program.)
---------------------------------------------------------------------------

A. Market and Technology Assessment

    DOE develops information in the market and technology assessment 
that provides an overall picture of the market for the products 
concerned, including the purpose of the products, the industry 
structure, manufacturers, market characteristics, and technologies used 
in the products. This activity includes both quantitative and 
qualitative assessments, based primarily on publicly available 
information. The subjects addressed in the market and technology 
assessment for this residential dishwasher rulemaking include: (1) 
Scope and product classes; (2) manufacturers and industry structure; 
(3) existing efficiency programs; (4) shipments information; (5) market 
and industry trends; and (6) technologies that could improve the energy 
efficiency of residential dishwashers. The key findings of DOE's market 
assessment are summarized below. See chapter 3 of the NOPR TSD for 
further discussion of the market and technology assessment.
1. Scope and Product Classes
    In 10 CFR 430.2, DOE defines dishwasher as ``a cabinet-like 
appliance which with the aid of water and detergent, washes, rinses, 
and dries (when a drying process is included) dishware, glassware, 
eating utensils, and most cooking utensils by chemical, mechanical and/
or electrical means and discharges to the plumbing drainage system.''
    When evaluating and establishing energy conservation standards, DOE 
divides covered products into product classes by the type of energy 
used or by capacity or other performance-related features that justify 
a different standard. In making a determination whether a performance-
related feature justifies a different standard, DOE must consider such 
factors as the utility to the consumer of the feature and other factors 
DOE determines are appropriate. (42 U.S.C. 6295(q)) For this 
rulemaking, DOE proposes to maintain the scope of coverage as defined 
by its current regulations for residential dishwashers, which include 
two product classes based on capacity as specified in ANSI/AHAM 
Standard DW-1-2010:
     Compact (capacity less than eight place settings plus six 
serving pieces); and
     Standard (capacity equal to or greater than eight place 
settings plus six serving pieces).
2. Technology Options
    DOE identified 16 technology options that would be expected to 
improve the efficiency of residential dishwashers: condensation drying; 
control strategies; fan or jet drying; flow-through heating; improved 
fill control; finer filters; increased motor efficiency; optimized 
spray-arm geometry; increased insulation; low standby-loss electronic 
controls; microprocessor controls (including soil-sensing controls); 
modified sump geometry, with and without dual pumps; reduced inlet 
water temperature; supercritical carbon dioxide washing; ultrasonic 
washing; and variable washing pressures and flow rates.
    After identifying all potential technology options for improving 
the efficiency of residential dishwashers, DOE performed the screening 
analysis (see section IV.B of this notice and chapter 4 of the NOPR 
TSD) on these technologies to determine which to consider further in 
the analysis and which to eliminate.

B. Screening Analysis

    DOE uses the following four screening criteria to determine which 
technology options are suitable for further consideration in an energy 
conservation standards rulemaking:
    1. Technological feasibility. Technologies that are not 
incorporated in commercial products or in working prototypes will not 
be considered further.
    2. Practicability to manufacture, install, and service. If it is 
determined that mass production and reliable installation and servicing 
of a technology in commercial products could not be achieved on the 
scale necessary to serve the relevant market at the time of the 
compliance date of the standard, then that technology will not be 
considered further.
    3. Impacts on product utility or product availability. If it is 
determined that a technology would have significant

[[Page 76152]]

adverse impact on the utility of the product to significant subgroups 
of consumers or would result in the unavailability of any covered 
product type with performance characteristics (including reliability), 
features, sizes, capacities, and volumes that are substantially the 
same as products generally available in the United States at the time, 
it will not be considered further.
    4. Adverse impacts on health or safety. If it is determined that a 
technology would have significant adverse impacts on health or safety, 
it will not be considered further.
10 CFR part 430, subpart C, appendix A, 4(a)(4) and 5(b).
    In sum, if DOE determines that a technology, or a combination of 
technologies, fails to meet one or more of the above four criteria, it 
will be excluded from further consideration in the engineering 
analysis. The reasons for eliminating any technology are discussed 
below.
1. Screened-Out Technologies
Reduced Inlet-Water Temperature
    Reduced inlet-water temperature requires that residential 
dishwashers tap the cold water line for their water supply. Because 
most residential dishwashers in the United States tap the hot water 
line, this design option would require significant alteration of 
existing residential dishwasher installations to accommodate newly 
purchased units incorporating this design option. Therefore, DOE 
believes that it would not be practicable to install this technology on 
the scale necessary to serve the relevant market at the time of the 
effective date of an amended standard.
Supercritical Carbon Dioxide Washing
    Supercritical carbon dioxide washing, which uses supercritical 
carbon dioxide instead of conventional detergent and water to wash 
dishes, has been researched but has not been implemented in 
commercially available dishwashers. Thus, DOE believes that it would 
not be practicable to manufacture, install and service this technology 
on the scale necessary to serve the relevant market at the time of the 
effective date of an amended standard. Furthermore, because this 
technology has not progressed beyond the research stage, it is not yet 
possible to assess whether it will have any adverse impacts on 
equipment utility to consumers or equipment availability, or any 
adverse impacts on consumers' health or safety.
Ultrasonic Washing
    A residential dishwasher using ultrasonic waves to generate a 
cleaning mist was produced for the Japanese market in 2002. However, 
this model is no longer available on the market. Available information 
indicates that the use of a mist with ion generation instead of water 
with detergent would decrease cleaning performance, impacting consumer 
utility.
    Ultrasonic dishwashing based upon soiled-dish immersion in a fluid 
that is then excited by ultrasonic waves has not been demonstrated. In 
an immersion-based ultrasonic dishwasher, standing ultrasonic waves 
within the washing cavity and the force of bubble cavitation implosion 
can damage fragile dishware. Because no manufacturers currently produce 
ultrasonic dishwashers, it is impossible to assess whether this design 
option would have any impacts on consumers' health or safety, or 
product availability.
2. Remaining Technologies
    Through a review of each technology, DOE found that all of the 
other identified technologies met all four screening criteria to be 
examined further in DOE's analysis. In summary, DOE did not screen out 
the following technology options: condensation drying; control 
strategies; fan or jet drying; flow-through heating; improved fill 
control; finer filters; increased motor efficiency; optimized spray-arm 
geometry; increased insulation; low standby-loss electronic controls; 
microprocessor controls (including soil-sensing controls); modified 
sump geometry, with and without dual pumps; and variable washing 
pressures and flow rates.
    All of these technology options are technologically feasible, given 
that the evaluated technologies are being used in commercially 
available products or working prototypes. Therefore, all of the energy 
conservation levels evaluated in this notice are technologically 
feasible. DOE also finds that all of the remaining technology options 
also meet the other screening criteria (i.e., practicable to 
manufacture, install, and service and do not result in adverse impacts 
on consumer utility, product availability, health, or safety). For 
additional details, see chapter 4 of the NOPR TSD.

C. Engineering Analysis

    In the engineering analysis DOE establishes the relationship 
between the manufacturer production cost (MPC) and improved residential 
dishwasher efficiency. This relationship serves as the basis for cost-
benefit calculations for individual consumers, manufacturers, and the 
nation. DOE typically structures the engineering analysis using one of 
three approaches: (1) Design option; (2) efficiency level; or (3) 
reverse engineering (or cost assessment). The design-option approach 
involves adding the estimated cost and associated efficiency of various 
efficiency-improving design changes to the baseline to model different 
levels of efficiency. The efficiency-level approach uses estimates of 
costs and efficiencies of products available on the market at distinct 
efficiency levels to develop the cost-efficiency relationship. The 
reverse-engineering approach involves testing products for efficiency 
and determining cost from a detailed bill of materials (BOM) derived 
from reverse engineering representative products.
    For this analysis, DOE relied on a hybrid approach of the three 
methods. DOE selected units available at each of the analyzed 
efficiency levels to develop a detailed BOM for each product, similar 
to the reverse-engineering approach. However, DOE did not assume the 
costs derived from the BOMs represented the MPC at each efficiency 
level. DOE used the design option approach to add features that can 
improve efficiency to the baseline BOM to estimate the MPC at higher 
efficiency levels, similar to the design-option approach. For 
residential dishwashers, it is difficult to assign a specific energy or 
water savings to a particular design option. DOE observed the sets of 
design options incorporated into units available on the market at each 
efficiency level to assign design options to each of the analyzed 
efficiency levels, similar to the efficiency-level approach. Using this 
hybrid approach, DOE developed the relationship between MPC and 
residential dishwasher efficiency.
    This section provides more detail on how DOE selected the 
efficiency levels used for its analysis and developed the MPC at each 
efficiency level. Chapter 5 of the NOPR TSD contains further 
description of the engineering analysis.
1. Efficiency Levels
a. Baseline Efficiency Levels
    A baseline unit is a unit that just meets current Federal energy 
conservation standards and provides basic consumer utility.\18\ DOE 
identified products available on the market rated at the current energy 
conservation standards levels (see Table IV.1 below). Accordingly, DOE 
analyzed these

[[Page 76153]]

products as baseline units. DOE uses the baseline unit for comparison 
in several phases of the NOPR analyses, including the engineering 
analysis, LCC analysis, PBP analysis, and NIA. To determine energy 
savings that will result from an amended energy conservation standard, 
DOE compares energy use at each of the higher energy efficiency levels 
to the energy consumption of the baseline unit. Similarly, to determine 
the changes in price to the consumer that will result from an amended 
energy conservation standard, DOE compares the price of a unit at each 
higher efficiency level to the price of a unit at the baseline. 
Additional details on the selection of baseline units may be found in 
chapter 5 of the NOPR TSD.
---------------------------------------------------------------------------

    \18\ The current Federal energy conservation standards went into 
effect on May 30, 2013.
---------------------------------------------------------------------------

    Table IV.1 presents the baseline levels identified for each 
residential dishwasher product class.

                 Table IV.1--Baseline Efficiency Levels
------------------------------------------------------------------------
                                                              Per-cycle
                                                   Annual       water
                 Product class                   energy use  consumption
                                                 (kWh/year)      (gal/
                                                                cycle)
------------------------------------------------------------------------
Standard......................................          307          5.0
Compact.......................................          222          3.5
------------------------------------------------------------------------

b. Higher Energy Efficiency Levels
    Table IV.2 shows the efficiency levels DOE selected for standard 
residential dishwashers in this NOPR analysis.

 Table IV.2--Residential Dishwasher Efficiency Levels--Standard Product
                                  Class
------------------------------------------------------------------------
                                                              Per-cycle
                                                   Annual       water
               Efficiency level                  energy use  consumption
                                                 (kWh/year)      (gal/
                                                                cycle)
------------------------------------------------------------------------
0_Baseline....................................          307         5.00
1.............................................          295         4.25
2.............................................          280         3.50
3.............................................          234         3.10
4_Max-Tech....................................          180         2.22
------------------------------------------------------------------------

    For standard residential dishwashers, DOE selected efficiency 
levels according to key levels identified in other efficiency programs 
and based on availability of products on the market. Efficiency Level 1 
corresponds to the existing ENERGY STAR \19\ criteria for standard 
residential dishwashers. Efficiency Level 2 corresponds to potential 
ENERGY STAR criteria identified during the process of setting the 
current ENERGY STAR criteria. This level was included in the Draft 2 
V5.0 Dishwashers Specification, released on February 3, 2011.\20\ 
Efficiency Level 3 is a gap-fill level developed as described below. 
Efficiency Level 4 is the max-tech efficiency level, as defined by the 
maximum available technology that DOE identified on the market at the 
time of its analysis. DOE did not identify any working prototypes that 
were more efficient than this maximum available technology.\21\
---------------------------------------------------------------------------

    \19\ Information on the ENERGY STAR program can be found at 
energystar.gov.
    \20\ The draft specification document is available at https://www.energystar.gov/products/specs/sites/products/files/ES_Draft_2_V5.0_Dishwashers_Specification.pdf. DOE notes that this 
level was removed from the Final V5.0 Dishwashers Specification, and 
subsequent specification versions 5.1 and 5.2; however, the energy 
and water consumption represent a technically feasible efficiency 
level beyond the current ENERGY STAR criteria.
    \21\ DOE notes that a standard residential dishwasher is 
available with rated annual energy consumption of 171 kWh/year and 
water consumption of 4.1 gal/cycle. These ratings are based on a 
cold-water connection, which DOE eliminated from consideration as a 
technology option in the screening analysis.
---------------------------------------------------------------------------

    To determine the appropriate Efficiency Level 3, DOE surveyed the 
products currently available on the market in the United States. DOE's 
Compliance Certification Database \22\ contains standard residential 
dishwasher models with a range of rated annual energy consumption and 
per-cycle water consumption between the max-tech and baseline. However, 
after removing products certified using a cold-water connection, which 
DOE screened out as a technology option as discussed in section IV.B of 
this NOPR, DOE observed that very few products are available with rated 
annual energy consumption below 234 kWh/year and per-cycle water 
consumption below 3.1 gal/cycle. Figure IV.1 shows the distribution of 
standard residential dishwashers included in DOE's Compliance 
Certification Database, after removing models certified using a cold-
water connection. DOE developed efficiency level 3 based on this 
distribution.
---------------------------------------------------------------------------

    \22\ DOE's Compliance Certification Database is accessible at 
http://www.regulations.doe.gov/certification-data/.
    \23\ Units certified using a cold-water connection removed. 
Database accessed on May 22, 2014.

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

[[Page 76154]]

[GRAPHIC] [TIFF OMITTED] TP19DE14.004

    Table IV.3 shows the efficiency levels DOE considered for compact 
residential dishwashers in this NOPR analysis.

  Table IV.3--Residential Dishwasher Efficiency Levels--Compact Product
                                  Class
------------------------------------------------------------------------
                                                             Per-cycle
                                           Annual energy       water
            Efficiency Level              use (kWh/year)    consumption
                                                            (gal/cycle)
------------------------------------------------------------------------
0_Baseline..............................             222            3.50
1.......................................             203            3.10
2_Max-Tech..............................             141            2.00
------------------------------------------------------------------------

    Based on basic model numbers listed in DOE's Compliance 
Certification Database, DOE expects that fewer than 10 individual 
compact basic models are currently available on the market. The 
majority of models included in the Compliance Certification Database 
are also rated either at the baseline or max-tech efficiency level. In 
the ENERGY STAR Draft 2 Version 6.0 Residential Dishwasher 
Specification \24\, however, the Environmental Protection Agency 
proposed eligibility criteria for compact residential dishwashers 
consistent with Efficiency Level 1 shown in Table IV.3. As part of its 
proposal, ENERGY STAR discussed feasible energy and water improvements 
for compact products with manufacturers. ENERGY STAR's supporting 
analysis included the expected design options manufacturers would use 
to reach this intermediate efficiency level. Accordingly, DOE 
considered the proposed compact ENERGY STAR criteria as an efficiency 
level in this analysis. Efficiency Level 2 is the maximum available 
efficiency level, as defined by the maximum available technology that 
DOE could identify on the market at the time of its analysis. DOE did 
not identify any working prototypes that were more efficient than the 
maximum available technology.
---------------------------------------------------------------------------

    \24\ Information on the ENERGY STAR specification is available 
at: https://www.energystar.gov/products/specs/residential_dishwasher_specification_version_6_0_pd.
---------------------------------------------------------------------------

2. Manufacturer Production Cost Estimates
    Based on product teardowns and cost modeling, DOE developed overall 
cost-efficiency relationships for the standard and compact residential 
dishwasher product classes. DOE selected products covering the range of 
efficiencies available on the market for the teardown analysis. During 
the teardown process, DOE created detailed BOMs that included all 
components and processes used to manufacture the products. DOE used the 
BOMs from the teardowns as an input to a cost model, which was used to 
calculate the MPC for each product torn down.
    As discussed earlier in this section, DOE used a hybrid approach of 
the design-option, efficiency-level, and reverse-engineering approaches 
in this engineering analysis. During the teardown process, DOE observed 
the combinations of design options manufacturers used to reach higher 
efficiency levels. Using the BOMs from the products torn down, DOE 
constructed typical BOMs for each efficiency level to estimate the MPC 
based on the expected combinations of design options at each efficiency 
level. Table IV.4 and Table IV.5 show the incremental MPCs for each of 
the analyzed residential dishwasher efficiency levels compared to the 
baseline efficiency level MPC. For additional details, see chapter 5 of 
the NOPR TSD.

                  Table IV.4--Cost-Efficiency Relationship for Standard Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                                                     Per-cycle      Incremental
                                                                   Annual energy       water       manufacturer
                        Efficiency level                          use (kWh/year)    consumption     production
                                                                                    (gal/cycle)    cost (2013$)
----------------------------------------------------------------------------------------------------------------
0_Baseline......................................................             307            5.00             $ -

[[Page 76155]]

 
1...............................................................             295            4.25          $ 9.52
2...............................................................             280            3.50         $ 36.53
3...............................................................             234            3.10         $ 74.72
4_Max-Tech......................................................             180            2.22         $ 74.72
----------------------------------------------------------------------------------------------------------------

                  Table IV.5--Cost-Efficiency Relationship for Compact Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                                                     Per-Cycle      Incremental
                                                                   Annual energy       Water       manufacturer
                        Efficiency level                          use (kWh/year)    Consumption     production
                                                                                    (gal/cycle)    cost (2013$)
----------------------------------------------------------------------------------------------------------------
0_Baseline......................................................             222            3.50             $ -
1...............................................................             203            3.10          $ 8.01
2_Max-Tech......................................................             141            2.00         $ 21.50
----------------------------------------------------------------------------------------------------------------

D. Markups Analysis

    The markups analysis develops appropriate markups in the 
distribution chain to convert the MPC estimates derived in the 
engineering analysis to consumer prices. At each step in the 
distribution channel, companies mark up the price of the product to 
cover business costs and profit margin. For residential dishwashers, 
the main parties in the distribution chain are manufacturers and 
retailers.
    The manufacturer markup converts MPC to manufacturer selling price 
(MSP). DOE developed an average manufacturer markup by examining the 
annual Securities and Exchange Commission (SEC) 10-K reports filed by 
publicly traded manufacturers primarily engaged in appliance 
manufacturing and whose combined product range includes residential 
dishwashers.
    For retailers, DOE developed separate markups for baseline products 
(baseline markups) and for the incremental cost of more efficient 
products (incremental markups). Incremental markups are coefficients 
that relate the change in the MSP of higher-efficiency models to the 
change in the retailer sales price. DOE relied on economic data from 
the U.S. Census Bureau to estimate average baseline and incremental 
markups.\25\
---------------------------------------------------------------------------

    \25\ U.S. Census, 2007 Annual Retail Trade Survey (ARTS), 
Electronics and Appliance Stores sectors.
---------------------------------------------------------------------------

    Chapter 6 of the NOPR TSD provides details on DOE's development of 
markups for residential dishwashers.

E. Energy and Water Use Analysis

    DOE's energy and water use analysis estimated the range of energy 
and water use of residential dishwashers in the field, i.e., as they 
are actually used by consumers. The energy and water use analysis 
provided the basis for other analyses DOE performed, particularly 
assessments of the energy and water savings and the savings in consumer 
operating costs that could result from DOE's adoption of amended 
standards.
    DOE determined a range of annual energy use and per-cycle water 
consumption of residential dishwashers by multiplying the per-cycle 
energy use and per-cycle water use of each considered design by the 
number of cycles per year in a representative sample of U.S. 
households.\26\
---------------------------------------------------------------------------

    \26\ For the dishwasher standards rulemaking, DOE estimated 
consumer usage (cycles per year) to establish dishwasher annual 
energy use within the life-cycle cost (LCC) and payback period (PBP) 
analysis. To estimate average dishwasher usage, DOE utilized a 2001 
Arthur D. Little (ADL) report that focused solely on dishwashers. 
Information from the ADL report was used to determine an average 
usage of 215 cycles per year. DOE used the Residential Energy 
Consumption Survey 2009 (RECS 2009) to characterize household 
variability of dishwasher usage.
---------------------------------------------------------------------------

    DOE analyzed per-cycle energy consumption based on two components: 
(1) Water-heating energy, and (2) machine (motor) and drying energy, 
values for which are taken from data developed by DOE in the 
engineering analysis. See chapter 5 of the NOPR TSD for more 
information. The largest component of residential dishwasher energy 
consumption is water-heating energy use, which is the energy required 
to heat the inlet water to the temperature for dishwashing. The machine 
energy consists of the motor energy (for water pumping and food 
disposal), and drying energy consists of heat to dry cleaned dishes.
    DOE estimated the per-cycle water-heating energy consumption based 
on DOE's residential dishwasher test procedure (which refers to this 
quantity as ``water energy consumption''). DOE estimated this energy 
consumption for residential dishwashers that operate with a nominal 
inlet water temperature of 120 [deg]F \27\, the most common situation 
in U.S. homes. For a residential dishwasher using electrically heated 
water, the water-heating energy consumption, expressed in kWh per 
cycle, is equal to the water consumption per cycle times a nominal 
water heater temperature rise of 70 [deg]F times the specific heat of 
water (0.0024 kWh per gallon per [deg]F).\28\ For a residential 
dishwasher using gas-heated or oil-heated water, the calculation is the 
same, but also incorporates a nominal water heater recovery efficiency 
of 0.80 for gas-fired water heating and 0.78 for oil-fired water 
heating.\29\
---------------------------------------------------------------------------

    \27\ Energy Conservation Program: Test Procedures for 
Residential Dishwashers, Dehumidifiers, and Conventional Cooking 
Products. Available at https://www.federalregister.gov/articles/2012/05/25/2012-11155/energy-conservation-program-test-procedures-for-residential-dishwashers-dehumidifiers-and#h-58.
    \28\ The water heater temperature rise of 70 [deg]F assumes an 
average water heater inlet temperature of 50 [deg]F, as specified as 
the national average in the dishwasher test procedure.
    \29\ The recovery efficiency indicates how efficient a water 
heater is at heating water. The DOE test procedure for dishwashers 
specifies a recovery efficiency of 0.80 for gas-fired water heating 
and 0.78 for oil-fired water heating, which is representative of gas 
and oil water heaters currently in the housing stock.
---------------------------------------------------------------------------

