59470 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 430 

[Docket Number EE–2008–BT–STD–0012] 

RIN 1904–AB79 

Energy Conservation Program: Energy 

Conservation Standards for 

Residential Refrigerators, RefrigeratorFreezers, and Freezers 

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 (EPCA) prescribes 

energy conservation standards for 

various consumer products and 

commercial and industrial equipment, 

including residential refrigerators, 

refrigerator-freezers, and freezers. EPCA 

also requires the U.S. Department of 

Energy (DOE) to determine whether 

more stringent, amended standards for 

these products are technologically 

feasible and economically justified, and 

would save a significant amount of 

energy. In this NOPR, DOE proposes 

amended energy conservation standards 

for residential refrigerators, refrigeratorfreezers, and freezers. The NOPR also 

announces a public meeting to receive 

comment on these proposed standards 

and associated analyses and results. 

DATES: DOE will hold a public meeting 

on Thursday, October 14, 2010, from 9 

a.m. to 4 p.m., in Washington, DC. DOE 

must receive requests to speak at the 

public meeting before 4 p.m., Thursday, 

September 30, 2010. Additionally, DOE 

plans to conduct the public meeting via 

webinar. To participate via webinar, 

DOE must be notified by no later than 

Thursday, October 7, 2010. Participants 

seeking to present statements in person 

during the meeting must submit to DOE 

a signed original and an electronic copy 

of statements to be given at the public 

meeting before 4 p.m., Thursday, 

October 7, 2010. 

DOE will accept comments, data, and 

information regarding this notice of 

proposed rulemaking (NOPR) before and 

after the public meeting, but no later 

than November 26, 2010. See section 

VII, ‘‘Public Participation,’’ for details. 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 1E–245, 1000 

Independence Avenue, SW., 

Washington, DC 20585. To attend, 

please notify Ms. Brenda Edwards at 

(202) 586–2945. Please note that foreign 

nationals visiting DOE Headquarters are 

subject to advance security screening 

procedures, requiring a 30-day advance 

notice. Any foreign national wishing to 

participate in the meeting should advise 

DOE as soon as possible by contacting 

Ms. Brenda Edwards at (202) 586–2945 

to initiate the necessary procedures. 

Any comments submitted must 

identify the NOPR for Energy 

Conservation Standards for 

Refrigerators, Refrigerator-Freezers, and 

Freezers, and provide docket number 

EE–2008–BT–STD–0012 and/or 

regulatory information number (RIN) 

number 1904–AB79. Comments may be 

submitted using any of the following 

methods: 

1. Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

2. E-mail: ResRefFreez-2008-STD0012@hq.doe.gov. Include the docket 

number and/or RIN in the subject line 

of the message. 

3. Mail: Ms. Brenda Edwards, U.S. 

Department of Energy, Building 

Technologies Program, Mailstop EE–2J, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121. Please 

submit one signed original paper copy. 

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. Please submit one 

signed original paper copy. 

For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see section VII of this document (Public 

Participation). 

Docket: For access to the docket to 

read background documents or 

comments received, visit the U.S. 

Department of Energy, Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., Suite 600, 

Washington, DC, (202) 586–2945, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

Please call Ms. Brenda Edwards at the 

above telephone number for additional 

information regarding visiting the 

Resource Room. 

FOR FURTHER INFORMATION CONTACT: 

Subid Wagley, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Program, EE–2J, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121, 202–287– 

1414, e-mail: Subid.Wagley@ee.doe.gov 

or Michael Kido, U.S. Department of 

Energy, Office of the General Counsel, 

GC–71, 1000 Independence Avenue, 

SW., Washington, DC 20585–0121, (202) 

586–9507, e-mail: 

Michael.Kido@hq.doe.gov. 

For information on how to submit or 

review public comments and on how to 

participate in the public meeting, 

contact Ms. Brenda Edwards, U.S. 

Department of Energy, Office of Energy 

Efficiency and Renewable Energy, 

Building Technologies Program, EE–2J, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–2945. E-mail: 

Brenda.Edwards@ee.doe.gov 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Summary of the Proposed Rule 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Refrigerators, Refrigerator-Freezers, and 

Freezers 

III. General Discussion 

A. Test Procedures 

1. Test Procedure Rulemaking Schedule 

2. Icemaking 

3. Circumvention 

4. Variable Anti-Sweat Heater Control 

5. Standby and Off Mode Energy Use 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

C. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

D. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Consumers 

b. Life-Cycle Costs 

c. Energy Savings 

d. Lessening of Utility or Performance of 

Products 

e. Impact of Any Lessening of Competition 

f. Need for National Energy Conservation 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion 

A. Market and Technology Assessment 

1. Exclusion of Wine Coolers From This 

Rulemaking 

2. Product Classes 

a. French Door Refrigerators With Throughthe-Door Ice Service 

b. Chest Freezers With Automatic Defrost 

c. All-Refrigerators 

d. Products With Automatic Icemakers 

e. Built-In Products 

f. Combining Product Classes 2 With 1, and 

12 With 11 

g. Modification of the Definition for 

Compact Products 

B. Screening Analysis 

1. Discussion of Comments 

a. Alternative Refrigerants 

b. Alternative Foam-Blowing Agents 

c. Vacuum-Insulated Panels 

2. Technologies Considered 

C. Engineering Analysis 

1. Product Classes Analyzed/ 

Representative Products 

2. Baseline Energy Use Curves 

a. Baseline Energy Use Under the Proposed 

New Test Procedure 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59471 

b. Change of Energy Use Equation Slope 

c. Energy Use Measurement Changes 

Associated With Other Test Procedure 

Changes 

3. Efficiency Levels Analyzed 

4. Engineering Analysis Treatment of 

Design Options 

a. Heat Exchangers 

b. Variable Speed Compressors for 

Compact Products 

c. Variable Anti-Sweat Heaters 

d. Vacuum-Insulated Panels 

5. Energy Modeling 

6. Cost-Efficiency Curves 

7. Development of Standards for LowVolume Products 

D. Markups To Determine Product Cost 

E. Energy Use Analysis 

F. Life-Cycle Cost and Payback Period 

Analyses 

1. Product Cost 

2. Installation Cost 

3. Annual Energy Consumption 

4. Energy Prices 

5. Energy Price Projections 

6. Maintenance and Repair Costs 

7. Product Lifetime 

8. Discount Rates 

9. Compliance Date of Amended Standards 

10. Base Case Efficiency Distribution 

11. Inputs to Payback Period Analysis 

12. Rebuttable-Presumption Payback 

Period 

G. National Impact Analysis—National 

Energy Savings and Net Present Value 

Analysis 

1. Shipments 

2. Forecasted Efficiency in the Base Case 

and Standards Cases 

3. Site-to-Source Energy Conversion 

4. Discount Rates 

5. Benefits From Effects of Standards on 

Energy Prices 

H. Consumer Subgroup Analysis 

I. Manufacturer Impact Analysis 

1. Overview 

a. Phase 1: Industry Profile 

b. Phase 2: Industry Cash-Flow Analysis 

c. Phase 3: Subgroup Impact Analysis 

2. GRIM Analysis 

a. GRIM Key Inputs 

b. GRIM Scenarios 

3. Discussion of Comments 

a. Potential Regulation of HFCs 

b. Manufacturer Tax Credits 

c. Standards-Induced Versus Normal 

Capital Conversion Costs 

d. Manufacturer Markups 

4. Manufacturer Interviews 

a. Potential for Significant Changes to 

Manufacturing Facilities 

b. VIPs 

c. Impact on U.S. Production and Jobs 

d. Impacts to Product Utility 

e. Technical Difficulties Associated With 

Higher Efficiency Levels 

f. Changes in Consumer Behavior 

g. Separate Product Classes for Built-Ins 

h. Test Procedure Concerns 

J. Employment Impact Analysis 

K. Utility Impact Analysis 

L. Environmental Analysis 

M. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

a. Monetizing Carbon Dioxide Emissions 

b. Social Cost of Carbon Values Used in 

Past Regulatory Analyses 

c. Current Approach and Key Assumptions 

2. Valuation of Other Emissions 

Reductions 

N. Demand Response 

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. Cash-Flow Analysis Results 

b. Impacts on Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Sub-Group of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Significance of Energy Savings 

b. Net Present Value of Consumer Costs 

and Benefits 

c. Indirect Impacts on Employment 

4. Impact on Utility or Performance of 

Products 

5. Impact of Any Lessening of Competition 

6. Need of the Nation To Conserve Energy 

7. Other Factors 

C. Proposed Standards 

1. Standard-Size Refrigerator-Freezers 

2. Standard-Size Freezers 

3. Compact Refrigeration Products 

4. Built-In Refrigeration Products 

5. Summary of Benefits and Costs 

(Annualized) of Proposed Standards 

6. Energy Standard Round-off 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

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 Public Meeting 

B. Procedure for Submitting Requests To 

Speak 

C. Conduct of 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 

The Energy Policy and Conservation 

Act (42 U.S.C. 6291 et seq.; EPCA or the 

Act), as amended, provides that any 

new or amended energy conservation 

standard DOE prescribes for certain 

consumer products, such as residential 

refrigerators, refrigerator-freezers, and 

freezers (collectively referred to in this 

document as ‘‘refrigeration products’’), 

shall be designed to ‘‘achieve the 

maximum improvement in energy 

efficiency * * * which the Secretary 

determines is technologically feasible 

and economically justified.’’ (42 U.S.C. 

6295(o)(2)(A)) The new or amended 

standard must ‘‘result in 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 

refrigeration products. The proposed 

standards, which are the maximum 

allowable energy use expressed as a 

function of the calculated adjusted 

volume of a given product, are shown in 

Table I.1. These 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 January 1, 2014. 

TABLE I.1—PROPOSED REFRIGERATION PRODUCT ENERGY CONSERVATION STANDARDS

[Effective starting 1/1/2014] 

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

1. Refrigerators and refrigerator-freezers with manual defrost .............................................................. 7.99AV + 225.0 0.282av + 225.0 

1A. All-refrigerators—manual defrost ..................................................................................................... 6.79AV + 193.6 0.240av + 193.6 

2. Refrigerator-freezers—partial automatic defrost ................................................................................ 7.99AV + 225.0 0.282av + 225.0 

3. Refrigerator-freezers—automatic defrost with top-mounted freezer without an automatic icemaker 8.04AV + 232.7 0.284av + 232.7 

3–BI. Built-in refrigerator-freezer—automatic defrost with top-mounted freezer without an automatic 

icemaker.

8.57AV + 248.2 0.303av + 248.2 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59472 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

1 DOE uses discount rates of 7 and 3 percent 

based on guidance from the Office of Management 

and Budget. See section IV.G for further 

information. 

TABLE I.1—PROPOSED REFRIGERATION PRODUCT ENERGY CONSERVATION STANDARDS—Continued 

[Effective starting 1/1/2014] 

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

3I. Refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker 

without through-the-door ice service.

8.04AV + 316.7 0.284av + 316.7 

3I–BI. Built-in refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic 

icemaker without through-the-door ice service.

8.57AV + 332.2 0.303av + 332.2 

3A. All-refrigerators—automatic defrost .................................................................................................. 7.07AV + 201.6 0.250av + 201.6 

3A–BI. Built-in All-refrigerators—automatic defrost ................................................................................ 7.55AV + 215.1 0.266av + 215.1 

4. Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker.8.48AV + 296.5 0.299av + 296.5 

4–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker.9.04AV + 316.2 0.319av + 316.2 

4I. Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker 

without through-the-door ice service.

8.48AV + 380.5 0.299av + 380.5 

4I–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic 

icemaker without through-the-door ice service.

9.04AV + 400.2 0.319av + 400.2 

5. Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker.8.80AV + 315.4 0.311av + 315.4 

5–BI. Built-In Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker.9.35AV + 335.1 0.330av + 335.1 

5I. Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker without through-the-door ice service.8.80AV + 399.4 0.311av + 399.4 

5I–BI. Built-In Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker without through-the-door ice service.9.35AV + 419.1 0.330av + 419.1 

5A. Refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door ice 

service.

9.15AV + 471.3 0.323av + 471.3 

5A–BI. Built-in refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-thedoor ice service.9.72AV + 4955. 0.343av + 495.5 

6. Refrigerator-freezers—automatic defrost with top-mounted freezer with through-the-door ice service.8.36AV + 384.1 0.295av + 384.1 

7. Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice 

service.

8.50AV + 431.1 0.300av + 431.1 

7–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer with through-thedoor ice service.9.07AV + 454.3 0.320av + 454.3 

8. Upright freezers with manual defrost ................................................................................................. 5.57AV + 193.7 0.197av + 193.7 

9. Upright freezers with automatic defrost without an automatic icemaker ........................................... 8.62AV + 228.3 0.305av + 228.3 

9–BI. Built-In Upright freezers with automatic defrost without an automatic icemaker ......................... 9.24AV + 244.6 0.326av + 244.6 

10. Chest freezers and all other freezers except compact freezers ...................................................... 7.29AV + 107.8 0.257av + 107.8 

10A. Chest freezers with automatic defrost ........................................................................................... 10.24AV + 148.1 0.362av + 148.1 

11. Compact refrigerators and refrigerator-freezers with manual defrost .............................................. 9.03AV + 252.3 0.319av + 252.3 

11A.Compact refrigerators and refrigerator-freezers with manual defrost ............................................. 7.84AV + 219.1 0.277av + 219.1 

12. Compact refrigerator-freezers—partial automatic defrost ................................................................ 5.91AV + 335.8 0.209av + 335.8 

13. Compact refrigerator-freezers—automatic defrost with top-mounted freezer .................................. 11.80AV + 339.2 0.417av + 339.2 

13A. Compact all-refrigerator—automatic defrost .................................................................................. 9.17AV + 259.3 0.324av + 259.3 

14. Compact refrigerator-freezers—automatic defrost with side-mounted freezer ................................ 6.82AV + 456.9 0.241av + 456.9 

15. Compact refrigerator-freezers—automatic defrost with bottom-mounted freezer ............................ 12.88AV + 368.7 0.455av + 368.7 

16. Compact upright freezers with manual defrost ................................................................................ 8.65AV + 225.7 0.306av + 225.7 

17. Compact upright freezers with automatic defrost ............................................................................. 10.17AV + 351.9 0.359av + 351.9 

18. Compact chest freezers .................................................................................................................... 9.25AV + 136.8 0.327av + 136.8 

AV = adjusted volume in cubic feet; av = adjusted volume in liters. 

DOE’s analyses indicate that the 

proposed standards would save a 

significant amount of energy—an 

estimated 4.48 quads of cumulative 

energy over 30 years (2014 through 

2043). This amount is equivalent to 

three times the total energy used 

annually for refrigeration and freezers in 

U.S. homes. 

The cumulative national net present 

value (NPV) of total consumer costs and 

savings of the proposed standards for 

products shipped in 2014–2043, in 

2009$, ranges from $2.44 billion (at a 

7-percent discount rate) to $18.57 

billion (at a 3-percent discount rate).1

The net present value (NPV) is the 

estimated total value of future 

operating-cost savings during the 

analysis period, minus the estimated 

increased product costs, discounted to 

2010. The industry net present value 

(INPV) is the sum of the discounted 

cash flows to the industry from the base 

year through the end of the analysis 

period (2010 to 2043). Using a real 

discount rate of 7.2 percent, DOE 

estimates that INPV for manufacturers of 

all refrigeration products in the base 

case is $4.434 billion in 2009$. If DOE 

adopts the proposed standards, it 

expects that manufacturers may lose 11 

to 22 percent of their INPV, or 

approximately $0.495 to $0.995 billion. 

Using a 7-percent discount rate, the 

NPV of consumer costs and savings 

from today’s proposed standards would 

amount to 2.5 to 4.9 times the total 

estimated industry losses. Using a 3- 

percent discount rate, the NPV would 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59473 

2The 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. 

3A metric ton is equivalent to 1.1 short tons. 

Results for NOX and Hg are given in short tons. 4 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value for the time-series of costs and benefits using 

a discount rate of either three or seven percent. 

From the present value, DOE then calculated the 

fixed annual payment over the analysis time period 

(2014 through 2043) that yielded the same present 

value. The fixed annual payment is the annualized 

value. Although DOE calculated annualized values, 

this does not imply that the time-series of cost and 

benefits from which the annualized values were 

determined is a steady stream of payments. 

amount to 19 to 38 times the total 

estimated industry losses. 

The projected economic impacts of 

the proposed standards on individual 

consumers are generally positive. For 

example, the estimated average lifecycle cost (LCC) savings are $22 for topmount refrigerator-freezers, $19 for 

bottom-mount refrigerator-freezers, $37 

for side-by-side refrigerator-freezers, 

$148 for upright freezers, $56 for chest 

freezers, $10 for compact refrigerators, 

$11 for compact freezers, and from $0 to 

$116 for built-in refrigeration products, 

depending on the product class.2

In addition, the proposed standards 

would have significant environmental 

benefits. The energy saved is in the form 

of electricity and DOE expects the 

energy savings from the proposed 

standards to eliminate the need for 

approximately 4.2 gigawatts (GW) of 

generating capacity by 2043. The 

savings would result in cumulative 

greenhouse gas emission reductions of 

305 million metric tons (Mt 3) of carbon 

dioxide (CO2) in 2014–2043. During this 

period, the proposed standards would 

result in emissions reductions of 245 

kilotons (kt) of nitrogen oxides (NOX) 

and 1.55 tons (t) of mercury (Hg). DOE 

estimates the net present monetary 

value of the CO2 emissions reduction is 

between $1.04 and $16.22 billion, 

expressed in 2009$ and discounted to 

2010. DOE also estimates the net present 

monetary value of the NOX emissions 

reduction, expressed in 2009$ and 

discounted to 2010, is between $22 and 

$229 million at a 7-percent discount 

rate, and between $53 and $546 million 

at a 3-percent discount rate. 

DOE estimates emissions reduction 

benefits according to a multi-step 

approach. First, DOE analyzes 

monetized emissions benefits separately 

from the NPV of consumer benefits. 

Second, DOE calculates emissions 

relative to an ‘‘existing regulations’’ 

baseline determined by the most recent 

version of the Annual Energy Outlook 

forecast. The base case emissions 

scenario is described at http://www.eia.

doe.gov/oiaf/aeo/pdf/trend_6.pdf. 

Finally, any emissions reductions are in 

addition to the regulatory emissions 

reductions modeled in AEO. DOE 

calculates this value by doing a 

perturbation of the base case AEO 

forecast as described in the TSD chapter 

15 at section 15.2.4. As noted in section 

15.2.4 of TSD chapter 15, the baseline 

accounts for regulatory emissions 

reductions through 2008, including 

CAIR but not CAMR. Subsequent 

regulations, including the currently 

proposed CAIR replacement rule, the 

Clean Air Transport Rule, do not appear 

in the baseline. DOE requests comment 

on its baseline treatment of regulatory 

emissions reductions. See Issue 1 under 

‘‘Issues on Which DOE Seeks Comment’’ 

in section VII.E. 

The benefits and costs of today’s 

proposed standards can also be 

expressed in terms of annualized values 

over the 2014–2043 period. Estimates of 

annualized values are shown in Table 

I.2. The annualized monetary values are 

the sum of (1) the annualized national 

economic value, expressed in 2009$, of 

the benefits from operating products 

that meet the proposed standards 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in equipment purchase costs, 

which is another way of representing 

consumer NPV), and (2) the monetary 

value of the benefits of emission 

reductions, including CO2 emission 

reductions.4 The value of the CO2

reductions, otherwise known as the 

Social Cost of Carbon (SCC), is 

calculated using a range of values per 

metric ton of CO2 developed by a recent 

interagency process. The monetary costs 

and benefits of cumulative emissions 

reductions are reported in 2009$ to 

permit comparisons with the other costs 

and benefits in the same dollar units. 

The derivation of the SCC values is 

discussed in section IV.M. 

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 CO2 savings are performed with 

different methods that use quite 

different time frames for analysis. The 

national operating cost savings is 

measured for the lifetime of refrigeration 

products shipped in 2014–2043. The 

SCC values, on the other hand, reflect 

the present value of all future climaterelated impacts resulting from the 

emission of one ton of carbon dioxide in 

each year. These impacts go well 

beyond 2100. 

Using a 7-percent discount rate and 

the SCC value of $21.40/ton in 2010 (in 

2007$), which is discounted at 3 percent 

(see note below in Table I.2), the cost of 

the standards proposed in today’s rule 

is $1,841 million per year in increased 

equipment costs, while the annualized 

benefits are $2,112 million per year in 

reduced equipment operating costs, 

$316 million in CO2 reductions, and $7 

million in reduced NOX emissions. In 

this case, the net benefit amounts to 

$594 million per year. Using a 3-percent 

discount rate and the SCC value of 

$21.40/ton in 2010 (in 2007$), the cost 

of the standards proposed in today’s 

rule is $1,849 million per year in 

increased equipment costs, while the 

benefits are $2,929 million per year in 

reduced operating costs, $316 million in 

CO2 reductions, and $33 million in 

reduced NOX emissions. At a 3-percent 

discount rate, the net benefit amounts to 

$1,429 million per year. 

TABLE I.2—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR REFRIGERATION PRODUCTS FOR 2014– 

2043 PERIOD

Discount rate 

Monetized (million 2009$/year) 

Primary 

estimate* 

Low 

estimate* 

High 

estimate* 

Benefits 

Operating Cost Savings .......................................................................... 7% ...................................... 2,112 1,852 2,377 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59474 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

5This part was titled Part B in EPCA, but was 

subsequently codified as Part A in the U.S. Code for 

editorial reasons. 

TABLE I.2—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR REFRIGERATION PRODUCTS FOR 2014– 

2043 PERIOD—Continued 

Discount rate 

Monetized (million 2009$/year) 

Primary 

estimate* 

Low 

estimate* 

High 

estimate* 

3% ...................................... 2,929 2,520 3,335 

CO2 Reduction at $4.7/th ** .................................................................... 5% ...................................... 85 85 85 

CO2 Reduction at $21.4/th ** .................................................................. 3% ...................................... 316 316 316 

CO2 Reduction at $35.1/th ** .................................................................. 2.5% ................................... 492 492 492 

CO2 Reduction at $64.9/th ** .................................................................. 3% ...................................... 963 963 963 

NOX Reduction at $2,519/th ** ................................................................ 7% ...................................... 7 7 7 

3% ...................................... 33% 33 33 

Total (Operating Cost Savings, CO2 Reduction and NOX Reduction) †.7% plus CO2 range ............ 2,204–3,082 1,944–2,822 2,469–3,348 

7% ...................................... 2,435 2,175 2,700 

3% ...................................... 3,278 2,869 3,684 

3% plus CO2 range ............ 3,047–3,925 2,638–3,516 3,453–4,331 

Costs 

Incremental Product Costs ..................................................................... 7% ...................................... 1,841 1,733 1,950 

3% ...................................... 1,849 1,729 1,969 

Net Benefits/Costs 

Total (Operating Cost Savings, CO2 Reduction and NOX Reduction, minus Incremental Product Costs) †.7% plus CO2 range ............ 363–1,241 211–1,089 519–1,397 

7% ...................................... 594 442 750 

3% ...................................... 1,429 1,140 1,714 

3% plus CO2 range ............ 1,198–2,076 909–1,787 1,483–2,362 

* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010 Reference case, Low Economic Growth case, and Low Economic Growth case, respectively. 

** The CO2 values represent global monetized values (in 2007$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.70, $21.40, and $35.10 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. 

The value of $64.90 per ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 

2009$) is the average of the low and high values used in DOE’s analysis. NOX savings are in addition to the regulatory emissions reductions 

modeled in the Annual Energy Outlook forecast. 

† Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $21.40/ton in 2010 

(in 2007$). 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 with the $4.70/ton value at the low end, and the $64.90/ton 

value at the high end. 

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 at least some, 

if not most, product classes covered by 

today’s proposal. Based on the analyses 

described above, DOE found the benefits 

of the proposed standards to the Nation 

(energy savings, positive NPV of 

consumer benefits, consumer LCC 

savings, and emission reductions) 

outweigh the burdens (loss of INPV for 

manufacturers and LCC increases for 

some consumers). 

DOE also considered lower energy use 

levels as trial standard levels, and is still 

considering them in this rulemaking. 