    The energy used to operate the machine powers the motor (to pump 
water and dispose of food) and the heating element, which boosts the 
supplied water's temperature to the

[[Page 76156]]

required washing temperature. DOE estimated the per-cycle machine and 
drying energy consumption for representative units at each efficiency 
level by subtracting the per-cycle water-heating energy consumption 
from the per-cycle dishwasher energy consumption as determined in the 
engineering analysis.
    Standby power is defined as a product's minimum power consumption 
while plugged in and not performing any active mode function.\30\ DOE 
estimated the per-cycle energy use by subtracting the annual energy use 
associated with standby power from the total annual energy use and 
dividing the result by the national average number of residential 
dishwasher cycles per year. DOE used data provided by AHAM for the May 
2012 direct final rule on the total annual residential dishwasher 
energy use and the standby power use for each considered efficiency 
level.\31\
---------------------------------------------------------------------------

    \30\ Active mode includes the main functions of washing, 
rinsing, or drying (when a drying process is included), or is 
involved in functions necessary for these main functions, such as 
admitting water into the dishwasher, pumping water out of the 
dishwasher, circulating air, or regenerating an internal water 
softener. For more information, see the DOE dishwasher test 
procedure at 10 CFR part 430, subpart B, appendix C1.
    \31\ For more information, see chapter 7 of the NOPR TSD.
---------------------------------------------------------------------------

    DOE determined the standby annual energy consumption by multiplying 
the energy use in standby mode per hour by the hours the residential 
dishwasher is in standby mode, which is the difference between the 
number of hours in a year and the active hours, which is equal to the 
number of residential dishwasher cycles per year multiplied by cycle 
time, which is estimated to be 1 hour.\32\
---------------------------------------------------------------------------

    \32\ The 1-hour cycle time is an estimate of the typical cycle 
time for a dishwasher. Actual cycle times vary based on wash 
selection, load, and model of dishwasher.
---------------------------------------------------------------------------

    DOE estimated the per-cycle water use by efficiency level in its 
engineering analysis, as described in chapter 5 of the NOPR TSD.
    To estimate the number of cycles per year in a representative 
sample of U.S. households, DOE considered the following data sources. 
DOE analyzed data from the Energy Information Administration (EIA)'s 
2009 Residential Energy Consumption Survey (RECS 2009), which was the 
most recent such survey available at the time of DOE's analysis.\33\ 
RECS is a national sample survey of housing units that collects 
statistical information on the consumption of and expenditures for 
energy in housing units along with data on energy-related 
characteristics of the housing units and occupants. Of the more than 
12,000 households in RECS, almost 7,400 have residential dishwashers. 
For each household using a residential dishwasher, RECS provides data 
on the number of residential dishwasher cycles in the following bins: 
(1) Less than once per week, (2) once per week, (3) 2-3 times per week, 
(4) 4-6 times per week, (5) at least once per day. DOE converted the 
above information to annual values and created a triangular or uniform 
distribution for each bin. DOE randomly assigned a specific numerical 
value from within the appropriate bin to each household in the 
residential dishwasher sample. The average number of cycles per year 
derived from the RECS 2009 data is 171.
---------------------------------------------------------------------------

    \33\ Arthur D. Little. ``Review of Survey Data to Support 
Revisions to DOE's Dishwasher Test Procedure,'' December 18, 2001. 
Prepared for the U.S. Department of Energy by Arthur D. Little: 
Cambridge, MA. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001.
---------------------------------------------------------------------------

    While the RECS data represent the most recent nationally 
representative sample of dishwasher usage, the binning approach that 
the RECS survey uses to collect the data does not allow for the 
derivation of a point estimate to help determine annual energy and 
water use without making assumptions about the distribution of usage 
within bins. For example, of the 18% of national households that 
responded that they used their dishwashers at least once per day, it is 
not known what percentage of these households use their dishwashers 
more than once a day or if viewed weekly, more than 7 times a week. 
Because the RECS data do not include point estimates of usage, DOE 
relies on survey data it used to develop the 2003 residential 
dishwasher test procedure amendments and analyzed again during the 2012 
standards rulemaking \34\ to estimate the average number of residential 
dishwasher cycles per year. In the review, survey data on consumers' 
residential dishwasher usage habits from the 1990's were collected from 
a number of sources including several residential dishwasher 
manufacturers, detergent manufacturers, energy and consumer interest 
groups, independent researchers, and government agencies. This study 
provides a large data set of point estimates which DOE believes is the 
best source of information on usage rates at present. This survey 
review was used in the development of the 2003 residential dishwasher 
test procedure amendments to reduce the average cycles per year from 
264 to 215, which DOE believed was more reflective of dishwasher use 
nation-wide at the time and was not inconsistent with the steady 
decrease over the previous 20 years in the average-use cycles for a 
dishwasher.\35\ Because of the facts detailed above, DOE is proposing 
in this document to use an average usage of 215 cycles per year as the 
value for average residential dishwasher use instead of 171 cycles 
estimated from the RECS survey data. DOE notes that 215 cycles per year 
is the number of cycles required to be used to calculate energy usage 
in DOE's test procedure for residential dishwashers which is also the 
basis for the ENERGY GUIDE label administered by the Federal Trade 
Commission. DOE further notes that alternative analysis that relies on 
additional assumptions regarding use patterns within the ``binned'' 
RECS data could yield results similar to those from the earlier data, 
depending on the assumptions made for each of the bins. DOE does 
recognize that dishwasher usage data are a key input when calculating 
energy and water use and ultimately have a direct effect on the 
benefits derived from estimated energy and water use savings described 
by this proposed rulemaking. DOE is aware that a point estimate for the 
annual number of dishwasher cycles is subject to uncertainty given how 
data on this topic are collected. Given this uncertainty, DOE 
encourages the public to comment on its use of these surveys and the 
limitations of each.
---------------------------------------------------------------------------

    \34\ Arthur D. Little. ``Review of Survey Data to Support 
Revisions to DOE's Dishwasher Test Procedure,'' December 18, 2001. 
Prepared for the U.S. Department of Energy by Arthur D. Little: 
Cambridge, MA. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001
    Note that several of the surveys used in this review share the 
problem of defining a single value for a category (i.e, a point 
estimate), but to a much less extent than the RECS data. Generally 
the other surveys minimize this issue by including more categories, 
by better distributing categories, and by having more bounded 
categories.
    \35\ 68 FR 51887 (Aug. 29, 2003) and Arthur D. Little. ``Review 
of Survey Data to Support Revisions to DOE's Dishwasher Test 
Procedure,'' December 18, 2001. Prepared for the U.S. Department of 
Energy by Arthur D. Little: Cambridge, MA. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0021-0001. 
The 215 value was based on the review's recommendation that the 
number of average-use cycles per year be reduced into the range of 
200 to 233 cycles.
---------------------------------------------------------------------------

    DOE did not assume that all dishwashers are operated exactly at the 
average usage per year and used other survey data to characterize the 
variability in the usage. For purposes of conducting the LCC and PBP 
analysis, DOE characterized each usage bin with a probability 
distribution. To capture the uncertainty inherent to the usage response 
for each household in the RECS sample, DOE used a Monte Carlo

[[Page 76157]]

simulation in the LCC and PBP analysis that selects a value for usage 
within the distribution that is used to characterize each bin. The 
result of using probability distribution to characterize the RECS 
response bins provided a weighted-average dishwasher usage of 171 
cycles per year.
    Although DOE characterized the usage bins with probability 
distributions, it is certainly possible and equally likely that the 
weighted-average value is as low as 146 and as high as 453. This 
uncertainty led DOE to conclude that the ADL survey review, which 
focused more closely and solely on dishwasher usage habits, provided a 
more representative value for the average number of cycles per year 
that did the RECS survey. The sorting of user responses in RECS into 
usage frequency bins, however, allowed DOE to use RECS 2009 to capture 
dishwasher usage variability from household to household (since not 
every household will run the average number of dishwasher cycles per 
year). The LCC and PBP analysis normalized the dishwasher usage by the 
ratio of 215-to-171 cycles per year. The resulting range of values used 
in the LCC analysis is consistent with the average use in the DOE 
residential dishwasher test procedure.
    Table IV.6 and Table IV.7 show the estimated average annual energy 
and water use for each efficiency level analyzed for standard 
residential dishwashers.

                          Table IV.6--Standard Residential Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Annual Energy Use
                                                       --------------------------------------------------------------------------------------------------
                                                                                                                              Total
                   Efficiency Level                                        Machine +        Standby    --------------------------------------------------
                                                        Water Heating*      Drying         [dagger]                                     kWh/  kWh/  gal/
                                                                                                           kWh/year        kWh/year     year  year  year
-------------------------------------------------------------------------------------------------------------------------------------- --------------------------
Baseline..............................................           177.0           130.0             0.0             307         1,075.0
1.....................................................           150.4           140.3             4.3             295           913.8
2.....................................................           123.9           151.8             4.3             280           752.5
3.....................................................           109.7           120.0             4.3             234           666.5
4.....................................................            78.6            97.1             4.3             180           477.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of one hour. Standby hours = 8760 hours - (215 cycles x 1 hour) = 8545 hours.

                          Table IV.7--Compact Residential Dishwashers: Average Annual Energy and Water Use by Efficiency Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Annual Energy Use
                                                       --------------------------------------------------------------------------------------------------
                                                                                                                              Total
                   Efficiency Level                                        Machine +        Standby    --------------------------------------------------
                                                        Water Heating*      Drying         [dagger]                                     kWh/  kWh/  gal/
                                                                                                           kWh/year        kWh/year     year  year  year
-------------------------------------------------------------------------------------------------------------------------------------- --------------------------
Baseline..............................................           123.9            78.4            19.7             222           752.5
1.....................................................           109.7            78.7            14.5             203           666.5
2.....................................................            70.8            65.9             4.3             141           430.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Shown for the case of electrically heated water.
[dagger] Standby annual energy use based on a dishwasher cycle length of 1 hour. Standby hours = 8760 hours_(215 cycles x 1 hour) = 8545 hours.

    Chapter 7 of the NOPR TSD provides details on DOE's energy and 
water use analysis for residential dishwashers.

F. Life-Cycle Cost and Payback Period Analysis

    DOE conducted LCC and PBP analyses to evaluate the economic impacts 
on individual consumers of potential energy conservation standards for 
residential dishwashers. The LCC is the total consumer expense over the 
life of a product, consisting of purchase and installation costs plus 
operating costs (expenses for energy use, maintenance, and repair). To 
compute the operating costs, DOE discounts future operating costs to 
the time of purchase and sums them over the lifetime of the product. 
The PBP is the estimated amount of time (in years) it takes consumers 
to recover the increased purchase cost (including installation) of a 
more efficient product through lower operating costs. DOE calculates 
the PBP by dividing the change in purchase cost due to a more stringent 
standard by the change in annual operating cost for the year that new 
standards are assumed to take effect.
    For any given efficiency level, DOE measures the change in LCC 
relative to an estimate of the base-case appliance efficiency 
distribution. The base-case estimate reflects the market in the absence 
of new or amended energy conservation standards, including the market 
for products that exceed the current energy conservation standards. In 
contrast, the PBP is measured relative to the baseline product.
    For each considered efficiency level in each product class, DOE 
calculated the LCC and PBP for a nationally representative set of 
housing units. As stated previously, DOE developed household samples 
from the 2009 RECS. For each sample household, DOE determined the 
energy consumption for the residential dishwasher and the appropriate 
electricity price. By developing a representative sample of households, 
the analysis captured the variability in energy consumption and energy 
prices associated with the use of residential dishwashers.
    Inputs to the calculation of total installed cost include the cost 
of the product--which includes MPCs, manufacturer markups, retailer and 
distributor markups, and sales taxes--and installation costs. Inputs to 
the calculation of operating expenses include annual energy 
consumption, energy and water prices and price projections, repair and 
maintenance costs, product lifetimes, discount rates, and the year that 
compliance with standards is required. DOE created distributions of 
values for product lifetime, discount rates, and sales taxes, with 
probabilities attached to each

[[Page 76158]]

value, to account for their uncertainty and variability.
    The computer model DOE uses to calculate the LCC and PBP, which 
incorporates Crystal Ball\TM\ (a commercially available software 
program), relies on a Monte Carlo simulation to incorporate uncertainty 
and variability into the analysis. The Monte Carlo simulations randomly 
sample input values from the probability distributions and residential 
dishwasher user samples. The model calculated the LCC and PBP for 
products at each efficiency level for 10,000 housing units per 
simulation run.
    DOE calculated the LCC and PBP for all customers as if each were to 
purchase a new product in the year that compliance with any amended 
standards is expected to be required. Any amended standards would apply 
to residential dishwashers manufactured 3 years after the date on which 
any final amended standard is published. (42 U.S.C. 6295(g)(10)(B)) For 
today's NOPR, DOE estimates publication of any final standards in 2016. 
Therefore, for purposes of its analysis, DOE used 2019 as the first 
year of compliance with any amended standards.
    Table IV.8 summarizes the approach and data DOE used to derive 
inputs to the LCC and PBP calculations. The subsections that follow 
provide further discussion. Details of the spreadsheet model, and of 
all the inputs to the LCC and PBP analyses, are contained in chapter 8 
and its appendices of the NOPR TSD.

Table IV.8--Summary of Inputs and Methods for the LCC and PBP Analysis *
------------------------------------------------------------------------
              Inputs                            Source/method
------------------------------------------------------------------------
Product Cost......................  Derived by multiplying MPCs by
                                     manufacturer and retailer markups
                                     and sales tax, as appropriate. Used
                                     historical data to derive a price
                                     scaling index to forecast product
                                     costs.
Installation Costs................  Baseline installation cost
                                     determined with data from RS Means.
                                     Assumed no change with efficiency
                                     level.
Annual Energy and Water Use.......  The sum of the total per-cycle
                                     annual energy and water use
                                     multiplied by the number of cycles
                                     per year and the standby annual
                                     energy use. Average number of
                                     cycles based on ADL field data.
                                    Variability: Based on the 2009 RECS
                                     normalized to the average number of
                                     cycles.
Energy and Water Prices...........  Electricity: Based on EIA's Form 861
                                     data for 2012.
                                    Gas: Based on EIA's Natural Gas
                                     Navigator for 2012.
                                    LPG: Based on EIA's State Energy
                                     Consumption, Price and Expenditures
                                     Estimates for 2012.
                                    Variability: Regional energy prices
                                     determined for 27 regions.
                                    Water: Based on 2012 AWWA/Raftelis
                                     Survey.
                                    Variability: By census region.
Energy and Water Price Trends.....  Energy: Forecasted using AEO 2014
                                     price forecasts.
                                    Water: Forecasted using BLS historic
                                     water price index information.
Repair and Maintenance Costs......  Assumed no change with efficiency
                                     level.
Product Lifetime..................  Estimated using survey results from
                                     RECS (1990, 1993, 1997, 2001, 2005,
                                     2009) and the U.S. Census American
                                     Housing Survey (2005, 2007), along
                                     with historic data on appliance
                                     shipments.
                                    Variability: Characterized using
                                     Weibull probability distributions.
Discount Rates....................  Approach involves identifying all
                                     possible debt or asset classes that
                                     might be used to purchase the
                                     considered appliances, or might be
                                     affected indirectly. Primary data
                                     source was the Federal Reserve
                                     Board's SCF ** for 1989, 1992,
                                     1995, 1998, 2001, 2004, 2007, and
                                     2010.
Compliance Date...................  2019
------------------------------------------------------------------------
* References for the data sources mentioned in this table are provided
  in the sections following the table or in chapter 8 of the NOPR TSD.
** Survey of Consumer Finances.

1. Product Cost
    To calculate consumer product costs, DOE multiplied the MPCs 
developed in the engineering analysis by the supply-chain markups 
described above (along with sales taxes). DOE used different markups 
for baseline products and higher-efficiency products, because DOE 
applies an incremental markup to the increase in MSP associated with 
higher-efficiency products.
    Economic literature and historical data suggest that the real costs 
of many products may trend downward over time according to ``learning'' 
or ``experience'' curves. Experience curve analysis focuses on entire 
industries (often operating globally) and aggregates over many causal 
factors that may not be well characterized. Experience curve analysis 
implicitly includes factors such as efficiencies in labor, capital 
investment, automation, materials prices, distribution, and economies 
of scale at an industry-wide level.\36\
---------------------------------------------------------------------------

    \36\ Taylor, M. and Fujita, K.S. Accounting for Technological 
Change in Regulatory Impact Analyses: The Learning Curve Technique. 
LBNL-6195E. Lawrence Berkeley National Laboratory, Berkeley, CA. 
April 2013. http://escholarship.org/uc/item/3c8709p4#page-1.
---------------------------------------------------------------------------

    For the default price trend for this NOPR, DOE estimated an 
experience rate for residential dishwashers based on an analysis of 
long-term historical data. Producer Price Index (PPI) data specific to 
residential dishwashers were not available. Instead, DOE derived a 
residential dishwasher price index from 1988 to 2013 using Producer 
Price Index (PPI) data for miscellaneous household appliances from the 
Bureau of Labor Statistics (BLS). An inflation-adjusted price index was 
calculated using the implicit price deflators for GDP for the same 
years. This proxy for historic price data was then regressed on the 
cumulative quantity of residential dishwashers produced, based on a 
corresponding series for total shipments of residential dishwashers.
    To calculate an experience rate, a least-squares power-law fit was 
performed on the residential dishwasher price index versus cumulative 
shipments (including imports). DOE then derived a price factor index, 
with the price in 2013 equal to 1, to forecast prices in the year of 
compliance for amended energy conservation standards in the LCC and PBP 
analysis, and for the NIA, for each subsequent year through 2048. The 
index value in each year is a function of the experience rate and the 
cumulative production through that year. To derive the latter, DOE used 
projected shipments from the base-case projections made for the NIA 
(see section IV.G of this notice). The average annual rate of price 
decline in the default case is 1.33 percent.
2. Installation Cost
    Installation cost includes labor, overhead, and any miscellaneous

[[Page 76159]]

materials and parts needed to install the product. DOE used data from 
the 2013 RS Means Plumbing Cost data book \37\ to estimate the baseline 
installation cost. DOE found no evidence that installation costs would 
be impacted with increased efficiency levels.
---------------------------------------------------------------------------

    \37\ RS Means, Residential Cost Data, 2013.
---------------------------------------------------------------------------

3. Annual Energy and Water Consumption
    For each sampled household, DOE determined the energy and water 
consumption for a residential dishwasher at different efficiency levels 
using the approach described above in section IV.E of this notice.
4. Energy Prices
    DOE derived average annual residential electricity prices for 27 
geographic regions using data from EIA's Form EIA-861 database (based 
on ``Annual Electric Power Industry Report'').\38\ DOE calculated an 
average annual regional residential price by: (1) Estimating an average 
residential price for each utility (by dividing the residential 
revenues by residential sales); and (2) weighting each utility by the 
number of residential consumers it served in that region. The NOPR 
analysis used the data for 2012.
---------------------------------------------------------------------------

    \38\ Available at: www.eia.doe.gov/cneaf/electricity/page/eia861.html.
---------------------------------------------------------------------------

    DOE calculated average residential natural gas prices for each of 
the 27 geographic regions using data from EIA's ``Natural Gas 
Monthly.'' \39\ DOE calculated average annual regional residential 
prices by: (1) Estimating an average residential price for each state; 
and (2) weighting each state by the number of residential consumers. 
The NOPR analysis used the data for 2012.
---------------------------------------------------------------------------

    \39\ Available at: http://www.eia.gov/oil_gas/natural_gas/data_publications/natural_gas_monthly/ngm.html.
---------------------------------------------------------------------------

    DOE calculated average residential LPG prices for each of the 27 
geographic regions using data from EIA's ``State Energy Consumption, 
Price, and Expenditures Estimates (SEDS).'' \40\ DOE calculated average 
annual regional residential prices by: (1) Estimating an average 
residential price for each State; and (2) weighting each State by the 
number of residential consumers. The NOPR analysis used the data for 
2012.
---------------------------------------------------------------------------

    \40\ Available at: http://www.eia.gov/state/seds/seds-data-fuel.cfm?sid=US.
---------------------------------------------------------------------------

    To estimate energy prices in future years, DOE multiplied the 
average regional energy prices discussed in the preceding section by 
the forecast of annual national-average residential energy price 
changes in the Reference case from AEO 2014, which has an end year of 
2040.\41\ To estimate price trends after 2040, DOE used the average 
annual rate of change in prices from 2020 to 2040.
---------------------------------------------------------------------------

    \41\ U.S. Department of Energy-Energy Information 
Administration, Annual Energy Outlook 2013 with Projections to 2040 
(Available at: http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

5. Water and Wastewater Prices
    For today's NOPR, DOE obtained data on water and wastewater prices 
for 2012 from the Water and Wastewater Rate Survey conducted by 
Raftelis Financial Consultants and the water utility association, 
American Water Works Association. The survey, which analyzes each 
industry separately, covers approximately 290 water utilities and 214 
wastewater utilities. The water survey includes, for each utility, the 
cost to consumers of purchasing a given volume of water or treating a 
given volume of wastewater. The data provide a division of the total 
consumer cost into fixed and volumetric charges. DOE's calculations use 
only the volumetric charge to calculate water and wastewater prices, 
because only this charge is affected by a change in water use. Average 
water and wastewater prices were estimated for each of four census 
regions. Each RECS household was assigned a water and wastewater price 
depending on its census region location.
    To estimate the future trend for water and wastewater prices, DOE 
used data on the historic trend in the national water price index (U.S. 
city average) from 1970 through 2012, combined with the all-products 
CPI for this same period. It extrapolated a future trend based on the 
linear inflation-adjusted growth during the 1970 to 2012 period. DOE 
used the projected inflation-adjusted water price trend to forecast 
water and wastewater prices for residential dishwashers.
    Chapter 8 of the NOPR TSD provides more detail about DOE's approach 
to developing water and wastewater prices.
6. Maintenance and Repair Costs
    Repair costs are associated with repairing or replacing components 
that have failed in an appliance; maintenance costs are associated with 
maintaining the operation of the product. Typically, small incremental 
increases in product efficiency produce no, or only minor, changes in 
repair and maintenance costs compared to baseline efficiency products.
    During the rulemaking for the May 2012 direct final rule, DOE 
requested information as to whether maintenance and repair costs are a 
function of efficiency level and product class. Manufacturers responded 
that these costs would not increase with efficiency. DOE does not 
expect repair costs to have changed since the last rulemaking; 
therefore, DOE did not assume that more efficient residential 
dishwashers would have greater repair or maintenance costs.
    DOE did not have data showing how many households would repair 
rather than replace their dishwashers. The replacement frequency is 
determined by a survival function which is part of the shipments model. 
DOE used an accounting method that tracks the total stock of units by 
vintage. DOE estimated a stock of dishwashers by vintage by integrating 
historical shipments starting from 1972. Depending on the vintage, a 
certain percentage of units will fail and need to be replaced. To 
estimate how long a unit will function before failing, DOE used a 
survival function based on a product lifetime distribution having an 
average value of approximately 15 years. Because DOE assumed that a 
consumer's decision to replace or repair their dishwasher was not 
impacted by an increase in dishwasher efficiency, the replacement 
frequency was unaffected by the increased installed cost, the repair 
cost, and the energy costs savings associated with more efficient 
dishwashers.
7. Product Lifetime
    Because the lifetime of appliances varies depending on utilization 
and other factors, DOE develops a distribution of lifetimes from which 
specific values are assigned to the appliances in the household sample. 
DOE conducted an analysis of residential dishwasher lifetimes in the 
field based on a combination of shipments data and RECS 2009 data on 
the ages of the residential dishwashers reported in the household 
stock. As described in chapter 8 of the NOPR TSD, the analysis yielded 
an estimate of mean age for residential dishwashers of approximately 15 
years. It also yielded a survival function that DOE incorporated as a 
probability distribution in its LCC analysis. See chapter 8 of the NOPR 
TSD for further details on the method and sources DOE used to develop 
product lifetimes.
8. Discount Rates
    In the calculation of LCC, DOE applies discount rates appropriate 
to households to estimate the present value of future operating costs. 
DOE estimated a distribution of residential discount rates for 
dishwashers based on consumer financing costs and opportunity cost of 
funds related to

[[Page 76160]]

appliance energy cost savings and maintenance costs.
    To establish residential discount rates for the LCC analysis, DOE's 
approach involved identifying all relevant household debt or asset 
classes in order to approximate a consumer's opportunity cost of funds 
related to appliance energy cost savings and maintenance costs. It 
estimated the average percentage shares of the various types of debt 
and equity by household income group using data from the Federal 
Reserve Board's Survey of Consumer Finances (SCF) for 1995, 1998, 2001, 
2004, 2007, and 2010.\42\ Using the SCF and other sources, DOE then 
developed a distribution of rates for each type of debt and asset by 
income group to represent the rates that may apply in the year in which 
amended standards would take effect. DOE assigned each sample household 
a specific discount rate drawn from one of the distributions. The 
average rate across all types of household debt and equity and income 
groups, weighted by the shares of each class, is 4.49 percent. See 
chapter 8 in the NOPR TSD for further details on the development of 
consumer discount rates.
---------------------------------------------------------------------------

    \42\ Note that two older versions of the SCF are also available 
(1989 and 1992); these surveys are not used in this analysis because 
they do not provide all of the necessary types of data (e.g., credit 
card interest rates). DOE determines that the 15-year span covered 
by the six surveys included is sufficiently representative of recent 
debt and equity shares and interest rates.
---------------------------------------------------------------------------

9. Base-Case Efficiency Distribution
    To accurately estimate the share of consumers that would be 
affected by a standard at a particular efficiency level, DOE's LCC 
analysis considered the projected distribution of product efficiencies 
that consumers purchase under the base case (i.e., the case without new 
energy efficiency standards). DOE refers to this distribution of 
product of efficiencies as a base-case efficiency distribution.
    To estimate the base-case efficiency distribution of standard 
residential dishwashers for 2019, DOE relied on data submitted by AHAM 
for the May 2012 direct final rule. These data provide shares of 
shipments by efficiency level for 2002-2005 and 2008-2010. These data 
show a significant increase in the share of ENERGY STAR products in 
both periods. To predict the market shares for each efficiency level in 
2019, DOE conducted efficiency distribution analysis based on the DOE's 
Compliance Certification Database for standard residential dishwashers 
and considered the market trends present in the AHAM data, and assumed 
these trends would continue in a manner consistent with the decline in 
average energy use. This trend is described in chapter 10 of the NOPR 
TSD. DOE also conducted efficiency distribution analysis based on DOE's 
Compliance Certification Database for compact residential dishwashers.
    The estimated shares for the base-case efficiency distribution for 
residential dishwashers are shown in Table IV-9. See chapter 8 of the 
NOPR TSD for further information on the derivation of the base-case 
efficiency distributions. For standard residential dishwashers, DOE 
also considered an alternative base-case efficiency distribution that 
uses a different set of historical data. This distribution is described 
in appendix 8-F of the NOPR TSD.

          Table IV.9--Residential Dishwasher Base-Case Efficiency Distribution by Product Class in 2013
----------------------------------------------------------------------------------------------------------------
                                                             Standard                         Compact
                                                 ---------------------------------------------------------------
                Efficiency level                   Annual energy       % of        Annual energy       % of
                                                  use (kWh/year)     shipments    use (kWh/year)     shipments
----------------------------------------------------------------------------------------------------------------
Baseline........................................             307            12.1             222            48.1
1...............................................             295            43.9             203            14.8
2...............................................             234             3.2             141            37.0
3...............................................             180             0.4  ..............  ..............
----------------------------------------------------------------------------------------------------------------

10. Inputs to Payback Period Analysis
    The payback period is the amount of time it takes the consumer to 
recover the additional installed cost of more efficient products, 
compared to baseline products, through energy cost savings. Payback 
periods are expressed in years. Payback periods that exceed the life of 
the product mean that the increased total installed cost is not 
recovered in reduced operating expenses.
    The inputs to the PBP calculation for each efficiency level are the 
change in total installed cost of the product and the change in the 
first-year annual operating expenditures relative to the baseline. The 
PBP calculation uses the same inputs as the LCC analysis, except that 
discount rates are not needed.
11. Rebuttable-Presumption Payback Period
    As noted above, EPCA, as amended, establishes a rebuttable 
presumption that a standard is economically justified if the Secretary 
finds that the additional cost to the consumer of purchasing a product 
complying with an energy conservation standard level will be less than 
three times the value of the energy (and, as applicable, water) savings 
during the first year that the consumer will receive as a result of the 
standard, as calculated under the test procedure in place for that 
standard. (42 U.S.C. 6295(o)(2)(B)(iii)) For each considered efficiency 
level, DOE determined the value of the first year's energy and water 
savings by calculating the quantity of those savings in accordance with 
the applicable DOE test procedure, and multiplying that amount by the 
average energy and water price forecast for the year in which 
compliance with the amended standard would be required. The results of 
the rebuttable payback period analysis are summarized in section 
V.B.1.c of this NOPR.

G. Shipments

    DOE uses forecasts of product shipments to calculate the national 
impacts of potential amended energy conservation standards on energy 
use, NPV, and future manufacturer cash flows. DOE develops shipment 
projections based on historical data and an analysis of key market 
drivers for residential dishwashers. In DOE's shipments model, 
shipments of products are driven by new construction and stock 
replacements. The shipments model takes an accounting approach, 
tracking market shares of each product class and the vintage of units 
in the existing stock. Stock accounting uses

[[Page 76161]]

product shipments as inputs to estimate the age distribution of in-
service product stocks for all years. The age distribution of in-
service product stocks is a key input to calculations of both the NES 
and NPV, because operating costs for any year depend on the age 
distribution of the stock. DOE also considers the impacts on shipments 
from changes in product purchase price and operating cost associated 
with higher energy efficiency levels.
    New housing forecasts and residential dishwasher saturation data 
comprised the two primary inputs for DOE's estimates of new 
construction shipments. ``New housing'' includes newly-constructed 
single-family and multi-family units (referred to as ``new housing 
completions'') and mobile home placements. For new housing completions 
and mobile home placements, DOE used AEO 2014 for forecasts of new 
housing, and adopted the projections from AEO 2014 for later years.
    DOE calibrated the shipments model against historical residential 
dishwasher shipments. In general, DOE estimated replacements using a 
product retirement function developed from product lifetime. DOE based 
the retirement function on a probability distribution for the product 
lifetime that was developed in the LCC analysis. The shipments model 
assumes that no units are retired below a minimum product lifetime and 
that all units are retired before exceeding a maximum product lifetime.
    DOE applied a price elasticity parameter to estimate the effect of 
standards on residential dishwasher shipments. DOE estimated the price 
elasticity parameter from a regression analysis that used purchase 
price and efficiency data specific to several residential appliances 
during 1980-2002. The estimated ``relative price elasticity'' 
incorporates the impacts from purchase price, operating cost, and 
household income. Based on evidence that the price elasticity of demand 
is significantly different over the short run and long run for other 
consumer goods (i.e., automobiles),\43\ DOE assumed that the relative 
price elasticity declines over time. DOE estimated shipments in each 
standards case using the relative price elasticity along with the 
change in the relative price between a standards case and the base 
case. For details on the shipments analysis, see chapter 9 of the NOPR 
TSD.
---------------------------------------------------------------------------

    \43\ S. Hymans. Consumer Durable Spending: Explanation and 
Prediction, Brookings Papers on Economic Activity, 1971. Vol. 1971, 
No. 1, pp. 234-239.
---------------------------------------------------------------------------

H. National Impact Analysis

    The NIA assesses the national energy savings (NES) and the national 
net present value NPV of total consumer costs and savings that would be 
expected to result from new or amended standards at specific efficiency 
levels. (``Consumer'' in this context refers to consumers of the 
product being regulated.) DOE calculates the NES and NPV based on 
projections of annual appliance shipments, along with the annual energy 
consumption and total installed cost data from the energy use and LCC 
analyses.\44\ For the present analysis, DOE forecasted the energy 
savings, operating cost savings, product costs, and NPV of consumer 
benefits over the lifetime of products sold from 2019 through 2048.
---------------------------------------------------------------------------

    \44\ For the NIA, DOE adjusts the installed cost data from the 
LCC analysis to exclude sales tax, which is a transfer.
---------------------------------------------------------------------------

    DOE evaluates the impacts of new and amended standards by comparing 
base-case projections with standards-case projections. The base-case 
projections characterize energy use and consumer costs for each product 
class in the absence of new or amended energy conservation standards. 
DOE compares these projections with projections characterizing the 
market for each product class if DOE adopted new or amended standards 
at specific energy efficiency levels (i.e., the TSLs or standards 
cases) for that class. For the base-case forecast, DOE considers 
historical trends in efficiency and various forces that are likely to 
affect the mix of efficiencies over time. For the standards cases, DOE 
also considers how a given standard would likely affect the market 
shares of efficiencies greater than the standard.
    DOE uses a spreadsheet model to calculate the energy savings and 
the national consumer costs and savings from each TSL. The TSD that DOE 
provides during the rulemaking help explain the models and how to use 
them, and interested parties can review DOE's analyses by changing 
various input quantities within the spreadsheet. The NIA spreadsheet 
model uses typical values (as opposed to probability distributions) as 
inputs.
    For the results presented in today's notice, DOE used projections 
of energy prices and housing starts from the AEO 2014 Reference case. 
As part of the NIA, DOE analyzed scenarios that used inputs from the 
AEO 2014 Low Economic Growth and High Economic Growth cases. Those 
cases have higher and lower energy price trends compared to the 
Reference case, as well as higher and lower housing starts, which 
result in higher and lower appliance shipments to new homes. NIA 
results based on these cases are presented in appendix 10-C of the NOPR 
TSD.
    Table IV.10 summarizes the inputs and methods DOE used for the NIA 
analysis for the NOPR. Discussion of these inputs and methods follows 
the table. See chapter 10 of the NOPR TSD for further details.

   Table IV.10--Summary of Inputs and Methods for the National Impact
                                Analysis
------------------------------------------------------------------------
                Inputs                               Method
------------------------------------------------------------------------
Shipments............................  Annual shipments from shipments
                                        model.
Compliance Date of Standard..........  2019.
Base-Case Forecasted Efficiencies....  Efficiency distributions are
                                        forecasted based on historical
                                        efficiency data.
Standards-Case Forecasted              Used a ``roll-up'' scenario.
 Efficiencies.
Annual Energy Consumption per Unit...  Annual weighted-average values
                                        are a function of energy use at
                                        each CSL.
Total Installed Cost per Unit........  Annual weighted-average values
                                        are a function of cost at each
                                        CSL.
                                       Incorporates forecast of future
                                        product prices based on
                                        historical data.
Annual Energy Cost per Unit..........  Annual weighted-average values as
                                        a function of the annual energy
                                        consumption per unit and energy
                                        prices.
Repair and Maintenance Cost per Unit.  Annual values do not change with
                                        efficiency level.
Energy Prices........................  AEO 2014 forecasts (to 2040) and
                                        extrapolation through 2048.
Energy Site-to-Source Conversion       Varies yearly and is generated by
 Factor.                                NEMS-BT.
Discount Rate........................  Three and seven percent real.
Present Year.........................  Future expenses discounted to
                                        2014, when the NOPR will be
                                        published.
------------------------------------------------------------------------

[[Page 76162]]

1. National Energy and Water Savings
    The national energy and water savings analysis involves a 
comparison of national energy and water consumption of the considered 
products in each potential standards case (TSL) with consumption in the 
base case with no new or amended energy and water conservation 
standards. DOE calculated the national energy consumption by 
multiplying the number of units (stock) of each product (by vintage or 
age) by the unit energy consumption (also by vintage). Vintage 
represents the age of the product. DOE calculated annual NES based on 
the difference in national energy consumption for the base case 
(without amended efficiency standards) and for each higher efficiency 
standard. DOE estimated energy consumption and savings based on site 
energy and converted the electricity consumption and savings to primary 
energy using annual conversion factors derived from the AEO 2014 
version of NEMS. Cumulative energy savings are the sum of the NES for 
each year over the timeframe of the analysis.
    DOE has historically presented NES in terms of primary energy 
savings. In the case of electricity use and savings, this quantity 
includes the energy consumed by power plants to generate delivered 
(site) electricity.
    In response to the recommendations of a committee on ``Point-of-Use 
and Full-Fuel-Cycle Measurement Approaches to Energy Efficiency 
Standards'' appointed by the National Academy of Sciences, DOE 
announced its intention to use FFC measures of energy use and 
greenhouse gas and other emissions in the national impact analyses and 
emissions analyses included in future energy conservation standards 
rulemakings. 76 FR 51281 (Aug. 18, 2011). After evaluating the 
approaches discussed in the August 18, 2011 notice, DOE published a 
statement of amended policy in the Federal Register in which DOE 
explained its determination that NEMS is the most appropriate tool for 
its FFC analysis and its intention to use NEMS for that purpose. 77 FR 
49701 (Aug. 17, 2012).
a. Forecasted Efficiency in the Base Case and Standards Cases
    A key component of the NIA is the trend in energy efficiency 
forecasted for the base case (without new or amended standards) and 
each of the standards cases. Section IV.F.9 of this notice describes 
how DOE developed a base-case energy efficiency distribution (which 
yields a shipment-weighted average efficiency) for each of the 
considered product classes for the first year of the forecast period. 
To project the trend in efficiency for standard residential dishwashers 
over the entire forecast period, DOE utilized the historical trend in 
shipment-weighted average efficiency from 2002 to 2010, as provided by 
AHAM, model-weighted data from the DOE's Compliance Certification 
Database and considered the potential effect of programs such as ENERGY 
STAR. The historical trend demonstrates that the shipment-weighted 
average annual energy use decreased by almost 75 percent from 2002 to 
2010, reaching 309 kWh/year. DOE fit an exponential function to the 
2002 to 2010 data that indicated that the base-case shipment-weighted 
average annual energy use will asymptotically approach a value of 280 
kWh/year by 2048 and remain at that level. This trend is described in 
chapter 10 of the NOPR TSD.
    DOE determined that a roll-up scenario is most appropriate to 
establish the distribution of efficiencies for the year that compliance 
with revised residential dishwasher standards would be required. Under 
the ``roll-up'' scenario, DOE assumes: (1) Product efficiencies in the 
base case that do not meet the standard level under consideration would 
``roll-up'' to meet the new standard level; and (2) product 
efficiencies above the standard level under consideration would not be 
affected. The details of DOE's approach to forecast efficiency trends 
are described in chapter 10 of the NOPR TSD.
2. Net Present Value Analysis
    The inputs for determining the NPV of the total costs and benefits 
experienced by consumers of considered appliances are: (1) Total annual 
installed cost, (2) total annual savings in operating costs, and (3) a 
discount factor. DOE calculates net savings each year as the difference 
between the base case and each standards case in total savings in 
operating costs and total increases in installed costs. DOE calculates 
operating cost savings over the life of each product shipped during the 
forecast period.
    The operating cost savings are primarily energy cost savings. These 
are calculated using the estimated energy savings in each year and the 
projected price of the appropriate form of energy. To estimate energy 
prices in future years, DOE multiplied the average regional energy 
prices discussed in the preceding section by the forecast of annual 
national-average residential energy price changes in the Reference case 
from AEO 2014, which has an end year of 2040. To estimate price trends 
after 2040, DOE used the average annual rate of change in prices from 
2020 to 2040.
    In calculating the NPV, DOE multiplies the net savings in future 
years by a discount factor to determine their present value. For 
today's NOPR, DOE estimated the NPV of consumer benefits using both a 
3-percent and a 7-percent real discount rate. DOE uses these discount 
rates in accordance with guidance provided by the Office of Management 
and Budget (OMB) to Federal agencies on the development of regulatory 
analysis.\45\ The discount rates for the determination of NPV are in 
contrast to the discount rates used in the LCC analysis, which are 
designed to reflect a consumer's perspective. The 7-percent real value 
is an estimate of the average before-tax rate of return to private 
capital in the U.S. economy. The 3-percent real value represents the 
``social rate of time preference,'' which is the rate at which society 
discounts future consumption flows to their present value.
---------------------------------------------------------------------------

    \45\ OMB Circular A-4 (Sept. 17, 2003), section E, ``Identifying 
and Measuring Benefits and Costs. Available at: www.whitehouse.gov/omb/memoranda/m03-21.html.
---------------------------------------------------------------------------

a. Total Installed Cost per Unit
    As discussed in section IV.F.1 of this NOPR, DOE developed a 
residential dishwasher price trend based on an experience rate for 
miscellaneous household appliances. It used this trend to forecast the 
prices of residential dishwashers sold in each year in the forecast 
period. DOE applied the same values to forecast prices for each product 
class at each considered efficiency level. By 2048, which is the end 
date of the forecast period, the price is forecasted to drop 37.4 
percent relative to 2013. DOE's projection of product prices for 
residential dishwashers is described in further detail in appendix 10-C 
of the NOPR TSD.
    To evaluate the effect of uncertainty regarding the price trend 
estimates, DOE investigated the impact of different product price 
forecasts on the consumer NPV for the considered TSLs for residential 
dishwashers. In addition to the default price trend, DOE considered two 
product price sensitivity cases: (1) A high price decline case based on 
an exponential fit using PPI data for 1988 to 2013; (2) a low price 
decline case based on an experience rate derived using PPI and 
shipments data for 1991 to 2000. The derivation of these price trends 
and the results of these sensitivity cases are described in

[[Page 76163]]

appendix 10-C of the NOPR TSD. In the high price decline case, the NPV 
is significantly higher than in the default case. In the low price 
decline case, the NPV is slightly lower than in the default case. The 
rank order of the TSLs is the same in all of the cases.

I. Consumer Subgroup Analysis

    In analyzing the potential impact of new or amended standards on 
consumers, DOE evaluates the impact on identifiable subgroups of 
consumers that may be disproportionately affected by a national 
standard. DOE evaluated impacts on particular subgroups of consumers by 
analyzing the LCC impacts and PBP for those particular consumers from 
alternative standard levels. For this rulemaking, DOE analyzed the 
impacts of the considered standard levels on low-income households and 
senior-only households. Chapter 11 in the NOPR TSD describes the 
consumer subgroup analysis.