However, DOE has tentatively 

concluded that the potential burdens of 

the lower energy use levels would 

outweigh the projected benefits. Based 

on consideration of the public 

comments DOE receives in response to 

this notice and related information 

collected and analyzed during the 

course of this rulemaking effort, DOE 

may adopt energy use levels presented 

in this notice that are either higher or 

lower than the proposed standards, or 

some combination of level(s) that 

incorporate the proposed standards in 

part. 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying today’s proposal as well as 

some of the relevant historical 

background related to the establishment 

of standards for refrigeration products. 

A. Authority 

Title III of EPCA sets forth a variety 

of provisions designed to improve 

energy efficiency. Part A of title III (42 

U.S.C. 6291–6309) provides for the 

Energy Conservation Program for 

Consumer Products Other than 

Automobiles.5 EPCA covers consumer 

products and certain commercial 

equipment (referred to collectively 

hereafter as ‘‘covered products’’), 

including the types of refrigeration 

products that are the subject of this 

rulemaking. (42 U.S.C. 6292(a)(1)) EPCA 

prescribed energy conservation 

standards for these products (42 U.S.C. 

6295(b)(1)–(2)), and directed DOE to 

conduct three cycles of rulemakings to 

determine whether to amend these 

standards. (42 U.S.C. 6295(b)(3)(A)(i), 

(b)(3)(B)–(C), and (b)(4)) As explained in 

further detail in section II.B, this 

rulemaking represents the third round 

of amendments to the standards for 

refrigeration products under 42 U.S.C. 

6295(b). (DOE notes that under 42 

U.S.C. 6295(m), the agency must 

periodically review its already 

established energy conservation 

standards for a covered product. Under 

this requirement, the next review that 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59475 

DOE would need to conduct would 

occur no later than six years from the 

issuance of a final rule establishing or 

amending a standard for a covered 

product.) 

Under the Act, DOE’s energy 

conservation program for covered 

products consists essentially of four 

parts: (1) Testing, (2) labeling, (3) the 

establishment of Federal energy 

conservation standards, and (4) 

certification and enforcement 

procedures. The Federal Trade 

Commission (FTC) is responsible for 

labeling, and DOE implements the 

remainder of the program. Section 323 

of the Act authorizes DOE, subject to 

certain criteria and conditions, to 

develop test procedures to measure the 

energy efficiency, energy use, or 

estimated annual operating cost of each 

covered product. (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 of 

efficiency of those products. (42 U.S.C. 

6293(c) and 6295(s)) Similarly, DOE 

must use these test procedures to 

determine whether the products comply 

with standards adopted under EPCA. Id. 

The test procedures for refrigeration 

products currently appear at title 10, 

Code of Federal Regulations (CFR), part 

430, subpart B, appendices A1 and B1, 

respectively. (These procedures are 

undergoing possible amendments and 

may ultimately be recodified as part of 

new appendices A and B. See 75 FR 

29824 (May 27, 2010) (discussing 

possible amendments to the test 

procedures for refrigeration products). 

EPCA provides criteria for prescribing 

amended standards for covered 

products. As indicated above, any 

amended standard for a covered product 

must be designed to achieve the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A)) Furthermore, 

EPCA precludes DOE from adopting any 

standard that would not result in the 

significant conservation of energy. (42 

U.S.C. 6295(o)(3)) Moreover, DOE may 

not prescribe a standard: (1) For certain 

products, including refrigeration 

products, 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)) The Act also provides 

that, 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 do so 

after receiving comments on the 

proposed standard, and by considering, 

to the greatest extent practicable, the 

following seven factors: 

1. The economic impact of the 

standard on manufacturers and 

consumers of the products subject to the 

standard; 

2. The savings in operating costs 

throughout the estimated average life of 

the covered products in the type (or 

class) compared to any increase in the 

price, initial charges, or maintenance 

expenses for the covered products that 

are likely to result from the imposition 

of the standard; 

3. The total projected amount of 

energy savings likely to result directly 

from the imposition of the standard; 

4. Any lessening of the utility or the 

performance of the covered products 

likely to result from the imposition of 

the standard; 

5. The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the imposition of the 

standard; 

6. The need for national energy 

conservation; and 

7. Other factors the Secretary of 

Energy (Secretary) considers relevant. 

(42 U.S.C. 6295(o)(2)(B)(i)(I)–(VII)) 

EPCA also contains what is known as 

an ‘‘anti-backsliding’’ provision, which 

prevents 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 a new 

standard if interested persons have 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any covered product type (or 

class) with performance characteristics, 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available in the United States. 

(42 U.S.C. 6295(o)(4)) 

Further, EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy savings 

during the first year that the consumer 

will receive as a result of the standard, 

as calculated under the applicable test 

procedure. See 42 U.S.C. 

6295(o)(2)(B)(iii). 

Additionally, 42 U.S.C. 6295(q)(1) 

specifies requirements when 

promulgating a standard for a type or 

class of covered product that has two or 

more subcategories. DOE must specify a 

different standard level than that which 

applies generally to such type or class 

of products ‘‘for any group of covered 

products which have the same function 

or intended use, if * * * 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’’ than applies or will apply to 

the other products within that type or 

class. Id. In determining whether a 

performance-related feature justifies a 

different standard for a group of 

products, DOE must ‘‘consider such 

factors as the utility to the consumer of 

such a feature’’ and other factors DOE 

deems appropriate. Id. Any rule 

prescribing such a standard must 

include an explanation of the basis on 

which such higher or lower level was 

established. (42 U.S.C. 6295(q)(2)). 

Federal energy conservation 

requirements generally supersede State 

laws or regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c)) DOE 

can, however, grant waivers of Federal 

preemption for particular State laws or 

regulations, in accordance with the 

procedures and other provisions of 

section 327(d) of the Act. (42 U.S.C. 

6297(d)) 

Finally, Section 310(3) of the Energy 

Independence and Security Act of 2007 

(EISA 2007; Pub. L. 110–140 (codified at 

42 U.S.C. 6295(gg))) amended EPCA to 

require that energy conservation 

standards address standby mode and off 

mode energy use. Specifically, when 

DOE adopts a standard for a covered 

product after July 1, 2010, it must, if 

justified by the criteria for adoption of 

standards in section 325(o) of EPCA (42 

U.S.C. 6295(o)), incorporate standby 

mode and off mode energy use into the 

standard, if feasible, or adopt a separate 

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 refrigeration products 

address standby and off mode energy 

use. In this rulemaking, DOE intends to 

incorporate such energy use into any 

amended standard it adopts in the final 

rule, which is scheduled to be issued by 

December 31, 2010. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59476 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

B. Background 

1. Current Standards 

In a final rule published on April 28, 

1997 (1997 Final Rule), DOE prescribed 

the current energy conservation 

standards for refrigeration products 

manufactured on or after July 1, 2001. 

62 FR 23102. This final rule completed 

the second round of rulemaking to 

amend the standards for refrigeration 

products, required under 42 U.S.C. 

6295(b)(3)(B)–(C). The standards consist 

of separate equations for each product 

class. Each equation provides a means 

to calculate the maximum levels of 

energy use permitted under the 

regulations. These levels vary based on 

the storage volume of the refrigeration 

product and on the particular 

characteristics and features included in 

a given product (i.e., based on product 

class). 10 CFR 430.32(a). The current 

standards are set forth in Table II.1. DOE 

notes that the standard levels denoted in 

the proposed product classes listed as 

5A and 10A were established by the 

Office of Hearings and Appeals through 

that Office’s exception relief process. 

TABLE II.1—FEDERAL ENERGY EFFICIENCY STANDARDS FOR REFRIGERATORS, REFRIGERATOR-FREEZERS, AND FREEZERS

Product class 

Energy standard 

equations for maximum energy use 

(kWh/yr) 

Made effective by 

the 1997 final rule 

1. Refrigerators and refrigerator-freezers with manual defrost .................................................................................................... 8.82AV+248.4 

0.31av+248.4 

2. Refrigerator-freezers—partial automatic defrost ....................................................................................................................... 8.82AV+248.4 

0.31av+248.4 

3. Refrigerator-freezers—automatic defrost with top-mounted freezer without through-the-door ice service and all-refrigerator—automatic defrost.9.80AV+276.0 

0.35av+276.0 

4. Refrigerator-freezers—automatic defrost with side-mounted freezer without through-the-door ice service ............................ 4.91AV+507.5 

0.17av+507.5 

5. Refrigerator-freezers—automatic defrost with bottom-mounted freezer without through-the-door ice service ....................... 4.60AV+459.0 

0.16av+459.0 

6. Refrigerator-freezers—automatic defrost with top-mounted freezer with through-the-door ice service .................................. 10.20AV+356.0 

0.36av+356.0 

7. Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service ................................. 10.10AV+406.0 

0.36av+406.0 

8. Upright freezers with manual defrost ........................................................................................................................................ 7.55AV+258.3 

0.27av+258.3 

9. Upright freezers with automatic defrost .................................................................................................................................... 12.43AV+326.1 

0.44av+326.1 

10. Chest freezers and all other freezers except compact freezers ............................................................................................ 9.88AV+143.7 

0.35av+143.7 

11. Compact refrigerators and refrigerator-freezers with manual defrost .................................................................................... 10.70AV+299.0 

0.38av+299.0 

12. Compact refrigerator-freezer—partial automatic defrost ........................................................................................................ 7.00AV+398.0 

0.25av+398.0 

13. Compact refrigerator-freezers—automatic defrost with top-mounted freezer and compact all-refrigerator—automatic defrost.12.70AV+355.0 

0.45av+355.0 

14. Compact refrigerator-freezers—automatic defrost with side-mounted freezer ...................................................................... 7.60AV+501.0 

0.27av+501.0 

15. Compact refrigerator-freezers—automatic defrost with bottom-mounted freezer .................................................................. 13.10AV+367.0 

0.46av+367.0 

16. Compact upright freezers with manual defrost ....................................................................................................................... 9.78AV+250.8 

0.35av+250.8 

17. Compact upright freezers with automatic defrost ................................................................................................................... 11.40AV+391.0 

0.40av+391.0 

18. Compact chest freezers .......................................................................................................................................................... 10.45AV+152.0 

0.37av+152.0 

Made effective 

Product class through OHA 

exception relief 

5A. Refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door ice service ............................ 5.0AV+539.0 

0.18av+539.0 

10A. Chest freezers with automatic defrost .................................................................................................................................. 14.76AV+211.5 

0.52av+211.5 

AV: Adjusted Volume in ft3; av: Adjusted Volume in liters (L). 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59477 

6The petition, submitted June 1, 2004, can be 

viewed at http://www.standardsasap.org/

documents/rfdoe.pdf (last accessed August 18, 

2010). 

2. History of Standards Rulemaking for 

Refrigerators, Refrigerator-Freezers, and 

Freezers 

The amendments made to EPCA by 

the National Appliance Energy 

Conservation Act of 1987 (NAECA; Pub. 

L. 100–12) included mandatory energy 

conservation standards for refrigeration 

products and requirements that DOE 

conduct two cycles of rulemakings to 

determine whether to amend these 

standards. (42 U.S.C. 6295(b)(1), (2), 

(3)(A)(i), and (3)(B)–(C)) DOE completed 

the first of these rulemaking cycles in 

1989 and 1990 by adopting amended 

performance standards for all 

refrigeration products manufactured on 

or after January 1, 1993. 54 FR 47916 

(November 17, 1989); 55 FR 42845 

(October 24, 1990). As indicated above, 

DOE completed a second rulemaking 

cycle to amend the standards for 

refrigeration products by issuing a final 

rule in 1997, which adopted the current 

standards for these products. 62 FR 

23102 (April 28, 1997). 

In 2005, DOE granted a petition, 

submitted by a coalition of state 

governments, utility companies, 

consumer and low-income advocacy 

groups, and environmental and energy 

efficiency organizations, requesting that 

it conduct a rulemaking to amend the 

standards for residential refrigeratorfreezers.6 DOE then conducted limited 

analyses to examine the technological 

and economic feasibility of amended 

standards at the ENERGY STAR levels 

that were in effect for 2005 for the two 

most popular product classes of 

refrigerator-freezers. These analyses 

identified potential energy savings and 

other potential benefits and burdens 

from such standards, and assessed other 

issues associated with such standards. 

Most recently, DOE has undertaken this 

rulemaking to satisfy the statutory 

requirement that DOE publish a final 

rule no later than December 31, 2010, to 

determine whether to amend the 

standards for refrigeration products 

manufactured on or after January 1, 

2014. (42 U.S.C. 6295(b)(4)) 

DOE initiated this rulemaking on 

September 18, 2008, by publishing on 

its Web site its ‘‘Rulemaking Framework 

Document for Refrigerators, RefrigeratorFreezers, and Freezers.’’ (A PDF of the 

framework document is available at 

http://www1.eere.energy.gov/buildings/ 

appliance_standards/residential/pdfs/ 

refrigerator_freezer_framework.pdf). 

DOE also published a notice 

announcing the availability of the 

framework document and a public 

meeting to discuss the document. It also 

requested public comment on the 

document. 73 FR 54089 (September 18, 

2008). The framework document 

described the procedural and analytical 

approaches that DOE anticipated using 

to evaluate energy conservation 

standards for refrigeration products and 

identified various issues to be resolved 

in conducting the rulemaking. 

On September 29, 2008, DOE held the 

framework document public meeting. At 

that meeting, DOE discussed the issues 

detailed in the framework document 

and described the analyses the agency 

planned to conduct during the 

rulemaking. Through the public 

meeting, DOE sought feedback from 

interested parties on these subjects and 

provided information regarding the 

rulemaking process that DOE would 

follow. Interested parties discussed the 

following major issues at the public 

meeting: Test procedure revisions; 

product classes; technology options; 

approaches to the engineering, life-cycle 

cost, and payback period analyses; 

efficiency levels analyzed in the 

engineering analysis; and the approach 

for estimating typical energy 

consumption. At the meeting, and 

during the related comment period, 

DOE received many comments that 

helped it identify and resolve issues 

involved in this rulemaking. 

DOE then gathered additional 

information and performed preliminary 

analyses for the purpose of developing 

potential amended energy conservation 

standards for refrigeration products. 

This process culminated in DOE’s 

announcement of the preliminary 

analysis public meeting, at which DOE 

would discuss and receive comments on 

the following matters: The product 

classes DOE analyzed; the analytical 

framework, models, and tools that DOE 

was using to evaluate standards; the 

results of the preliminary analyses 

performed by DOE; and potential 

standard levels that DOE could 

consider. 74 FR 58915 (November 16, 

2009) (the November 2009 notice). DOE 

also invited written comments on these 

subjects and announced the availability 

on its Web site of a preliminary 

technical support document 

(preliminary TSD) it had prepared to 

inform interested parties and enable 

them to provide comments. Id. (The 

preliminary TSD is available at http:// 

www1.eere.energy.gov/buildings/ 

appliance_standards/residential/pdfs/ 

ref_frz_prenopr_prelim_tsd.pdf.) 

Finally, DOE stated its interest in 

receiving views concerning other 

relevant issues that participants 

believed would affect energy 

conservation standards for refrigeration 

products, or that DOE should address in 

this NOPR. Id. at 58917–18. 

The preliminary TSD provided an 

overview of the activities DOE 

undertook in developing standards for 

the refrigeration products, and 

discussed the comments DOE received 

in response to the framework document. 

It also described the analytical 

framework that DOE used (and 

continues to use) in this rulemaking, 

including a description of the 

methodology, the analytical tools, and 

the relationships among the various 

analyses that are part of the rulemaking. 

The preliminary TSD presented and 

described in detail each analysis DOE 

had performed up to that point, 

including descriptions of inputs, 

sources, methodologies, and results. 

These analyses were as follows: 

• A market and technology 

assessment addressed the scope of this 

rulemaking, identified the potential 

classes for refrigeration products, 

characterized the markets for these 

products, and reviewed techniques and 

approaches for improving their 

efficiency; 

• A screening analysis reviewed 

technology options to improve the 

efficiency of refrigeration products, and 

weighed these options against DOE’s 

four prescribed screening criteria: (1) 

Technological feasibility, (2) 

practicability to manufacture, install, 

and service, (3) impacts on equipment 

utility or equipment availability, (4) 

adverse impacts on health or safety; 

• An engineering analysis estimated 

the increases in manufacturer selling 

prices (MSPs) associated with more 

energy-efficient refrigeration products; 

• An energy use analysis estimated 

the annual energy use in the field of 

refrigeration products as a function of 

efficiency levels; 

• A markups analysis converted 

estimated manufacturer selling price 

(MSP) increases derived from the 

engineering analysis to consumer prices; 

• A life-cycle cost analysis calculated, 

at the consumer level, the discounted 

savings in operating costs throughout 

the estimated average life of the 

product, compared to any increase in 

installed costs likely to result directly 

from the imposition of a given standard; 

• A payback period (PBP) analysis 

estimated the amount of time it would 

take consumers to recover the higher 

expense of purchasing more energy 

efficient products through lower 

operating costs; 

• A shipments analysis estimated 

shipments of the refrigeration products 

over the 30-year analysis period (2014– 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59478 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

7An ‘‘all-refrigerator’’ is defined as ‘‘an electric 

refrigerator which does not include a compartment 

for the freezing and long time storage of food at 

temperatures below 32 °F (0.0 °C). It may include 

a compartment of 0.50 cubic feet capacity (14.2 

liters) or less for the freezing and storage of ice.’’ 

(10 CFR part 430, subpart B, appendix A1, section 

1.4). 

8 DOE Docket No. EERE–2008–BT–STD–0012, 

Comment 49. DOE considered the Joint Comments 

to supersede earlier comments by the listed parties 

regarding issues subsequently discussed in the Joint 

Comments. 

2043), which were used in performing 

the national impact analysis (NIA); 

• A national impact analysis assessed 

the national energy savings, and the 

national net present value of total 

consumer costs and savings, expected to 

result from specific, potential energy 

conservation standards for refrigeration 

products; 

• A preliminary manufacturer impact 

analysis took the initial steps in 

evaluating the effects new efficiency 

standards may have on manufacturers. 

In the November 2009 notice, DOE 

summarized the nature and function of 

the following analyses: (1) Engineering, 

(2) energy use characterization, (3) 

markups to determine installed prices, 

(4) LCC and PBP analyses, and (5) 

national impact analysis. Id. at 58917. 

The preliminary analysis public 

meeting announced in the November 

2009 notice took place on December 10, 

2009. At this meeting, DOE presented 

the methodologies and results of the 

analyses set forth in the preliminary 

TSD. Major topics discussed at the 

meeting included test procedure 

revisions, product classes (including 

wine coolers, all-refrigerators,7 and 

built-in refrigeration products), the use 

of alternative foam blowing agents and 

refrigerants, engineering analysis tools, 

the use of VIPs, mark-ups, field energy 

consumption, life-cycle cost inputs, 

efficiency distribution forecasts, and 

trial standard level selection criteria. 

DOE also discussed plans for 

conducting the NOPR analyses. The 

comments received since publication of 

the November 2009 notice, including 

those received at the preliminary 

analysis public meeting, have 

contributed to DOE’s proposed 

resolution of the issues in this 

rulemaking. This NOPR quotes and 

summarizes many of these comments, 

and responds to the issues they raised. 

A parenthetical reference at the end of 

a quotation or paraphrase provides the 

location of the item in the public record. 

In response to the preliminary 

analysis, DOE also received a comment 

submitted by groups representing 

manufacturers (Association of Home 

Appliance Manufacturers, Whirlpool, 

General Electric Company (GE), 

Electrolux, LG Electronics, BSH, 

Alliance Laundry, Viking Range, SubZero Wolf, Friedrich A/C, U-Line, 

Samsung, Sharp Electronics, Miele, Heat 

Controller, AGA Marvel, Brown Stove, 

Haier, Fagor America, Airwell Group, 

Arcelik, Fisher & Paykel, Scotsman Ice, 

Indesit, Kuppersbusch, Kelon, 

DeLonghi); energy and environmental 

advocates (American Council for an 

Energy Efficient Economy, Appliance 

Standards Awareness Project, Natural 

Resources Defense Council, Alliance to 

Save Energy, Alliance for Water 

Efficiency, Northwest Power and 

Conservation Council, Northeast Energy 

Efficiency Partnerships); and consumer 

groups (Consumer Federation of 

America, National Consumer Law 

Center). This collective set of comments, 

which DOE refers to in this notice as the 

‘‘Joint Comments’’ 8 recommends 

specific energy conservation standards 

for refrigeration products that, in the 

commenters’ view, would satisfy the 

requirements under EPCA. DOE neither 

organized nor was a member of the 

group but sent staff to observe some 

meetings and made its contractors 

available to perform data processing. 

Consistent with its legal obligations 

when developing an energy 

conservation standard, DOE is providing 

the public with the opportunity to 

comment on the proposed levels that 

DOE is considering adopting for 

refrigeration products, which mirror 

those recommended in the Joint 

Comments. As DOE has not yet reached 

a final decision on the levels it should 

prescribe, DOE invites comment on 

these proposed levels, possible 

alternative levels, and all other aspects 

presented in today’s NOPR. 

III. General Discussion 

The following section discusses 

various technical aspects related to this 

proposed rulemaking. In particular, it 

addresses aspects involving the test 

procedures for refrigeration products, 

the technological feasibility of potential 

standards to assign to these products, 

and the potential energy savings and 

economic justification for prescribing 

the proposed amended standards for 

refrigeration products. 

A. Test Procedures 

As noted above, DOE’s current test 

procedures for refrigeration products 

appear at 10 CFR part 430, subpart B, 

appendices A1 (for refrigerators and 

refrigerator-freezers) and B1 (for 

freezers). DOE recently issued a NOPR 

in which it proposed to amend these 

appendices, and to create new 

Appendices A and B, applicable to 

refrigerators/refrigerator-freezers and 

freezers, respectively, for products 

covered by today’s proposed standards, 

(i.e., those manufactured on or after 

January 1, 2014). 75 FR 29824 (May 27, 

2010). While the proposed test 

procedures would retain or revise many 

of the provisions currently in 

appendices A1 and B1, they would also 

add some new procedures. Most of the 

revisions and additions would apply to 

all refrigeration products, and would be 

reflected in both new appendices, as 

follows: Updating references to the 

Association of Home Appliance 

Manufacturers (AHAM) HRF–1 test 

standard; incorporating icemaking 

energy use into the energy use metric for 

products with automatic icemakers; 

clarifying the procedures for test sample 

preparation; modifying the test methods 

for convertible compartments and 

special-purpose compartments; 

modifying the anti-sweat heater 

definition to include those heaters that 

prevent sweat (i.e., moisture 

condensation) on interior surfaces; 

establishing new compartment 

temperatures and volume calculation 

methods; modifying the test methods for 

advanced defrost systems; eliminating 

the optional third part of the test 

method for products with variable 

defrost systems; and adjusting and 

correcting the various energy use 

equations included in the test procedure 

regulatory text. Id. 

DOE also proposed to adopt language 

in a new appendix A to incorporate test 

methods for products equipped with 

variable anti-sweat heater control 

systems that are currently addressed in 

waivers. These waivers apply only to 

refrigerators and refrigerator-freezers. Id. 

at 29835–37. 

Finally, DOE proposed to amend 

certain other provisions to clarify that 

combination freezer-wine storage 

products are not subject to the standards 

for refrigerator-freezers and to require 

manufacturers and private labelers to 

include additional information when 

they certify to DOE the compliance of 

refrigeration products that use advanced 

controls. Id. at 29829 and 29841–42. 

The test procedure NOPR public 

meeting was held June 22, 2010. DOE 

received numerous comments from 

stakeholders at this meeting, addressing 

all aspects of the proposed test 

procedure amendments. The comment 

period for the test procedure rulemaking 

ended on August 10, 2010. Id. at 29824. 

1. Test Procedure Rulemaking Schedule 

The preliminary analysis documents 

were published, and the preliminary 

analysis public meeting was held, prior 

to publication of the test procedure 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59479 

9Comments made during the public meeting are 

cited as (Commenter acronym, Public Meeting 

Transcript, No. 28 at [pages in the transcript at 

which the comment appears]). 

10Written comments are cited as (Commenter 

acronym, No. [assigned comment number in the 

docket] at p. [page number at which the comment 

appears]). 