J. Manufacturer Impact Analysis

    The following sections address the various steps taken to analyze 
the impacts of the amended standards on manufacturers.
1. Overview
    In determining whether an amended energy conservation standard for 
residential dishwashers is economically justified, DOE is required to 
consider ``the economic impact of the standard on the manufacturers and 
on the consumers of the products subject to such standard.'' (42 U.S.C. 
6295(o)(2)(B)(i)(I)) The statute also calls for an assessment of the 
impact of any lessening of competition that is likely to result from 
the adoption of a standard as determined by the Attorney General. (42 
U.S.C. 6295(o)(2)(B)(i)(V)) DOE conducted the MIA to estimate the 
financial impact of amended energy conservation standards on 
manufacturers, and to assess the impacts of such standards on 
employment and manufacturing capacity.
    The MIA involves both quantitative analysis and qualitative 
evaluation. The quantitative elements of the MIA rely on the Government 
Regulatory Impact Model (GRIM), an industry cash-flow model customized 
for this rulemaking. See section IV.J.2 of this notice for details on 
the GRIM. The qualitative parts of the MIA address factors such as 
product characteristics, characteristics of particular firms, and 
market trends. The complete MIA is discussed in chapter 12 of the NOPR 
TSD. DOE conducted the MIA in the three phases described below.
a. Phase 1, Industry Profile
    In Phase 1 of the MIA, DOE prepared a profile of the residential 
dishwasher manufacturing industry based on the market and technology 
assessment prepared for this rulemaking. Before initiating the detailed 
impact studies, DOE collected information on the present and past 
market structure and characteristics of the industry, tracking trends 
in market share data, product attributes, product shipments, 
manufacturer markups, and the cost structure for various manufacturers.
    The profile also included an analysis of manufacturers in the 
industry using Security and Exchange Commission 10-K filings,\46\ 
Standard & Poor's stock reports,\47\ and corporate annual reports 
released by both public and privately held companies. DOE used this and 
other publicly available information to derive preliminary financial 
inputs for the GRIM including industry revenues, cost of goods sold, 
and depreciation, as well as selling, general, and administrative 
(SG&A), and research and development (R&D) expenses. Based on its 
analysis, DOE used the same industry average financial parameters 
developed in support of the May 2012 direct final rule.
---------------------------------------------------------------------------

    \46\ Available online at www.sec.gov.
    \47\ Available online at www.standardandpoors.com.
---------------------------------------------------------------------------

b. Phase 2, Industry Cash Flow Analysis
    Phase 2 focused on the financial impacts of potential amended 
energy conservation standards on the industry as a whole. Amended 
energy conservation standards can affect manufacturer cash flows in 
three distinct ways: (1) 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/or possible changes in sales volumes. 
DOE used the GRIM to model these effects in a cash-flow analysis of the 
residential dishwasher manufacturing industry. In performing this 
analysis, DOE used the financial parameters from the 2012 residential 
dishwasher energy conservation standards rulemaking, the cost-
efficiency curves from the engineering analysis, and the shipment 
assumptions from the NIA.
c. Phase 3, Sub-Group Impact Analysis
    Using average cost assumptions to develop an industry-cash-flow 
estimate may not adequately assess differential impacts of amended 
energy conservation standards among manufacturer subgroups. For 
example, small businesses, manufacturers of niche products, or 
companies exhibiting a cost structure that differs significantly from 
the industry average could be more negatively affected. While DOE did 
not identify any other subgroup of manufacturers of residential 
dishwashers that would warrant a separate analysis, DOE specifically 
investigated impacts on small business manufacturers. See section VI.B 
of this notice for more information.
    The MIA also addresses the direct impact on employment tied to the 
manufacturing of residential dishwashers. Using the GRIM, census data 
and information gained through manufacturer interviews conducted in 
support of the May 2012 direct final rule, DOE estimated the domestic 
labor expenditures and number of domestic production workers in the 
base case and at each TSL from 2014 to 2048.
2. GRIM
    DOE uses the GRIM to quantify the changes in cash flow that alter 
industry value. The GRIM is a standard, discounted cash-flow model that 
incorporates manufacturer costs, markups, shipments, and industry 
financial information as inputs, and models changes in manufacturing 
costs, shipments, investments, and margins that may result from amended 
energy conservation standards. The GRIM uses these inputs to arrive at 
a series of annual cash flows, beginning with the base year of the 
analysis, 2014, and continuing to 2048. DOE uses the industry-average 
weighted-average cost of capital (WACC) of 8.5 percent, as this 
represents the minimum rate of return necessary to cover the debt and 
equity obligations manufacturers use to finance operations.
    DOE used the GRIM to compare INPV in the base case with INPV at 
various TSLs (the standards cases). The difference in INPV between the 
base and standards cases represents the financial impact of the amended 
standard on manufacturers. Additional details about the GRIM can be 
found in chapter 12 of the NOPR TSD.
a. GRIM Key Inputs
Manufacturer Production Costs
    Changes in the MPCs of residential dishwashers can affect revenues, 
gross margins, and cash flow of the industry, making product cost data 
key inputs for DOE's analysis. DOE estimated the MPCs for standard and 
compact product classes at the baseline and higher efficiency levels, 
as described in section IV.C of this notice. The cost model also 
disaggregated the MPCs into the cost of materials, labor, overhead, and

[[Page 76164]]

depreciation. DOE used the MPCs and cost breakdowns as described in 
section IV.C of this NOPR, and further detailed in chapter 5 of the 
NOPR TSD, for each efficiency level analyzed in the GRIM.
Base-Case Shipments Forecast
    The GRIM estimates manufacturer revenues in each year of the 
forecast based in part on total unit shipments and the distribution of 
these values by efficiency level and product class. Changes in the 
efficiency mix and total shipments at each standard level affect 
manufacturer finances. For this analysis, the GRIM uses the NIA 
shipments forecasts from 2013 to 2048, the end of the analysis period.
    To calculate shipments, DOE developed a shipments model for each 
product class based on an analysis of key market drivers for 
residential dishwashers. For greater detail on the shipments analysis, 
see section IV.G of this NOPR and chapter 9 of the NOPR TSD.
Product and Capital Conversion Costs
    Amended energy conservation standards may cause manufacturers to 
incur conversion costs to bring their production facilities and product 
designs into compliance. For the MIA, DOE classified these costs into 
two major groups: (1) Product conversion costs and (2) capital 
conversion costs. Product conversion costs are investments in research, 
development, testing, marketing, and other non-capitalized costs 
focused on making product designs comply with the amended energy 
conservation standard. Capital conversion costs are investments in 
property, plant, and equipment needed to adapt or change existing 
production facilities so that new product designs can be fabricated and 
assembled.
    DOE's estimates of the product and capital conversion costs for the 
residential dishwasher manufacturing industry can be found in section 
V.B.2 of this NOPR and in chapter 12 of the NOPR TSD.
b. GRIM Scenarios
Standards-Case Shipments Forecasts
    The MIA results presented in section V.B.2 of this NOPR all use 
shipments from the NIA in the GRIM. For standards case shipments, DOE 
assumed that base-case shipments of products that did not meet the new 
standard would roll up to meet the standard in the compliance year. 
These forecasts also include the impact of relative price elasticity on 
shipment volumes. In this regard the balance of first costs and 
operating costs factor into the total shipments in the standards case. 
See section IV.G of this NOPR for a description of the standards-case 
efficiency distributions.
    The NIA also used historical data to derive a price scaling index 
to forecast product costs. The MPCs and MSPs in the GRIM use the 
default price forecast for all scenarios. See section IV.F.1 of this 
notice for a discussion of DOE's price forecasting methodology.
Capital Conversion Cost Scenarios
    DOE developed two model scenarios for the capital conversion costs 
required to meet each TSL. One scenario is based on the capital 
conversion costs developed for the energy conservation standards from 
the May 2012 direct final rule, scaled to reflect the new efficiency 
levels for each product class considered in this NOPR. Additionally, 
DOE developed a separate capital conversion cost scenario using the 
engineering cost model. For this estimate, DOE identified the design 
pathways considered in the engineering analysis, estimated the cost of 
the changes in production equipment to implement each design option, 
and aggregated these costs to reflect the industry-wide investment 
using market information about the number of platform and product 
families currently on the market from each manufacturer.
Markup Scenarios
    MSP is equal to MPC times a manufacturer markup. The MSP includes 
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. DOE used the baseline 
manufacturer markup, 1.24, developed for the May 2012 direct final rule 
for all products when modeling the base case in the GRIM.
    For the standards case in the GRIM, DOE modeled two markup 
scenarios to represent the uncertainty regarding the potential impacts 
on prices and profitability for manufacturers following the 
implementation of amended energy conservation standards. For both GRIM 
markup scenarios, DOE placed no premium on higher efficiency products. 
This assumption is informed by a market structure in which 88 percent 
of product shipments currently adhere to ENERGY STAR standards, leaving 
little to no room for differentiation by efficiency level alone. The 
two standards-case markup scenarios are (1) a preservation of gross 
margin as a percentage of revenues markup scenario, and (2) a 
preservation of earnings before interest and taxes (EBIT) markup 
scenario. Modifying these markups from the base case to the standards 
cases yields different sets of impacts on industry revenues and cash 
flow.
    The preservation of gross margin as a percentage of revenues markup 
scenario assumes that the baseline markup of 1.24 is maintained for all 
products in the standards case. This scenario represents the upper 
bound of industry profitability as manufacturers are able to fully pass 
through additional costs due to standards to their customers under this 
scenario.
    The preservation of EBIT markup scenario is similar to the 
preservation of gross margin as a percentage of revenues markup 
scenario with the exception that in the standards case, minimally 
compliant products lose a fraction of the baseline markup. This 
scenario represents the lower bound profitability and a more 
substantial impact on the dishwasher industry as manufacturers accept a 
lower margin in an attempt to offer price competitive entry level 
products while maintaining the same level of EBIT they saw prior to 
amended standards.
3. Manufacturer Interviews
    For this rulemaking, DOE relies on information gathered from 
manufacturer interviews conducted in support of the May 2012 direct 
final rule. For that rulemaking, DOE interviewed manufacturers 
representing more than 80 percent of residential dishwasher sales. 
These interviews were in addition to those DOE conducted as part of the 
engineering analysis for the May 2012 direct final rule. DOE used these 
interviews to tailor the GRIM for today's rule to incorporate unique 
financial characteristics of the 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. See appendix 12-A of the NOPR TSD 
for additional information on the previous MIA interviews. The 
following sections describe the most significant issues identified by 
manufacturers during the interviews conducted in support of the May 
2012 direct final rule.
a. Dishwasher Performance
    All manufacturers interviewed expressed concerns about the 
potential impacts of amended standards on product performance, citing 
several adverse consequences of standards above those agreed upon in 
the Joint Petition. For higher efficiency standards, the performance 
metrics

[[Page 76165]]

manufacturers expected to be most severely impacted include wash 
performance, drying performance, cycle time, and the noise levels 
reached in operation. In considering these metrics, manufacturers 
anticipated negative reactions ranging from small but meaningful 
changes in consumer behavior to higher rates of service calls and 
returns. For efficiency standards well above those proposed in the 
Joint Petition, manufacturers expected blanket rejection of poorly 
performing products in the market. In considering impacts to wash 
performance, manufacturers cited an increase in unnecessary rinsing or 
washing of dishes prior to loading the dishwasher, switching to a more 
aggressive cycle, and running multiple cycles when dishes are not 
adequately cleaned in a single cycle as the most likely changes in 
consumer behavior. Manufacturers suggested that any of these changes 
would result in an increase in both energy and water consumption over 
that used by a dishwasher of satisfactory performance. To mitigate the 
impact of future standards on product performance, several 
manufacturers recommended the adoption of a performance metric into the 
test procedure and standard.
    While all manufacturers suggested that the efficiency level 
specified in the Joint Petition would not likely have a substantial 
negative impact on wash performance, some manufacturers noted that 
standards above this level would result in a decrease in performance 
unless substantially higher-cost technology changes were implemented. 
The comments did not indicate the specific technology changes that 
would be required. Even without such technology changes, however, 
several manufacturers offer or have offered products at efficiency 
levels above those specified by the Joint Petition, including the max-
tech efficiency level identified in today's proposed rule. Accordingly, 
DOE evaluated these higher efficiency levels as part of this 
rulemaking.
    DOE conducted investigative testing to assess cleaning performance 
in support of this NOPR according to the ENERGY STAR Test Method for 
Determining Dishwasher Cleaning Performance (Cleaning Performance Test 
Method).\48\ The testing included multiple units from different 
manufacturers at multiple efficiency levels. Based on this internal 
testing and the availability of products on the market, DOE determined 
that products from the baseline efficiency level to Efficiency Level 3 
for standard residential dishwashers are able to maintain cleaning 
performance.
---------------------------------------------------------------------------

    \48\ * * *
---------------------------------------------------------------------------

b. Test Procedures
    During interviews conducted as part of the development of the May 
2012 direct final rule for residential dishwashers, manufacturers 
raised concerns over the DOE dishwasher test procedure and the 
multitude of additional dishwasher test procedures in the field at that 
time. Several manufacturers suggested that the DOE test procedure did 
not accurately capture the energy used by dishwashers in the field. 
These manufacturers cited the single cycle specification and lack of 
performance metrics in the test procedure as providing an easy avenue 
for circumvention of the standards. In the scenario described, 
manufacturers could optimize a particular cycle to perform well on the 
DOE test procedure with the implicit understanding that this cycle will 
not meet customer expectations and thus will not be used in the field 
as customers opt for a different, more energy-intensive cycle.
    In contrast, other manufacturers raised concerns over expanding the 
test procedure to cover multiple cycles, citing the additional testing 
burden this would generate. Similarly, some manufacturers raised 
concerns over how DOE would implement a performance test, noting that 
there already exist numerous performance tests in the industry 
including those developed by AHAM, IEC, and Consumer Reports and that 
each performance test procedure favors a different machine cycle 
algorithm.
    As discussed in sections II.A and II.B.3 of this NOPR, the DOE test 
procedure for residential dishwashers is found at Title 10 of CFR part 
430, subpart B, appendix C1 (proposed to be redesignated as appendix C 
in this rulemaking). Although appendix C1 does not include provisions 
for measuring cleaning performance, the ENERGY STAR program recently 
finalized the Cleaning Performance Test Method. The Cleaning 
Performance Test Method harmonizes with the procedures in appendix C1, 
requiring manufacturers to test on the same cycles. Appendix C1 also 
requires that testing be conducted on the cycles recommended for 
completely washing a full load of normally soiled dishes.
c. Increased Competition
    During interviews conducted in support of the May 2012 direct final 
rule, manufacturers of both baseline and high efficiency products 
anticipated an increase in competition in industry stemming from 
amended standards. Manufacturers whose market share was largely 
attributed to baseline products expected to see either the removal of 
features from higher efficiency units as a means to cut costs to 
maintain a low-cost minimally-compliant product, or the disappearance 
of entry-level models as they are forced to add other features and cost 
in line with current higher efficiency products. If the latter approach 
prevails, manufacturers of higher efficiency products expected to see 
increased competition as manufacturers that previously focused on low 
efficiency products moved into their target segment of the market. As 
noted in section III.D.1.c of this NOPR, the Attorney General provides 
DOE with a determination and analysis of the impact of any lessening of 
competition that is likely to result from the imposition of the 
standard. (42 U.S.C. 6295(o)(2)(B)(i)(V) and (B)(ii))
d. Cumulative Regulatory Burden
    During interviews conducted in support of the May 2012 direct final 
rule, several manufacturers noted that residential dishwashers are but 
one of a suite of appliances they produce and that the cumulative 
burden of research and development to meet standards, capital 
expenditures and retraining of staff to produce products at the new 
standards, and product testing to certify compliance of new products 
represent a significant burden when taken in combination across their 
various product lines. Manufacturers suggested that the ability to 
establish standards in a coordinated fashion by such vehicles as the 
Joint Petition and receiving adequate notice of DOE's plans for amended 
standards are both necessary elements in mitigating the cumulative 
burden and aligning changes in efficiency regulations with the product 
development cycle. Cumulative regulatory burden is discussed further in 
section V.B.2.e of this NOPR and chapter 12 of the NOPR TSD.

K. Emissions Analysis

    In the emissions analysis, DOE estimates the reduction in power 
sector emissions of carbon dioxide (CO2), nitrogen oxides 
(NOX), sulfur dioxide (SO2), and mercury (Hg) 
from potential energy conservation standards for residential 
dishwashers. In addition to estimating impacts of standards on power 
sector emissions, 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 FFC. 
In accordance with DOE's FFC

[[Page 76166]]

Statement of Policy (76 FR 51281 (Aug. 18, 2011) as amended at 77 FR 
49701 (August 17, 2012)), the FFC analysis also includes impacts on 
emissions of methane (CH4) and nitrous oxide 
(N2O), both of which are recognized as greenhouse gases.
    DOE primarily conducted the emissions analysis using emissions 
factors for CO2 and most of the other gases derived from 
data in AEO 2014. Combustion emissions of CH4 and 
N2O were estimated using emissions intensity factors 
published by the Environmental Protection Agency (EPA) in its 
Greenhouse Gas (GHG) Emissions Factors Hub.\49\ 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.
---------------------------------------------------------------------------

    \49\ See http://www.epa.gov/climateleadership/inventory/ghg-emissions.html.
---------------------------------------------------------------------------

    For CH4 and N2O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO2eq). Gases are converted to CO2eq 
by multiplying each ton of the greenhouse gas by the gas's global 
warming potential (GWP) over a 100-year time horizon. Based on the 
Fifth Assessment Report of the Intergovernmental Panel on Climate 
Change,\50\ DOE used GWP values of 28 for CH4 and 265 for 
N2O.
---------------------------------------------------------------------------

    \50\ IPCC, 2013: Climate Change 2013: The Physical Science 
Basis. Contribution of Working Group I to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Stocker, 
T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. 
Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge 
University Press, Cambridge, United Kingdom and New York, NY, USA. 
Chapter 8.
---------------------------------------------------------------------------

    EIA prepares the AEO using NEMS. Each annual version of NEMS 
incorporates the projected impacts of existing air quality regulations 
on emissions. AEO 2014 generally represents current legislation and 
environmental regulations, including recent government actions, for 
which implementing regulations were available as of October 31, 2013.
    SO2 emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO2 for affected EGUs in the 48 contiguous States and 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). CAIR, which created an allowance-
based trading program that operates along with the Title IV program, 
was remanded to the EPA by the U.S. Court of Appeals for the District 
of Columbia Circuit, but it remained in effect.\51\ In 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.\52\ The court ordered EPA to continue 
administering CAIR. The emissions factors used for today's NOPR, which 
are based on AEO 2014, assume that CAIR remains a binding regulation 
through 2040.\53\
---------------------------------------------------------------------------

    \51\ 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).
    \52\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (U.S. June 24, 2013) (No. 12-1182).
    \53\ On April 29, 2014, the U.S. Supreme Court reversed the 
judgment of the DC Circuit and remanded the case for further 
proceedings consistent with the Supreme Court's opinion. The Supreme 
Court held in part that EPA's methodology for quantifying emissions 
that must be eliminated in certain states due to their impacts in 
other downwind states was based on a permissible, workable, and 
equitable interpretation of the Clean Air Act provision that 
provides statutory authority for CSAPR. See EPA v. EME Homer City 
Generation, No 12-1182, slip op. at 32 (U.S. April 29, 2014). 
Because DOE is using emissions factors based on AEO 2014 for today's 
NOPR, the NOPR assumes that CAIR, not CSAPR, is the regulation in 
force. The difference between CAIR and CSAPR is not relevant for the 
purpose of DOE's analysis of SO2 emissions.
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Beginning in 2016, however, SO2 emissions will 
decline significantly as a result of the Mercury and Air Toxics 
Standards (MATS) for power plants. 77 FR 9304 (Feb. 16, 2012). In the 
final MATS rule, EPA established a standard for hydrogen chloride as a 
surrogate for acid gas hazardous air pollutants (HAP), and also 
established a standard for SO2 (a non-HAP acid gas) as an 
alternative equivalent surrogate standard for acid gas HAP. The same 
controls are used to reduce HAP and non-HAP acid gas; thus, 
SO2 emissions will be reduced as a result of the control 
technologies installed on coal-fired power plants to comply with the 
MATS requirements for acid gas. AEO 2014 assumes that, in order to 
continue operating, coal plants must have either flue gas 
desulfurization or dry sorbent injection systems installed by 2016. 
Both technologies, which are used to reduce acid gas emissions, also 
reduce SO2 emissions. Under the MATS, emissions will be far 
below the cap established by CAIR, so it is unlikely that excess 
SO2 emissions allowances resulting from the lower 
electricity demand would be needed or used to permit offsetting 
increases in SO2 emissions by any regulated EGU. Therefore, 
DOE believes that energy efficiency standards will reduce 
SO2 emissions in 2016 and beyond.
    CAIR established a cap on NOX emissions in 28 eastern 
States and the District of Columbia.\54\ 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.
---------------------------------------------------------------------------

    \54\ CSAPR also applies to NOX, and it would 
supersede the regulation of NOX under CAIR. As stated 
previously, the current analysis assumes that CAIR, not CSAPR, is 
the regulation in force. The difference between CAIR and CSAPR with 
regard to DOE's analysis of NOX is slight.
---------------------------------------------------------------------------

    The MATS limit mercury emissions from power plants, but they do not 
include emissions caps. DOE estimated mercury emissions using emissions 
factors based on AEO 2014, which incorporates the MATS.