11Based on 0.22 gallons of drinking water per 

person per day (Am J Physiol Regul Integr Comp 

Physiol 283: R993–R1004, 2002.) and 2.89 people 

per household with a standard sized refrigerator 

(2005 RECS data for standard-size refrigerators with 

TTD ice.). 

12EER, the energy efficiency ratio, is a measure 

of the efficiency of a compressor or a refrigeration 

system, being equal to the delivered cooling in 

British Thermal Units per hour (Btu/hr) divided by 

the compressor or system power input in Watts (W). 

The value 5 Btu/hr-W is based on a typical EER of 

5.5 Btu/hr-W for the compressor of a baseline 

standard-size refrigerator (See NOPR TSD Chapter 

5, Engineering Analysis, section 5.8.4), with some 

reduction of this efficiency associated with the 

additional power input of the evaporator and 

condenser fans. 

NOPR describing the amended test 

procedure on which the preliminary 

analysis was based. Because of this 

situation, AHAM commented that it was 

difficult for it to comment fully on the 

preliminary analysis because the 

specific test procedure changes were not 

yet known. (AHAM, Public Meeting 

Transcript, No. 28 at p. 17) 9 Edison 

Electric Institute (EEI) expressed 

concern about completion of the energy 

standards rulemaking, since the test 

procedure NOPR had not yet been 

published. (EEI, Public Meeting 

Transcript, No. 28 at p. 25) The 

Appliance Standards Awareness Project 

(ASAP) commented that test procedure 

rulemakings have been completed by 

the time of the energy standards NOPR 

in the past, and that this is a reasonable 

approach. (ASAP, Public Meeting 

Transcript, No. 28 at p. 26) 

While DOE acknowledges the 

advantages of publishing the test 

procedure rulemaking prior to 

discussing the preliminary analysis, the 

agency is working diligently to complete 

all of the rulemakings related to 

refrigeration products within the 

statutorily mandated schedule. DOE 

notes that under EPCA, an amended or 

new energy conservation standard may 

not be prescribed unless a test 

procedure for the regulated product has 

been prescribed. See 42 U.S.C. 

6295(o)(3). DOE has every intention of 

complying with this requirement. 

2. Icemaking 

DOE received numerous comments 

regarding energy use attributable to 

icemaking during the preliminary 

analysis phase of this rulemaking. 

Stakeholders generally agreed that 

icemaking energy use should be 

incorporated into the energy use metric 

for refrigeration products. American 

Council for an Energy Efficient 

Economy (ACEEE) and ASAP submitted 

a joint comment (hereafter referred to as 

ACEEE/ASAP) urging that icemaker 

energy use and losses associated with 

through-the-door ice and water service 

be incorporated into the test method 

and rulemaking. (ACEEE/ASAP, No. 43 

at p. 1) 10 These commenters added that 

water service as well as ice service 

should be included in the refrigeration 

product energy use metric. (Id. at 1–2) 

A group of California utilities consisting 

of Pacific Gas and Electric, San Diego 

Gas and Electric, Southern California 

Gas Company, and Southern California 

Edison, collectively organized as the 

California Investor Owned Utilities 

(IOU), commented that the energy 

associated with operating automatic ice 

makers should be addressed, because 

operational automatic ice makers 

contribute significantly to the 

refrigerator energy consumption. (IOU, 

No. 36 at p. 2) IOU also commented that 

energy use associated with water 

dispensing should be considered in the 

test procedure. (IOU, No. 36 at p. 6) The 

Natural Resources Defense Council 

(NRDC) agreed with the guidance DOE 

developed on how to treat icemakers 

during testing (75 FR 2122 (January 14, 

2010)), and commented that the 

guidance will be adequate for use in this 

rulemaking. NRDC added that it is 

imperative that DOE revise the test 

procedure to include ice maker energy 

usage in the next standard. (NRDC, No. 

39 at p. 2) Support for incorporating 

icemaking energy use explicitly in the 

energy metric was also expressed by LG 

Electronics U.S.A. (LG), Northeast 

Energy Efficiency Partnerships (NEEP), 

Northwest Power and Conservation 

Council (NPCC), ASAP, and in 

unpaginated comments submitted by 

Sub Zero-Wolf, Inc. (Sub Zero). (LG, No. 

41 at p. 1; NEEP, No. 38 at p. 1; NPCC, 

No. 33 at p. 1; ASAP, Public Meeting 

Transcript, No. 28 at p. 28; Sub Zero, 

No. 40 at p. 2) 

Regarding the inclusion of a method 

in the test procedure for measuring the 

energy use attributable to water 

dispensing, DOE is unaware of any 

publicly available information about the 

daily water usage by consumers using 

water dispenser-equipped refrigeration 

products. DOE developed a preliminary 

estimate for this energy use as follows. 

Assuming an average consumption of 

0.63 gallons per standard size 

refrigerator per day,11 a water 

temperature of 70 °F when entering the 

system (typical household ambient 

temperature to which the water in the 

refrigerator supply tubing would 

equilibrate between icemaking cycles) 

and a dispensed temperature of 39 °F 

(the standardized temperature for the 

fresh food compartment in the HRF–1– 

2008 test procedure), and a refrigeration 

system EER12 of 5 Btu/hr-W, this energy 

use is equal to 12 kWh per year, roughly 

2.5 percent of the average energy use of 

a typical refrigerator-freezer. Based on 

these data, there appears to be limited 

potential for savings from increasing the 

efficiency of the cooling and processing 

of the dispensed water. Although 

solenoid valves are energized while 

water is dispersed, the duration of valve 

actuation is so short that the valves do 

not contribute significantly to energy 

use. The only significant energy use 

attributable to water dispensation by the 

refrigeration system is for cooling the 

water. Unlike with the case of automatic 

icemaking, in which electric heaters are 

typically used to free ice from an ice 

mold, there is no obvious portion of the 

energy use that can be reduced or 

eliminated by improving component 

efficiency. Based on the limited amount 

of available data, DOE currently lacks 

sufficient information regarding the 

level of water consumption associated 

with water dispenser-equipped 

refrigeration equipment to either 

develop a test procedure or set a 

standard within the context of the 

agency’s current rulemaking activities. 

DOE may consider the adoption of such 

a method in a future rulemaking to 

amend its test procedures. 

Several stakeholders highlighted the 

challenges involved in the development 

of a test procedure for icemaking energy 

use. AHAM commented that developing 

a procedure to determine automatic 

icemaking energy consumption would 

be complex, and that any such 

procedure must be robust and 

repeatable. (AHAM, No. 34 at p. 2) GE 

commented that it is critical that DOE 

insist on a robust, repeatable procedure 

that minimizes variability for 

calculating icemaker energy prior to 

inclusion in any standards. (GE, No. 37 

at p. 1) LG commented on the 

complexity of such a procedure and also 

emphasized that any such procedure 

that DOE adopts be verifiable, 

repeatable, and reliable. (LG, No. 41 at 

p. 3) Other stakeholders commenting on 

the complexity of development of an 

icemaking test procedure include Sub 

Zero and AHAM. (Sub Zero, No. 40 at 

p. 3; Sub Zero, Public Meeting 

Transcript, No. 28 at p. 29; AHAM, 

Public Meeting Transcript, at pp. 30, 31) 

AHAM’s ongoing work to develop a 

test procedure to measure icemaking 

energy use was mentioned at the public 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59480 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

13Coefficient of Performance, equal to cooling 

energy delivered by the refrigeration product 

divided by energy input. This is related to EER, 

explained above, by the conversion of the units of 

energy input from British Thermal Units (Btu) to 

Watt-Hours (W-h). 

meeting. (Public Meeting Transcript, 

No. 28 at pp. 28–33) AHAM noted that 

there was significant variation in the 

initial measurements made by AHAM 

members to assess a preliminary 

icemaking energy use test procedure 

and that additional work is required to 

better understand the reasons for this 

variation. (See ‘‘AHAM Update to DOE 

on Status of Ice Maker Energy Test 

Procedure,’’ 11/19/2009, No. 46) AHAM 

further commented that the next step is 

to complete round robin evaluation, 

which is expected to take 3 to 4 months. 

The initial measurements made by 

AHAM members did not explore the 

potential impact of volume or product 

type on automatic ice maker energy use 

and provided no indication of how 

icemaker energy might be incorporated 

into the baseline energy efficiency 

curves. Additional testing to provide 

this information is expected to take 

another 4 months. (AHAM, No. 34 at p. 

2) The projected date of completion of 

this process, based on the January 15 

date of the comments, was at best the 

middle of August 2010. 

Given the complexity of this test 

procedure development work, many 

stakeholders suggested that finalizing a 

standard in 2010 based on a test 

procedure which includes a 

measurement of icemaking energy use is 

not critical for purposes of setting 

appropriate energy efficiency levels. 

Stakeholders who held this view 

included ACEEE/ASAP, GE, NRDC, and 

Sub Zero. (ACEEE/ASAP, No. 43 at p. 

1–2; GE, No. 37 at p. 1; NRDC, No. 39 

at p. 2; Sub Zero, No. 40 at p. 3) NEEP 

disagreed with this viewpoint and 

commented that DOE should consider 

imposing a deadline for the industry-led 

process to finalize an updated test 

procedure that incorporates icemaking 

energy use, after which DOE should 

quickly finalize a procedure to 

incorporate into its regulations. NEEP 

also suggested that a test procedure 

update prior to promulgation of 

standards was a more ideal solution. 

(NEEP, No. 38 at p. 1) Sub Zero and 

NEEP commented that a short delay in 

publication of the final rule for this 

rulemaking would be acceptable if 

necessary to allow sufficient time to 

develop the icemaking test procedure. 

(Sub Zero, No. 40 at p. 3; NEEP, No. 38 

at p. 2) 

Several stakeholder comments 

addressed details associated with an 

icemaking test procedure. AHAM 

commented that the energy use metric 

should be expressed in annual kWh per 

year. (AHAM, Public Meeting 

Transcript, No. 28 at p. 32) The AHAM 

draft proposal is based on converting a 

measurement of the energy required to 

produce one pound of ice by a 

production quantity of 1.8 pounds per 

day to determine annual icemaking 

energy use. (AHAM, No. 34 at p. 2) IOU 

recommended consideration of either a 

‘‘kWh per pound of ice’’ metric or a 

‘‘kWh per year’’ metric. (IOU, No. 36 at 

pp. 2–3) In light of these comments, 

DOE proposes to establish an annual 

energy use for ice that will be added to 

the energy use measured using the 

current test procedure (or an amended 

version of the current procedure) to 

provide a total annual energy use metric 

that includes the energy associated with 

icemaking. 

Additionally, AHAM commented that 

‘‘the test procedure may need to allow 

manufacturers to subtract the 

thermodynamic energy required to 

convert water to ice, so that this energy 

is not targeted for energy efficiency 

improvements.’’ (AHAM, No. 34 at p. 2) 

However, AHAM acknowledged that the 

theoretical efficiency depends on the 

Coefficient of Performance (COP) 13 of 

the particular refrigerator-freezer, which 

can vary. (Id.) Consideration of the COP 

in this context is important, because the 

AHAM comment implication is that the 

thermodynamic energy required to 

convert water to ice is independent of 

refrigerator design. On the contrary, this 

energy use is indirectly proportional to 

the COP, which is a characteristic of the 

refrigerator’s design. However, EPCA 

requires that test procedures ‘‘shall be 

reasonably designed to produce test 

results which measure energy 

efficiency, energy use * * * or 

estimated annual operating cost of a 

covered product during a representative 

average use cycle or period of use 

***’’ (42 U.S.C. 6293(b)(3)). This 

statutory provision calls for measuring 

energy use, and does not single out for 

incorporation into the test procedure 

only that portion of the energy use that 

could be eliminated or reduced through 

design modifications. DOE tentatively 

interpreted this requirement to mean 

that the test procedure must measure all 

of the energy use associated with a 

given product function. 

LG commented that an icemaking test 

procedure should consider the potential 

overlap of icemaking and defrost 

periods. (LG, No. 41 at p. 3) DOE 

interprets this comment as addressing 

the fact that achieving steady state 

operation during icemaking may take a 

long time to achieve—possibly longer 

than the elapsed time between defrosts. 

Hence, the energy use increment 

associated with icemaking is difficult to 

distinguish from the energy use 

increment associated with defrost. DOE 

is not at this time considering this level 

of detail regarding a potential icemaking 

test. 

Both AHAM and Sub Zero mentioned 

the need to consider manual as well as 

automatic icemaking. (AHAM, Public 

Meeting Transcript, No. 28 at p. 32; Sub 

Zero, No. 40 at p. 3) DOE notes that 

there is limited information available 

regarding the energy use of automatic 

icemakers, while there is no publicly 

available information regarding the 

energy use involved in manual 

icemaking. Hence, DOE is examining 

the possibility of incorporating the 

energy use of automatic icemakers into 

the energy use metric while leaving 

open for the time being the treatment of 

energy use related to manual icemaking. 

DOE plans to incorporate icemaking 

energy use into the energy use metric for 

refrigeration products. However, DOE 

acknowledges the challenges in 

developing an accurate and repeatable 

test procedure and the need to avoid 

uncontrolled variability in energy test 

results associated with adopting a 

premature procedure. DOE also seeks to 

address this aspect of energy 

consumption and to improve the 

accuracy of representations of energy 

use (i.e., on the EnergyGuide label used 

to inform consumers regarding product 

energy use) and has attempted to lay the 

initial foundations for an improved 

measurement by proposing a fixed 

placeholder representing icemaking 

energy use in kWh per year for all 

products equipped with an automatic 

icemaker. 75 FR 29846–47 (May 27, 

2010). The proposed placeholder value 

is equal to the average reported by 

AHAM of measurements made using a 

draft icemaking energy use test 

procedure. (‘‘AHAM Update to DOE on 

Status of Ice Maker Energy Test 

Procedure,’’ No. 46 at p. 11) DOE 

intends to closely monitor industry 

efforts in developing a method of 

measuring icemaking energy use and 

may propose the incorporation of such 

a measurement into the test procedure 

and energy conservation standard at the 

appropriate time. 

Stakeholders also commented 

regarding the approach used to set 

standards for icemaking energy use or to 

adjustment of energy standards to 

include icemaking energy use. DOE 

sought input regarding an appropriate 

method to establish maximum 

icemaking energy use as a function of 

product class and adjusted volume, as 

well as the available technology options 

to reduce icemaking energy use. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59481 

(Preliminary Analysis Public Meeting 

Presentation, No. 26 at p. 19) EEI 

commented that maximum icemaking 

energy is more a function of the number 

and characteristics of occupants/users 

than it is a function of volume. (EEI, 

Public Meeting Transcript, No. 28 at p. 

34) DOE agrees with this comment, but 

notes that energy conservation 

standards, defined by EPCA as ‘‘a 

performance standard which prescribes 

a minimum level of energy efficiency or 

a maximum quantity of energy use 

* * * for a covered product * * *’’ (42 

U.S.C. 6291(6)(A)), do not address 

characteristics of the product purchasers 

or users. IOU commented that ice maker 

efficiency is directly affected by 

refrigeration system efficiency, ice 

maker component efficiency, allowable 

sub freezing temperature, and ice maker 

type. (IOU, No. 36 at p. 6) Stakeholders 

including AHAM, GE, and Whirlpool 

commented that it is premature to 

evaluate design options for reducing 

icemaking energy use and/or to set 

standards for icemaking at other than 

current baseline levels. (AHAM, No. 34 

at p. 3; AHAM, Public Meeting 

Transcript, No. 28 at pp. 32, 33; GE, No. 

37 at p. 1; Whirlpool, No. 31 at p. 5) 

AHAM further elaborated that a 

necessary first step before setting 

standards for icemaking would be to 

develop a robust test procedure and to 

establish that function’s baseline energy 

use. In AHAM’s view, the evaluation of 

design options and the potential for 

energy use reduction should be 

considered for a future rulemaking after 

fully demonstrating the validity of the 

test procedure (AHAM, No. 34 at p. 3) 

DOE agrees that proposing a standard 

level for icemaking energy use is 

premature prior to the development of 

a test procedure that can be used to 

evaluate baseline icemaking energy use. 

EPCA prohibits the establishment of 

energy conservation standards for 

refrigeration products if no test 

procedure has been prescribed. See 42 

U.S.C. 6295(o)(3)(A). DOE’s proposed 

approach of assigning a fixed quantity of 

energy to icemaking in the test 

procedure in lieu of a test that measures 

each product’s icemaking efficiency for 

comparison with a standard would 

provide information to consumers 

regarding the additional energy use 

associated with icemaking, since the 

energy use measurement reported on 

EnergyGuide labels will include this 

component. This proposed method 

would also give the industry additional 

time in which to perfect its test 

procedure to address this particular 

energy-consuming component. 

The test procedure, which is the basis 

for the engineering analysis, does not 

consider variation of icemaking energy 

use as a function of product 

characteristics (other than the presence 

of an automatic icemaker). For that 

reason, DOE stated during the 

preliminary analysis public meeting that 

the engineering analysis does not 

consider icemaking. (Public Meeting 

Transcript, No. 28 at p. 27) NPCC 

pointed out that DOE’s energy use 

analysis (see chapter 7 of the 

preliminary TSD) does address 

icemaking energy use through 

application in the calculations of the 

Usage Adjustment Factor (UAF) that 

converts energy test measurements to 

field energy use. (NPCC, Public Meeting 

Transcript, No. 28 at p. 27) DOE agrees 

that the usage adjustment factors (UAF) 

incorporate an adjustment to include 

icemaking energy use. (See Preliminary 

TSD, No. 22 at p. 7–6.) In the 

preliminary LCC analysis, DOE 

calculated energy savings by 

multiplying the energy use reduction 

under consideration (e.g., 20-percent 

energy use reduction) by multiplying 

this percentage reduction by all of the 

calculated baseline field energy use, 

including icemaking energy use for 

products having automatic icemakers. In 

contrast, the NOPR analysis separated 

icemaking energy use from 

consideration of energy use reduction as 

much as possible, which is consistent 

with the proposal DOE is currently 

considering to incorporate icemaking 

energy use into the test procedure. This 

process is described more fully in the 

NOPR TSD. 

3. Circumvention 

Consumers Union submitted 

comments that specifically addressed 

circumvention. Key points made in its 

submittal included the following: 

• Test procedures need to keep up 

with product development and must be 

continually updated and strengthened. 

Test procedures must be updated more 

frequently. (Consumers Union, No. 44 at 

pp. 5, 6) 

• Regulations should explicitly 

provide a procedure for DOE to quickly 

close testing loopholes and to hold 

manufacturers accountable for any 

intentional manipulation of test 

procedures. (Consumers Union, No. 44 

at pp. 5, 6) 

• The test procedure should require 

compartment temperatures to be within 

a smaller range of acceptable values, 

such as within +/¥2° F of ideal storage 

values. (Consumers Union, No. 44 at p. 

5) 

• The test procedure should reflect 

typical consumer conditions by 

explicitly forbidding any special energy 

savings at test temperatures, settings, or 

conditions that consumers are unlikely 

to experience. (Consumers Union, No. 

44 at p. 5) 

DOE acknowledges the need to update 

test procedures more frequently. DOE 

also acknowledges that enforcement and 

verification activities are needed to 

ensure that manufacturers cannot 

circumvent the test procedure. To this 

end, DOE is examining a variety of 

options to address these concerns and 

notes that its concurrent test procedure 

rulemaking would likely deal with these 

issues. Additionally, by statute, the 

agency is obligated to update its test 

procedure at least once every seven 

years, which DOE has every intention to 

fulfill. See 42 U.S.C. 6293(b). 

4. Variable Anti-Sweat Heater Control 

Anti-sweat heaters are used to prevent 

the condensation of moisture on 

refrigeration product surfaces. Such 

accumulation of moisture as liquid 

droplets is undesirable because (1) It is 

unsightly, (2) it encourages mold 

growth, and (3) the water drops can fall 

to the floor and create a slip hazard. 

These heaters are often electricityconsuming resistance heaters. However, 

many refrigeration products also use 

waste heat from the refrigeration system 

to provide anti-sweat heating functions. 

This is accomplished by routing hot gas 

or warm liquid refrigerant tubing in the 

regions of the cabinet that require antisweat heating. 

GE and AHAM both supported DOE’s 

proposal to amend the current test 

procedure to address the treatment of 

products equipped with a variable antisweat heater control system. These 

systems control anti-sweat heater 

operation by reducing or eliminating 

their energy use when ambient 

conditions, such as humidity, indicate 

that heater operation at full load is 

unnecessary. (GE, No. 37 at p. 2; AHAM, 

No. 34 at p. 10) DOE notes that, while 

it plans to modify the current test 

procedure to enable it to address 

variable anti-sweat heater control 

systems, the agency may choose not to 

directly incorporate the current waiver 

language covering these types of 

systems into the test procedure. See, 

e.g., variable antisweat heater waivers 

published at 73 FR 10425 (February 27, 

2008) and 74 FR 20695 (May 5, 2009). 

DOE proposed as part of its test 

procedure amendments to incorporate a 

modified version of that procedure (see 

75 FR 29835–37 (May 27, 2010)), and is 

considering public comments in 

finalizing those amendments. 

5. Standby and Off Mode Energy Use 

DOE also notes that EPCA, as 

amended by EISA 2007, requires DOE to 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59482 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

14 In other words, a product with energy usage 

that is a certain percentage below the current energy 

standard should remain the same percentage below 

the baseline energy use under the proposed test 

procedure after subtracting icemaking energy use. 

Hence, the max-tech levels expressed as percentage 

of energy use reduction should be the same for both 

sets of test procedures. 

amend its test procedures for all covered 

products, including those for 

refrigeration products, to include 

measurement of standby mode and off 

mode energy consumption, except 

where current test procedures fully 

address such energy consumption. (42 

U.S.C. 6295(gg)(2)) As indicated above, 

DOE’s current test procedures for 

refrigeration products fully address 

standby and off mode energy use, and 

any amended test procedure that DOE 

adopts for these products will continue 

to do so. 

B. Technological Feasibility 

1. General 

In each standards rulemaking, DOE 

conducts a screening analysis based on 

information gathered on all current 

technology options and prototype 

designs that have the potential to 

improve product or equipment 

efficiency. To conduct the analysis, DOE 

develops a list of design options for 

consideration in consultation with 

manufacturers, design engineers, and 

other interested parties. DOE then 

determines which of these means for 

improving efficiency are technologically 

feasible. DOE considers a design option 

to be technologically feasible if it is 

currently in use by the relevant 

industry, or if a working prototype 

exists. See 10 CFR part 430, subpart C, 

appendix A, section 4(a)(4)(i) (providing 

that ‘‘[t]echnologies incorporated in 

commercially available products or in 

working prototypes will be considered 

technologically feasible.’’) 

Once DOE has determined that 

particular design options are 

technologically feasible, it evaluates 

each of these design options using the 

following additional screening criteria: 

(1) Practicability to manufacture, install, 

or service; (2) adverse impacts on 

product utility or availability; and (3) 

adverse impacts on health or safety. (10 

CFR part 430, subpart C, appendix A, 

section 4(a)(4)). Section IV.B of this 

notice discusses the results of the 

screening analysis for refrigeration 

products, particularly the designs DOE 

considered, those it screened out, and 

those that are the basis for the trial 

standard levels (TSLs) in this 

rulemaking. For further details on the 

screening analysis for this rulemaking, 

see chapter 4, Screening Analysis, of the 

NOPR TSD. 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt (or not 

adopt) an amended standard for a type 

or class of covered product, it must 

‘‘determine the maximum improvement 

in energy efficiency or maximum 

reduction in energy use that is 

technologically feasible’’ for such 

product. (42 U.S.C. 6295(p)(1)) 

Accordingly, DOE determined the 

maximum technologically feasible 

(hereafter max-tech) reductions in 

energy use for refrigeration products in 

the engineering analysis. 

As described in the preliminary TSD, 

DOE conducted a full analysis of a set 

of product classes that comprise a large 

percentage of product shipments in the 

market today. DOE’s approach for 

extending proposed standard levels 

established for these product classes to 

the non-analyzed product classes is 

described in chapter 2, Analytical 

Framework, of the preliminary TSD, in 

section 2.15. However, this section of 

this notice reports the max-tech 

efficiency levels only for the directly 

analyzed product classes. 