L. Monetizing Carbon Dioxide and Other Emissions Impacts

    As part of the development of this proposed rule, DOE considered 
the estimated monetary benefits from the reduced emissions of 
CO2 and NOX that are expected to result from each 
of the TSLs considered. In order to make this calculation analogous to 
the calculation of the NPV of consumer benefit, DOE considered the 
reduced emissions expected to result over the lifetime of 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 relied 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

[[Page 76167]]

increased flood risk, and the value of ecosystem services. Estimates of 
the SCC are provided in dollars per metric ton of CO2. A 
domestic SCC value is meant to reflect the value of damages in the 
United States resulting from a unit change in CO2 emissions, 
while a global SCC value is meant to reflect the value of damages 
worldwide.
    Under section 1(b) of Executive Order 12866, agencies must, to the 
extent permitted by law, ``assess both the costs and the benefits of 
the intended regulation and, recognizing that some costs and benefits 
are difficult to quantify, propose or adopt a regulation only upon a 
reasoned determination that the benefits of the intended regulation 
justify its costs.'' The purpose of the SCC estimates presented here is 
to allow agencies to incorporate the monetized social benefits of 
reducing CO2 emissions into cost-benefit analyses of 
regulatory actions. The estimates are presented with an acknowledgement 
of the many uncertainties involved and with a clear understanding that 
they should be updated over time to reflect increasing knowledge of the 
science and economics of climate impacts.
    As part of the interagency process that developed these SCC 
estimates, technical experts from numerous agencies met on a regular 
basis to consider public comments, explore the technical literature in 
relevant fields, and discuss key model inputs and assumptions. The main 
objective of this process was to develop a range of SCC values using a 
defensible set of input assumptions grounded in the existing scientific 
and economic literatures. In this way, key uncertainties and model 
differences transparently and consistently inform the range of SCC 
estimates used in the rulemaking process.
a. Monetizing Carbon Dioxide Emissions
    When attempting to assess the incremental economic impacts of 
CO2 emissions, the analyst faces a number of challenges. A 
report from the National Research Council \55\ points out that any 
assessment will suffer from uncertainty, speculation, and lack of 
information about: (1) Future emissions of GHGs; (2) the effects of 
past and future emissions on the climate system; (3) the impact of 
changes in climate on the physical and biological environment; and (4) 
the translation of these environmental impacts into economic damages. 
As a result, any effort to quantify and monetize the harms associated 
with climate change will raise questions of science, economics, and 
ethics and should be viewed as provisional.
---------------------------------------------------------------------------

    \55\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use (2009). National Academies 
Press: Washington, DC.
---------------------------------------------------------------------------

    Despite the limits of both quantification and monetization, SCC 
estimates can be useful in estimating the social benefits of reducing 
CO2 emissions. The agency can estimate the benefits from 
reduced (or costs from increased) emissions in any future year by 
multiplying the change in emissions in that year by the SCC values 
appropriate for that year. The NPV of the benefits can then be 
calculated by multiplying each of these future benefits by an 
appropriate discount factor and summing across all affected years.
    It is important to emphasize that the interagency process is 
committed to updating these estimates as the science and economic 
understanding of climate 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. Development of Social Cost of Carbon Values
    In 2009, an interagency process was initiated to offer a 
preliminary assessment of how best to quantify the benefits from 
reducing carbon dioxide emissions. To ensure consistency in how 
benefits are evaluated across Federal agencies, the Administration 
sought to develop a transparent and defensible method, specifically 
designed for the rulemaking process, to quantify avoided climate change 
damages from reduced CO2 emissions. The interagency group 
did not undertake any original analysis. Instead, it combined SCC 
estimates from the existing literature to use as interim values until a 
more comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: global SCC estimates for 2007 (in 2006$) of $55, $33, 
$19, $10, and $5 per metric ton of CO2. These interim values 
represented the first sustained interagency effort within the U.S. 
government to develop an SCC for use in regulatory analysis. The 
results of this preliminary effort were presented in several proposed 
and final rules.
c. Current Approach and Key Assumptions
    After the release of the interim values, the interagency group 
reconvened on a regular basis to generate improved SCC estimates. 
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 (IPCC). 
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 integrated assessment models, at discount rates of 2.5, 
3, and 5 percent. The fourth set, which represents the 95th percentile 
SCC estimate across all three models at a 3-percent discount rate, was 
included to represent higher-than-expected impacts from temperature 
change further out in the tails of the SCC distribution. The values 
grow in real terms over time. Additionally, the interagency group 
determined that a range of values from 7 percent to 23 percent should 
be used to adjust the global SCC to calculate domestic effects,\56\ 
although preference is given to consideration of the global benefits of 
reducing CO2 emissions. Table IV.11 presents the values in 
the 2010 interagency group report,\57\ which is

[[Page 76168]]

reproduced in appendix 14-A of the NOPR TSD.
---------------------------------------------------------------------------

    \56\ 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.
    \57\ Social Cost of Carbon for Regulatory Impact Analysis Under 
Executive Order 12866. Interagency Working Group on Social Cost of 
Carbon, United States Government (February 2010) (Available at: 
www.whitehouse.gov/sites/default/files/omb/inforeg/for-agencies/Social-Cost-of-Carbon-for-RIA.pdf).

                     Table IV.11--Annual SCC Values From 2010 Interagency Report, 2010-2050
                                           (2007$ per metric ton CO2)
----------------------------------------------------------------------------------------------------------------
                                                                           Discount Rate
                                                 ---------------------------------------------------------------
                                                        5%              3%             2.5%             3%
                      Year                       ---------------------------------------------------------------
                                                                                                       95th
                                                      Average         Average         Average       percentile
----------------------------------------------------------------------------------------------------------------
2010............................................             4.7            21.4            35.1            64.9
2015............................................             5.7            23.8            38.4            72.8
2020............................................             6.8            26.3            41.7            80.7
2025............................................             8.2            29.6            45.9            90.4
2030............................................             9.7            32.8            50.0           100.0
2035............................................            11.2            36.0            54.2           109.7
2040............................................            12.7            39.2            58.4           119.3
2045............................................            14.2            42.1            61.7           127.8
2050............................................            15.7            44.9            65.0           136.2
----------------------------------------------------------------------------------------------------------------

    The SCC values used for today's notice were generated using the 
most recent versions of the three integrated assessment models that 
have been published in the peer-reviewed literature.\58\
---------------------------------------------------------------------------

    \58\ Technical Update of the Social Cost of Carbon for 
Regulatory Impact Analysis Under Executive Order 12866, Interagency 
Working Group on Social Cost of Carbon, United States Government 
(May 2013; revised November 2013) (Available at:
    http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).
---------------------------------------------------------------------------

    Table IV.12 shows the updated sets of SCC estimates in 5-year 
increments from 2010 to 2050. The full set of annual SCC estimates 
between 2010 and 2050 is reported in appendix 14-B of the NOPR TSD. The 
central value that emerges is the average SCC across models at the 3-
percent discount rate. However, for purposes of capturing the 
uncertainties involved in regulatory impact analysis, the interagency 
group emphasizes the importance of including all four sets of SCC 
values.

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

    It is important to recognize that a number of key uncertainties 
remain, and that current SCC estimates should be treated as provisional 
and revisable because they will evolve with improved scientific and 
economic understanding. The interagency group also recognizes that the 
existing models are imperfect and incomplete. The 2009 National 
Research Council report 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 
analytical challenges that are being addressed by the research 
community, including research programs housed in many of the Federal 
agencies participating in the interagency process to estimate the SCC. 
The interagency group intends to periodically review and reconsider 
those estimates to reflect increasing knowledge of the science and 
economics of climate impacts, as well as improvements in modeling.
    In summary, in considering the potential global benefits resulting 
from reduced CO2 emissions, DOE used the values from the 
2013 interagency report adjusted to 2013$ using the implicit price 
deflator for GDP from the Bureau of Economic Analysis. For each of the 
four sets of SCC values, the values for emissions in 2015 were $12.0, 
$40.5, $62.4, and $119 per metric ton avoided (values expressed in 
2013$). DOE derived values after 2050 using the relevant growth rates 
for the 2040-2050 period in the interagency update.
    DOE multiplied the CO2 emissions reduction estimated for 
each year by the SCC value for that year in each of the

[[Page 76169]]

four cases. To calculate a present value of the stream of monetary 
values, DOE discounted the values in each of the four cases using the 
specific discount rate that had been used to obtain the SCC values in 
each case.
2. Valuation of Other Emissions Reductions
    As noted above, DOE has taken into account how amended energy 
conservation standards would reduce site NOX emissions 
nationwide and increase power sector NOX emissions in those 
22 States not affected by the CAIR. DOE estimated the monetized value 
of net NOX emissions reductions resulting from each of the 
TSLs considered for today's NOPR based on estimates found in the 
relevant scientific literature. Estimates of monetary value for 
reducing NOX from stationary sources range from $476 to 
$4,893 per ton in 2013$.\59\ DOE calculated monetary benefits using a 
medium value for NOX emissions of $2,684 per short ton (in 
2013$), and real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \59\ U.S. Office of Management and Budget, Office of Information 
and Regulatory Affairs, 2006 Report to Congress on the Costs and 
Benefits of Federal Regulations and Unfunded Mandates on State, 
Local, and Tribal Entities (2006) (Available at: www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf).
---------------------------------------------------------------------------

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

M. Utility Impact Analysis

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

N. Employment Impact Analysis

    DOE considers employment impacts in the domestic economy as one 
factor in selecting a proposed standard. Employment impacts include 
both direct and indirect impacts. Direct employment impacts are any 
changes in the number of employees of manufacturers of the products 
subject to standards, their suppliers, and related service firms. The 
MIA addresses those impacts. Indirect employment impacts from standards 
consist of the net jobs created or eliminated in the national economy, 
other than in the manufacturing sector being regulated, caused by: (1) 
Reduced spending by end users on energy; (2) reduced spending on new 
energy supply by the utility industry; (3) increased spending on new 
products to which the new standards apply; and (4) the effects of those 
three factors throughout the economy.
    One method for assessing the possible effects on the demand for 
labor of such shifts in economic activity is to compare sector 
employment statistics developed by the Labor Department's Bureau of 
Labor Statistics (BLS).\60\ The BLS regularly publishes its estimates 
of the number of jobs per million dollars of economic activity in 
different sectors of the economy, as well as the jobs created elsewhere 
in the economy by this same economic activity. Data from BLS indicate 
that expenditures in the utility sector generally create fewer jobs 
(both directly and indirectly) than expenditures in other sectors of 
the economy.\61\ There are many reasons for these differences, 
including wage differences and the fact that the utility sector is more 
capital-intensive and less labor-intensive than other sectors. Energy 
conservation standards have the effect of reducing consumer utility 
bills. Because reduced consumer expenditures for energy likely lead to 
increased expenditures in other sectors of the economy, the general 
effect of efficiency standards is to shift economic activity from a 
less labor-intensive sector (i.e., the utility sector) to more labor-
intensive sectors (e.g., the retail and service sectors). Thus, based 
on the BLS data alone, DOE believes net national employment will 
increase due to shifts in economic activity resulting from amended 
standards for residential dishwashers.
---------------------------------------------------------------------------

    \60\ Data on industry employment, hours, labor compensation, 
value of production, and the implicit price deflator for output for 
these industries are available upon request by calling the Division 
of Industry Productivity Studies (202-691-5618) or by sending a 
request by email to dipsweb@bls.gov. Available at: www.bls.gov/news.release/prin1.nr0.htm.
    \61\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

    For the amended standard levels considered in this NOPR, DOE 
estimated indirect national employment impacts using an input/output 
model of the U.S. economy called Impact of Sector Energy Technologies 
version 3.1.1 (ImSET).\62\ ImSET is a special-purpose version of the 
``U.S. Benchmark National Input-Output'' (I-O) model, which was 
designed to estimate the national employment and income effects of 
energy-saving technologies. The ImSET software includes a computer-
based I-O model having structural coefficients that characterize 
economic flows among 187 sectors most relevant to industrial, 
commercial, and residential building energy use.
---------------------------------------------------------------------------

    \62\ J.M. Roop, M.J. Scott, and R.W. Schultz, ImSET 3.1: Impact 
of Sector Energy Technologies, PNNL-18412, Pacific Northwest 
National Laboratory, 2009. Available at: www.pnl.gov/main/publications/external/technical_reports/PNNL-18412.pdf
---------------------------------------------------------------------------

    DOE notes that ImSET is not a general equilibrium forecasting 
model, and understands the uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Because ImSET does not incorporate price changes, the 
employment effects predicted by ImSET may over-estimate actual job 
impacts over the long run for this rulemaking. Because ImSET predicts 
small job impacts resulting from this rulemaking, regardless of these 
uncertainties, the actual job impacts are likely to be negligible in 
the overall economy. For more details on the employment impact 
analysis, see chapter 16 of the NOPR TSD.

V. Analytical Results

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

[[Page 76170]]

A. Trial Standard Levels

    DOE analyzed the benefits and burdens of three TSLs for residential 
dishwashers. These TSLs were developed using combinations of efficiency 
levels for the standard and compact product classes analyzed by DOE. 
DOE presents the results for those TSLs in today's rule. DOE presents 
the results for all efficiency levels that it analyzed in the NOPR TSD. 
Table V.1 presents the TSLs and the corresponding efficiency levels for 
residential dishwashers. TSL 3 represents the maximum technologically 
feasible (``max-tech'') improvements in energy efficiency for both 
standard and compact residential dishwashers. TSL 2 consists of the 
next efficiency level below the max-tech level for both standard and 
compact residential dishwashers. TSL 1 consists of the first efficiency 
level considered above the baseline for standard residential 
dishwashers, and the baseline level for compacts.

                          Table V.1--Trial Standard Levels for Residential Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                  Standard                              Compact
                                      --------------------------------------------------------------------------
                 TSL                                   Annual  energy                             Annual  energy
                                             CSL          use (kWh)               CSL                use (kWh)
----------------------------------------------------------------------------------------------------------------
1....................................               1             295  Baseline.................             222
2....................................               3             234  1........................             203
3....................................               4             180  2........................             141
----------------------------------------------------------------------------------------------------------------

B. Economic Justification and Energy Savings

1. Economic Impacts on Individual Consumers
    DOE analyzed the economic impacts on residential dishwasher 
consumers by looking at the effects potential amended standards would 
have on the LCC and PBP. DOE also examined the impacts of potential 
standards on consumer subgroups. These analyses are discussed below.
a. Life-Cycle Cost and Payback Period
    To evaluate the net economic impact of potential amended energy 
conservation standards on consumers of residential dishwashers, DOE 
conducted LCC and PBP analyses for each TSL. In general, higher-
efficiency products would affect consumers in two ways: (1) Purchase 
price would increase, and (2) annual operating costs would decrease. 
Inputs used for calculating the LCC and PBP include total installed 
costs (i.e., product price plus installation costs), and operating 
costs (i.e., annual energy savings, energy prices, energy price trends, 
repair costs, and maintenance costs). The LCC calculation also uses 
product lifetime and a discount rate.
    Chapter 8 of the NOPR TSD provides detailed information on the LCC 
and PBP analyses.
    Table V.2 through Table V.5 show the LCC and PBP results for all 
efficiency levels considered for both standard and compact residential 
dishwashers. In the first of each pair of tables, the simple payback is 
measured relative to the baseline product. In the second tables, the 
LCC savings are measured relative to the base-case efficiency 
distribution in the compliance year (see section IV.F.9 of this NOPR). 
No impacts occur when the base-case efficiency for a specific consumer 
equals or exceeds the efficiency at a given TSL; a standard would have 
no effect because the product installed would be at or above that 
standard level without amended standards.

                             Table V.2--Average LCC and PBP Results by Efficiency Level for Standard Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Average costs 2013$
                                                            Efficiency   ----------------------------------------------------------------     Simple
                           TSL                                 level                       First year's      Lifetime                      payback years
                                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
_.......................................................               0             483              45             518           1,000               _
1.......................................................               1             495              43             492             987             6.1
_.......................................................               2             531              40             462             993            10.8
2.......................................................               3             582              34             387             970             9.0
3.......................................................               4             582              26             296             879             5.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.

    Table V.3--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Standard Residential
                                                   Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers      Average
                               TSL                                  Efficiency         that          savings *
                                                                       level        experience   ---------------
                                                                                 ----------------
                                                                                     Net cost          2013$
----------------------------------------------------------------------------------------------------------------
1...............................................................               1               6               2
_...............................................................               2              39              -2
2...............................................................               3              53              21

[[Page 76171]]

 
3...............................................................               4              33             112
----------------------------------------------------------------------------------------------------------------
* The calculation includes households with zero LCC savings (no impact).

                             Table V.4--Average LCC and PBP Results by Efficiency Level for Compact Residential Dishwashers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Average costs 2013$
                                                            Efficiency   ---------------------------------------------------------------- Simple payback
                           TSL                                 level                       First year's      Lifetime                          years
                                                                          Installed cost  operating cost  operating cost        LCC
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               0             456              26             302             758  ..............
2.......................................................               1             467              24             274             741             4.5
3.......................................................               2             485              16             188             673             2.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: The results for each TSL are calculated assuming that all consumers use products at that efficiency level. The PBP is measured relative to the
  baseline product.

    Table V.5--Average LCC Savings Relative to the Base-Case Efficiency Distribution for Compact Residential
                                                   Dishwashers
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of consumers      Average
                               TSL                                  Efficiency         that          savings *
                                                                       level        experience   ---------------
                                                                                 ----------------
                                                                                     Net cost          2013
----------------------------------------------------------------------------------------------------------------
1...............................................................               0  ..............  ..............
2...............................................................               1               9               8
3...............................................................               2               6              51
----------------------------------------------------------------------------------------------------------------
Note: The calculation includes households with zero LCC savings (no impact).

b. Consumer Subgroup Analysis
    As described in section IV.I of this notice, DOE determined the 
impact of the considered TSLs on low-income households and senior-only 
households.\63\ Table V.6 compares the average LCC savings at each 
efficiency level for the two consumer subgroups, along with the average 
LCC savings for the entire sample for each product class for 
residential dishwashers. The average LCC savings for low-income 
households and senior-only households at the considered efficiency 
levels are not substantially different from the average for all 
households. Chapter 11 of the NOPR TSD presents the complete LCC and 
PBP results for the two subgroups.
---------------------------------------------------------------------------

    \63\ DOE did not analyze subgroup impacts for compact 
dishwashers because the saturation of these products is extremely 
small.

                Table V.6--Standard Residential Dishwashers: Comparison of Average LCC Savings for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Average life-cycle cost savings (2013$)              Simple payback period (years)
                                                         -----------------------------------------------------------------------------------------------
                           TSL                              Low-income      Senior-only                     Low-income      Senior-only
                                                            households      households    All households    households      households    All households
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.......................................................               2               1               2             6.2             8.4             6.1
2.......................................................              15               1              21             9.5            11.6             9.0
3.......................................................             100              71             112             5.6             6.8             5.3
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 76172]]

c. Rebuttable Presumption Payback
    As discussed above, EPCA provides a rebuttable presumption that an 
energy conservation standard is economically justified if the increased 
purchase cost for a product that meets the standard is less than three 
times the value of the first-year energy and water savings resulting 
from the standard. In calculating a rebuttable presumption payback 
period for the considered standard levels, DOE used discrete values 
rather than distributions for input values, and, as required by EPCA, 
based the energy and water use calculation on the DOE test procedures 
for residential dishwashers. As a result, DOE calculated a single 
rebuttable presumption payback value, and not a distribution of payback 
periods, for each efficiency level. Table V.7 presents the rebuttable-
presumption payback periods for the considered TSLs. While DOE examined 
the rebuttable-presumption criterion, it considered whether the 
standard levels considered for this proposed rule are economically 
justified through a more detailed analysis of the economic impacts of 
those levels pursuant to 42 U.S.C. 6295(o)(2)(B)(i). The results of 
that analysis serve as the basis for DOE to evaluate the economic 
justification for a potential standard level (thereby supporting or 
rebutting the results of any preliminary determination of economic 
justification).

           Table V.7--Residential Dishwashers: Rebuttable PBPs
------------------------------------------------------------------------
                                            Trial standard level
          Product class           --------------------------------------
                                        1            2            3
------------------------------------------------------------------------
Standard (years).................          3.9          7.1          4.2
Compact (years)..................  ...........          3.1          2.0
------------------------------------------------------------------------

2. Economic Impacts on Manufacturers
    DOE performed an MIA to estimate the impact of amended energy 
conservation standards on manufacturers of residential dishwashers. The 
section below describes the expected impacts on manufacturers at each 
TSL. Chapter 12 of the NOPR TSD explains the analysis in further 
detail.
a. Industry Cash Flow Analysis Results
    DOE modeled two scenarios using different markup assumptions and 
two scenarios using different conversion cost assumptions for a total 
of four different scenarios. Each scenario results in a unique set of 
cash flows and corresponding industry value at each TSL. These 
assumptions correspond to the bounds of a range of market responses 
that DOE anticipates could occur in the standards case. The tables 
below depict the financial impacts on manufacturers (represented by 
changes in INPV) and the conversion costs DOE estimates manufacturers 
would incur at each TSL. The first two tables correspond to the 
scenarios using scaled estimates of the capital conversion costs from 
the May 2012 direct final rule with the preservation of gross margin 
markups and the preservation of EBIT markups respectively. The third 
and fourth tables correspond to the scenarios using estimates of the 
capital conversion from the current engineering cost model, again with 
the preservation of gross margin markups and the preservation of EBIT 
markups respectively. Those scenarios with the preservation of gross 
margin markups reflect the lower (less severe) bound of impacts whereas 
the scenarios with the preservation of EBIT markups reflect the upper 
(more severe) bound of impacts.
    The INPV results refer to the difference in industry value between 
the base case and the standards case, which DOE calculated by summing 
the discounted industry cash flows from the base year (2014) through 
the end of the analysis period (2048). The discussion also notes the 
difference in cash flow between the base case and the standards case in 
the year before the compliance date of potential amended energy 
conservation standards. This figure provides an estimate of the 
required conversion costs relative to the cash flow generated by the 
industry in the base case.

  Table V.8--Manufacturer Impact Analysis for Residential Dishwashers--Scaled Capital Conversion Costs From the
                May 2012 Direct Final Rule With the Preservation of Gross Margin Markups Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  (2013$ millions)           586.6           507.3           483.0           426.0
Change in INPV................  (2013$ millions)  ..............          (79.2)         (103.6)         (160.5)
                                (%).............  ..............          -13.5%          -17.7%          -27.4%
Product Conversion Costs......  (2013$ millions)  ..............            38.3            61.7            80.2
Capital Conversion Costs......  (2013$ millions)  ..............            79.2           172.0           236.7
Total Conversion Costs........  (2013$ millions)  ..............           117.5           233.7           316.9
----------------------------------------------------------------------------------------------------------------

  Table V.9--Manufacturer Impact Analysis for Residential Dishwashers--Scaled Capital Conversion Costs From the
                    May 2012 Direct Final Rule With the Preservation of EBIT Markups Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  (2013$ millions)           586.6           506.1           404.2           346.8
Change in INPV................  (2013$ millions)  ..............          (80.5)         (182.3)         (239.8)
                                (%).............  ..............          -13.7%          -31.1%          -40.9%
Product Conversion Costs......  (2013$ millions)  ..............            38.3            61.7            80.2

[[Page 76173]]

 
Capital Conversion Costs......  (2013$ millions)  ..............            79.2           172.0           236.7
Total Conversion Costs........  (2013$ millions)  ..............           117.5           233.7           316.9
----------------------------------------------------------------------------------------------------------------

   Table V.8--Manufacturer Impact Analysis for Residential Dishwashers--Capital Conversion Costs From the 2014
                  Engineering Cost Model With the Preservation of Gross Margin Markups Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  (2013$ millions)           586.6           543.1           465.2           445.5
Change in INPV................  (2013$ millions)  ..............          (43.5)         (121.4)         (141.1)
                                (%).............  ..............           -7.4%          -20.7%          -24.0%
Product Conversion Costs......  (2013$ millions)  ..............            38.3            61.7            80.2
Capital Conversion Costs......  (2013$ millions)  ..............            35.4           219.7           236.1
    Total Conversion Costs....  (2013$ millions)  ..............            73.7           281.4           316.3
----------------------------------------------------------------------------------------------------------------

   Table V.9--Manufacturer Impact Analysis for Residential Dishwashers--Capital Conversion Costs From the 2014
                      Engineering Cost Model With the Preservation of EBIT Markups Scenario
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                      Units          Base case   -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
INPV..........................  (2013$ millions)           586.6           541.8           382.9           362.6
Change in INPV................  (2013$ millions)  ..............          (44.7)         (203.7)         (224.0)
                                (%).............  ..............           -7.6%          -34.7%          -38.2%
Product Conversion Costs......  (2013$ millions)  ..............            38.3            61.7            80.2
Capital Conversion Costs......  (2013$ millions)  ..............            35.4           219.7           236.1
    Total Conversion Costs....  (2013$ millions)  ..............            73.7           281.4           316.3
----------------------------------------------------------------------------------------------------------------

    Because standard residential dishwashers represent over 99 percent 
of shipments in the year leading up to amended standards, changes to 
this product class contribute the majority of impacts to INPV across 
all TSLs analyzed in this rulemaking.
    At TSL 1, DOE estimates impacts on INPV to range from -$43.5 
million to -$80.5 million, or a change in INPV of -7.4 percent to -13.7 
percent. At this level, industry free cash flow is estimated to 
decrease by as much as 99.0 percent to $0.5 million, compared to the 
base-case value of $47.3 million in the year leading up to the amended 
energy conservation standards. As TSL 1 corresponds to the current 
ENERGY STAR criteria for standard residential dishwashers, and these 
products represent 88 percent of shipments in the year leading up to 
amended standards, only a small fraction of the market is affected at 
this efficiency level. In either markup scenario, the impact on INPV at 
TSL 1 stems largely from the conversion costs required to switch 
production lines from manufacturing baseline units to those meeting the 
standards set at Efficiency Level 1 for standard residential 
dishwashers.
    As a large fraction of the energy used in dishwashing is associated 
with heating the wash water, the design options proposed to meet this 
efficiency level relate primarily to minimizing the amount of wash 
water through spray-arm optimization, filter improvements, and enabling 
greater control over the wash water temperature. Both of these 
practices are in common use in higher efficiency platforms across the 
industry and contribute to an MPC of $213.24 for standard dishwashers. 
Because the industry already produces a substantial number of products 
at this efficiency level, product and capital conversion costs are 
limited to $73.7 million based on the engineering cost model, or $117.5 
million based on the scaled conversion costs taken from the May 2012 
direct final rule.
    At TSL 2, DOE estimates impacts on INPV to range from -$103.6 
million to -$203.7 million, or a change in INPV of -17.7 percent to -
34.7 percent. At this level, industry free cash flow is estimated to 
decrease by as much as 247.1 percent to -$69.6 million, compared to the 
base-case value of $47.3 million in the year leading up to the amended 
energy conservation standards.
    DOE expects manufacturers would make more extensive improvements to 
meet TSL 2 compared to TSL 1. For standard dishwashers, these 
improvements include exchanging a heated drying system for a 
condensation drying system, further optimizing the hydraulic system 
(extending to a redesign of both the sump and water lines and further 
improvements to the filters), and incorporating a flow meter, 
temperature sensor, and soil sensor to finely tune water consumption, 
temperature, and the drying cycle. The component changes required to 
enable these improvements contribute to an MPC of $278.44 for standard 
dishwashers. For standard dishwashers, only 3.7 percent of shipments 
currently meet the standards specified at TSL 2. In contrast, 51.9 
percent of shipments of compact dishwashers currently meet the 
standards specified at TSL 2. Because only a few standard residential

[[Page 76174]]

dishwashers currently employ these energy and water saving measures, 
the product and capital conversion costs for standard dishwashers rise 
to $223.9 million based on the scaled conversion costs taken from the 
May 2012 direct final rule, or $249.2 million based on the engineering 
cost model, as the production lines responsible for producing over 95 
percent of standard product shipments would need retooling and 
upgrades. For manufacturers of compact dishwashers, these investments 
total $9.8 million based on the scaled conversion costs taken from the 
May 2012 direct final rule, or $32.2 million based on the engineering 
cost model. Accordingly, the conversion costs required to design and 
produce compliant standard dishwashers contribute to the majority of 
impacts on INPV at TSL 2.
    At TSL 3, DOE estimates impacts on INPV to range from -141.1 
million to -$239.8 million, or a change in INPV of -24.0 percent to -
40.9 percent. At this level, industry free cash flow is estimated to 
decrease by as much as 274.7 percent to -$82.6 million, compared to the 
base-case value of $47.3 million in the year leading up to the amended 
energy conservation standards. The impact to INPV is most severe at TSL 
3 as less than 1 percent of shipments in the year leading up to amended 
standards meet this efficiency level. Only 0.4 percent of standard 
dishwasher shipments and 37.0 percent of compact dishwasher shipments 
currently meet the standards specified at TSL 3. As such, standards at 
TSL 3 would affect nearly all platforms and will result in substantial 
capital conversion costs associated with improvements to nearly all 
production facilities. Because so few products exist at this level, 
nearly all manufacturers would face complete redesigns for products to 
meet this standard. Accordingly, the product conversion costs increase 
to reflect this substantial research effort. The capital and product 
conversion costs required to bring products into compliance rise to a 
total of $316.9 million based on the scaled conversion costs taken from 
the May 2012 direct final rule, or $316.3 million based on the 
engineering cost model. Production lines responsible for producing over 
99 percent of product shipments would need retooling and upgrades at 
TSL 3. The conversion costs at TSL 3 stem from both the research 
programs needed to develop such optimized products and the capital 
investment required to change over production lines responsible for 
producing over 99 percent of product shipments.
    DOE expects manufacturers of standard residential dishwashers would 
incorporate similar design options at TSL 3 as at TSL 2, extended to 
include more highly optimized control strategies that would further 
reduce the wash and rinse water temperatures. Although the component 
changes required to enable these improvements contribute to the same 
MPC of $278.44 for standard dishwashers at TSL 3 as for TSL 2, the 
levels specified at TSL 3 significantly impact INPV because of the 
larger conversion costs associated with developing and producing these 
highly optimized products. For compact residential dishwashers, moving 
from TSL 2 to TSL 3 would require significant changes to the portion of 
the market that is not currently at the max- tech efficiency level. 
These changes would result in a range of INPV impacts for compact 
manufacturers ranging from -241 percent to -1,262 percent. Because 
these impacts are attributed to manufacturers of baseline compact 
residential dishwashers in the countertop configuration, DOE expects 
that manufacturers would exit the market for these products at TSL 3.
b. Impacts on Employment
    DOE used the GRIM to estimate the domestic labor expenditures and 
number of domestic production workers in the base case and at each TSL 
from 2014 to 2048. DOE used the labor content of each product and the 
MPCs from the engineering analysis to estimate the total annual labor 
expenditures associated with residential dishwashers sold in the United 
States. Using statistical data from the most recent U.S. Census 
Bureau's 2011 ``Annual Survey of Manufactures'' (ASM) and interviews 
with manufacturers from the May 2012 direct final rule, DOE estimates 
that 95 percent of residential dishwashers sold in the United States 
are manufactured domestically and hence that portion of total labor 
expenditures is attributable to domestic labor. Labor expenditures for 
the manufacture of a product are a function of the labor intensity of 
the product, the sales volume, and an assumption that wages in real 
terms remain constant.
    Using the GRIM, DOE forecasts the domestic labor expenditure for 
residential dishwasher production labor in 2019 will be approximately 
$290.7 million. Using the $27.17 hourly wage rate including fringe 
benefits and 2,042 production hours per year per employee found in the 
2011 ASM, DOE estimates there will be approximately 5,240 domestic 
production workers involved in manufacturing residential dishwashers in 
2019, the year in which any amended standards would go into effect. In 
addition, DOE estimates that 1,250 non-production employees in the 
United States will support residential dishwasher production. The 
employment spreadsheet of the residential dishwasher GRIM shows the 
annual domestic employment impacts in further detail.
    The production worker estimates in this section cover workers only 
up to the line-supervisor level who are directly involved in 
fabricating and assembling dishwashers within an Original Equipment 
Manufacturer (OEM) facility. Workers performing services that are 
closely associated with production operations, such as material 
handling with a forklift, are also included as production labor. 
Additionally, the employment impacts shown are independent of the 
employment impacts from the broader U.S. economy, which are documented 
in chapter 13 of the NOPR TSD.
    Table V.10 depicts the potential levels of production employment 
that could result following amended energy conservation standards as 
calculated by the GRIM. The employment levels shown reflect the 
scenario in which manufacturers continue to produce the same scope of 
covered products in domestic facilities and domestic production is not 
shifted to lower-labor-cost countries. If all existing production were 
moved outside of the United States, the expected impact to domestic 
manufacturing employment would be a loss of 5,240 jobs, the equivalent 
of the total base-case domestic production employment. Because there is 
a risk of manufacturers evaluating sourcing decisions in response to 
amended energy conservation standards, the expected impact to domestic 
production employment falls between the potential increases as shown in 
Table V.10, and the levels of job loss associated with all domestic 
manufacturing of residential dishwashers moving outside of the United 
States. The discussion below includes a qualitative evaluation of the 
likelihood of negative domestic production employment impacts at the 
various TSLs.

[[Page 76175]]

             Table V.10--Total Number of Domestic Residential Dishwasher Production Workers in 2019
----------------------------------------------------------------------------------------------------------------
                                                                                  Trial standard level
                                                            Base case  -----------------------------------------
                                                                              1             2             3
----------------------------------------------------------------------------------------------------------------
Total Number of Domestic Production Workers in 2019             5,240         5,252         5,426         5,485
 (without changes in production locations)..............
----------------------------------------------------------------------------------------------------------------

    The design options specified at some higher ELs increase the labor 
content (measured in dollars) of standard residential dishwashers by as 
much as 17 percent. All examined TSLs show modest gains in domestic 
manufacturing employment levels provided manufacturers do not relocate 
production facilities outside of the United States. However, at higher 
TSLs, some of the design options analyzed greatly impact the ability of 
manufacturers to make product changes within existing platforms. 
Because of the higher labor content, the very large upfront capital 
costs, and the fact that so few existing units meet the standards 
proposed in this NOPR, some manufacturers may consider relocating some 
or all of their domestic production of residential dishwashers to lower 
labor cost countries.
c. Impacts on Manufacturing Capacity
    Less than 5 percent of shipments of residential dishwashers already 
comply with the amended energy conservation standards proposed in this 
rulemaking. Not every manufacturer that ships standard residential 
dishwashers offers products that meet these amended energy conservation 
standards. Because manufacturers would need to make substantial 
platform changes by the 2019 compliance date, many would have to run 
parallel production between the announcement of the final rule and the 
compliance date. This requirement may impact manufacturing capacity 
during this interim period. DOE seeks additional comment on the impact 
to manufacturing capacity between the issuance date and the compliance 
date of any amended energy conservation standards for residential 
dishwashers.
d. Impacts on Sub-Groups of Manufacturers
    Using average cost assumptions to develop an industry cash-flow 
estimate may not be adequate for assessing differential impacts among 
manufacturer subgroups. Small manufacturers, niche equipment 
manufacturers, and manufacturers exhibiting a cost structure 
substantially different from the industry average could be affected 
disproportionately. DOE examined the potential for disproportionate 
impacts on small business manufacturers, as discussed in section VI.B 
of this NOPR. DOE did not identify any other manufacturer subgroups for 
this rulemaking.
e. Cumulative Regulatory Burden
    While any one regulation may not impose a significant burden on 
manufacturers, the combined effects of several impending regulations 
may have serious consequences for some manufacturers, groups of 
manufacturers, or an entire industry. Assessing the impact of a single 
regulation may overlook this cumulative regulatory burden. In addition 
to energy conservation standards, other regulations can significantly 
affect manufacturers' financial operations. Multiple regulations 
affecting the same manufacturer can strain profits and can lead 
companies to abandon product lines or markets with lower expected 
future returns than competing products. For these reasons, DOE conducts 
an analysis of cumulative regulatory burden as part of its energy 
conservation standards rulemakings.
    In interviews conducted in support of the May 2012 direct final 
rule, manufacturers provided comments on some of these regulations. DOE 
summarized and addressed these comments in section IV.J.3 of this NOPR. 
For the cumulative regulatory burden, DOE attempts to quantify or 
describe the impacts of other Federal regulations that have a 
compliance date within approximately 3 years of the compliance date of 
this rulemaking. Most of the major regulations identified by DOE that 
meet this criterion are other energy conservation standards for 
products and equipment also made by manufacturers of residential 
dishwashers. See chapter 12 of the NOPR TSD for the results of DOE's 
analysis of the cumulative regulatory burden.
3. National Impact Analysis
a. Significance of Energy Savings
    To estimate the energy savings attributable to potential standards 
for residential dishwashers, DOE compared the energy consumption of 
those products under the base case to their anticipated energy 
consumption under each TSL. Table V.11 presents DOE's projections of 
the national energy savings and national water savings for each TSL 
considered for residential dishwashers. The savings were calculated 
using the approach described in section IV.H.1 of this NOPR.

 Table V.11--Residential Dishwashers (for Standard and Compact Product Classes): Cumulative National Energy and
                                            Water Savings (2019-2048)
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                             Savings                             -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Source Energy Savings (quads)...................................            0.00            1.00            2.39
FFC Energy Savings (quads)......................................            0.01            1.06            2.53
Water Savings (trillion gallons)................................            0.03            0.24            0.99
----------------------------------------------------------------------------------------------------------------

    OMB Circular A-4 \64\ 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

[[Page 76176]]

benefits and costs. For this rulemaking, DOE undertook a sensitivity 
analysis using 9, rather than 30, years of product shipments. The 
choice of a 9-year period is a proxy for the timeline in EPCA for the 
review of certain energy conservation standards and potential revision 
of and compliance with such revised standards.\65\ The review timeframe 
established in EPCA is generally not synchronized with the product 
lifetime, product manufacturing cycles, or other factors specific to 
residential dishwashers. Thus, such results are presented for 
informational purposes only and are not indicative of any change in 
DOE's analytical methodology. The NES sensitivity analysis results 
based on a 9-year analytical period are presented in Table V.12. The 
impacts are counted over the lifetime of residential dishwashers 
purchased in 2019-2027.
---------------------------------------------------------------------------

    \64\ U.S. Office of Management and Budget, ``Circular A-4: 
Regulatory Analysis'' (Sept. 17, 2003) (Available at: http://www.whitehouse.gov/omb/circulars_a004_a-4/).
    \65\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain products, a 
3-year period after any new standard is promulgated before 
compliance is required, except that in no case may any new standards 
be required within 6 years of the compliance date of the previous 
standards. While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6 year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

 Table V.12--Residential Dishwashers (for Standard and Compact Product Classes): Cumulative National Energy and
                                 Water Savings for Products Shipped in 2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                             Savings                             -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
Source Energy Savings (quads)...................................            0.00            0.27            0.68
FFC Energy Savings (quads)......................................            0.00            0.28            0.72
Water (trillion gallons)........................................            0.01            0.05            0.27
----------------------------------------------------------------------------------------------------------------

b. Net Present Value of Consumer Costs and Benefits
    DOE estimated the cumulative NPV to the nation of the total costs 
and savings for consumers that would result from particular standard 
levels for residential dishwashers. In accordance with the OMB's 
guidelines on regulatory analysis (OMB Circular A-4, section E, 
September 17, 2003), DOE calculated NPV using both a 7-percent and a 3-
percent real discount rate.
    Table V.13 shows the consumer NPV results for each TSL DOE 
considered for residential dishwashers. The impacts are counted over 
the lifetime of products purchased in 2019-2048.

 Table V.13--Residential Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in
                                                    2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                          Discount rate                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2013$
----------------------------------------------------------------------------------------------------------------
3 percent.......................................................            0.15            2.14            15.7
7 percent.......................................................            0.05            0.23            5.56
----------------------------------------------------------------------------------------------------------------

    The NPV results based on the aforementioned 9-year analytical 
period are presented in Table V.14. The impacts are counted over the 
lifetime of products purchased in 2019-2027. As mentioned previously, 
such results are presented for informational purposes only and is not 
indicative of any change in DOE's analytical methodology or decision 
criteria.

 Table V.14--Residential Dishwashers: Cumulative Net Present Value of Consumer Benefits for Products Shipped in
                                                    2019-2027
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                          Discount rate                          -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                                                                   Billion 2013$
----------------------------------------------------------------------------------------------------------------
3 percent.......................................................            0.06            0.13            4.96
7 percent.......................................................            0.03           -0.14            2.43
----------------------------------------------------------------------------------------------------------------

    The above results reflect the use of a default trend to estimate 
the change in price for residential dishwashers over the analysis 
period (see section IV.F.1 of this NOPR). DOE also conducted a 
sensitivity analysis that considered one scenario with a lower rate of 
price decline than the reference case and one scenario with a higher 
rate of price decline than the reference case. The results of these 
alternative cases are presented in appendix 10-C of the NOPR TSD.

[[Page 76177]]

c. Impacts on Employment
    DOE develops estimates of the indirect employment impacts of 
potential standards on the economy in general. As discussed above, DOE 
expects energy conservation standards for residential dishwashers to 
reduce energy bills for consumers of those products, and the resulting 
net savings to be redirected to other forms of economic activity. These 
expected shifts in spending and economic activity could affect the 
demand for labor. As described in section IV.N of this NOPR, DOE used 
an input/output model of the U.S. economy to estimate indirect 
employment impacts of the TSLs that DOE considered in this rulemaking. 
DOE understands that there are uncertainties involved in projecting 
employment impacts, especially changes in the later years of the 
analysis. Therefore, DOE generated results for near-term timeframes, 
where these uncertainties are reduced.
    The results suggest that today's standards are likely to have 
negligible impact on the net demand for labor in the economy. The net 
change in jobs is so small that it would be imperceptible in national 
labor statistics and might be offset by other, unanticipated effects on 
employment. Chapter 16 of the NOPR TSD presents detailed results.
4. Impact on Utility or Performance of Products
    Based on testing conducted in support of this proposed rule, 
discussed in section IV.C.1.b, DOE concluded that the TSL proposed in 
this NOPR would not reduce the utility or performance of the 
residential dishwashers under consideration in this rulemaking. 
Manufacturers of these products currently offer units that meet or 
exceed today's standards. (42 U.S.C. 6295(o)(2)(B)(i)(IV))
5. Impact of Any Lessening of Competition
    DOE has also considered any lessening of competition that is likely 
to result from amended standards. The Attorney General determines the 
impact, if any, of any lessening of competition likely to result from a 
proposed standard, and transmits such determination to DOE, together 
with an analysis of the nature and extent of such impact. (42 U.S.C. 
6295(o)(2)(B)(i)(V) and (B)(ii))
    DOE will transmit a copy of today's NOPR and the accompanying TSD 
to the Attorney General, requesting that the DOJ provide its 
determination on this issue. DOE will consider DOJ's comments on the 
proposed rule in determining whether to proceed with the proposed 
energy conservation standards. DOE will also publish and respond to 
DOJ's comments in the Federal Register in a separate notice.
6. Need of the Nation To Conserve Energy
    Enhanced energy efficiency, where economically justified, improves 
the nation's energy security, strengthens the economy, and reduces the 
environmental impacts or costs of energy production. Reduced 
electricity demand due to energy conservation standards is also likely 
to reduce the cost of maintaining the reliability of the electricity 
system, particularly during peak-load periods. As a measure of this 
reduced demand, chapter 15 in the NOPR TSD presents the estimated 
reduction in generating capacity for the TSLs that DOE considered in 
this rulemaking.
    Energy savings from amended standards for residential dishwashers 
could also produce environmental benefits in the form of reduced 
emissions of air pollutants and greenhouse gases associated with 
electricity production. Table V.15 provides DOE's estimate of 
cumulative emissions reductions to result from the TSLs considered in 
this rulemaking. DOE reports annual CO2, NOX, and 
Hg emissions reductions for each TSL in chapter 13 of the NOPR TSD.

    Table V.15--Cumulative Emissions Reduction Estimated for Residential Dishwasher Trial Standard Levels for
                                          Products Shipped in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                               Trial standard level
                                                                 -----------------------------------------------
                                                                         1               2               3
----------------------------------------------------------------------------------------------------------------
                                         Power Sector and Site Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             0.2            57.9           137.5
SO2 (thousand tons).............................................            -0.4            42.4            98.1
NOX (thousand tons).............................................             2.3            68.9           171.0
Hg (tons).......................................................             0.0             0.1             0.3
N2O (thousand tons).............................................             0.0             0.7             1.7
CH4 (thousand tons).............................................             0.0             5.0            11.7
----------------------------------------------------------------------------------------------------------------
                                               Upstream Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             0.1             4.0             9.7
SO2 (thousand tons).............................................             0.0             0.5             1.2
NOX (thousand tons).............................................             1.2            57.8           141.6
Hg (tons).......................................................             0.0             0.0             0.0
N2O (thousand tons).............................................             0.0             0.0             0.1
CH4 (thousand tons).............................................             7.1           340.1           834.5
----------------------------------------------------------------------------------------------------------------
                                               Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
CO2 (million metric tons).......................................             0.3            61.9           147.2
SO2 (thousand tons).............................................            -0.4            42.9            99.4
NOX (thousand tons).............................................             3.4           126.7           312.6
Hg (tons).......................................................             0.0             0.1             0.3
N2O (thousand tons).............................................             0.0             0.7             1.7
N2O (thousand tons CO2eq)*......................................            -1.2           196.9           462.3
CH4 (thousand tons).............................................             7.0           345.1           846.2

[[Page 76178]]

 
CH4 (thousand tons CO2eq)*......................................           197.3         9,663.4        23,693.2
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
Negative values refer to an increase in emissions.