DOE used the proposed test 

procedures that would apply once 

manufacturers must comply with the 

new standard to determine the max-tech 

efficiency levels of the directly analyzed 

product classes. The efficiency levels 

are defined as reductions in that portion 

of the energy use not associated with 

icemaking. As described in section III.A, 

above, the energy use associated with 

icemaking under the proposed test 

procedure is a fixed quantity not 

correlated with an efficiency level. 

Separating this fixed quantity of energy 

use from the definition of efficiency 

level allows a more direct comparison of 

products, irrespective of whether a 

given product is equipped with an 

automatic icemaker. This approach also 

allows DOE to compare the efficiency 

levels based on the proposed test 

procedure (i.e., projections of possible 

energy use reductions) against the 

energy use based on the existing test 

procedure and current standard.14

DOE used the full set of design 

options considered applicable for these 

products classes to determine the maxtech efficiency levels for the analyzed 

product classes. (See chapter 5 of the 

NOPR TSD, section 5.4.4.) Table III.1 

lists the max-tech levels that DOE 

determined for this rulemaking. The 

table also presents the max-tech levels 

that are commercially available. The 

max-tech levels differ from those 

presented in the preliminary TSD, and 

are generally lower (i.e., the percent 

energy use reductions are lower for the 

NOPR analysis, thus the max-tech 

energy use is higher). The reduction in 

the max-tech efficiency levels is due to 

the revisions DOE implemented in the 

NOPR engineering analysis to address 

new information obtained during this 

phase of the work. 

TABLE III.1—MAX-TECH EFFICIENCY LEVELS FOR THE REFRIGERATION PRODUCTS RULEMAKING

Product class Description 

Efficiency level (percent 

energy use reduction) 

DOE analysis 

(in percent) 

Max tech 

commercially 

available 

(in percent) 

Standard-Size Refrigerator-Freezers 

3 ........................ Refrigerator-freezers—automatic defrost with top-mounted freezer without through-the-door 

ice service.

36 30 

5 ........................ Refrigerator-freezers—automatic defrost with bottom-mounted freezer without through-thedoor ice service.36 33 

7 ........................ Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door 

ice service.

33 32 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59483 

TABLE III.1—MAX-TECH EFFICIENCY LEVELS FOR THE REFRIGERATION PRODUCTS RULEMAKING—Continued 

Product class Description 

Efficiency level (percent 

energy use reduction) 

DOE analysis 

(in percent) 

Max tech 

commercially 

available 

(in percent) 

Standard-Size Freezers 

9 ........................ Upright freezers with automatic defrost .................................................................................... 44 27 

10 ...................... Chest freezers and all other freezers except compact freezers .............................................. 41 16 

Compact Products 

11 ...................... Compact refrigerators and refrigerator-freezers with manual defrost ...................................... 59 27 

18 ...................... Compact chest freezers ............................................................................................................ 42 23 

Built-In Products 

3A–BI ................ Built-In All-refrigerators—automatic defrost .............................................................................. 28 31 

5–BI .................. Built-In Refrigerator-freezers—automatic defrost with bottom-mounted freezer without 

through-the-door ice service.

27 27 

7–BI .................. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer with throughthe-door ice service.22 21 

9–BI .................. Built-In Upright freezers with automatic defrost ....................................................................... 27 27 

The max-tech efficiency levels 

identified for commercially available 

products are in most cases different 

from the max-tech levels shown in 

Table III.1. These levels are significantly 

higher than the commercially available 

max-tech levels for product classes 9 

(upright freezers with automatic 

defrost), 10 (chest freezers), 11 (compact 

refrigerators and refrigerator-freezers 

with manual defrost), and 18 (compact 

chest freezers). DOE determined that 

higher max-tech levels for these 

products were possible because the 

commercially available products 

generally do not use all of the energy 

efficient design options considered in 

the DOE max-tech analyses. Prototypes 

with the DOE max-tech levels have not 

been identified, but the design options 

are all used in commercially available 

products. 

DOE determined the max-tech levels 

using the EPA Refrigerator Analysis 

(ERA) program to conduct energy 

modeling. DOE conducted this energy 

modeling for specific products 

examined during the engineering 

analysis. DOE created energy models for 

the existing products and adjusted these 

models to represent modified designs 

using the screened-in design options. 

The max-tech levels represent the most 

efficient design option combinations 

applicable for the analyzed products. 

This process is described in the NOPR 

TSD in chapter 5, Engineering Analysis 

in sections 5.4.4 and 5.7. DOE 

considered different sets of design 

options for each product class, as 

indicated in Table III.2, 

TABLE III.2—DESIGN OPTIONS CONSIDERED FOR MAX TECH

Product class 

Design option 

BLDC* fan 

motors 

Heat 

exchanger 

improvement 

Thicker 

walls 

Vacuum 

insulation 

panels 

(VIPs) 

Variable 

speed 

compressor 

Adaptive 

defrost 

Variable 

anti-sweat 

heater 

control 

Isobutane 

refrigerant 

3 .................................................................... √ √ √ √ √ 

5 .................................................................... √ √ √ √ √ √ 

7 .................................................................... √ √ √ √ √ √ 

9 .................................................................... √ √ √ √ √ √ 

10 .................................................................. √ √ √ √ 

11 .................................................................. √ √ √ √ √ 

18 .................................................................. √ √ √ √ 

3A–BI ............................................................ √ √ √ √ √ 

5–BI .............................................................. √ √ √ √ √ √ 

7–BI .............................................................. √ √ √ √ √ √ 

9–BI .............................................................. √ √ √ √ √ 

* Brushless-Direct-Current. 

Stakeholder comments and questions 

regarding the preliminary analysis maxtech levels primarily address (a) The 

validity of max tech that is calculated 

based on technology options that are 

used in commercialized products but 

which is not achieved in actual 

products or prototypes, (b) the validity 

of consideration of variable speed 

compressors for compact products, (c) 

whether some of the design options, 

particularly heat exchanger size 

increases, would fit physically in the 

products, and (d) the validation of the 

energy modeling predictions. Comments 

falling under categories (b) through (d) 

address engineering analysis issues and 

are discussed in section IV.C, below. 

Some stakeholders questioned DOE’s 

use of energy analysis based on design 

options used in commercial products to 

determine max-tech levels rather than 

the maximum efficiency levels of 

available products. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59484 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

15The NIA spreadsheet model is described in 

section IV.G of this notice. 

AHAM questioned DOE’s use of the 

max-tech evaluation. AHAM supports 

DOE’s historical approach of using the 

max-tech reference to identify those 

units in the market that have achieved 

the maximum efficiency. (AHAM, No. 

34 at pp. 10, 15) 

GE also pointed out the discrepancy 

between the commercially available 

max-tech level and the theoretical maxtech level. (GE, Public Meeting 

Transcript, No. 28 at p. 77) GE 

mentioned that DOE has not provided a 

detailed comparison of the maximum 

efficiency levels currently available in 

the market with the model-based max 

tech. (Id.) In written comments, GE also 

stated that DOE should not use 

theoretical max-tech levels not yet 

proven as viable alternatives in the 

marketplace and noted that there may 

be some instances where the inclusion 

of certain designs options may not yield 

additive improvements in efficiency. 

(GE, No. 37 at p. 2) 

While DOE has often selected maxtech levels that are based on 

commercially available efficiency levels, 

max-tech selections are not required to 

be limited to commercially available 

products or prototypes. DOE follows a 

prescribed method for evaluating 

technologies, which is laid out in 10 

CFR part 430, subpart C, appendix A. 

When DOE evaluates design options in 

ascertaining max-tech levels, these 

options are ones that have been 

incorporated into commercial products 

or in working prototypes. See, e.g., 10 

CFR part 430, subpart C, appendix A, 

section 4(a)(4)(i) and 5(b)(1). The range 

of candidate standard levels will 

typically include the most energy 

efficient combination of design options. 

10 CFR part 430, subpart C, appendix A, 

section 5(c)(3)(i)(A). Because all of the 

design options represented by the maxtech levels examined by DOE are in use 

in the marketplace, DOE is considering 

max-tech levels that employ 

combinations of these design options, 

which, for some of the product classes, 

are not currently found in the 

marketplace. DOE considered in the 

analysis whether the chosen design 

options used for the max-tech analyses 

can be combined and concluded that the 

chosen combinations are valid. For 

example, when considering VIPs, DOE 

adjusted the analysis to remove some 

conventional insulation, and when 

considering variable-speed compressors, 

DOE removed high-efficiency singlespeed compressor design options. 

DOE requests comment on the maxtech levels identified and on the 

combinations of design options 

considered applicable to achieve maxtech designs. DOE requests that 

comments also address as appropriate 

the differences in applicable design 

options for different product classes. 

See Issue 2 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section VII.E. Based 

on comments received in response to 

these issues, DOE may make 

adjustments to its proposed levels. 

C. Energy Savings 

1. Determination of Savings 

DOE used its NIA spreadsheet model 

to estimate energy savings from 

amended standards for the refrigeration 

products that are the subject of this 

rulemaking.15 For each TSL, DOE 

forecasted energy savings beginning in 

2014, the year that manufacturers would 

be required to comply with amended 

standards, and ending in 2043. DOE 

quantified the energy savings 

attributable to each TSL as the 

difference in energy consumption 

between the standards case and the base 

case. The base case represents the 

forecast of energy consumption in the 

absence of amended mandatory 

efficiency standards, and considers 

market demand for more-efficient 

products. 

The NIA spreadsheet model calculates 

the electricity savings in ‘‘site energy’’ 

expressed in kilowatt-hours (kWh). Site 

energy is the energy directly consumed 

by refrigeration products at the locations 

where they are used. DOE reports 

national energy savings on an annual 

basis in terms of the aggregated source 

(primary) energy savings, which is the 

savings in the energy that is used to 

generate and transmit the site energy. 

(See TSD chapter 10.) To convert site 

energy to source energy, DOE derived 

annual conversion factors from the 

model used to prepare the Energy 

Information Administration’s (EIA) 

Annual Energy Outlook 2010 

(AEO2010). 

2. Significance of Savings 

As noted above, 42 U.S.C. 

6295(o)(3)(B) prevents DOE from 

adopting a standard for a covered 

product if such standard would not 

result in ‘‘significant’’ energy savings. 

While the term ‘‘significant’’ is not 

defined in the Act, the U.S. Court of 

Appeals, in Natural Resources Defense 

Council v. Herrington, 768 F.2d 1355, 

1373 (DC Cir. 1985), indicated that 

Congress intended ‘‘significant’’ energy 

savings in this context to be savings that 

were not ‘‘genuinely trivial.’’ The energy 

savings for all of the TSLs considered in 

this rulemaking are nontrivial, and, 

therefore, DOE considers them 

‘‘significant’’ within the meaning of 

section 325 of EPCA. 

D. Economic Justification 

1. Specific Criteria 

As noted in section II.B, 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 an 

amended standard on manufacturers, 

DOE first determines the quantitative 

impacts using an annual cash-flow 

approach. This step includes both a 

short-term assessment—based on the 

cost and capital requirements during the 

period between the issuance of a 

regulation and when entities must 

comply with the regulation—and a longterm assessment over a 30-year analysis 

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, paying particular 

attention to 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 different DOE 

regulations and other regulatory 

requirements on manufacturers. 

For individual consumers, measures 

of economic impact include the changes 

in LCC and the PBP associated with new 

or amended standards. The LCC, which 

is separately specified in EPCA as one 

of the seven factors to be considered in 

determining the economic justification 

for a new or amended standard, 42 

U.S.C. 6295(o)(2)(B)(i)(II), is discussed 

in the following section. For consumers 

in the aggregate, DOE also calculates the 

national net present value of the 

economic impacts on consumers over 

the forecast period used in a particular 

rulemaking. 

b. Life-Cycle Costs 

The LCC is the sum of the purchase 

price of a product (including its 

installation) and the operating expense 

(including energy and maintenance and 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59485 

16BT stands for DOE’s Building Technologies 

Program. 

17The EIA allows the use of the name ‘‘NEMS’’ 

to describe only an AEO version of the model 

without any modification to code or data. Because 

the present analysis entails some minor code 

Continued 

repair expenditures) discounted over 

the lifetime of the product. The LCC 

savings for the considered efficiency 

levels are calculated relative to a base 

case that reflects likely trends in the 

absence of amended standards. The LCC 

analysis requires a variety of inputs, 

such as product prices, product energy 

consumption, energy prices, 

maintenance and repair costs, product 

lifetime, and consumer discount rates. 

DOE assumed in its analysis that 

consumers will purchase the considered 

products in 2014. 

To account for uncertainty and 

variability in specific inputs, such as 

product lifetime and discount rate, DOE 

uses a distribution of values with 

probabilities attached to each value. A 

distinct advantage of this approach is 

that DOE can identify the percentage of 

consumers estimated to receive LCC 

savings or experience an LCC increase, 

in addition to the average LCC savings 

associated with a particular standard 

level. In addition to identifying ranges 

of impacts, DOE evaluates the LCC 

impacts of potential standards on 

identifiable subgroups of consumers 

that may be disproportionately affected 

by a national standard. 

c. Energy Savings 

While significant conservation of 

energy is a separate statutory 

requirement for imposing an energy 

conservation standard, EPCA requires 

DOE, in determining the economic 

justification of a standard, to consider 

the total projected energy savings that 

are expected to result directly from the 

standard. (42 U.S.C. 6295(o)(2)(B)(i)(III)) 

DOE uses the NIA spreadsheet results in 

its consideration of total projected 

energy savings. 

d. 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 sought to develop standards for 

refrigeration products that would not 

lessen the utility or performance of 

these products. None of the TSLs 

presented in today’s NOPR would 

substantially reduce the utility or 

performance of the products under 

consideration in the rulemaking. 

However, manufacturers may reduce the 

availability of features that increase 

energy use, such as multiple drawers, in 

response to amended standards. (42 

U.S.C. 6295(o)(2)(B)(i)(IV)) 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from standards. It also directs the 

Attorney General of the United States 

(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)(i)(V) and (B)(ii)) 

DOE has transmitted a copy of today’s 

proposed rule to the Attorney General 

and has requested that the Department 

of Justice (DOJ) provide its 

determination on this issue. DOE will 

address the Attorney General’s 

determination in the final rule. 

f. Need for National Energy 

Conservation 

Certain benefits of the proposed 

standards are likely to be reflected in 

improvements to the security and 

reliability of the Nation’s energy system. 

Reductions in the demand for electricity 

may also result in reduced costs for 

maintaining the reliability of the 

Nation’s electricity system. DOE 

conducts a utility impact analysis to 

estimate how standards may affect the 

Nation’s needed power generation 

capacity. 

Energy savings from the proposed 

standards are also likely to result in 

environmental benefits in the form of 

reduced emissions of air pollutants and 

greenhouse gases associated with energy 

production. DOE reports the 

environmental effects from the proposed 

standards for refrigeration products, and 

from each TSL it considered, in the 

environmental assessment contained in 

chapter 15 in the NOPR TSD. DOE also 

reports estimates of the economic value 

of emissions reductions resulting from 

the considered TSLs. 

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors that the Secretary deems to 

be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VII)) In developing the 

proposals of this notice, DOE has also 

considered the comments of the 

stakeholders, including those raised in 

the Joint Comments. 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii), EPCA creates a 

rebuttable presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard is less than three times the 

value of the first-year of energy savings 

resulting from the standard, as 

calculated under the applicable DOE 

test procedure. DOE’s LCC and PBP 

analyses generate values used to 

calculate the payback period for 

consumers of potential amended energy 

conservation standards. These analyses 

include, but are not limited to, the 3- 

year payback period contemplated 

under the rebuttable presumption test. 

However, DOE routinely conducts an 

economic analysis that considers the 

full range of impacts to the consumer, 

manufacturer, Nation, and environment, 

as required under 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE to 

definitively evaluate the economic 

justification for a potential standard 

level (thereby supporting or rebutting 

the results of any preliminary 

determination of economic 

justification). The rebuttable 

presumption payback calculation is 

discussed in section IV.F.12 of this 

NOPR and chapter 8 of the NOPR TSD. 

IV. Methodology and Discussion 

DOE used two spreadsheet tools to 

estimate the impact of today’s proposed 

standards. The first spreadsheet 

calculates LCCs and payback periods of 

potential new energy conservation 

standards. The second provides 

shipments forecasts, and then calculates 

national energy savings and net present 

value impacts of potential new energy 

conservation standards. DOE also 

assessed manufacturer impacts, largely 

through use of the Government 

Regulatory Impact Model (GRIM). The 

two spreadsheets will be made available 

online at the rulemaking Web site: 

http://www1.eere.energy.gov/buildings/

appliance_standards/residential/

refrigerators_freezers.html. 

Additionally, DOE estimated the 

impacts on utilities and the 

environment of energy efficiency 

standards for refrigeration products. 

DOE used a version of EIA’s National 

Energy Modeling System (NEMS) for the 

utility and environmental analyses. The 

NEMS model simulates the energy 

sector of the U.S. economy. EIA uses 

NEMS to prepare its Annual Energy 

Outlook, a widely known energy 

forecast for the United States. The 

version of NEMS used for appliance 

standards analysis is called NEMS– 

BT,16 and is based on the AEO version 

with minor modifications.17 The 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59486 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

modifications and runs the model under various 

policy scenarios that deviate from AEO 

assumptions, the name ‘‘NEMS–BT’’ refers to the 

model as used here. For more information on 

NEMS, refer to The National Energy Modeling 

System: An Overview, DOE/EIA–0581 (98) 

(Feb.1998), available at: http://tonto.eia.doe.gov/ 

FTPROOT/forecasting/058198.pdf. 

18Title 10—Energy, Chapter II—Department of 

Energy, Part 430—Energy Conservation Program for 

Consumer Products, Subpart A—General 

Provisions, Section 430.32—Energy and Water 

Conservation Standards and Effective Dates. 

NEMS–BT offers a sophisticated picture 

of the effect of standards because it 

accounts for the interactions between 

the various energy supply and demand 

sectors and the economy as a whole. 

A. Market and Technology Assessment 

When beginning an energy 

conservation standards rulemaking, 

DOE develops information that provides 

an overall picture of the market for the 

products concerned, including the 

purpose of the products, the industry 

structure, and market characteristics. 

This activity includes both quantitative 

and qualitative assessments, based 

primarily on publicly available 

information. The subjects addressed in 

the market and technology assessment 

for this rulemaking include product 

classes and manufacturers; quantities, 

and types of products sold and offered 

for sale; retail market trends; regulatory 

and non-regulatory programs; and 

technologies or design options that 

could improve the energy efficiency of 

the product(s) under examination. See 

chapter 3, Market and Technology 

Assessment, of the NOPR TSD for 

further discussion of the market and 

technology assessment. 

Discussion presented in this section 

of today’s NOPR primarily addresses the 

scope of coverage of refrigeration 

products and the product class 

structure. Both of these issues were 

discussed at length during the 

preliminary analysis public meeting. 

DOE is proposing several modifications 

of the product class structure, as 

discussed in section IV.A.2, Below. 

1. Exclusion of Wine Coolers From This 

Rulemaking 

During the preliminary analysis, DOE 

considered whether wine coolers are 

covered products under EPCA, and 

whether they would be considered in 

this rulemaking. DOE modified the 

definition of ‘‘Electric Refrigerator’’ on 

November 19, 2001, by limiting the 

definition to products designed for the 

refrigerated storage of food at 

temperatures above 32 °F and below 

39 °F. 66 FR 57845, 57848 (November 

19, 2001). The modification imposed an 

upper limit on the applicable storage 

temperature range, thus eliminating 

wine storage products, which operate 

with storage temperatures above 40 °F 

(and generally near 55 °F) from 

consideration as electric refrigerators. 

The industry generally urged DOE to 

consider wine coolers within the scope 

of its rulemaking. (AHAM, No. 34 at p. 

9; Sub Zero, Public Meeting Transcript, 

No. 28 at p. 108; Sub Zero, No. 40 at p. 

9; Whirlpool, No. 31 at p. 2) AHAM 

further argued that DOE does have the 

authority to regulate wine coolers, and 

stated that regulation of wine coolers 

under a DOE standard is important to 

prevent manufacturers from having to 

meet multiple State requirements. 

(AHAM, Public Meeting Transcript, No. 

28 at p. 36) Sub Zero suggested that 

DOE establish a standard that is 

consistent with current standards set by 

the California Energy Commission (CEC) 

and Natural Resources Canada (NRCan), 

and also argued that no State or foreign 

requirement should set a de facto 

national standard for any appliance. 

(Sub Zero, No. 40 at p. 9) Other 

commenters, IOU and Energy Solutions, 

representing Pacific Gas and Electric 

(PG&E), supported DOE’s proposal. 

(IOU, No. 36 at p. 12; PG&E, Public 

Meeting Transcript, No. 28 at p. 36) 

DOE notes that residential wine 

coolers are appliances designed for the 

storage of wine at a temperature of 

approximately 55 °F. Because they are 

neither designed for food storage, nor 

maintain storage temperatures below 39 

°F, they are not ‘‘electric refrigerators’’ as 

defined in 10 CFR 430.2. Since EPCA 

does not define the term ‘‘refrigerators’’ 

or ‘‘refrigeration products,’’ a definition 

could be developed to account for those 

products that operate with warmer 

compartment temperature ranges, 

including wine storage products. DOE 

may consider such a change in a future 

rulemaking. 

2. Product Classes 

In evaluating and establishing energy 

conservation standards, DOE generally 

divides covered products into classes by 

the type of energy used, or by capacity 

or other performance-related feature that 

justifies a different standard for those 

products. (See 42 U.S.C. 6295(q)). In 

deciding whether a feature justifies a 

different standard, DOE must consider 

factors such as the utility of the feature 

to users. (Id.) DOE normally establishes 

different energy conservation standards 

for different product classes based on 

these criteria. The CFR sets forth 18 

product classes for refrigerators, 

refrigerator-freezers, and freezers.18

These classes are based on the following 

characteristics: type of unit (refrigerator, 

refrigerator-freezer, or freezer), size of 

the cabinet (standard or compact), type 

of defrost system (manual, partial, or 

automatic), presence or absence of 

through-the-door (TTD) ice service, and 

placement of the fresh food and freezer 

compartments for refrigerator-freezers 

(top, side, bottom). 

DOE proposes to create 19 new 

product classes to account for the 

increasingly wider number of variants of 

products. Six new product classes were 

discussed and proposed in the 

preliminary analysis phase. Table IV.1 

presents the product classes under 

consideration in this rulemaking, 

including both current and proposed 

classes. Note that the designation of 

some of the current product classes has 

changed in order to address the 

proposed division of these product 

classes. The subsections below provide 

additional details and discussion of 

comments relating to the product 

classes under consideration. 

TABLE IV.1—PROPOSED PRODUCT CLASSES FOR REFRIGERATION PRODUCTS

Number Product class 

Classes listed in the CFR 

1 .................................... Refrigerators and refrigerator-freezers with manual defrost. 

2 .................................... Refrigerator-freezers—partial automatic defrost. 

3 .................................... Refrigerator-freezers—automatic defrost with top-mounted freezer without an automatic icemaker. 

4 .................................... Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker. 

5 .................................... Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker. 

6 .................................... Refrigerator-freezers—automatic defrost with top-mounted freezer with through-the-door ice service. 

7 .................................... Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59487 

TABLE IV.1—PROPOSED PRODUCT CLASSES FOR REFRIGERATION PRODUCTS—Continued 

Number Product class 

8 .................................... Upright freezers with manual defrost. 

9 .................................... Upright freezers with automatic defrost without an automatic icemaker. 

10 .................................. Chest freezers with manual defrost and all other freezers except compact freezers. 

11 .................................. Compact refrigerators and refrigerator-freezers with manual defrost. 

12 .................................. Compact refrigerator-freezers—partial automatic defrost. 

13 .................................. Compact refrigerator-freezers—automatic defrost with top-mounted freezer. 

14 .................................. Compact refrigerator-freezers—automatic defrost with side-mounted freezer. 

15 .................................. Compact refrigerator-freezers—automatic defrost with bottom-mounted freezer. 

16 .................................. Compact upright freezers with manual defrost. 

17 .................................. Compact upright freezers with automatic defrost. 

18 .................................. Compact chest freezers. 

Product classes proposed to be established in this rulemaking and introduced in the preliminary TSD 

1A .................................. All-refrigerators—manual defrost. 