    As part of the analysis for this proposed rule, DOE estimated 
monetary benefits likely to result from the reduced emissions of 
CO2 and NOX that DOE estimated for each of the 
TSLs considered for residential dishwashers. As discussed in section 
IV.L of this notice, for CO2, DOE used the most recent 
values for the SCC developed by an interagency process. The four sets 
of SCC values for CO2 emissions reductions in 2015 resulting 
from that process (expressed in 2013$) are represented by $12.0/metric 
ton (the average value from a distribution that uses a 5-percent 
discount rate), $40.5/metric ton (the average value from a distribution 
that uses a 3-percent discount rate), $62.4/metric ton (the average 
value from a distribution that uses a 2.5-percent discount rate), and 
$119/metric ton (the 95th-percentile value from a distribution that 
uses a 3-percent discount rate). The values for later years are higher 
due to increasing damages (emissions-related costs) as the projected 
magnitude of climate change increases.
    Table V.16 presents the global value of CO2 emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values, and these results are presented in 
chapter 14 of the NOPR TSD.

    Table V.16--Estimates of Global Present Value of CO2 Emissions Reduction for Residential Dishwasher Trial
                                                 Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                             SCC Case*
                                                 ---------------------------------------------------------------
                       TSL                                                                          3% discount
                                                    5% discount     3% discount    2.5% discount    rate, 95th
                                                   rate, average   rate, average   rate, average    percentile
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2013$
----------------------------------------------------------------------------------------------------------------
                                 Site and Power Sector Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             1.7             7.7            12.1            23.9
2...............................................           400.3         1,849.1         2,936.9         5,724.7
3...............................................           901.5         4,245.7         6,772.6        13,138.4
----------------------------------------------------------------------------------------------------------------
                                       Upstream Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             0.5             2.4             3.8             7.4
2...............................................            27.1           125.8           200.0           389.8
3...............................................            62.4           296.1           473.1           917.1
----------------------------------------------------------------------------------------------------------------
                                       Total FFC Emissions
----------------------------------------------------------------------------------------------------------------
1...............................................             2.3            10.1            15.9            31.3
2...............................................           427.4         1,974.9         3,136.9         6,114.5
3...............................................           963.8         4,541.8         7,245.7        14,056.0
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119
  per metric ton (2013$).

    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 on 
reducing CO2 emissions in this rulemaking is subject to 
change. DOE, together with other Federal agencies, will continue to 
review various methodologies for estimating the monetary value of 
reductions in CO2 and other GHG emissions. This ongoing 
review will consider the comments on this subject that are part of the 
public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this proposed rule the 
most recent values and analyses resulting from the interagency process.
    DOE also estimated the cumulative monetary value of the economic 
benefits associated with NOX emissions reductions 
anticipated to result from amended standards for residential 
dishwashers. The dollar-per-ton values that DOE used are discussed in 
section IV.L of this notice. Table V.17 presents the cumulative present 
values for each TSL calculated using 7-percent and 3-percent discount 
rates.

[[Page 76179]]

 Table V.17--Estimates of Present Value of NOX Emissions Reduction Under
              Residential Dishwashers Trial Standard Levels
------------------------------------------------------------------------
                                            3% discount     7% discount
                   TSL                         rate            rate
------------------------------------------------------------------------
                                                  Million 2013$ *
------------------------------------------------------------------------
                     Power Sector and Site Emissions
------------------------------------------------------------------------
1.......................................             3.2             1.6
2.......................................            95.5            44.4
3.......................................           221.4            98.5
------------------------------------------------------------------------
                           Upstream Emissions
------------------------------------------------------------------------
1.......................................             1.7             0.8
2.......................................            77.9            34.8
3.......................................           178.9            76.9
------------------------------------------------------------------------
                           Total FFC Emissions
------------------------------------------------------------------------
1.......................................             4.9             2.4
2.......................................           173.3            79.2
3.......................................           400.3           175.4
------------------------------------------------------------------------
 * Negative values refer to an increase in emissions.

7. Summary of National Economic Impacts
    The NPV of the monetized benefits associated with emissions 
reductions can be viewed as a complement to the NPV of the customer 
savings calculated for each TSL considered in this rulemaking. Table 
V.18 presents the NPV values that result from adding the estimates of 
the potential economic benefits resulting from reduced CO2 
and NOX emissions in each of four valuation scenarios to the 
NPV of customer savings calculated for each TSL considered in this 
rulemaking, at both a 7-percent and 3-percent discount rate. The 
CO2 values used in the columns of each table correspond to 
the four sets of SCC values discussed above.

Table V.18--Net Present Value of Customer Savings Combined With Present Value of Monetized Benefits From CO2 and
                                            NOX Emissions Reductions
----------------------------------------------------------------------------------------------------------------
                                                     Customer NPV at 3% discount rate added with:
                                     ---------------------------------------------------------------------------
                                       SCC case $12.0/    SCC case $40.5/    SCC case $62.4/     SCC case $119/
                 TSL                   metric ton CO2*    metric ton CO2*    metric ton CO2*    metric ton CO2*
                                       and medium value   and medium value   and medium value   and medium value
                                           for NOX            for NOX            for NOX            for NOX
----------------------------------------------------------------------------------------------------------------
                                                                     Billion 2013$
----------------------------------------------------------------------------------------------------------------
1...................................                0.2                0.2                0.2                0.2
2...................................                2.7                4.3                5.5                8.4
3...................................               17.1               20.6               23.3               30.2
----------------------------------------------------------------------------------------------------------------

 
                                                     Customer NPV at 7% discount rate added with:
                                     ---------------------------------------------------------------------------
                                       SCC case $12.0/    SCC case $40.5/    SCC case $62.4/     SCC case $119/
                 TSL                   metric ton CO2*    metric ton CO2*    metric ton CO2*    metric ton CO2*
                                       and medium value   and medium value   and medium value   and medium value
                                           for NOX            for NOX            for NOX            for NOX
----------------------------------------------------------------------------------------------------------------
                                                                     Billion 2013$
----------------------------------------------------------------------------------------------------------------
1...................................                0.1                0.1                0.1                0.1
2...................................                0.7                2.3                3.4                6.4
3...................................                6.7               10.3               13.0               19.8
----------------------------------------------------------------------------------------------------------------
* For each of the four cases, the corresponding SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119
  per metric ton (2013$).

    Although adding the value of customer savings to the values of 
emission reductions provides a valuable perspective, two issues should 
be considered. First, the national operating cost savings are domestic 
U.S. customer monetary savings that occur as a result of market 
transactions, while the value of CO2 reductions is based on 
a global value. Second, the assessments of operating cost savings and 
the SCC are performed with different methods that use different time 
frames for analysis. The national operating cost savings is measured 
for the lifetime of equipment shipped in 2019 to 2048. 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.
8. Other Factors
    The Secretary of Energy, in determining whether a standard is 
economically justified, may consider any other factors that the 
Secretary deems to be relevant. (42 U.S.C. 6295(o)(2)(B)(i)(VI)) DOE 
did not consider any other factors for this NOPR.

C. Conclusion

    When considering proposed standards, the new or amended energy 
conservation standard that DOE adopts for any type (or class) of 
covered product must be designed to achieve the maximum improvement in 
energy efficiency that the Secretary determines is technologically 
feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In 
determining whether a standard is economically justified, the Secretary 
must determine whether the benefits of the standard exceed its burdens, 
considering to the greatest extent practicable the seven statutory 
factors discussed previously. (42 U.S.C. 6295(o)(2)(B)(i)) The new or 
amended standard must also result in a significant conservation of 
energy. (42 U.S.C. 6295(o)(3)(B))
    The Department considered the impacts of standards at each TSL, 
beginning with a maximum technologically feasible level, to determine 
whether that level was economically justified. Where the max-tech level 
was not justified, DOE then

[[Page 76180]]

considered the next most efficient level and undertook the same 
evaluation until it reached the highest efficiency level that is both 
technologically feasible and economically justified and saves a 
significant amount of energy.
    To aid the reader as DOE discusses the benefits and/or burdens of 
each trial standard level, tables present a summary of the results of 
DOE's quantitative analysis for each TSL. In addition to the 
quantitative results presented in the tables, DOE also considers other 
burdens and benefits that affect economic justification. Those include 
the impacts on identifiable subgroups of consumers, such as low-income 
households and seniors, who may be disproportionately affected by a 
national standard. Section IV.I of this notice presents the estimated 
impacts of each TSL for these subgroups.
    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 (for 
example, 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 (that is, renter 
versus owner; builder versus purchaser). Other literature indicates 
that with less than perfect foresight and a high degree of uncertainty 
about the future, consumers may trade off these types of investments at 
a higher than expected rate between current consumption and uncertain 
future energy cost savings.
    In DOE's current regulatory analysis, potential changes in the 
benefits and costs of a regulation due to changes in consumer purchase 
decisions are included in two ways: First, if consumers forego a 
purchase of a product in the standards case, this decreases sales for 
product manufacturers, and the impact on manufacturers attributed to 
lost revenue is included in the MIA. Second, DOE accounts for energy 
savings attributable only to products actually used by consumers in the 
standards case; if a regulatory option decreases the number of products 
used by consumers, this decreases the potential energy savings from an 
energy conservation standard. DOE provides detailed estimates of 
shipments and changes in the volume of product purchases in chapter 9 
of the NOPR TSD. However, DOE's current analysis does not explicitly 
control for heterogeneity in consumer preferences, preferences across 
subcategories of products or specific features, or consumer price 
sensitivity variation according to household income.\66\
---------------------------------------------------------------------------

    \66\ P.C. Reiss and M.W. White. Household Electricity Demand, 
Revisited. Review of Economic Studies (2005) 72, 853-883.
---------------------------------------------------------------------------

    While DOE is not prepared at present to provide a fuller 
quantifiable framework for estimating the benefits and costs of changes 
in consumer purchase decisions due to an energy conservation standard, 
DOE is committed to developing a framework that can support empirical 
quantitative tools for improved assessment of the consumer welfare 
impacts of appliance standards. 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.\67\ DOE 
welcomes comments on how to more fully assess the potential impact of 
energy conservation standards on consumer choice and how to quantify 
this impact in its regulatory analysis in future rulemakings.
---------------------------------------------------------------------------

    \67\ Alan Sanstad, Notes on the Economics of Household Energy 
Consumption and Technology Choice. Lawrence Berkeley National 
Laboratory. 2010. Available online at: www1.eere.energy.gov/buildings/appliance_standards/pdfs/consumer_ee_theory.pdf.
---------------------------------------------------------------------------

1. Benefits and Burdens of TSLs Considered for Residential Dishwashers
    Table V.19 and Table V.20 summarize the quantitative impacts 
estimated for each TSL for residential dishwashers. The efficiency 
levels contained in each TSL are described in section V.A of this NOPR.

        Table V.19--Summary of Results for Residential Dishwasher Trial Standard Levels: National Impacts
----------------------------------------------------------------------------------------------------------------
               Category                         TSL 1                    TSL 2                    TSL 3
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Energy Savings quads
----------------------------------------------------------------------------------------------------------------
                                                          0.01                     1.06                     2.53
----------------------------------------------------------------------------------------------------------------
                                     NPV of Customer Benefits 2013$ billion
----------------------------------------------------------------------------------------------------------------
3% discount rate.....................                      0.1                      2.1                     15.7
7% discount rate.....................                      0.1                      0.2                      5.6
----------------------------------------------------------------------------------------------------------------
                                       Cumulative FFC Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 million metric tons..............                      0.3                     61.9                    147.2
NOX thousand tons....................                      3.4                    126.7                    312.6
Hg tons..............................                      0.0                      0.1                      0.3
N2O thousand tons....................                      0.0                      0.7                      1.7
N2O thousand tons CO2eq *............                     -1.2                    196.9                    462.3
CH4 thousand tons....................                      7.0                    345.1                    846.2
CH4 thousand tons CO2eq *............                    197.3                  9,663.4                   23,693
SO2 thousand tons....................                     -0.4                     42.9                     99.4
----------------------------------------------------------------------------------------------------------------

[[Page 76181]]

 
                                          Value of Emissions Reduction
----------------------------------------------------------------------------------------------------------------
CO2 2013$ million **.................              2.3 to 31.3         427.4 to 6,114.5          963.8 to 14,056
NOX_3% discount rate 2013$ million...                      4.9                    173.3                    400.3
NOX_7% discount rate 2013$ million...                      2.4                     79.2                    175.4
----------------------------------------------------------------------------------------------------------------
* CO2eq is the quantity of CO2 that would have the same GWP.
** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2
  emissions.

   Table V.20--Summary of Results for Residential Dishwasher Trial Standard Levels: Consumer and Manufacturer
                                                     Impacts
----------------------------------------------------------------------------------------------------------------
               Category                        TSL 1 *                  TSL 2 *                  TSL 3 *
----------------------------------------------------------------------------------------------------------------
                                              Manufacturer Impacts
----------------------------------------------------------------------------------------------------------------
Impact to Industry NPV (2013$                    (43.5)-(80.5)          (103.6)-(203.7)          (141.1)-(239.8)
 million, 8.5% discount rate)........
Industry NPV (% change)..............             (7.4)-(13.7)            (17.7)-(34.7)            (24.0)-(40.9)
----------------------------------------------------------------------------------------------------------------
                                            Direct Employment Impacts
----------------------------------------------------------------------------------------------------------------
Potential Increase in Domestic                              12                      186                      245
 Production Workers in 2018..........
----------------------------------------------------------------------------------------------------------------
                                      Consumer Average LCC Savings (2013$)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher..................                        2                       21                      112
Compact Dishwasher...................                     n.a.                        8                       51
----------------------------------------------------------------------------------------------------------------
                                           Consumer Simple PBP (years)
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher..................                      6.1                      9.0                      5.3
Compact Dishwasher...................                     n.a.                      4.5                      2.9
----------------------------------------------------------------------------------------------------------------
                                      Distribution of Consumer LCC Impacts
----------------------------------------------------------------------------------------------------------------
Standard Dishwasher..................
Net Cost (%).........................                       6%                      53%                      33%
Compact Dishwasher...................
Net Cost (%).........................                     n.a.                       9%                       6%
----------------------------------------------------------------------------------------------------------------
* Parentheses indicate negative (-) values. The entry ``n.a.'' means not applicable because there is no change
  in the standard at certain TSLs.

    DOE first considered TSL 3, which represents the max-tech 
efficiency levels. TSL 3 would save 2.53 quads of energy and 0.99 
trillion gallons of water, amounts DOE considers significant. Under TSL 
3, the NPV of consumer benefit would be $5.6 billion using a discount 
rate of 7 percent, and $15.7 billion using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 3 are 147.2 Mt of 
CO2, 312.6 thousand tons of NOX, 99.4 thousand 
tons of SO2, 0.3 tons of Hg, 1.7 thousand tons of 
N2O, and 846.2 thousand tons of CH4. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 3 ranges from $963.8 million to $14,056 million.
    At TSL 3, the average LCC impact is a savings of $112 for standard 
residential dishwashers and a savings of $51 for compact residential 
dishwashers. The simple payback period is 5.3 years for standard 
residential dishwashers and 2.9 years for compact residential 
dishwashers. The fraction of consumers experiencing either an LCC 
benefit net cost is 33 percent for standard residential dishwashers and 
6 percent for compact residential dishwashers.
    DOE testing suggested that manufacturers may have to consider 
extending the cycle time in order to maintain cleaning performance in 
dishwashers with reduced energy and water use at TSL 3. While DOE did 
not modify current dishwasher designs in order to assess how long the 
cycle may need to be extended in order to maintain current cleaning 
performance, DOE is concerned that current dishwasher designs with TSL 
3 energy and water use may result in consumer utility concerns.
    At TSL 3, the projected change in INPV ranges from a decrease of 
$141.1 million to a decrease of $239.8 million, equivalent to 24.0 
percent and 40.9 percent, respectively. Products that meet the 
efficiency standards specified by this TSL are forecast to represent 
less than 1 percent of shipments in the year leading up to amended 
standards. As such, manufacturers would have to redesign nearly all 
products by the expected 2019 compliance date to meet demand. 
Redesigning all units to meet the current max-tech efficiency levels 
would require considerable capital and product conversion expenditures. 
At TSL 3, the capital conversion costs total as much as $236.7 million, 
2.5 times the industry annual capital expenditure in the year leading 
up to amended standards. DOE estimates that complete platform redesigns 
would cost the industry $80.2 million in product conversion costs. 
These conversion costs largely relate to the extensive research 
programs required to develop new products that meet the efficiency 
standards set forth by TSL 3. These

[[Page 76182]]

costs are equivalent to 1.8 times the industry annual budget for 
research and development. As such, the conversion costs associated with 
the changes in products and manufacturing facilities required at TSL 3 
would require significant use of manufacturers' financial reserves 
(manufacturer capital pools), impacting other areas of business that 
compete for these resources and significantly reducing INPV. In 
addition, manufacturers could face a substantial impact on 
profitability at TSL 3. Because manufacturers are more likely to reduce 
their margins to maintain a price-competitive product at higher TSLs, 
DOE expects that TSL 3 would yield impacts closer to the high end of 
the range of INPV impacts. If the high end of the range of impacts is 
reached, as DOE expects, TSL 3 could result in a net loss to 
manufacturers of 40.9 percent of INPV. DOE also notes that the 
significant impacts on the INPV of compact residential dishwasher 
manufacturers, as discussed in V.B.2.a, would likely result in the 
elimination of countertop products from the market.
    The Secretary tentatively concludes that at TSL 3 for residential 
dishwashers, the benefits of energy savings, water savings, positive 
NPV of consumer benefits, emission reductions, and the estimated 
monetary value of the CO2 emissions reductions would be 
outweighed by the economic burden on some consumers, the potential 
burden on all consumers from loss of product utility, and the impacts 
on manufacturers, including the conversion costs and profit margin 
impacts that could result in a large reduction in INPV. Consequently, 
the Secretary has tentatively concluded that TSL 3 is not economically 
justified.
    DOE then considered TSL 2. TSL 2 would save 1.06 quads of energy 
and 0.24 trillion gallons of water, amounts DOE considers significant. 
Under TSL 2, the NPV of consumer benefit would be $0.2 billion using a 
discount rate of 7 percent, and $2.1 billion using a discount rate of 3 
percent.
    The cumulative emissions reductions at TSL 2 are 61.9 Mt of 
CO2, 126.7 thousand tons of NOX, 42.9 thousand 
tons of SO2, 0.1 ton of Hg, 0.7 thousand tons of 
N2O, and 345.1 thousand tons of CH4. The 
estimated monetary value of the CO2 emissions reductions at 
TSL 2 ranges from $427.4 million to $6,114.5 million.
    At TSL 2, the average LCC impact is a savings of $21 for standard 
residential dishwashers and a savings of $8 for compact residential 
dishwashers. The simple payback period is 9.0 years for standard 
residential dishwashers and 4.5 years for compact residential 
dishwashers. The fraction of consumers experiencing an LCC net cost is 
53 percent for standard residential dishwashers and 9 percent for 
compact residential dishwashers.
    At TSL 2, the projected change in INPV ranges from a decrease of 
$103.6 million to a decrease of $203.7 million, decreases of 17.7 
percent and 34.7 percent, respectively. Products that meet the 
efficiency standards specified by this TSL represent less than 5 
percent of shipments in the year leading up to amended standards. As 
such, manufacturers would have to overhaul a significant fraction of 
products by the 2019 compliance date to meet demand, although DOE 
testing suggested that the design changes would not require extension 
of the cycle time in order to maintain cleaning performance in 
dishwashers at the energy and water use associated with TSL 2. 
Redesigning significant component systems or developing entirely new 
platforms to meet the efficiency levels specified by this TSL would 
require considerable capital and product conversion expenditures. At 
TSL 2, the estimated capital conversion costs total as much as $219.7 
million, which is 2.3 times the industry annual capital expenditure in 
the year leading up to amended standards. DOE estimates that the 
redesigns necessary to meet these standards would cost the industry 
$61.7 million in product conversion costs. These conversion costs 
largely relate to the research programs required to develop products 
that meet the efficiency standards set forth by TSL 2, and are 1.4 
times the industry annual budget for research and development in the 
year leading up to amended standards. As such, the conversion costs 
associated with the changes in products and manufacturing facilities 
required at TSL 2 would still require significant use of manufacturers' 
financial reserves (manufacturer capital pools), impacting other areas 
of business that compete for these resources and significantly reducing 
INPV. Because manufacturers are more likely to reduce their margins to 
maintain a price-competitive product at higher TSLs, DOE expects that 
TSL 2 would yield impacts closer to the high end of the range of INPV 
impacts as indicated by the preservation of EBIT markup scenario. If 
the high end of the range of impacts is reached, as DOE expects, TSL 2 
could result in a net loss of 34.7 percent in INPV to manufacturers of 
residential dishwashers.
    The Secretary tentatively concludes that at TSL 2 for residential 
dishwashers, the benefits of energy savings, water savings, positive 
NPV of consumer benefits, emission reductions, and the estimated 
monetary value of the CO2 emissions reductions would 
outweigh the negative impacts on some consumers and on manufacturers, 
including the conversion costs that could result in a reduction in INPV 
for manufacturers.
    After considering the analysis and the benefits and burdens of TSL 
2, the Secretary tentatively concludes that this TSL will offer the 
maximum improvement in efficiency that is technologically feasible and 
economically justified, and will result in the significant conservation 
of energy. Therefore, DOE today proposes TSL 2 for residential 
dishwashers. The proposed amended energy conservation standards for 
residential dishwashers, which are a maximum allowable annual energy 
use and maximum allowable per-cycle water consumption, are shown in 
Table V.21.

     Table V.21--Proposed Amended Energy Conservation Standards for
                         Residential Dishwashers
------------------------------------------------------------------------
                                     Compliance date: May 30, 2019
                             -------------------------------------------
        Product class            Maximum  annual      Maximum per-cycle
                                  energy use *        water consumption
------------------------------------------------------------------------
1. Standard (>=8 place        234 kWh/year........  3.1 gal/cycle.
 settings plus 6 serving
 pieces).

[[Page 76183]]

 
2. Compact (year........  3.1 gal/cycle.
 settings plus 6 serving
 pieces).
------------------------------------------------------------------------
* Annual energy use, expressed in kilowatt-hours (kWh) per year, is
  calculated as: The sum of the annual standby electrical energy in kWh
  and the product of (1) the representative average dishwasher use
  cycles per year and (2) the sum of machine electrical energy
  consumption per cycle in kWh, the total water energy consumption per
  cycle in kWh, and, for dishwashers having a truncated normal cycle,
  the drying energy consumption divided by 2 in kWh. A truncated normal
  cycle is defined as the normal cycle interrupted to eliminate the
  power-dry feature after the termination of the last rinse option.

2. Summary of Benefits and Costs (Annualized) of the Standards
    The benefits and costs of today's standards can also be expressed 
in terms of annualized values. The annualized monetary values are the 
sum of (1) the annualized national economic value, expressed in 2013$, 
of the benefits from operating products that meet the proposed 
standards (consisting primarily of operating cost savings from using 
less energy and water, minus increases in product purchase costs, which 
is another way of representing consumer NPV), and (2) the monetary 
value of the benefits of emission reductions, including CO2 
emission reductions.\68\ The value of the CO2 reductions, 
otherwise known as the SCC, is calculated using a range of values per 
metric ton of CO2 developed by a recent interagency process.
---------------------------------------------------------------------------

    \68\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(2020, 2030, etc.), and then discounted the present value from each 
year to 2014. The calculation uses discount rates of 3 and 7 percent 
for all costs and benefits except for the value of CO2 
reductions, for which DOE used case-specific discount rates, as 
shown in Table V.22. Using the present value, DOE then calculated 
the fixed annual payment over a 30-year period, starting in the 
compliance year, that yields the same present value.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO2 reductions provides a useful perspective, two issues 
should be considered. First, the national operating savings are 
domestic U.S. consumer monetary savings that occur as a result of 
market transactions, while the value of CO2 reductions is 
based on a global value. Second, the assessments of operating cost 
savings and SCC are performed with different methods that use quite 
different time frames for analysis. The national operating cost savings 
is measured for the lifetime of products shipped in 2019-2048. The SCC 
values, on the other hand, reflect the present value of all future 
climate-related impacts resulting from the emission of one ton of 
carbon dioxide in each year. These impacts continue well beyond 2100.
    Table V.22 shows the annualized values for residential dishwashers 
under TSL 2, expressed in 2013$. The results under the primary estimate 
are as follows. Using a 7-percent discount rate for benefits and costs 
other than CO2 reductions, for which DOE used a 3-percent 
discount rate along with the SCC series corresponding to a value of 
$40.5/ton in 2015 (in 2013$), the cost of the standards for residential 
dishwashers in today's rule is $413 million per year in increased 
equipment costs, while the annualized benefits are $437 million per 
year in reduced equipment operating costs, $113 million in 
CO2 reductions, and $8.37 million in reduced NOX 
emissions. In this case, the net benefit amounts to $146 million per 
year. Using a 3-percent discount rate for all benefits and costs and 
the SCC series corresponding to a value of $40.5/ton in 2015 (in 
2013$), the cost of the standards for residential dishwashers in 
today's rule is $406 million per year in increased equipment costs, 
while the benefits are $529 million per year in reduced operating 
costs, $113 million in CO2 reductions, and $9.95 million in 
reduced NOX emissions. In this case, the net benefit amounts 
to $246 million per year.

Table V.22--Annualized Benefits and Costs of Proposed Amended Standards (TSL 2) for Residential Dishwashers Sold
                                                  in 2019-2048
----------------------------------------------------------------------------------------------------------------
                                                                          Million 2013$/year
                                                     -----------------------------------------------------------
                                     Discount rate                         Low net benefits    High net benefits
                                                      Primary estimate *      estimate *          estimate *
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Consumer Operating Cost Savings.  7%................  437...............  388...............  506.
                                  3%................  529...............  462...............  624.
CO2 Reduction at $12.0/t **.....  5%................  34................  30................  39.
CO2 Reduction at $40.5/t **.....  3%................  113...............  100...............  131.
CO2 Reduction at $62.4/t **.....  2.5%..............  165...............  146...............  191.
CO2 Reduction at $119/t **......  3%................  351...............  311...............  406.
NOX Reduction at $2,684/t.......  7%................  8.37..............  7.53..............  9.49.
                                  3%................  9.95..............  8.86..............  11.43.
Total [dagger]..................  7% plus CO2 range.  479 to 796........  425 to 706........  555 to 921.
                                  7%................  558...............  496...............  647.
                                  3% plus CO2 range.  572 to 890........  501 to 782........  674 to 1,041.
                                  3%................  652...............  572...............  766.

[[Page 76184]]

 
                                                      Costs
----------------------------------------------------------------------------------------------------------------
Consumer Incremental Product      7%................  413...............  468...............  371.
 Costs.
                                  3%................  406...............  465...............  361.
----------------------------------------------------------------------------------------------------------------
                                               Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Total [dagger]..................  7% plus CO2 range.  66 to 383.........  -43 to 238........  183 to 550.
                                  7%................  146...............  28................  275.
                                  3% plus CO2 range.  167 to 484........  36 to 317.........  313 to 680.
                                  3%................  246...............  106...............  405.
----------------------------------------------------------------------------------------------------------------
* The results include benefits to consumers which accrue after 2048 from the dishwashers purchased from 2019
  through 2048. Costs incurred by manufacturers, some of which may be incurred prior to 2019 in preparation for
  the rule, are not directly included, but are indirectly included as part of incremental equipment costs. The
  extent of the costs and benefits will depend on the projected price trends of dishwashers, as the consumer
  demand for dishwashers is a function of dishwasher prices. The Primary, Low Benefits, and High Benefits
  Estimates utilize forecasts of energy prices and housing starts from the AEO 2014 Reference case, Low
  Estimate, and High Estimate, respectively. In addition, incremental product costs reflect a medium decline
  rate for projected product price trends in the Primary Estimate, a low decline rate in the Low Benefits
  Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price
  trends are explained in section IV.H.2.a of this notice.
** The CO2 values represent global values (in 2013$) of the social cost of CO2 emissions in 2013 under several
  scenarios. The values of $12.0, $40.5, and $62.4 per ton are the averages of SCC distributions calculated
  using 5%, 3%, and 2.5% discount rates, respectively. The value of $119 per ton represents the 95th percentile
  of the SCC distribution calculated using a 3% discount rate.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount
  rate, which is $40.5/ton in 2015 (in 2013$). In the rows labeled as ``7% plus CO2 range'' and ``3% plus CO2
  range,'' the operating cost and NOX benefits are calculated using the labeled discount rate, and those values
  are added to the full range of CO2 values.

VI. Procedural Issues and Regulatory Review

A. Review Under Executive Orders 12866 and 13563

    Section 1(b)(1) of Executive Order 12866, ``Regulatory Planning and 
Review,'' requires each agency to identify the problem that it intends 
to address, including, where applicable, the failures of private 
markets or public institutions that warrant new agency action, as well 
as to assess the significance of that problem. 58 FR 51735 (Oct. 4, 
1993). The problems that 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 
residential dishwasher 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 residential dishwashers that are not captured by the 
users of such equipment. These benefits include externalities related 
to environmental protection and energy security that are not reflected 
in energy prices, such as reduced emissions of greenhouse gases.
    In addition, DOE has determined that today's regulatory action is a 
``significant regulatory action'' under Executive Order 12866. DOE 
presented to the Office of Information and Regulatory Affairs (OIRA) in 
the OMB for review the draft rule and other documents prepared for this 
rulemaking, including a regulatory impact analysis (RIA), and has 
included these documents in the rulemaking record. The assessments 
prepared pursuant to Executive Order 12866 can be found in the 
technical support document for this rulemaking.
    DOE has also reviewed this regulation pursuant to Executive Order 
13563, issued on January 18, 2011. 76 FR 3281 (Jan. 21, 2011). EO 13563 
is supplemental to and explicitly reaffirms the principles, structures, 
and definitions governing regulatory review established in Executive 
Order 12866. To the extent permitted by law, agencies are required by 
Executive Order 13563 to: (1) Propose or adopt a regulation only upon a 
reasoned determination that its benefits justify its costs (recognizing 
that some benefits and costs are difficult to quantify); (2) tailor 
regulations to impose the least burden on society, consistent with 
obtaining regulatory objectives, taking into account, among other 
things, and to the extent practicable, the costs of cumulative 
regulations; (3) select, in choosing among alternative regulatory 
approaches, those approaches that maximize net benefits (including 
potential economic, environmental, public health and safety, and other 
advantages; distributive impacts; and equity); (4) to the extent 
feasible, specify performance objectives, rather than specifying the 
behavior or manner of compliance that regulated entities must adopt; 
and (5) identify and assess available alternatives to direct 
regulation, including providing economic incentives to encourage the 
desired behavior, such as user fees or marketable permits, or providing 
information upon which choices can be made by the public.
    DOE emphasizes as well that Executive Order 13563 requires agencies 
to use the best available techniques to quantify anticipated present 
and future benefits and costs as accurately as possible. In its 
guidance, the Office of Information and Regulatory Affairs has 
emphasized that such techniques may include identifying changing future 
compliance costs that might result from technological innovation or 
anticipated behavioral changes. For the reasons stated in the preamble, 
DOE believes that today's NOPR is consistent with these principles, 
including the requirement that, to the extent permitted by law, 
benefits justify costs and that net benefits are maximized.

B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act requires preparation of an initial 
regulatory flexibility analysis (IRFA) for any rule that by law must be 
proposed

[[Page 76185]]

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. (5 U.S.C. 601 et seq.) 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).
    For manufacturers of residential dishwashers, the Small Business 
Administration (SBA) has set a size threshold, which defines those 
entities classified as ``small businesses'' for the purposes of the 
statute. DOE used the SBA's small business size standards to determine 
whether any small entities would be subject to the requirements of the 
rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 
53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size 
standards are listed by North American Industry Classification System 
(NAICS) code and industry description and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf. 
Residential dishwasher manufacturing is classified under NAICS 335228, 
``Other Major Household Appliance Manufacturing.'' The SBA sets a 
threshold of 500 employees or less for an entity to be considered as a 
small business for this category.
    To estimate the number of small businesses which could be impacted 
by the amended energy conservation standards, DOE conducted a market 
survey using all available public information to identify potential 
small manufacturers. To identify small business manufacturers, DOE 
surveyed the May 2012 direct final rule for residential dishwasher 
energy conservation standards, the AHAM membership directory, several 
product databases (DOE's Compliance Certification Database, CEC, and 
ENERGY STAR databases) and individual company Web sites. DOE screened 
out companies that did not themselves manufacture products covered by 
this rulemaking, did not meet the definition of a ``small business,'' 
or are foreign owned and operated.
    Approximately half of the total domestic market for residential 
dishwashers is manufactured in the United States by one corporation. 
Together, this manufacturer and three other manufacturers do not meet 
the definition of a small business manufacturer and comprise 99 percent 
of the residential dishwasher market. The small portion of the 
remaining residential dishwasher market (approximately 69,000 units) is 
supplied by a combination of approximately 20 companies, all of which 
have small market shares. All of these companies are either foreign-
owned and operated, re-brand dishwashers manufactured by other 
companies, or exceed the SBA's employment threshold for consideration 
as a small business under the appropriate NAICS code. Therefore, DOE 
did not identify any domestic small business manufacturers of 
residential dishwashers.
    Based on the discussion above, DOE certifies that the standards for 
residential dishwashers set forth in this proposed rule would not have 
a significant economic impact on a substantial number of small 
entities. Accordingly, DOE has not prepared a regulatory flexibility 
analysis for this rulemaking. DOE will transmit this certification to 
the SBA as required by 5 U.S.C. 605(b).

C. Review Under the Paperwork Reduction Act

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

D. Review Under the National Environmental Policy Act of 1969

    Pursuant to the National Environmental Policy Act (NEPA) of 1969, 
DOE has determined that the proposed rule fits within the category of 
actions included in Categorical Exclusion (CX) B5.1 and otherwise meets 
the requirements for application of a CX. See 10 CFR part 1021, 
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,'' imposes certain requirements 
on Federal agencies formulating and implementing policies or 
regulations that preempt State law or that have Federalism 
implications. 64 FR 43255 (Aug. 10, 1999). The Executive Order requires 
agencies to examine the constitutional and statutory authority 
supporting any action that would limit the policymaking discretion of 
the States and to carefully assess the necessity for such actions. The 
Executive Order also requires agencies to have an accountable process 
to ensure meaningful and timely input by State and local officials in 
the development of regulatory policies that have Federalism 
implications. On March 14, 2000, DOE published a statement of policy 
describing the intergovernmental consultation process it will follow in 
the development of such regulations. 65 FR 13735. 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.

[[Page 76186]]

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 (Pub. L. 104-4, sec. 201, as 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 residential 
dishwashers manufacturers in the years between the final rule and the 
compliance date for the new standards, and (2) incremental additional 
expenditures by consumers to purchase higher-efficiency residential 
dishwashers, 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 Executive Order 12866. The 
SUPPLEMENTARY INFORMATION section of this NOPR and the ``Regulatory 
Impact Analysis'' section of the TSD for this proposed rule respond to 
those requirements.
    Under section 205 of UMRA, the Department is obligated to identify 
and consider a reasonable number of regulatory alternatives before 
promulgating a rule for which a written statement under section 202 is 
required. (2 U.S.C. 1535(a)) DOE is required to select from those 
alternatives the most cost-effective and least burdensome alternative 
that achieves the objectives of the proposed rule unless DOE publishes 
an explanation for doing otherwise, or the selection of such an 
alternative is inconsistent with law. As required by 42 U.S.C. 6295(g) 
and (o), today's proposed rule would establish energy conservation 
standards for residential dishwashers 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 this 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 rulemaking 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 of 2001 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. (44 U.S.C. 3516, 
note) 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,'' requires 
Federal agencies to prepare and submit to OIRA at OMB, a Statement of 
Energy Effects for any proposed significant energy action. 66 FR 28355 
(May 22, 2001). 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

[[Page 76187]]

supply, distribution, or use of energy, or (3) is designated by the 
Administrator of OIRA as a significant energy action. For any proposed 
significant energy action, the agency must give a detailed statement of 
any adverse effects on energy supply, distribution, or use should the 
proposal be implemented, and of reasonable alternatives to the action 
and their expected benefits on energy supply, distribution, and use.
    DOE has tentatively concluded that today's regulatory action, which 
sets forth energy conservation standards for residential dishwashers, 
is not a significant energy action because the proposed standards are 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy, nor has it been designated as such by 
the Administrator at OIRA. Accordingly, DOE has not prepared a 
Statement of Energy Effects on the proposed rule.

L. Review Under the Information Quality Bulletin for Peer Review

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

VII. Public Participation

A. Attendance at the Public Meeting

    The time, date, and location of the public meeting are listed in 
the DATES and ADDRESSES sections at the beginning of this proposed 
rule. If you plan to attend the public meeting, please notify Ms. 
Brenda Edwards at (202) 586-2945 or Brenda.Edwards@ee.doe.gov. As 
explained in the ADDRESSES section, foreign nationals visiting DOE 
Headquarters are subject to advance security screening procedures.
    In addition, you can attend the public meeting via webinar. Webinar 
registration information, participant instructions, and information 
about the capabilities available to webinar participants will be 
published on DOE's Web site at: http://www1.eere.energy.gov/buildings/appliance_standards/rulemaking.aspx?ruleid=106. Participants are 
responsible for ensuring their systems are compatible with the webinar 
software.

B. Procedure for Submitting Prepared General Statements for 
Distribution

    Any person who has plans to present a prepared general statement 
may request that copies of his or her statement be made available at 
the public meeting. Such persons may submit requests, along with an 
advance electronic copy of their statement in PDF (preferred), 
Microsoft Word or Excel, WordPerfect, or text (ASCII) file format, to 
the appropriate address shown in the ADDRESSES section at the beginning 
of this proposed rule. 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 proposed rule. 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 proposed rule.
    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

[[Page 76188]]

(if any), and submitter representative name (if any). If your comment 
is not processed properly because of technical difficulties, DOE will 
use this information to contact you. If DOE cannot read your comment 
due to technical difficulties and cannot contact you for clarification, 
DOE may not be able to consider your comment.
    However, your contact information will be publicly viewable if you 
include it in the comment itself or in any documents attached to your 
comment. Any information that you do not want to be publicly viewable 
should not be included in your comment, nor in any document attached to 
your comment. Otherwise, persons viewing comments will see only first 
and last names, organization names, correspondence containing comments, 
and any documents submitted with the comments.
    Do not submit to regulations.gov information for which disclosure 
is restricted by statute, such as trade secrets and commercial or 
financial information (hereinafter referred to as Confidential Business 
Information (CBI)). Comments submitted through regulations.gov cannot 
be claimed as CBI. Comments received through the Web site will waive 
any CBI claims for the information submitted. For information on 
submitting CBI, see the Confidential Business Information section 
below.
    DOE processes submissions made through regulations.gov before 
posting. Normally, comments will be posted within a few days of being 
submitted. However, if large volumes of comments are being processed 
simultaneously, your comment may not be viewable for up to several 
weeks. Please keep the comment tracking number that regulations.gov 
provides after you have successfully uploaded your comment.
    Submitting comments via email, hand delivery/courier, or mail. 
Comments and documents submitted via email, hand delivery, or mail also 
will be posted to regulations.gov. If you do not want your personal 
contact information to be publicly viewable, do not include it in your 
comment or any accompanying documents. Instead, provide your contact 
information in a cover letter. Include your first and last names, email 
address, telephone number, and optional mailing address. The cover 
letter will not be publicly viewable as long as it does not include any 
comments
    Include contact information each time you submit comments, data, 
documents, and other information to DOE. If you submit via mail or hand 
delivery/courier, please provide all items on a CD, if feasible. It is 
not necessary to submit printed copies. No facsimiles (faxes) will be 
accepted.
    Comments, data, and other information submitted to DOE 
electronically should be provided in PDF (preferred), Microsoft Word or 
Excel, WordPerfect, or text (ASCII) file format. Provide documents that 
are not secured, that are written in English, and that are free of any 
defects or viruses. Documents should not contain special characters or 
any form of encryption and, if possible, they should carry the 
electronic signature of the author.
    Campaign form letters. Please submit campaign form letters by the 
originating organization in batches of between 50 to 500 form letters 
per PDF or as one form letter with a list of supporters' names compiled 
into one or more PDFs. This reduces comment processing and posting 
time.
    Confidential Business Information. According to 10 CFR 1004.11, any 
person submitting information that he or she believes to be 
confidential and exempt by law from public disclosure should submit via 
email, postal mail, or hand delivery/courier two well-marked copies: 
one copy of the document marked confidential including all the 
information believed to be confidential, and one copy of the document 
marked non-confidential with the information believed to be 
confidential deleted. Submit these documents via email or on a CD, if 
feasible. DOE will make its own determination about the confidential 
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. DOE requests comment on the efficiency levels selected for its 
analysis. Specifically, DOE requests feedback on whether cleaning 
performance or any other consumer utility is affected at any of the 
analyzed efficiency levels.
    2. DOE requests comment on the estimated MPCs for each of the 
analyzed efficiency levels. DOE seeks input on what design options 
manufacturers are likely to incorporate into residential dishwashers at 
each of the analyzed efficiency levels, and their associated costs.
    3. DOE requests comment on what impact, if any, the proposed energy 
conservation standards would have on domestic manufacturing facilities 
and their associated employment. DOE requests information on whether 
domestic manufacturers would move production overseas or source an 
increased number of products from foreign OEMs under the proposed 
standards.
    4. DOE requests comment on the potential rebound effect from 
setting the proposed energy conservation standards for standard-size 
dishwashers and compact dishwashers. DOE requests comments on the 
potential technology options identified by DOE for improving the 
efficiency of residential dishwashers and its screening analysis used 
to select the most viable options for consideration in setting today's 
proposed standards. (see sections IV.A and B of this notice.)
    5. DOE requests comment on its estimate that standards do not 
impact a consumer's decision to replace or repair a failed dishwasher. 
Specifically, DOE seeks any data that indicate how dishwasher replace 
versus repair decisions are impacted by increased total installed cost, 
increased repair cost, and energy cost savings.
    6. DOE requests comment and information on the number of annual 
dishwasher cycles.
    7. DOE requests comment on utility issues, if any, that consumers 
may face under the proposed energy conservation standards.

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 430

    Administrative practice and procedure, Confidential business

[[Page 76189]]

information, Energy conservation, Household appliances, Imports, 
Intergovernmental relations, Reporting and recordkeeping requirements, 
and Small businesses.

    Issued in Washington, DC, on December 10, 2014.
David T. Danielson,
Assistant Secretary, Energy Efficiency and Renewable Energy.
    For the reasons set forth in the preamble, DOE proposes to amend 
part 430 of chapter II, subchapter D, of title 10 of the Code of 
Federal Regulations, as set forth below:

PART 430--ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS

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

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

Sec.  430.3  [Amended]

0
2. Section 430.3 is amended by:
0
a. Removing paragraph (h)(2);
0
b. Redesignating paragraphs (h)(3) through (7) as (h)(2) through (6), 
respectively; and
0
c. Removing ``C1'' from redesignated paragraph (h)(2) and adding ``C'' 
in its place.

Appendix C to Subpart B of Part 430--[Removed]

0
3. Appendix C to subpart B of part 430 is removed.

Appendix C1 to Subpart B of Part 430--[Redesignated as Appendix C 
Subpart B of Part 430]

0
4. Appendix C1 to subpart B of part 430 is redesignated as appendix C 
to subpart B of part 430.
0
5. In Sec.  430.32 add paragraph (f)(4) to read as follows:

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

* * * * *
    (f) * * *
    (4) All dishwashers manufactured on or after [Date 3 years after 
the publication in the Federal Register of the final rule] shall meet 
the following standard--
    (i) Standard size dishwashers shall not exceed 234 kwh/year and 3.1 
gallons per cycle.
    (ii) Compact size dishwashers shall not exceed 203 kwh/year and 3.1 
gallons per cycle.
* * * * *

[FR Doc. 2014-29519 Filed 12-18-14; 8:45 am]
BILLING CODE 6450-01-P
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