3A .................................. All-refrigerators—automatic defrost. 

5A .................................. Refrigerator-freezers—automatic defrost with bottom-mounted freezer with through-the-door ice service. 

10A ................................ Chest freezers with automatic defrost. 

11A ................................ Compact all-refrigerators—manual defrost. 

13A ................................ Compact all-refrigerators—automatic defrost. 

Additional product classes proposed to be established in this rulemaking 

3–BI ............................... Built-in refrigerator-freezer—automatic defrost with top-mounted freezer without an automatic icemaker. 

3I ................................... Refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without through-thedoor ice service. 

3I–BI .............................. Built-in refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without throughthe-door ice service. 

3A–BI ............................ Built-in all-refrigerators—automatic defrost. 

4I ................................... Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without through-thedoor ice service. 

4–BI ............................... Built-in refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker. 

4I–BI .............................. Built-in refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without throughthe-door ice service. 

5I ................................... Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker without through-thedoor ice service. 

5–BI ............................... Built-in refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker. 

5I–BI .............................. Built-in refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker without 

through-the-door ice service. 

5A–BI ............................ Built-in refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door ice service. 

7–BI ............................... Built-in refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service. 

9–BI ............................... Built-in upright freezers with automatic defrost without an automatic icemaker. 

DOE proposed six new product 

classes in the preliminary TSD. Two of 

these, product class 5A, ‘‘automatic 

defrost refrigerator-freezers with bottommounted freezer with through-the-door 

ice service,’’ and product class 10A, 

‘‘chest freezers with automatic defrost,’’ 

were identified in the framework 

document as product classes 19 and 20. 

DOE modified the designation of these 

product classes in order to maintain 

consistency with the product class 

designations adopted by Canada. DOE 

received comments from AHAM and 

Whirlpool supporting this modification. 

(AHAM, Public Meeting Transcript, No. 

28 at pp. 40; AHAM, No. 34 at p. 3; 

Whirlpool, No. 31 at p. 1) 

Four additional product classes 

proposed in the preliminary TSD are allrefrigerators. As described below, the 

proposed new test procedure has led to 

DOE’s proposal to establish separate 

product classes for these products. 

As part of today’s NOPR, DOE 

proposes 13 additional new product 

classes. These classes are based on 

incorporation of icemaking energy use 

into the test procedure, and the need to 

address the different consumer utility 

and energy use characteristics of builtin products. 

EPCA requires that the establishment 

of separate product classes be based on 

either (A) consumption of a different 

kind of energy from that consumed by 

other covered products within such type 

(or class); or (B) a capacity or other 

performance-related feature which other 

products within such type (or class) do 

not have, where such feature justifies a 

higher or lower standard from that 

which applies to other products within 

such type (or class). (42 U.S.C. 6295(q)). 

The second of these criteria is 

applicable to all of the new product 

classes proposed in this rulemaking. 

a. French Door Refrigerators With 

Through-the-Door Ice Service 

DOE proposes to establish a new 

product class 5A (refrigerator-freezers— 

automatic defrost with bottom-mounted 

freezer with through-the-door ice 

service). Most, if not all, products of this 

class have a pair of French doors rather 

than a single door serving the upper 

fresh food compartment. Products of 

class 5A have TTD ice service features 

which are not present in current 

product class 5 (refrigerator-freezers— 

automatic defrost with bottom-mounted 

freezer without through-the-door ice 

service). These added features increase 

energy use because of the thermal load 

associated with the TTD dispenser 

penetration and the anti-sweat heater 

energy generally used in this area of the 

product. See, e.g., Decision and Order 

(Maytag Corporation), Office of Hearings 

and Appeals, Case No. TEE–0022 

(published August 11, 2005) (granting 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59488 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

exception relief to Maytag and creating 

a revised energy equation to permit the 

sale of refrigerator-freezers equipped 

with a bottom-mounted freezer and 

through-the-door ice service). Hence, 

because of the presence of this 

capability, DOE has determined that 

these unique features merit a separate 

product class and justify a separate 

maximum energy use standard. 

b. Chest Freezers With Automatic 

Defrost 

Products of class 10A (chest freezers 

with automatic defrost) include an 

automatic defrost function, a feature not 

present in chest freezers with manual 

defrost. Automatic, as opposed to 

manual, defrost is recognized as a 

feature with distinct consumer utility 

that increases energy use, justifying a 

separate energy use standard. See, e.g., 

Decision and Order (Electrolux Home 

Products, Inc.), Office of Hearings and 

Appeals, Case No. TEE–0012 (published 

September 13, 2004). 

c. All-Refrigerators 

DOE proposes establishing four new 

all-refrigerator product classes to 

separate these products from their 

current product classes. These current 

product classes—1 (refrigerators and 

refrigerator-freezers with manual 

defrost), 3 (refrigerator-freezers— 

automatic defrost with top-mounted 

freezer without through-the-door ice 

service and all-refrigerators—automatic 

defrost), 11 (compact refrigerators and 

refrigerator-freezers with manual 

defrost), and 13 (compact refrigeratorfreezers—automatic defrost with topmounted freezer and compact allrefrigerator—automatic defrost)— 

include refrigerators with freezer 

compartments (‘‘basic refrigerators’’), 

refrigerator-freezers, and allrefrigerators. The proposed test 

procedure changes described in section 

III.A will result in significantly higher 

measured energy use for basic 

refrigerators and refrigerator-freezers, 

and somewhat less energy use for allrefrigerators. At this time, DOE believes 

that these differences in energy use 

characteristics under the proposed new 

test procedures, combined with the 

distinct utility difference associated 

with presence of a freezer compartment 

(of 0.5 cubic foot size or greater) satisfy 

the criteria under EPCA to establish 

separate product classes. (See 42 U.S.C. 

6295(q)(1)(B)). DOE received comments 

supporting this proposal from AHAM 

and Whirlpool (AHAM, Public Meeting 

Transcript, No. 28 at p. 40; AHAM, No. 

34 at p. 4; Whirlpool, Public Meeting 

Transcript, No. 28 at pp. 41–42) 

Whirlpool clarified in written comments 

that separate product classes should not 

be added for multi-door refrigerators 

(Whirlpool, No. 31 at p. 1). 

DOE’s proposal to separate allrefrigerators from the product classes 

that currently include all-refrigerators, 

refrigerator-freezers, and basic 

refrigerators is based on the 

performance afforded by the freezer 

compartments of refrigerator-freezers 

and basic refrigerators. All-refrigerators 

were not explicitly mentioned when the 

1990 energy standard was established. 

54 FR 6062, 6077 (February 7, 1989). 

Product class 1 includes all-refrigerators 

with manual defrost, since ‘‘allrefrigerator’’ is a sub-category of 

‘‘refrigerator.’’ That final rule did not 

explicitly recognize the existence of allrefrigerators with automatic defrost. (Id.) 

These products were subsequently 

added to product class 3 starting with 

the 1993 standard. 54 FR 47916 

(November 17, 1989). The NOPR for that 

final rule, made this change in response 

to comments received from Whirlpool 

and AHAM. 53 FR 48798, 48809 

(December 2, 1988). When compact 

products were later separated from 

standard-size products with the 2001 

standard, the compact all-refrigerators 

became part of product classes 11 (for 

manual defrost products) and 13 (for 

automatic defrost products). 62 FR 

23102 (April 28, 1997). 

Under the proposed test procedures 

that underpin today’s proposed levels, 

the energy use characteristics of allrefrigerators will not be consistent with 

the refrigerator-freezers and basic 

refrigerators of the same current product 

classes. Specifically, the measured 

energy use of all-refrigerators is 

expected to decrease under the 

proposed new test procedures, while the 

measured energy use of refrigeratorfreezers and basic refrigerators is 

expected to increase significantly (See 

the preliminary TSD chapter 5, 

Engineering Analysis, section 5.4.2.1). 

Since the freezer compartments of 

refrigerator-freezers and basic 

refrigerators provide a different level of 

consumer utility than all-refrigerators, 

and because the product differences also 

contribute to different efficiency 

characteristics, DOE tentatively believes 

that separating these product classes is 

justified under EPCA. See 42 U.S.C. 

6295(q). 

With respect to the treatment of those 

products equipped with off-cycle 

defrost, DOE sought comment on 

whether stakeholders agree with the 

agency’s interpretation that this feature 

is a form of automatic defrost and 

whether the proposed product class 1A 

(all-refrigerators with manual defrost) is 

needed. In products with off-cycle 

defrost, the evaporator warms above 

freezing temperature when the 

compressor turns off, thus allowing the 

frost to melt. Such defrost systems are 

used only in all-refrigerators or fresh 

food compartments of refrigeratorfreezers, because the compartment 

temperature must be above 32 °F for the 

evaporator to warm above freezing. The 

proposed product class 1A includes 

standard-size all-refrigerators with 

manual defrost. If off-cycle defrost is 

treated as automatic defrost rather than 

manual defrost, product class 1A would 

consist primarily of refrigerators with 

roll-bond evaporators enclosing freezer 

compartments with a size of less than 

0.5 cubic foot. During the preliminary 

analysis discussion, DOE was unaware 

of whether standard-size products with 

such small freezer compartments exist 

and requested comment on these issues 

for this reason. 

AHAM commented during the public 

meeting that it considers off-cycle 

defrost to be automatic defrost, but that 

it was not aware of any all-refrigerator 

products with manual defrost (AHAM, 

Public Meeting Transcript, No. 28 at p. 

40) However, Sanyo E&E Corporation 

(Sanyo) indicated in written comments 

that it manufacturers such products 

(Sanyo, No. 32 at p. 3) Based on this 

information, DOE proposes that product 

class 1A be established in addition to 

the other all-refrigerator product classes. 

ASAP urged DOE to avoid 

introducing too many product classes, 

and that streamlining product classes 

has been shown to reduce overall energy 

consumption. (ASAP, Public Meeting 

Transcript, No. 28 at p. 41) DOE 

believes that each of its proposed 

product classes is needed to ensure that 

meaningful efficiency levels will be 

established for each of these products. 

Because the measured energy use of 

products with freezer compartments 

larger than 0.5 cubic foot is expected to 

increase roughly 15 percent under the 

proposed new test procedure and the 

energy use of all-refrigerators is 

expected to decrease roughly 3 percent 

(see chapter 5, Engineering Analysis, of 

the preliminary TSD, section 5.4.2.1), 

the energy use characteristics of the 

former group of products will determine 

the new standards for these product 

classes. The proposed test procedure 

would be more representative of field 

energy use differences of these product 

classes and would show higher energy 

use for basic refrigerators and 

refrigerator-freezers than allrefrigerators. Accordingly, by DOE’s 

estimates, the potential energy savings 

associated with all-refrigerators 

resulting from the new energy standard 

would be roughly 18 percent less if DOE 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59489 

retains the current product class 

structure than they would be if DOE 

establishes separate all-refrigerator 

product classes. 

d. Products With Automatic Icemakers 

The test procedure proposed to apply 

to refrigeration products covered under 

the proposed new energy conservation 

standards incorporates energy use 

associated with automatic icemaking. 75 

FR 29846 (May 27, 2010). DOE 

considers an automatic icemaker to be a 

feature that provides unique consumer 

utility. Products equipped with an 

automatic icemaker would have energy 

characteristics that are distinct from 

those without one because the energy 

use measured under the proposed test 

procedure depends on the presence of 

an automatic icemaker. Therefore, DOE 

tentatively concludes that establishing 

product class distinctions based on the 

presence of an automatic icemaker is 

justified. (See 42 U.S.C. 6295(q).) 

Some of the existing product classes 

denote products that inherently have 

automatic icemakers. These include 

product classes 6 (refrigerator-freezers— 

automatic defrost with top-mounted 

freezer with through-the-door ice 

service) and 7 (refrigerator-freezers— 

automatic defrost with side-mounted 

freezer with through-the-door ice 

service). However, some of the other 

product classes denote products that 

may or may not include automatic 

icemakers. For these products, DOE 

proposes to establish new product 

classes, as indicated in Table IV.1, 

above. These proposed new product 

classes include conventional (freestanding) and built-in classes of 

refrigerator-freezers with automatic 

defrost. Built-in product classes are 

discussed further in section IV.A.2.e 

below. 

DOE requests comments on its 

proposal to establish product classes for 

products with automatic icemakers, 

including DOE’s proposed approach to 

account for icemakers in the product 

class structure. See Issue 3 under ‘‘Issues 

on Which DOE Seeks Comment’’ in 

section VII.E of this NOPR. The classes 

and levels that DOE ultimately adopts 

may be adjusted from the proposal 

based on the comments an information 

DOE receives and gathers. 

e. Built-In Products 

DOE received several comments on 

the possible establishment of separate 

product classes for built-in refrigeration 

products. Sub Zero supported 

establishing separate product classes, 

citing (i) inherent design differences 

between built-in and free-standing 

products that make attaining higher 

efficiency levels more difficult for builtins (the efficiency level difference was 

quantified as about 15 percent), (ii) 

limited design options for improving 

built-in unit efficiency, (iii) the unique 

utility of these products, not offered by 

conventional units, which, in Sub 

Zero’s view, satisfies the criteria under 

EPCA to justify creating a new product 

class, and (iv) the precedent set in the 

previous refrigeration product 

rulemaking, where separate product 

classes were established for compact 

refrigerators. (Sub Zero, Public Meeting 

Transcript, No. 28 at pp. 101–04; Sub 

Zero, No. 40 at pp. 5–7) In Sub Zero’s 

view, the unique consumer utility 

offered by built-ins is their ability to fit 

seamlessly into the surrounding kitchen 

cabinetry. (Sub-Zero, No. 40 at p. 6) Sub 

Zero also commented that built-ins have 

numerous differences when compared 

to their free-standing counterparts. 

Typically, built-in units have more 

doors and drawers than other products, 

and may also have glass doors and 

several different temperature 

compartments. (Id.) Sub Zero supported 

these statements with additional 

comments and concluded that DOE’s 

decision on whether to create product 

classes for built-in units is pivotal to 

Sub Zero’s ability to compete in the 

market. (Sub Zero, Public Meeting 

Transcript, No. 28 at p. 104; Sub Zero, 

No. 40 at p. 7) 

AHAM, Whirlpool, and Sanyo all 

submitted comments supporting Sub 

Zero’s request for separate product 

classes for built-in units. (AHAM, 

Public Meeting Transcript, No. 28 at pp. 

104–05; AHAM, No. 34 at p. 8; 

Whirlpool, No. 31 at p. 4; and Sanyo, 

No. 32 at p. 2) AHAM supported Sub 

Zero’s statement that built-in products 

provide an important utility to a subset 

of refrigeration product consumers. 

(AHAM, No. 34 at p. 8) Whirlpool 

agreed that the characteristics of builtin units are sufficiently different from 

free-standing models, and noted that 

built-ins have significantly different cost 

requirements to reach higher 

efficiencies. (Whirlpool, No. 31 at p. 4) 

Sanyo stated that the design issues 

affecting standard-sized built-in models 

affect compact built-ins as well. (Sanyo, 

No. 32 at p. 2) 

To address the built-in issue, AHAM 

suggested a definition for built-in 

products: 

Refrigerators, freezers and refrigerators 

with freezer units that are 7.75 cubic feet or 

greater; are totally encased by cabinetry or 

panels by either accepting a custom front 

panel or being equipped with an integral 

factory-finished face; are intended to be 

securely fastened to adjacent cabinetry, walls 

or floor; has sides which are not fully 

finished and are not intended to be visible 

after installation. 

(AHAM, No. 34 at p. 8) 

Despite these comments in favor of 

establishing a separate built-in class, 

DOE also received a number of 

comments opposing this approach. In 

their joint comments, ACEEE and ASAP 

voiced concern that lower standards for 

built-in products would lead to a 

consumer shift toward the built-in 

segment, thereby reducing the projected 

energy savings from the standard. 

(ACEEE/ASAP, No. 43 at p. 5) IOU 

agreed with the ACEEE/ASAP concern 

regarding an increasing built-in market 

share and noted that the incremental 

cost and associated price increase that 

manufacturers would incur to design 

built-in products that would satisfy the 

same level of efficiency as their freestanding counterparts is likely to be 

small when compared to the final retail 

price. Additionally, IOU, along with 

Earthjustice and NRDC, indicated that 

built-in products provide essentially the 

same amenity and service as freestanding products, and do not warrant 

separate product classes on the basis of 

offering a unique customer utility. (IOU, 

No. 36 at p. 11; Earthjustice, No. 35 at 

pp. 1–5; NRDC, No. 39 at p. 2) 

Requirements for consideration of 

separate product classes are addressed 

in 42 U.S.C. 6295(q). That section 

provides that when creating a separate 

class of products, certain criteria must 

be met: 

(q) Special rule for certain types or classes 

of products. 

(1) A rule prescribing an energy 

conservation standard for a type (or class) of 

covered products shall specify a level of 

energy use or efficiency higher or lower than 

that which applies (or would apply) for such 

type (or class) for any group of covered 

products which have the same function or 

intended use, if the Secretary determines that 

covered 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 performancerelated feature which other products within 

such type (or class) do not have and such 

feature justifies a higher or lower standard 

from that which applies (or will apply) to 

other products within such type (or class). 

In making a determination under this 

paragraph concerning whether a 

performance-related feature justifies the 

establishment of a higher or lower standard, 

the Secretary shall consider such factors as 

the utility to the consumer of such a feature, 

and such other factors as the Secretary deems 

appropriate. 

(2) Any rule prescribing a higher or lower 

level of energy use or efficiency under 

paragraph (1) shall include an explanation of 

the basis on which such higher or lower level 

was established. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59490 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

19Cabinet load refers to the thermal load (heat) 

entering the cabinet. The refrigeration system must 

remove this load from the cabinet to maintain 

compartment temperatures, and it expends energy 

in doing so. 

(42 U.S.C. 6295(q)) 

Based on the available facts currently 

before DOE, built-in products appear to 

provide unique consumer utility by 

enabling consumers to build these 

products seamlessly into their kitchen 

cabinetry. These products are designed 

with standard dimensions to fit 

standard cabinet sizes, including a 

shallow depth of 24 inches. As Sub-Zero 

pointed out, many of the design 

differences that permit this capability 

also have an impact on energy use. 

DOE’s analysis confirms the increased 

difficulty these products have as 

compared with freestanding units in 

achieving further reductions in energy 

use. This information is presented in 

detail in the NOPR TSD, and some of 

the information is summarized below in 

this section. 

However, the use of glass doors or 

additional doors and drawers do not 

appear to be unique to built-in products. 

DOE’s Web site research of the product 

offerings of four built-in manufacturers 

(Sub Zero, GE Monogram, Kitchenaid, 

and Viking, Web sites accessed June 3, 

2010) showed that most built-in 

products do not have these features 

(‘‘Online Research on Built-in 

Refrigeration Features’’, No. 51). Table 

IV.2 shows the results of a review of 

built-in products on the Web sites of 

these four major manufacturers of builtin refrigeration products. A very limited 

number of the available products (13 out 

of 116) had these special features. 

Additionally, DOE’s review of product 

offerings of conventional free-standing 

products shows that many product 

offerings have French doors or multiple 

drawers. Because these features are 

neither exclusive to built-ins nor shared 

by a vast majority of built-ins, DOE does 

not consider these features to be 

particularly relevant to the 

consideration of the consumer utility 

provided by built-in products. 

TABLE IV.2—BUILT-IN PRODUCT SPECIAL FEATURES

Glass window One extra drawer French doors One extra door and three 

extra drawers Number of products 

X ........................................... ........................................... ........................................... 3 

X ........................................... ........................................... X 1 

X ........................................... ........................................... 6 

X ........................................... 2 

X 1 

No special features 103 

Total number of products 116 

Note: Based on products on the Web sites of four key manufacturers of built-in refrigeration products. 

As noted above, in addition to 

providing special consumer utility, 

EPCA requires that the consumer utility 

offered by the product form the basis for 

the different efficiency characteristics 

that would merit the creation of a 

separate product class. Sub Zero’s 

comments to DOE have enumerated the 

design differences associated with the 

utility provided by built-in products 

that affect their energy efficiency, 

including the following: 

1. Built-ins are typically constrained by 

kitchen cabinetry, which can increase the 

exterior surface area and the door perimeter 

length per interior volume, and also limit 

manufacturers’ ability to increase wall 

thickness for built-in products more so than 

for conventional products because depth 

increase is limited by the standard cabinetry 

depth. 

2. Built-ins have more complex hinge 

motion to avoid adjacent cabinets, which 

increases the size of the hinge hardware 

embedded in the cabinet walls, thus 

increasing thermal loss. 

3. Air flow is more restricted for built-ins, 

since the installation imposes more limits on 

access for air movement. Condenser air flow 

is often in and out of the front of the 

condenser area, thus reducing condenser air 

flow rate. 

(Sub-Zero, No. 40 at p. 6) 

In addition, some built-in products 

use hot gas rather than warm liquid 

anti-sweat heating loops. Nearly all 

conventional free-standing products 

with refrigerant anti-sweat loop use 

warm liquid. Warm liquid loops use 

refrigerant liquid that has left the 

condenser to warm the surfaces in 

question, while hot gas loops use hot 

gas that has not yet entered the 

condenser. Because the hot gas 

refrigerant is at a higher temperature 

than the warm liquid used in a warm 

liquid loop, it can transfer significantly 

more heat to the heated surface and, in 

turn, to the cabinet interior. Hot gas 

loops are sometimes used in built-ins 

because the paneling mounted on the 

doors blocks the door frame surfaces 

from being warmed by ambient air, 

which more readily leads to 

condensation during field use (i.e., in a 

customer’s home). This design can 

increase cabinet load, resulting in a 

higher measured energy use.19

DOE analyzed four built-in products 

for the NOPR to determine whether 

their efficiency characteristics differ 

significantly from those of conventional 

free-standing products. These four 

products represent four key product 

classes for built-in products, all of 

standard (not compact) size: Allrefrigerator—automatic defrost 

(proposed product class 3A), 

refrigerator-freezers—automatic defrost 

with bottom-mounted freezer without 

through-the-door ice service (product 

class 5), refrigerator-freezers—automatic 

defrost with side-mounted freezer with 

through-the-door ice service (product 

class 7), and upright freezers with 

automatic defrost (product class 9). DOE 

compared the results of these analyses 

with those conducted for conventional 

(free-standing) products for product 

classes 3 (refrigerator-freezer— 

automatic defrost with top-mounted 

freezer without through-the-door ice 

service), 5, 7, and 9. 

Product class 3 under the current 

standard includes both all-refrigerator— 

automatic defrost and refrigeratorfreezer—automatic defrost with topmounted freezer without through-thedoor ice service. Because there are very 

few shipments of built-in top-mount 

refrigerators, and all-refrigerators are a 

minority product for the free-standing 

market, DOE compared a conventional 

top-mount refrigerator with the built-in 

all-refrigerator. 

DOE analyzed two conventional 

products of each examined product 

class. The max-tech levels for the 

analyzed built-ins and conventional 

products are compared in Table IV.3. 

The max-tech levels for the built-in 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59491 

products are significantly lower than 

those for the conventional products, by 

roughly 10 percent for the refrigeratorfreezers (product classes 5 and 7) and 15 

percent for the upright freezers (product 

class 9). The difference is greater for 

upright freezers because DOE 

considered wall thickness increases 

appropriate for conventional upright 

freezers but not for built-in upright 

freezers, due to the limited-space 

kitchen installation typical for built-in 

upright freezers. 

TABLE IV.3—MAX-TECH DIFFERENCES BETWEEN BUILT-IN AND CONVENTIONAL PRODUCTS

Product class Built-in: 3A 

conventional: 3 

5 

(see Note 1) 7 9 

Design Options .................. • Larger Heat Exchangers 

• BLDC Fan Motors .........

• VIPs (see Note 2) .........

• Variable-Speed Compressors.

• Adaptive Defrost ............

• Larger Heat Exchangers 

• BLDC Fan Motors .........

• VIPs (see Note 2) .........

• Variable-Speed Compressors.

• Adaptive Defrost ............

• Variable Anti-Sweat 

Heater Control (see 

Note 4).

• Larger Heat Exchangers..

• BLDC Fan Motors. ........

• VIPs (see Note 2). ........

• Variable-Speed Compressors..

• Adaptive Defrost. ...........

• Variable Anti-Sweat 

Heater Control for Ice 

Dispenser.

• Larger Heat Exchangers 

• BLDC Fan Motors 

• VIPs (see Note 2) 

• Variable-Speed Compressors 

• Adaptive Defrost 

• Forced Convection Condenser (see Note 5). 

• Wall Thickness Increase 

(see Note 6). 

Percentage energy use lower than a baseline-efficiency product 

Built-In Max Tech .............. 29% 27% 22% 27% 

Conventional Max Tech .... 36% 36% 33% 44% 

Notes: 

1. Percentage reduction is from reference standard curve with increased slope for product class 5. 

2. VIPs applied fully to doors and to half of cabinet. 

3. Many of the design options such as BLDC fan motors and adaptive defrost are already present in baseline-efficiency built-in products. 

4. Variable Anti-Sweat Heater control was not considered for the built-in products of product class 5, since French doors are not common for 

product class 5 built-ins. 

5. Forced convection condenser already present in the baseline built-in upright freezer. 

6. Wall thickness increase considered only for the conventional upright freezer, since the built-in upright freezer is designed primarily for installation in a kitchen, where limitations to product growth apply. 

Information provided by built-in unit 

manufacturers during the NOPR 

Manufacturer Impact Analysis (MIA) 

discussions is generally consistent with 

the design differences between built-in 

and conventional products shown in the 

detailed analysis described above. For 

example, achieving the ENERGY STAR 

efficiency level for built-in standard-size 

refrigerator-freezers generally requires 

use of variable-speed compressors, VIPs, 

or both. In contrast, conventional 

standard-size refrigerator-freezers 

generally achieve this efficiency level 

without use of either of these design 

options. This situation leaves fewer 

options available for further efficiency 

improvements for built-in products. 

Accordingly, based on this information, 

there do not appear to be additional 

design options currently available to 

enable manufacturers to produce builtins to an efficiency level matching their 

free-standing counterparts. 

Moreover, the unique consumer 

utility offered by built-in products is 

demonstrated in part by the higher costs 

some customers are willing to pay to 

obtain this utility. While cost difference 

alone is generally not considered to be 

basis for consumer utility, the 

significantly higher price paid by 

consumers for built-in products can be 

considered an indicator that consumers 

value the utility associated with the 

built-in design. The cost difference 

between built-in and conventional 

products is presented in Table IV.4 for 

product classes 4 (refrigerator-freezers— 

automatic defrost with side-mounted 

freezer without through-the-door ice 

service), 5, 7, and 9. This comparison is 

based on proprietary retail price data 

collected by The NPD Group, which 

includes retail purchase price 

information for millions of purchases of 

refrigeration products. The comparison 

between the built-in and conventional 

product types is based on separate 

consideration of brands that include 

only built-in products and brands that 

include only conventional products. 

Brands that include both built-in and 

conventional products (e.g., 

KitchenAid) are not represented in the 

table because the NPD Group dataset 

does not clearly distinguish built-in 

status in the data of such brands. The 

data show that built-in product average 

prices are approximately $3,500 to 

$6,200 higher than those of 

conventional products. 

TABLE IV.4—BUILT-IN PRODUCT COST COMPARED WITH CONVENTIONAL PRODUCTS

Product 

class 4 

Product 

class 5 

Product 

class 7 

Product 

class 9 

Built-In Median ................................................................................................. $6,214 $5,190 $6,637 $3,181 

Average ............................................................................................................ 7,017 4,983 7,213 4,062 

Std. Deviation .................................................................................................. 1,990 817 1,018 1,023 

Conventional Median ....................................................................................... 1,073 797 1,019 509 

Average ............................................................................................................ 2,220 852 1,048 520 

Std. Deviation .................................................................................................. 1,333 239 485 209 

Source: NPD, 2007–2008. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59492 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

DOE notes that retail price differences 

alone do not form the basis for 

consumer utility. In the commercial 

clothes washer (CCW) rulemaking, 

Alliance Laundry Systems (Alliance) 

asserted that the ability to load a clothes 

washer from the top is a ‘‘feature’’ within 

the meaning of 42 U.S.C. 6295 because 

it provides consumers the opportunity 

to purchase lower cost CCWs. 75 FR 

1122, 1130 (January 8, 2010). DOE 

disagreed and noted that while price is 

an important consideration to 

consumers, DOE accounts for these 

consumer impacts in its LCC and PBP 

analyses. 75 FR 1134. 

In the case of built-in refrigeration 

products, the facts suggest that the 

higher price paid for a built-in unit 

reflects the view of consumers that these 

products have a special utility when 

compared to free-standing equivalent 

products. As a result, unlike in the case 

of commercial clothes washers, where 

pricing itself was alleged to be a critical 

feature within the meaning of EPCA, 

pricing with respect to built-in products 

reflects the additional utility provided 

by these units. This price differential 

between built-in and stand-alone units 

indicates that consumers believe that 

built-in products offer a unique utility 

or other performance characteristic not 

offered by stand-alone units—in this 

case, that utility or performance would 

be the seamless integration of 

refrigeration products into kitchen 

cabinetry and the surrounding 

environment. 

In summary, DOE tentatively 

concludes that built-in products provide 

consumer utility associated with the 

ability to build the products into the 

kitchen cabinetry, an attribute that is 

not provided by other products, and that 

the design details associated with this 

product characteristic result in the 

reduced efficiency of these products. 

DOE has tentatively concluded that 

these criteria satisfy 42 U.S.C. 6295(q) 

and is tentatively proposing the creation 

of a separate built-in product class. 

DOE also proposes to adopt a 

modified version of the draft definition 

developed by AHAM for built-in 

products cited above, which would read 

as follows (changes from the AHAM 

draft are shown with italics for 

additions and bracketed text for 

deletions): 

Built-In Refrigerator/Refrigerator-Freezer/ 

Freezer means any refrigerator, refrigeratorfreezer or freezer with 7.75 cubic feet or 

greater total volume and 24 inches or less 

depth not including handles and not 

including custom front panels; is designed to 

be [totally] encased on the sides and rear by 

cabinetry [or panels by either accepting a 

custom front panel or being equipped with 

an integral factor-finish face]; is designed 

[intended] to be securely fastened to adjacent 

cabinetry, walls or floor; and has sides which 

are not fully finished and are not designed 

to be visible after installation. 

DOE considered AHAM’s draft 

definition’s exclusion of products with 

volumes less than 7.75 cubic feet. This 

limitation would exclude compact 

products, which are currently defined as 

having total volume less than 7.75 cubic 

feet and height less than 36 inches. (10 

CFR 430.2). The draft definition would 

also exclude non-compact products that 

have volume less than 7.75 cubic feet 

(such products would exceed 36 inches 

in height). DOE proposes retaining the 

AHAM draft definition’s omission of 

additional clarification regarding the 36- 

inch height limitation because DOE 

proposes to remove this limitation from 

the definition of compact products (see 

section IV.A.2.g, below). Sanyo 

suggested that DOE consider compact 

products as part of any built-in product 

classes that the agency establishes. 

(Sanyo, No. 32 at p. 2) However, DOE 

notes that special consideration for 

compact products was provided when 

the current energy standards were 

established in 1997. 62 FR 23102 (April 

28, 1997). In particular, DOE created 

separate product classes with less 

stringent standards for all compact 

refrigeration products to address their 

particular characteristics. (Id.) As 

discussed in section IV.A.2.g, the 

arguments for creating separate product 

classes for compact products at that 

time emphasized the issues associated 

with undercounter products (essentially 

built-in compact products) rather than 

compact products in general. For this 

reason, in DOE’s view, the relief sought 

by Sanyo for compact built-in products 

has already been provided and, under 

the available facts, no additional 

consideration appears to be merited at 

this time. 

Further, DOE understands that 

undercounter products are generally 

sold with finished sides to permit both 

free-standing and undercounter use. As 

a result, these products would not meet 

the proposed built-in definition. DOE 

does not propose relaxing the 

requirement for unfinished sides to 

allow for the inclusion of undercounter 

products. DOE is declining to take this 

step to prevent potential gaming by 

manufacturers seeking to claim their 

conventional products as built-in units. 

DOE also proposes to include a depth 

limitation in the definition for built-in 

products. The consumer utility and 

energy impacts associated with the 

depth limitation are highlighted in 

stakeholder comments (see, e.g., Sub 

Zero, No. 40 at p. 6). Investigation of 

dimensional data for built-in products 

shows that nearly all of these products 

have a 24-inch depth. DOE requests 

comments on whether any adjustment 

of the 24-inch dimension specified in 

the proposed definition should be made. 

See Issue 4 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section VII.E of this 

NOPR. 

DOE does not propose to adopt the 

portion of AHAM’s proposed built-in 

definition that addresses the front 

portion of the product—i.e., ‘‘* * * by 

either accepting a custom front panel or 

being equipped with an integral 

factory-finished face * * *’’) DOE 

declines to adopt this aspect of AHAM’s 

definition because it does not 

distinguish built-in products from 

conventional free-standing products, 

which generally have an integral 

factory-finished face. 

DOE is aware of the potential that 

manufacturers may attempt to apply the 

proposed definition in order to avail 

themselves of the more lenient 

efficiency levels that DOE proposes to 

permit built-in units to meet. DOE 

tentatively believes that the modified 

definition presented above provides 

sufficient protection against such 

improper use of the definition. DOE 

requests comment on whether the 

proposed definition is adequate to 

prevent potential gaming or whether 

changes are needed to further strengthen 

it while avoiding disqualifying any 

legitimate built-in products. (See Issue 4 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

DOE’s investigation of the built-in 

market through examination of built-in 

product offerings and discussion with 

manufacturers shows that the key 

standard-size built-in product classes 

include current product classes 4, 5, 7, 

9, and the all-refrigerators associated 

with current product class 3. DOE 

proposes establishing seven new builtin product classes, as listed in Table 

IV.1, above. Two of these product 

classes address the need to separate 

products with automatic icemakers from 

those without automatic icemakers, as 

described in section IV.A.2.d above. 

DOE requests comment on its 

proposal to establish separate product 

classes for built-in products. (See Issue 

4 under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) As with all other aspects of this 

proposal, DOE may adjust its treatment 

of built-in products depending on the 

comments and information it receives in 

response to the NOPR. 

DOE also requests comment on 

whether any additional product classes 

are required to fully address icemaking 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59493 

20 DOE Docket No. EERE–2008–BT–STD–0012, 

Comment 49. 

21Throughout this notice the term ‘‘reverseengineered product’’ refers to the products 

purchased and examined (reverse engineered) as 

part of the engineering analysis. Many of these 

products were entirely dismantled (torn down) to 

completely examine manufacturing details. 

and built-in products. (See Issue 5 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

f. Combining Product Classes 2 With 1, 

and 12 With 11 

In the preliminary analysis phase, 

DOE proposed combining product class 

2 (refrigerator-freezers—partial 

automatic defrost) with product class 1 

(refrigerators and refrigerator-freezers 

with manual defrost); and product class 

12 (compact refrigerator-freezers— 

partial automatic defrost), with product 

class 11 (refrigerators and refrigeratorfreezers with manual defrost). DOE 

noted that units in product classes 2 and 

12 contain freezer compartments that 

undergo manual defrost and fresh food 

compartments that undergo off-cycle 

defrost, a process which does not 

require additional energy to defrost. 

Hence, the defrost energy consumption 

for these units is expected to be the 

same as it would be for an identical unit 

in either product class 1 or 11. 

Additionally, DOE noted that 

shipments for product classes 1 and 2 

are very low (representing roughly 0.1 

percent of shipments), and the energy 

consumption standards for those 

product classes are identical. The 

shipments for product class 12 are also 

very low (representing less than 0.1 

percent of shipments). 

Finally, DOE noted that although the 

energy consumption standard for 

product class 12 is currently at a higher 

energy level than for product class 11, 

there is no obvious technical basis for 

this distinction. AHAM supported 

DOE’s proposal to combine these pairs 

of product classes into two classes 

(AHAM, Public Meeting Transcript, No. 

28 at p. 40 and No. 34 at p. 4) The Joint 

Comments that DOE received, to which 

AHAM was a signatory, suggested that 

DOE continue to maintain these 

separate classes. 

DOE requests comment on whether 

these proposed combinations 

(combining product class 2 with 

product class 1 and combining product 

class 12 with product class 11) should 

be adopted. DOE notes that the Joint 

Comments suggested maintaining the 

current separation.20 (See Issue 6 under 

‘‘Issues on Which DOE Seeks Comment’’ 

in section VII.E of this NOPR.) This 

approach may be adjusted based on 

comments and information submitted in 

response to today’s NOPR. 

g. Modification of the Definition for 

Compact Products 

Sanyo suggested in its comments that 

DOE remove the current 36 inch height 

limit for compact products. Sanyo stated 

that this requirement qualifies some 

Sanyo products as standard-size units 

even though they meet the volume 

provision under the compact unit 

definition. The energy consumption 

standards for standard-size products are 

more stringent than the standards for 

compact products. Sanyo believes that 

energy consumption is strongly 

correlated with volume, and only 

minimally correlated with height. 

(Sanyo, No. 32 at p. 2) 

DOE recognizes that a relationship 

between energy consumption and 

internal volume exists. DOE notes that 

the compact product classes were 

created as part of the rulemaking 

establishing the 2001 energy standards. 

As DOE explained in a July 1995 NOPR, 

these classes were created because fewer 

design options exist for reducing the 

energy consumption in these products. 

60 FR 37388, 37396 (July 20, 1995). The 

July 1995 NOPR discussed this 36-inch 

limitation within the context of 

insulation thickness and noted that 

issues related to the increase in 

insulation thickness in top and bottom 

panels ‘‘is recognized in the new 

definition of the compact class as 

limited to models below 36 inches in 

height.’’ 60 FR 37397. U–Line comments 

summarized in the 1995 NOPR 

indicated that ‘‘consumer uses of 

undercounter refrigerators and freezers 

will not permit increased exterior 

cabinet dimensions; exterior cabinet 

dimensions cannot exceed 24 inches in 

depth and width and 34 inches in 

height.’’ (Id.) 

However, the majority of compact 

products are not undercounter products 

with these specified dimensions. For 

example, the external dimensions of the 

compact products examined for reverse 

engineering during the engineering 

analysis, are summarized in Table 

IV.5.21 Some of these products are 

smaller than the undercounter 

maximum dimensions and some are 

larger. If smaller, increasing the height 

of these products to a 34-inch height 

and/or 24-inch depth or width would be 

possible. If larger, the product would 

not be used in the restricted 

undercounter application. The chest 

freezers would not be used in 

undercounter applications in any case 

because such installation would 

interfere with door operation, since the 

doors of chest freezer open upwards. As 

a result, DOE believes that the absolute 

restriction on external size increase 

suggested by the undercounter 

dimension limits (i.e., 24 inches and 34 

inches) does not apply to these 

products. Hence, DOE tentatively 

concludes that, while the 36-inch height 

limitation may be relevant for 

undercounter products, it is not relevant 

for compact products in general. 

TABLE IV.5—EXTERNAL DIMENSIONS OF COMPACT REVERSE-ENGINEERED PRODUCTS

Product Height 

(inches) 

Width 

(inches) 

Depth 

(inches) 1

1.7 cubic foot refrigerator .................................................................................... 18.5 17.5 17.6 

4 cubic foot refrigerator ....................................................................................... 32.9 18.6 17.5 

4 cubic foot ENERGY STAR refrigerator ............................................................ 33.0 19.5 19.8 

3.4 cubic foot chest freezer ................................................................................. 32.0 21.0 23.0 

7 cubic foot chest freezer .................................................................................... 31.5 36.5 20.4 

Second 7 cubic foot chest freezer ....................................................................... 31.0 37.0 23.0 

1 Depth does not include door handle and condenser (if applicable). 

Basic thermal considerations also 

suggest that the 36-inch limitation is not 

a particularly reliable indicator of the 

potential for energy use reduction. For 

example, consider two 7-cubic foot 

volume products, one 40 inches high 

and the other 30 inches high, both with 

a depth of 20 inches. Assuming a 

1.5-inch insulation thickness and 

ignoring the volume associated with the 

evaporator, the 40-inch product would 

have an insulated surface area of 28 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59494 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

22Available at: http://www1.eere.energy.gov/

buildings/appliance_standards/residential/pdfs/ 

refrigerator_freezer_framework.pdf. 

square feet (based on external 

dimensions) and door gasket perimeter 

length of 121 inches, while the 30-inch 

product would have both less surface 

area (27 square feet) and less door gasket 

perimeter length (114 inches). DOE 

expects that the taller product would 

have a greater thermal load as a result 

(because of the greater surface area and 

door perimeter length), yet it would not 

be considered a compact product under 

the current definition and would, thus, 

have to satisfy a more stringent energy 

standard. This example shows that basic 

theoretical considerations do not 

support the 36-inch limitation. 

Because the justification of limited 

undercounter space that led to the 36- 

inch limitation does not apply to most 

compact products, and because basic 

thermal considerations suggest that the 

limitation does not have a firm 

theoretical basis, DOE proposes to 

eliminate the limitation from the 

definition of compact products. DOE 

requests comment on its proposal to 

eliminate the 36-inch height limitation 

for compact products. (See Issue 7 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

B. Screening Analysis 

DOE uses the following four screening 

criteria to determine which design 

options are suitable for further 

consideration in a standards 

rulemaking: 

1. Technological feasibility. DOE will 

consider technologies incorporated in 

commercially available products or in 

working prototypes to be 

technologically feasible. 

2. Practicability to manufacture, 

install, and service. If mass production 

and reliable installation and servicing of 

a technology in commercially available 

products could be achieved on the scale 

necessary to serve the relevant market at 

the time the standard comes into effect, 

DOE would consider that technology 

practicable to manufacture, install, and 

service. 

3. Adverse impacts on product utility 

or product availability. If DOE 

determines that a technology would 

have significant 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 

consider this technology further. 

4. Adverse impacts on health or 

safety. If DOE determines that a 

technology will have significant adverse 

impacts on health or safety, it will not 

consider this technology further. 

10 CFR part 430, subpart C, appendix A, 

(4)(a)(4) and (5)(b) 

In the framework document 22 and 

accompanying public workshop held on 

September 29, 2008, DOE identified the 

technologies for improving refrigeration 

product efficiency that were under 

consideration for the rulemaking 

analyses. These technologies are listed 

in Table IV.6. Please see chapter 3 of the 

NOPR TSD for detailed descriptions of 

these technology options. 

TABLE IV.6—TECHNOLOGIES DOE CONSIDERED FOR RESIDENTIAL REFRIGERATION PRODUCTS

Insulation: Expansion Valve: 

Improved resistivity of insulation Improved expansion valves 

Increased insulation thickness Cycling Losses: 

VIPs Fluid control or solenoid valve 

Gas-filled panels Defrost System: 

Gasket and Door Design: Reduced energy for automatic defrost 

Improved gaskets Adaptive defrost 

Double door gaskets Condenser hot gas 

Improved door face frame Control System: 

Reduced heat load for TTD feature Temperature control 

Anti-Sweat Heater: Air-distribution control 

Condenser hot gas Other Technologies: 

Electric heater sizing Alternative refrigerants 

Electric heater controls Component location 

Compressor: Alternative Refrigeration Cycles: 

Improved compressor efficiency Lorenz-Meutzner cycle 

Variable-speed compressors Dual-loop system 

Linear compressors Two-stage system 

Evaporator: Control valve system 

Increased surface area Ejector refrigerator 

Improved heat exchange Tandem system 

Condenser: Alternative Refrigeration Systems: 

Increased surface area Stirling cycle 

Improved heat exchange Thermoelectric 

Force convection condenser Thermoacoustic 

Fans and Fan Motor: 

Evaporator fan and fan motor improvements 

Condenser fan and fan motor improvements 

DOE requested, but did not receive 

any comments, at either the framework 

workshop or during the framework 

comment period identifying additional 

technologies not mentioned that should 

be considered. Likewise, DOE received 

no comments recommending additional 

technologies during the preliminary 

analysis public meeting or comment 

period. 

As described in chapter 4, Screening 

Analysis of the NOPR TSD, DOE 

screened out several of the technologies 

listed in Table IV.6 from consideration 

in this rulemaking based on one or more 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59495 

of the screening criteria described 

above. A summary of the screening 

analysis identifying technologies that 

were screened out and the EPCA criteria 

used for the screening is presented in 

Table IV.7. The checkmarks in the table 

indicate which screening criteria were 

used to screen out the listed 

technologies. For greater detail 

regarding the screening analysis, see 

chapter 4 of the NOPR TSD. 

TABLE IV.7—SUMMARY OF SCREENING ANALYSIS

Excluded technology option 

EPCA criteria for screening 

Technological 

feasibility 

Practicability 

to manufacture, install, 

and service 

Adverse impacts on 

product utility 

Adverse impacts on 

health and 

safety 

Improved Insulation Resistivity ..................................................................................... √ 

Gas-Filled Panels ......................................................................................................... ................ √ √ 

Improved Gaskets, Double Gaskets, Improved Door Frame ....................................... ................ √ √ 

Linear Compressors ..................................................................................................... √ 

Improved Evaporator Heat Exchange .......................................................................... √ ............... √ 

Improved Condenser Heat Exchange .......................................................................... √ ............... √ 

Component Location ..................................................................................................... ................ √ √ √ 

Lorenz-Meutzner Cycle ................................................................................................. √ √ 

Two-Stage System ....................................................................................................... √ √ 

Control Valve System and Tandem System ................................................................ √ √ 

Ejector Refrigerator ....................................................................................................... √ √ 

Stirling Cycle ................................................................................................................. √ √ 

Thermoelectric .............................................................................................................. √ √ 

Thermoacoustic ............................................................................................................ √ √ 

In addition to this screening, DOE did 

not analyze a number of technologies in 

the engineering analysis because they 

were judged unsuitable for improving 

the measured energy use of refrigeration 

products for one or more of the 

following reasons: 

• Technology already used in 

baseline products and incapable of 

generating additional energy efficiency 

or reducing energy consumption. 

• Technology does not reduce energy 

use. 

• Insufficient data available 

demonstrating benefit of the technology. 

The technologies not analyzed for 

these reasons include Improved 

Expansion Valve, Off-Cycle Valve, 

Reduced Energy for Automatic Defrost, 

Condenser Hot Gas Defrost, Reduced 

Heat Load for TTD Feature, Warm 

Liquid or Hot Gas Refrigerant AntiSweat Heating, Electric Anti-Sweat 

Heater Sizing, Electronic Temperature 

Control, Air Distribution Control, Fan 

Blade Improvements, and Dual Loop 

System. Chapter 4 of the NOPR TSD 

discusses the reasons for not analyzing 

these technologies in greater detail. 

1. Discussion of Comments 

AHAM commented that efficiency 

levels based on noteworthy technologies 

can have implications on competition 

within the market, since technologies 

may be proprietary or in limited supply 

(AHAM, No. 34 at p. 15) AHAM 

specifically pointed out VIPs as an 

example of such a technology. (Id.) 

Neither EPCA nor the CFR (i.e., 10 CFR 

part 430, subpart C, appendix A) 

identify the proprietary status of a 

technology as a reason for screening out 

technologies. If a technology is in 

sufficiently limited supply to make its 

use in manufacturing of products 

impractical, DOE has the option of 

screening out such a technology based 

on one of the EPCA screening criteria. 

While proprietary status is not a filter 

for screening out potential technologies, 

DOE is required to consider ‘‘the impact 

of any lessening of competition * * * 

that is likely to result from the 

imposition of the standard’’ (42 U.S.C. 

6295(o)(2)(B)(i)(V)). Section IV.B.1.c 

below, discusses VIPs. DOE considered 

whether any others selected design 

options may be screened out based on 

supply constraints or whether their use 

might impact competition. DOE 

tentatively concluded that these 

screening criteria did not preclude 

further consideration of the selected 

design options in the analysis. 

During the NOPR phase manufacturer 

interviews, some manufacturers 

expressed concerns that the supply of 

the highest-efficiency compressors and/ 

or variable-speed compressors might be 

limited. Initial investigation of the 

compressor vendors supplying highefficiency compressors and variable 

speed compressors during the 

preliminary analysis phase indicated 

that one compressor supplier, Embraco, 

served as the primary source for these 

components. Embraco is a business unit 

of Whirlpool S/A, a majority-owned 

subsidiary of the Whirlpool 

Corporation. Discussions with 

compressor manufacturers during the 

NOPR phase of the rulemaking 

indicated that most manufacturers are 

planning to commercialize highefficiency compressors that would 

match the peak performance under 

consideration in the NOPR analysis and 

that these compressors would be 

available well before the arrival of the 

2014 compliance date that would apply 

to the final rule under development. In 

addition, DOE is aware that these other 

manufacturers have been developing 

and perfecting variable-speed 

compressors for over ten years. 

Information gathered during the NOPR 

phase indicates that these 

manufacturers are prepared to 

commercialize this technology and 

ramp up production as the market for 

such compressors emerges and grows. 

Based on all of this information, DOE 

tentatively concludes that neither highefficiency compressors nor variablespeed compressors would be in limited 

supply if the efficiency levels selected 

by DOE were to require the use of these 

types of compressors. DOE requests 

comment on these findings, including 

information that would confirm or cast 

doubt on DOE’s conclusions regarding 

compressor supply. (See Issue 8 under 

‘‘Issues on Which DOE Seeks Comment’’ 

in section VII.E of this NOPR.) 

DOE’s review of the screened-in 

technologies did not reveal that they 

would involve the use of proprietary 

technologies or that they would be in 

short supply, or that their use would 

lead to a lessening of competition. 

Additionally, DOE received 

comments on the screening analysis 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59496 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

23 Isobutane, also known as R–600a, is used as a 

refrigerant in a large percentage of the world’s 

refrigeration products, particularly in Europe, 

where it was first adopted in the 1990s. 

24This UL safety standard sets numerous 

requirements for refrigeration products and details 

tests for evaluating compliance with many of the 

requirements. 

25The isobutane limitation of UL 250 specifies 50 

grams maximum leakage during a system breach. 

Because some of the refrigerant remains in the 

system in such a scenario, the total allowable 

charge is somewhat higher than 50 grams under this 

standard, generally in a range approaching 60 

grams. 

26Personal communication with Randall J. 

Haseman of Underwriters Laboratories, February 1, 

2010 and June 28, 2010. 

from several interested parties primarily 

addressing the following design options: 

alternative refrigerants, alternative 

foam-blowing agents, and VIPs. The 

following sections describe the 

comments associated with these design 

options in detail. 

a. Alternative Refrigerants 

Most refrigeration products sold in 

the U.S. currently use HFC–134a 

refrigerant, a hydrofluorocarbon (HFC) 

with a high global warming potential 

(GWP). 

ACEEE, ASAP, Earthjustice, and the 

Natural Resources Defense Council 

(NRDC) all stated that DOE must 

consider hydrocarbon refrigerants as a 

design option because hydrocarbons are 

in widespread use overseas (ACEEE/ 

ASAP, No. 43 at pp. 4–5; Earthjustice, 

No. 35 at p. 5; NRDC, No. 39 at p. 7) 

Earthjustice and NRDC both also 

claimed that DOE has not provided 

evidence to support the exclusion of 

isobutane 23 as an alternative refrigerant. 

(Earthjustice, No. 35 at p. 5; NRDC, No. 

39 at p. 7) AHAM commented that the 

relevant safety standard—Underwriters 

Laboratories (UL) Standard 250, 

‘‘Household Refrigerators and Freezers’’ 

(UL 250) 24—currently limits the 

quantity of hydrocarbon refrigerants 

permitted to be used in refrigeration 

products to 50 grams.25 AHAM 

suggested that this quantity of 

refrigerant is insufficient for most 

typical refrigeration products and that 

UL had recently reopened the 

rulemaking process for UL 250 under a 

proposal calling for a higher 

hydrocarbon limit. (AHAM, Public 

Meeting Transcript, No. 28 at p. 49–50) 

GE stated that although the UL 

restriction may make it difficult to use 

isobutane, it does not make it 

impossible, and that UL may consider 

increasing the limit. (GE, Public Meeting 

Transcript, No. 28 at p. 50) Sub Zero 

agreed with GE’s comment but pointed 

out that there can be a significant capital 

expenditure associated with adopting 

isobutane refrigerant or hydrocarbon 

blowing agents. (Sub Zero, Public 

Meeting Transcript, No. 28 at p. 50) 

Many of the comments addressed 

issues with HFCs used both as 

refrigerant and as a blowing agent. 

These comments are presented in this 

section, but they apply equally to 

section IV.B.1.b, below, which 

addresses blowing agents. 

Many stakeholders noted the trend 

away from HFC use both worldwide and 

in the United States. The stakeholders 

commented that DOE’s analysis should 

more thoroughly consider this trend in 

order to avoid becoming immediately 

outdated, and that DOE should develop 

cost-efficiency analyses that account for 

a mandated phase-down of HFC 

substances. (GE, Public Meeting 

Transcript, No. 28 at pp. 47–48; AHAM, 

Public Meeting Transcript, No. 28 at p. 

18; Greenpeace, Public Meeting 

Transcript, No. 28 at pp. 50–51; ACEEE/ 

ASAP, No. 43 at p. 5; Sub-Zero, No. 40 

at p. 7; Greenpeace, No. 42 at pp. 1, 2; 

GE, No. 37 at p. 2; NRDC, No. 39 at p. 

7; Whirlpool, No. 31 at pp. 4, 5; AHAM, 

No. 34 at pp. 8–9) 

AHAM commented that upcoming 

regulations and legislation on the phasedown of HFCs could have a substantial 

impact on efficiency in the refrigeration 

products industry (AHAM, Public 

Meeting Transcript, No. 28 at p. 18) 

AHAM, Whirlpool, and Sub Zero 

further stated that they believe a phasedown of HFCs would have a net 

negative impact on energy efficiency 

and manufacturing cost (AHAM, No. 34 

at pp. 8–9; Sub Zero, No. 40 at p. 7; 

Whirlpool, No. 31 at pp. 4–5) AHAM 

and Whirlpool also argued that any 

analysis that does not account for an 

HFC phase-down would likely result in 

energy consumption standards that are 

unattainable (AHAM, No. 34 at p. 9; 

Whirlpool, No. 31 at pp. 4–5) 

GE suggested that DOE consider the 

positions of the current administration 

and the Environmental Protection 

Agency (EPA) on HFCs and other macro 

trends that GE asserts will significantly 

impact the industry. (GE, Public 

Meeting Transcript, No. 28 at pp. 47–48) 

For this rulemaking, GE commented that 

it is important for DOE to evaluate the 

potential industry impact of the HFC 

phase-down from a technical and 

economic perspective to avoid creating 

a disincentive for manufacturers to 

employ low-GWP foams and 

refrigerants. GE commented that DOE 

should recognize the potential 

environmental benefits that could be 

realized in a transition to low-GWP 

foams and refrigerants. (GE, No. 37 at p. 

2) 

Comments from the IOUs supported 

DOE’s use of HFCs in the baseline 

analysis but encouraged consideration 

of discontinued or reduced use of HFCs 

in case legislation is enacted or 

regulations established limiting their 

use (IOU, No. 36 at p. 12) Whirlpool 

stated that it would not switch to nonGWP substances, because of the costs 

associated with doing so, unless this is 

required by legislation (Whirlpool, No. 

31 at p. 5) 

DOE eliminated alternative 

refrigerants as a design option for most 

product classes because the available 

alternatives are either banned, have 

lower thermodynamic efficiencies, or, as 

in the case of hydrocarbons, are 

currently only allowed in limited 

quantities due to UL safety 

requirements. The UL proposal for 

modification of UL 250 calls for 

transition from an allowance of 50 g 

refrigerant being permitted to escape 

from a refrigeration product in case of 

a leak to a higher limit of 60 g total 

charge.26 This proposed change would 

not significantly affect the amount of 

refrigerant that can be used because 

roughly 10 g remains absorbed in the 

compressor oil during a typical 

catastrophic leak. DOE notes that UL 

had not made a final determination 

regarding changes to UL 250 at the time 

of the preparation of this notice. UL has 

indicated that due to the large number 

of comments to the proposals, UL’s next 

step would be to convene a Standards 

Technical Panel meeting, which would 

likely be held no earlier than September 

2010.26

DOE also considered EPA’s recently 

published proposed rule addressing 

hydrocarbon refrigerants, which 

includes a proposal to include isobutane 

on the EPA’s Significant New 

Alternatives Policy (SNAP) program list 

of allowed alternative refrigerants. 75 

FR 25799 (May 10, 2010). The EPA 

proposal calls for a total charge limit of 

57 g of isobutane. Id. at 25803. No final 

rule had issued at the time of the 

preparation of this notice. 

DOE calculated the potential range of 

isobutane charge levels that could 

replace the HFC–134a refrigerant in the 

products purchased for reverse 

engineering. DOE converted the actual 

charge of each reverse-engineered 

product to an equivalent isobutane 

charge (measured in grams), by 

adjusting for the lower density of 

isobutane. The equivalent isobutane 

charge levels for these products were in 

excess of both the EPA-proposed limit 

and the charge limit in the UL 250 

standard for all of the products covered 

by today’s NOPR except in the case of 

compact refrigerators. In order for a 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59497 

standard-size refrigerator-freezer to meet 

those charge levels, it would be 

necessary to make engineering changes 

such as adding a second refrigerant 

loop. Such a design change would 

reduce useful interior volume in the 

appliance, which represents a reduction 

in consumer utility. DOE is under 

general legal obligations to avoid 

promulgating standards that would 

either reduce the utility of a product, 42 

U.S.C. 6295(o)(2)(B)(i)(IV) or eliminate 

those products with capacities and 

volumes available at the time that DOE 

establishes its standard, 42 U.S.C. 

6295(o)(4). Therefore, DOE considered 

use of isobutane refrigerant as a design 

option only for compact refrigerators. 

DOE requests comment on the 

consideration of conversion to use of 

isobutane refrigerant as a design option 

only for compact refrigerators. (See 

Issue 9 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section VII.E of this 

NOPR.) 

b. Alternative Foam-Blowing Agents 

Blowing agents are included in the 

materials that are used to form 

insulation during the manufacturing 

process. The blowing agents help form 

the closed cell microstructure of the 

insulation as the blowing agent gases 

expand after the insulation components 

are injected into the wall cavities. 

Manufacturers selling refrigeration 

products in the U.S. market have 

predominantly used HFC blowing 

agents since 2003, which is when the 

EPA imposed a ban on the primary 

hydrochlorofluorocarbon (HCFC) 

blowing agent most manufacturers were 

using at the time. See 58 FR 65018 

(December 10, 1993) (phasing out 

production of HCFC–141b through the 

accelerated phase out rule promulgated 

under section 606 of the Clean Air Act). 

In response, some manufacturers have 

started using cyclopentane as a blowing 

agent rather than HFCs because of its 

much lower GWP. However, insulation 

made using cyclopentane during the 

blowing process has higher conductivity 

(see for example the preliminary TSD 

chapter 3, Table 3.3.2), leading to higher 

energy use. 

DOE received many comments 

encouraging DOE to consider the shift 

from HFCs to refrigerants and/or 

blowing agents with low GWP in 

refrigeration products. These comments 

are cited in section IV.B.1.a, above. 

None of the comments specifically 

indicated that use of alternative foamblowing agents would reduce energy 

use. DOE has investigated this issue and 

has concluded that use of alternative 

foam-blowing agents would not reduce 

energy use (see chapter 3 of the NOPR 

TSD, section 3.3.2.1, for more detail). 

Hence, DOE did not treat alternative 

foam-blowing agents as a design option 

in its analyses. 

DOE recognizes that possible 

legislation or regulations limiting the 

use of HFCs would have an impact on 

the industry’s transition to higher 

efficiency designs and, depending on 

the performance impact of insulation 

made without HFCs, may reduce the 

potential for efficiency improvement. 

Given that this step has not occurred, 

DOE believes that basing energy 

conservation standards on the uncertain 

prospect of passage of certain legislation 

would be speculative. DOE is, however, 

prepared to address this issue by 

evaluating the efficiency improvement 

and trial standard levels for products 

using alternative foam insulation 

materials, if legislation or some other 

legal requirements banning HFCs 

should be enacted or otherwise become 

effective. 

c. Vacuum-Insulated Panels 

DOE received comments concerning 

the viability of VIPs as a design option. 

These comments, examined below, 

addressed the supply, longevity, 

durability, and cost of VIPs. 

NPCC and ASAP emphasize that the 

standards are not prescriptive, and 

therefore manufacturers are not required 

to use VIPs to meet the standard even 

if the design options analysis has used 

VIPs (NPCC, No. 33 at p. 3; ASAP, 

Public Meeting Transcript, No. 28 at p. 

96) DOE agrees with this statement, but 

without being able to show that 

alternative design paths can be used to 

reach certain efficiency levels without 

VIPs, the viability of this technology 

must be considered when contemplating 

these levels. 

VIP Supply 

AHAM, LG, Sub Zero, and Whirlpool 

expressed concern regarding the ability 

of VIP vendors to keep up with the 

demand that might be generated by 

more stringent energy conservation 

standards for refrigeration products 

(AHAM, Public Meeting Transcript, No. 

28 at p. 94; Sub Zero, Public Meeting 

Transcript, No. 28 at p. 97; LG, No. 41 

at p. 4; Sub Zero, No. 40 at p.4; 

Whirlpool, No. 31 at p. 4; AHAM, No. 

34 at pp. 6, 7) Some of these comments 

raise the concern that VIP costs could 

increase to levels significantly greater 

than the levels DOE used in its analysis 

(AHAM, Public Meeting Transcript, No. 

28 at p. 94; Whirlpool, No. 31 at p. 4; 

AHAM, No. 34 at pp. 6, 7) AHAM, LG, 

Whirlpool, and Sub Zero recommended 

that DOE assess the market’s ability to 

mass-produce VIPs (AHAM, Public 

Meeting Transcript, No. 28 at p. 94; Sub 

Zero, Public Meeting Transcript, No. 28 

at p. 97; LG, No. 41 at p. 4; Sub Zero, 

No. 40 at p. 4; Whirlpool, No. 31 at p. 

4; AHAM, No. 34 at pp. 6–7) An 

additional factor cited by stakeholders 

that could potentially exacerbate any 

VIP supply issue is the increase in 

stringency of refrigeration product 

standards in other regions of the world, 

such as India and Europe. (Whirlpool, 

Public Meeting Transcript, No. 28 at p. 

95; AHAM, Public Meeting Transcript, 

No. 28 at p. 94) Whirlpool commented 

that it is expensive to increase VIP 

production capacity (Whirlpool, No. 31 

at p. 4) 

In contrast, IOU, ACEEE/ASAP, 

NRDC, and NPCC stated that the VIP 

industry is prepared to ramp up 

production to meet the high demand 

predicted for the refrigeration industry 

(IOU, No. 36 at p. 9; ACEEE/ASAP, No. 

43 at pp. 2–4; NRDC, No. 39 at p. 3; 

NPCC, No. 33 at p. 2) IOU estimated that 

demand would rise to the low millions 

to tens of millions of panels at most 

based on the results of the preliminary 

DOE analysis (IOU, No. 36 at p. 9) IOU 

also noted that there is rising interest for 

VIP use as building insulation, which 

could further stimulate growth in the 

market. (IOU, No. 36 at p. 10) ACEEE/ 

ASAP also reported that the VIP 

manufacturers were confident about 

scaling up to meet global demand 

(ACEEE/ASAP, No. 43 at p. 4) 

As Sub Zero notes, manufacturers 

have installed VIPs in refrigeration 

products for at least 20 years. (Sub Zero, 

No. 40 at p. 4) Sub Zero, which has 

installed VIPs in their products for the 

past 10 years, commented that three VIP 

suppliers are confident that they can 

meet the expected VIP demand, but that 

it is unclear whether they could meet 

the potential demand associated with 

major manufacturers and millions of 

refrigeration products. (Id.) IOU and the 

ACEEE/ASAP joint comment stated that 

VIPs have been incorporated into 

various new refrigerator models (IOU, 

No. 36 at p. 7; ACEEE/ASAP, No. 43 at 

p. 4) 

Several adjustments made to the 

assumptions in the engineering analysis 

reduced the relative importance of VIPs 

in meeting the proposed standard levels 

decreased when compared to the 

preliminary. Specifically, the 

adjustments involved reduced panel 

coverage, reduced effectiveness, and 

application only after all other design 

options were considered. (Details about 

the changes in relevant assumptions can 

be found in chapter 5, section 5.8.3 of 

the NOPR TSD.) In response to 

stakeholder comments, DOE conducted 

an assessment of the VIP market and the 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59498 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

potential ramp-up required by proposed 

standards and concluded that the 

market does not show ramp-up to be a 

critical issue leading to price pressure. 

From this analysis, DOE does not expect 

the estimated lead time for expanded 

VIP production to limit the availability 

of VIPs at mass-production levels. 

DOE contacted several VIP suppliers 

during the NOPR analysis phase to 

better assess the current production 

capacity and the ability of the industry 

to ramp up to expected demand by 

2014. These suppliers include 

Porextherm (Germany), Va-Q-tec 

(Germany), ThermoCor (U.S.), NanoPore 

Insulation LLC (U.S.), Glacier Bay 

(U.S.), and ThermalVisions (U.S.). DOE 

did not receive a response from any 

Asian companies it attempted to contact 

during this phase, but Porextherm 

estimated that there are five VIP 

producers based in China and Japan. 

DOE estimates the current worldwide 

VIP market to be in the range of 2.5 to 

5 million square meters based on input 

from VIP manufacturers. Va-Q-tec 

estimated that world demand is 

approximately 2 million square meters. 

ThermoCor estimated it to be about 5 

million square meters. Other vendors 

interviewed declined to provide 

estimates. 

ThermoCor noted that most of the 

growth in the U.S. market has happened 

since 2008, driven largely by the Federal 

manufacturer tax credit available for 

high efficiency refrigerators. (Energy 

Improvement and Extension Act of 

2008, Pub. L. 110–343, Div. B, Sec. 305 

(October 3, 2008)) In the U.S., major 

refrigerator manufacturers have started 

using VIPs in commodity models in 

addition to higher end products as a 

result of the manufacturer tax credit 

(available from 2008–2010). 

Manufacturers can receive $200 per unit 

for units with energy use at least 30 

percent lower than the standard. Va-Qtec stated that the VIP demand was 

largely concentrated in Japan prior to 

2008, and that the U.S. tax credit 

rapidly changed the landscape for VIP 

manufacturers, creating much greater 

demand. The VIP industry responded 

with a dramatic ramp-up in production, 

which demonstrates the industry’s 

ability to respond quickly to rapid 

increases in demand. 

DOE estimates that approximately 5.8 

million square meters of VIPs would be 

needed in the U.S. to meet the proposed 

standard levels in 2014 based on the 

design options presented in the NOPR 

engineering analysis (see the discussion 

of this estimate in TSD appendix 4–A, 

Investigation of VIP Supply, section 4– 

A–2). 

DOE also considered the potential 

increase in demand for VIPs in Europe 

and India, as highlighted by 

stakeholders during the preliminary 

analysis public meeting (Whirlpool, 

Public Meeting Transcript, No. 28 at p. 

95; AHAM, Public Meeting Transcript, 

No. 28 at p. 94) 

As part of this examination, DOE 

reviewed a variety of European 

directives aimed at improving energy 

efficiency. The European Energy 

Labeling Directive (94/2/EC) for cold 

appliances, which was issued by the 

European Commission on January 21, 

1994, established 7 efficiency levels for 

these products, from least efficient (G) 

to most efficient (A). In 2003, additional 

higher efficiency levels A+ and A++ 

were established. These levels all 

represent different percentages of 

reference energy use (representative 

energy use when the labeling directive 

was first established), called Energy 

Efficiency Index (EEI). The levels range 

from less than 30 percent of the 

reference value for A++ (the most 

efficient) to 125 percent of the reference 

value for G. The European Union 

established efficiency standards for 

residential refrigeration products with 

EU Council Directive 96/57/EC, dated 

September 3,1996. Maximum energy use 

standards were established for 10 

‘‘product categories,’’ the equivalent of 

the different product classes associated 

with DOE regulations. Commission 

Regulation (EC) No 643/2009 requires 

that the maximum allowable EEI will be 

55 starting July 1, 2010 (‘‘European 

Commission Regulation 643/2009’’, No. 

52). This level will drop to 44 on July 

1, 2012, and to 42 (equivalent to current 

efficiency level A+) on July 1, 2014. 

DOE received estimates from various 

VIP manufacturers that European 

demand is expected to rise to 2–5 

million square meters in response to the 

new standards. Information obtained 

from a manufacturer that has used VIPs 

in multiple products suggests that VIPs 

will be used primarily for A++ products, 

which may be considered the equivalent 

of the U.S. ENERGY STAR products. 

Along similar lines, India introduced 

a labeling program in 2006 that was 

initially voluntary but became 

mandatory in January 2010 (‘‘Indian 

Refrigerator Regulations’’, No. 53). The 

program establishes efficiency levels 

represented by ranges of energy use. The 

product label is required to indicate the 

product’s efficiency level. The allowable 

maximum energy use values associated 

with the efficiency levels are scheduled 

to be reduced in three steps between 

2010 and 2014. Based on discussions 

with manufacturers, India’s proposed 

standards for 2014 are not expected to 

be as stringent as those in the U.S. or 

Europe, and are not expected to require 

use of VIPs. 

Based on the available data, DOE 

estimates that the potential VIP demand 

for the U.S. and Europe would reach an 

annual level of roughly 10 million to 15 

million square meters. While this 

represents significant growth compared 

to the current market, it is consistent 

with the growth that the market has 

experienced recently for which VIP 

vendors have successfully ramped up 

their production. 

Several VIP manufacturers are 

currently expanding their facilities, 

while others have plans to expand if the 

increased demand becomes more 

reliable. Overall, the VIP manufacturers 

interviewed were confident that neither 

the time nor the capital investment is a 

limiting factor as long as they have a 

stable backlog. Five of the 

manufacturers interviewed have 

recently undergone significant 

expansion efforts. One manufacturer has 

increased its production capacity by 10 

times between 2008 and spring 2010 to 

reach a level of about 1.5 million square 

meters. Two other manufacturers have 

doubled their capacities in the past 9 

months, one reaching 1 million square 

meters and another reaching 120,000 

square meters. A fourth manufacturer 

has reached the capacity of about 

300,000 square meters over the past 1.5 

years. Lastly, as mentioned by ACEEE/ 

ASAP, NanoPore has recently doubled 

its capacity and has plans to expand to 

0.9 million square meters of capacity by 

2010. (ACEEE/ASAP, No. 43 at p. 4) 

VIP manufacturer estimates of the 

time required to bring a new plant online ranged from 6 to 18 months. The 

required time depends on whether 

existing production technology is 

replicated, or whether further 

improvements in production technology 

are designed and incorporated into new 

plants. Possible improvements include 

increased automation of the panel 

assembly and a shift to continuous 

rather than batch processing. 

Automation may involve the drying of 

the core material and the cutting of the 

bag and core. DOE visited a VIP 

production facility during the course of 

this investigation and concluded that 

the estimates provided by VIP vendors 

of time required to bring new 

production capacity online are 

consistent with the production process, 

given the equipment used. 

Sub Zero noted that large volume 

refrigerator manufacturers could 

produce VIPs in-house to control costs, 

though Sub Zero and other small 

manufacturers would not have that 

ability (Sub Zero, No. 40 at p. 4) 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59499 

27Wilkes, K., et al. ‘‘Aging of Polyurethane Foam 

Insulation in Simulated Refrigerator Panels—OneYear Results with Third-Generation Blowing 

Agents.’’ 29 Sep. 1999. http://www.ornl.gov/ 

webworks/cpr/pres/107629.pdf. Accessed 14 June 

2010. 

ThermoCor agreed that large 

manufacturers would have the means to 

develop VIP production capability inhouse by 2014. Several VIP 

manufacturers have considered joint 

ventures and licensing opportunities 

with refrigerator manufacturers. 

Manufacturers of VIPs suggest that 

transferring the knowledge and 

expertise of VIP production would be a 

straightforward process. A new VIP 

fabrication facility would need to have 

a production capacity between 300,000 

and 1.5 million square meters per year 

to be cost-effective at today’s VIP price 

levels. The capacity will typically vary 

based on the manufacturer, the panel 

type, and the facility location. 

VIP manufacturers do not anticipate 

the supply of raw materials to be an 

issue as production ramps up. The 

industry uses multiple suppliers for 

both the barrier film and the fill 

material. Materials used for the fill 

include glass fiber, fumed silica, and 

aerogel. Glass fiber is produced for a 

wide range of uses worldwide. Fumed 

silica, used as fill by some VIP 

manufacturers, currently is produced on 

a much smaller scale. Asked if the more 

limited range of uses of fumed silica 

could present material supply issues 

due to capacity ramp-up delays or 

intellectual property issues, Porextherm 

noted that intellectual property issues 

would not prevent new suppliers from 

building new fumed silica plants, citing 

several new production facilities that 

have come online recently in Asia. 

Porextherm also noted that the solar 

collector industry in particular is 

helping to expand the production of 

pure silica, which produces fumed 

silica as a by-product. Va-Q-tec 

estimates that it would take 

approximately 2.5 years to build a new 

fumed silica plant, but that current 

worldwide production capacity is 

sufficient to provide enough fumed 

silica for production of 100 million m2

of VIPs annually. Thermal Visions did 

not anticipate suppliers needing more 

than one year to respond to the rampup in production. 

NRDC recommended that DOE 

explore other applications in which 

durable vacuum-sealing is required in 

large production volumes for lessons 

and strategies (NRDC, No. 39 at p. 4) 

DOE interprets this comment to mean 

that the production technologies 

required for this aspect of VIP 

production may have already been 

developed for other industries, thus 

potentially limiting the required time to 

development the process for the VIP 

industry. Through its research discussed 

above, DOE confirmed that current 

technology is already enabling mass 

production of VIPs, so an additional 

survey of other applications was 

unnecessary. 

In summary, based on all of the above, 

DOE tentatively concludes that the VIP 

industry has the ability to increase 

production to meet the potential 

demand for VIPs within the three year 

gap between the final rule’s issuance 

and the compliance date for any 

amended standard. 

VIP Longevity 

AHAM questioned whether the 

average lifetime of VIPs is consistent 

with lifetime expectations for 

refrigeration products (AHAM, Public 

Meeting Transcript, No. 28 at p. 94–95) 

In response, DOE investigated the issue 

of VIP longevity in more depth. ACEEE 

and ASAP commented that VIP 

manufacturers have used accelerated 

aging techniques to estimate panel life. 

Manufacturers have estimated lifetimes 

between 20 and 50 years for silica core 

panels, and generally up to 15 years for 

panels constructed of other core 

materials. (ACEEE/ASAP, No. 43 at p. 3) 

ThermoCor and Va-Q-tec provided 

data on VIP degradation. ThermoCor 

panels, which have a glass fiber core, 

have been shown to retain about 75 

percent of their insulation value over 10 

years, a finding extrapolated from 7 

years of data collected from panels aged 

at room temperature. Va-Q-tec 

determined that their panels would 

yield a 15 percent increase in thermal 

conductivity over 15 years, based on 7 

years of observation of panels held in 

storage (‘‘Va-q-tec Lifetime Analysis’’, 

No. 55). In both cases, the data suggest 

that the degradation in insulation value 

is similar to that of polyurethane foam 

(Wilkes 2001),27 the insulating material 

used currently in nearly all products, 

and the insulation value would remain 

well above that of the baseline 

polyurethane foam for the lifetime of the 

refrigerator. As such, DOE did not factor 

VIP degradation into its analysis. 

VIP Quality and Durability 

AHAM and LG expressed concern 

that a short transition time to mass 

produce VIPs would adversely impact 

their quality (AHAM, No. 34 at p. 7; LG, 

No. 41 at p. 4) Sub Zero commented that 

there is a significant learning curve for 

commercialization of VIPs that will be 

steepened if standards require the 

wholesale transition to use of VIPs (Sub 

Zero, No. 40 at p. 4). 

Sub Zero also pointed out that 

shipping and handling may weaken a 

panel, causing it to fail slowly, without 

becoming apparent during visual 

inspections prior to installation. In 

addition, Sub Zero commented that 

panel installation is more critical to 

performance and reliability than it is for 

most other components, contributing to 

a steepened learning curve. In Sub 

Zero’s experience, VIP failure can cause 

the wall to bulge, leading to higher 

rejection rates, installation problems for 

built-ins, condensation, and 

compromised door structures. Sub Zero 

added, however, that their own service 

records for VIPs indicate that these 

panels have performed well in the field. 

(Sub Zero, No. 40 at p. 4; Sub Zero, 

Public Meeting Transcript, No. 28 at p. 

105) 

The IOUs asserted that technological 

advancements have occurred in core 

materials, external barriers, and 

methods to maintain vacuum integrity, 

all of which would help to improve 

panel durability. Additionally, VIP 

manufacturers are taking steps to 

maintain quality throughout the 

installation process, including the use of 

on-site quality checking devices and 

training programs for workers to help 

ensure that proper handling techniques 

are used. Also, the IOUs pointed out 

that some products have high insulation 

values even when the vacuum has been 

compromised (IOU, No. 36 at pp. 6–8) 

NRDC commented that the risk of 

premature failure is overstated given the 

ample opportunities for detection 

(NRDC, No. 39 at p. 4) NPCC concurred 

that concerns over VIP durability are 

overstated, but recommended that DOE 

assess efficiency improvements feasible 

without VIPs to identify efficiency 

levels that are particularly ‘‘robust’’. 

(NPCC, No. 33 at p. 2–3) 

DOE acknowledges that VIPs are more 

sensitive to handling issues during 

transport and installation when 

compared to other components. With 

this fact in mind, DOE still anticipates 

that manufacturers will make 

adjustments to their handling 

procedures to improve success rates of 

applying VIPs to their products, 

including taking those needed steps to 

ensure that VIPs remain intact after 

fabricating a refrigeration product. DOE 

also believes that innovations such as 

(1) the rapid VIP integrity testing system 

that one VIP manufacturer has 

developed for installation into each 

panel, which allows verification of each 

panel’s integrity even after installation 

into the product, and (2) the 

compartmentalized design of another 

available VIP technology that limits 

performance degradation to a small 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59500 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

region of a VIP will mitigate the 

potential impacts of VIP damage prior to 

installation. DOE believes that, after 

installation, VIPs would likely be very 

well protected from damage because 

they are encased inside the product 

walls or door, protected on one side by 

the product’s external shell (or interior 

liner) and on the other side by the 

polyurethane foam insulation. DOE 

notes that its discussions with 

manufacturers did not reveal a single 

instance in which a VIP field failure 

occurred. While this tentative finding 

does not imply that there have been no 

failures, DOE believes, based on the 

information made available for review, 

that this particular issue has had 

minimal to no impact on manufacturer 

warranty or maintenance costs. DOE 

tentatively concludes that the risk of 

VIP failure is an issue that can be 

sufficiently addressed through design 

innovations and careful handling 

procedures during the manufacturing 

process. 

VIP Cost Assumptions 

Several specific comments were made 

regarding VIP cost assumptions. These 

comments address treatment of the 

technology in the engineering analysis, 

and are addressed later in section 

IV.C.4.d, below. 

DOE requests comment and 

information on aspects of VIP 

technology that affect its suitability for 

consideration as a design option. 

Particularly, DOE seeks any new 

information not already discussed or 

considered in the rulemaking. (See Issue 

10 under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

2. Technologies Considered 

DOE has tentatively concluded that: 

(1) All of the efficiency levels discussed 

in today’s NOPR are technologically 

feasible; (2) products at these efficiency 

levels could be manufactured, installed, 

and serviced on a scale needed to serve 

the relevant markets; (3) these efficiency 

levels would not force manufacturers to 

use technologies that would adversely 

affect product utility or availability; and 

(4) these efficiency levels would not 

adversely affect consumer health or 

safety. Thus, the efficiency levels that 

DOE analyzed and is discussing in this 

notice are all achievable using ’’screened 

in’’ technology options identified 

through the screening analysis. The 

technologies DOE considered for each 

group of products are shown in Table 

IV.8. 

TABLE IV.8—TECHNOLOGIES CONSIDERED BY DOE FOR RESIDENTIAL REFRIGERATION PRODUCTS, BY PRODUCT GROUP

Design option 

Standard-size 

refrigeratorfreezers 

Standard-size 

freezers 

Compact 

refrigerators 

Compact 

freezers 

Increased Insulation Thickness .................................................................................. ...................... √ 

(see Note 1) 

√ √ 

Isobutane Refrigerant ................................................................................................. ...................... ...................... √ 

VIPs ............................................................................................................................ √ √ √ √ 

Improved Compressor Efficiency ................................................................................ √ √ √ √ 

Variable-Speed Compressor ...................................................................................... √ √ √ √ 

Increased Evaporator Surface Area ........................................................................... √ √ √ √ 

Increased Condenser Surface Area ........................................................................... √ √ √ √ 

Forced Convection Condenser ................................................................................... ...................... √ 

Brushless DC Evaporator Fan .................................................................................... √ √ 

Brushless DC Condenser Fan .................................................................................... √ √ 

Adaptive Defrost ......................................................................................................... √ √ 

Variable Anti-Sweat Heater Control ........................................................................... √ 

Note 1: Increased Insulation Thickness was not considered for built-in, standard-size freezers. 

C. Engineering Analysis 

The engineering analysis uses costefficiency relationships to show the 

manufacturing cost increases associated 

with achieving increased efficiency. 

DOE has identified the following three 

methodologies to generate the 

manufacturing costs needed for the 

engineering analysis: (1) The designoption approach, which provides the 

incremental costs of adding to a baseline 

model design options that will improve 

its efficiency; (2) the efficiency-level 

approach, which provides the relative 

costs of achieving increases in energy 

efficiency levels, without regard to the 

particular design options used to 

achieve such increases; and (3) the costassessment (or reverse engineering) 

approach, which provides ‘‘bottom-up’’ 

manufacturing cost assessments for 

achieving various levels of increased 

efficiency, based on detailed data as to 

costs for parts and material, labor, 

shipping/packaging, and investment for 

models that operate at particular 

efficiency levels. 

DOE conducted the engineering 

analysis for this rulemaking using a 

combined efficiency level/design 

option/reverse engineering approach. 

DOE defined efficiency levels using 

percentages representing energy use 

reductions. The reductions are defined 

to apply to energy use (not including 

icemaking energy use) measured using 

the proposed new test procedure, DOE’s 

premise that efficiency levels expressed 

as a percentage of energy use lower than 

that of baseline products are equivalent 

when calculated based on both the 

current test procedure and the proposed 

new test procedure (without icemaking 

energy use) allowed DOE to compare 

information developed from different 

sources. However, DOE’s analysis is 

based on the efficiency improvements 

associated with groups of design 

options. DOE developed estimates for 

efficiency improvements for design 

options through energy use modeling 

analysis conducted for selected reverseengineered products. The energy models 

were first established based on the 

existing product designs, and the 

models were subsequently adjusted to 

reflect application of the groups of 

design options considered for analysis. 

DOE based some of the design option 

information on data gained through 

reverse-engineering analysis, but also 

used other sources, such as component 

vendor inquiries and discussions with 

manufacturers as appropriate. Details of 

the engineering analysis are provided in 

the NOPR TSD chapter 5. 

DOE received several comments from 

interested parties on its approach to the 

engineering analysis, as described 

below. 

1. Product Classes Analyzed/ 

Representative Products 

DOE initially selected seven key 

product classes for direct analysis. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59501 

These product classes are summarized 

in Table IV.9. The direct analysis 

included reverse engineering, 

manufacturing cost modeling, and 

energy use modeling. 

TABLE IV.9—PRODUCT CLASSES DIRECTLY ANALYZED IN THE PRELIMINARY ENGINEERING ANALYSIS

Product category Product class 

Standard-size refrigerators and refrigerator-freezers ............................... 3. Refrigerator-freezer—automatic defrost with top-mounted freezer 

without through-the-door ice service. 

5. Refrigerator-freezers—automatic defrost with bottom-mounted freezer without through-the-door ice service. 

7. Refrigerator-freezers—automatic defrost with side-mounted freezer 

with through-the-door ice service. 

Standard-size freezers ............................................................................. 9. Upright freezers with automatic defrost. 

10. Chest freezers and all other freezers except compact freezers. 

Compact refrigerators ............................................................................... 11. Compact refrigerators and refrigerator-freezers with manual defrost. 

Compact freezers ..................................................................................... 18. Compact chest freezers. 

DOE selected representative products 

from each of these product classes to 

analyze and assess the products’ 

potential for energy use reduction. DOE 

selected these products by reviewing 

product offerings on manufacturer and 

retailer Web sites and selecting products 

for analysis that had features affecting 

energy use that are typical for the 

product classes. DOE selected products 

of two volumes for each analyzed 

product class and attempted to select 

two products of one of these volumes to 

serve as a product pair. Each product of 

this pair would be nearly identical in 

design except that one would be rated 

at the maximum allowable energy use 

and the other would satisfy the ENERGY 

STAR requirements. DOE presented 

these representative product selections 

at the Framework Workshop. For these 

directly-analyzed product classes, DOE 

developed two cost-efficiency curves for 

each class based on two of the three 

products purchased for reverse 

engineering that represented distinct 

designs. (The third reverse-engineered 

product of each class, as mentioned 

above, was typically a variant of one of 

the other products, and full analysis of 

this third product would not have 

provided additional useful information.) 

During the preliminary analysis 

public meeting, DOE again requested 

comment on the variation present in 

refrigeration product design, and the 

distribution of incremental costs to 

achieve energy use reductions as 

compared to the designs selected for 

analysis. 

AHAM commented that it is unable to 

provide detailed design data for its 

members, because such data are 

impossible to aggregate. AHAM 

suggested that DOE work with 

individual manufacturers during the 

MIA interviews to obtain this specific 

information. (AHAM, Public Meeting 

Transcript, No. 28 at p. 55; AHAM, No. 

34 at p. 5) Whirlpool commented that 

detailed study would be required to 

gather such information, and this 

analysis should be discussed in NOPRphase manufacturer interviews. 

(Whirlpool, No. 31 at p. 2) LG suggested 

that DOE review company Web sites to 

determine product design options. (LG, 

Public Meeting Transcript, No. 28 at p. 

56) 

DOE discussed with individual 

manufacturers the improvement 

potential of design options and the 

design option groupings required to 

achieve different efficiency levels for 

different product classes during the MIA 

interviews. Alone, this information was 

insufficient to clearly identify the 

design option pathways required to 

achieve all of the considered efficiency 

levels, but DOE made many engineering 

analysis adjustments based on the 

information gathered in these 

discussions (see Table IV.10 for a 

summary of key changes in the 

analysis). 

Based on the manufacturer 

discussions and accompanying 

analytical work, DOE concluded that the 

average characteristics of the products 

initially purchased for reverse 

engineering and subsequently used as 

the basis for the engineering analyses 

provide a reasonable representation of 

baseline products. DOE calculated the 

representative engineering costefficiency curve for each product class 

listed in Table IV.9, above, as the 

average of the two cost-efficiency curves 

developed for the two reverseengineered products of that class. 

Regarding LG’s suggestion that DOE 

examine manufacturer Web sites to 

obtain the information sought for its 

analysis, DOE notes that the detailed 

information DOE requires for its 

analysis is unavailable on these Web 

sites. 

TABLE IV.10—SUMMARY OF KEY ADJUSTMENTS TO THE ENGINEERING ANALYSIS

Parameter(s) Preliminary Changes for the proposed rule 

VIP Surface Coverage .................... Full product coverage, except for 

chest freezer walls.

Full coverage of doors, 50% coverage of cabinet to assure structural 

integrity, preference for coverage of freezer compartments, no 

change to exception for chest freezer walls. 

VIP Effectiveness ............................ Full effectiveness as determined 

by the ERA energy model.

50% of ERA energy model effectiveness to better match results reported by manufacturers. 

Cost Increase for Higher-Efficiency 

Components.

........................................................ Adjusted based on additional information. 

Conversion Costs for Increase of 

Door and Cabinet Insulation 

Thickness.

Based on Manufacturing Cost 

Model.

Increased due to updating of production equipment costs in manufacturing cost model. Shift in allocation of this cost to increase the 

portion allocated to the door thickness increase. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59502 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE IV.10—SUMMARY OF KEY ADJUSTMENTS TO THE ENGINEERING ANALYSIS—Continued 

Parameter(s) Preliminary Changes for the proposed rule 

Heat Exchanger (Condenser and 

Evaporator) Size Increase.

Application of a 20% increase in 

the UA value (inverse of thermal 

resistance) of the heat exchangers.

Application of this design option based on examination of product design details only for products for which size increase was possible. 

Direct modeling of heat exchanger performance based on selected 

geometry changes. Increase of fan power requirement for heat exchanger depth increases. 

Standby Power for Variable Speed 

Controls.

Not included ................................... Addition of 1.5W load outside the cabinet for products not already 

having electronic control. 

Variable Speed Compressor System Fan Control.Inconsistent selection of fan speed Fan operation at reduced speed to deliver reduced air flow at 50% 

power input consistent with cubic fan law. 

Variable Speed Compressor Performance for Compact Products......................................................... Degradation of compressor capacity in ERA energy modeling based 

on performance data obtained from a manufacturer. 

Isobutane Refrigerant ...................... Not considered .............................. Consideration of isobutane refrigerant for compact refrigerators, with 

5% energy use reduction. 

Variable Anti-Sweat Heater Control Considered for product class 5 * ... Considered for product classes 5 * and 7 **. 

Baseline Anti-Sweat Heater Operation (Product Class 5* only)......................................................... Baseline average wattage reduced for both directly analyzed products. 

Variable Defrost Compressor Run 

time between defrosts.

38 hours ......................................... 30 hours; Also, adjustment made in this value when converting to 

variable speed compressors to avoid modeling excessive defrost 

frequency. 

* Refrigerator-freezers—automatic defrost with bottom-mounted freezer without through-the-door ice service. 

** Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service. 

DOE also analyzed four product 

classes of built-in products (see Table 

IV.11). DOE selected one representative 

built-in product for analysis for each of 

these product classes. DOE judged the 

representativeness of these product 

selections based on discussions with 

manufacturers regarding design option 

groupings required to meet key 

efficiency levels with built-in products. 

TABLE IV.11—BUILT-IN PRODUCT CLASSES ANALYZED

Product category Product class 

Standard-size refrigerators and refrigerator-freezers ............................... 3A–BI. All Refrigerators with automatic defrost. 

5–BI. Refrigerator-freezers—automatic defrost with bottom-mounted 

freezer without through-the-door ice service. 

7–BI. Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service. 

Standard-size freezers ............................................................................. 9–BI. Upright freezers with automatic defrost. 

DOE’s proposal to directly analyze a 

limited number of product classes was 

initially presented in the framework 

document and discussed at the 

framework workshop. (‘‘Framework 

Document Public Meeting on Energy 

Conservation Standards for 

Refrigerators, Refrigerator-Freezers, and 

Freezers,’’ No. 6 at p. 45) DOE did not 

conduct a full analysis of all product 

classes in light of limited resources and 

the limited value this additional data 

would have yielded given the small 

number of product shipments associated 

with the non-analyzed product classes. 

Instead, DOE developed an approach to 

extend the energy standards to these 

product classes. Discussion of this 

extension of the standards and 

associated comments is presented in 

section IV.C.7, below. 

2. Baseline Energy Use Curves 

a. Baseline Energy Use Under the 

Proposed New Test Procedure 

As described in section III.A, above, 

DOE has proposed new test procedures 

for refrigeration products that will affect 

their measured energy use. DOE 

developed equations for baseline 

product energy use as a function of 

adjusted volume under the proposed 

new test procedures (which excludes 

the energy required to make ice—i.e., 

icemaking energy use) based on 

information provided by AHAM, as 

described in chapter 5, section 5.4.2, of 

the preliminary TSD. (Icemaking energy 

is the additional energy used to produce 

ice, which is distinct from the energy 

expended by an automatic ice 

dispensing system to dispense ice.) 

These equations address the test 

procedure changes associated with 

compartment temperatures and volume 

calculation method. 

DOE sought comment on the 

proposed baseline energy use/adjusted 

volume relationships under the 

proposed new test procedure. AHAM 

and Whirlpool supported the DOE 

approach and found it to be wellsummarized and sufficiently rigorous. 

(AHAM, No. 34 at p. 5 and Public 

Meeting Transcript, No. 28 at p. 61; 

Whirlpool, No. 31 at p. 1) 

LG questioned the development of 

baseline energy use equations that do 

not include automatic icemaker energy 

use for products with automatic 

icemakers and suggested that the energy 

use of automatic icemakers should be 

included in the DOE analysis and in the 

baseline energy use equations. (LG, 

Public Meeting Transcript, No. 28 at p. 

60) The LG comment also suggests that 

it would not be possible to develop a 

baseline energy use equation prior to 

finalization of the applicable test 

procedure, indicating that the portion of 

the measurement associated with 

automatic icemakers is still in 

development. (Id.) 

The proposed test procedure includes 

a value for icemaking energy use for 

those products that have automatic 

icemakers. 75 FR 29846 (May 27, 2010). 

However, the discussion regarding 

efficiency levels is based on the 

percentages of energy use reductions 

from baseline energy use excluding 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59503 

28The word ‘‘representative’’ is inserted here to 

indicate that the Proposed Procedure Reduced 

Baseline Energy Use is intended to be 

representative of the products in a product class, 

rather than applying to any one particular product 

that is minimally-compliant under the current 

standard. This distinction is made because there is 

variation in the change in measured energy use 

when applying the proposed test procedure. 

icemaking energy use. In this context, 

icemaking energy use is the 84 kWh 

assigned to icemaking in the proposed 

test procedure. Id. at 29847. As 

described in section III.A, above, 

sufficient information is unavailable to 

accurately determine the variation of 

icemaking energy use as a function of 

efficiency level. Hence, DOE is not 

considering reductions of the 84 kWh 

allocated to icemaking energy use as 

part of this standard. Instead, the 

examined energy use reductions 

exclude icemaking energy use. DOE 

believes this treatment also allows more 

meaningful comparisons to other 

information sources, such as 

information obtained from discussions 

with manufacturers regarding design 

option groups required to achieve 

efficiency levels. 

Electrolux requested that DOE clarify 

its definition of baseline energy use, as 

referenced throughout the preliminary 

TSD. (Electrolux, Public Meeting 

Transcript, No. 28 at pp. 62–63) Sub 

Zero also commented that it is unclear 

in the preliminary TSD whether 

references to baseline energy refer to 

calculations under the current test 

procedure or under the proposed test 

procedure. (Sub Zero, Public Meeting 

Transcript, No. 28 at pp. 63–66) 

DOE interprets these comments to 

mean that the preliminary TSD did not 

clearly explain in its discussion of costefficiency curves and efficiency levels 

whether the examined percentage 

energy use reductions applied to the 

current energy standard (i.e., a baseline 

product tested using the current test 

procedure) or to a baseline product 

tested under the new proposed test 

procedure. To clarify stakeholders’ 

concerns, DOE notes that standards 

determined by reducing the current 

standard levels by the stated percentage 

reductions applied to products tested 

under the proposed new test procedure 

would have hidden in them the 

additional energy use reductions 

associated with the impacts of applying 

the proposed new test procedure. The 

equation below indicates, for products 

with automatic icemakers, how energy 

use associated with the analyzed 

efficiency levels would be calculated. 

For products without automatic 

icemakers, the icemaking energy use 

would not be added (i.e., the last term 

in the expression would be eliminated). 

TECEL∂ICE,NEW = TECSTD,NEW × (1 ¥ R) 

+ TECICE

Where: 

TECEL∂ICE,NEW = Test energy consumption at 

a given efficiency level, including 

icemaking energy consumption, using 

the new test procedure 

TECSTD,NEW = Test energy consumption under 

the current standard, not including 

icemaking energy consumption, using 

the new test procedure 

R = Reduction in energy consumption 

(expressed as fraction) due to efficiency 

improvements at a given efficiency level 

TECICE = Icemaking test energy consumption 

DOE conducted the analysis based on 

the proposed new test procedure. 

However, as discussed, DOE applies the 

energy use reduction associated with 

the efficiency level to the baseline 

energy use, excluding icemaking energy 

use. For the purposes of this discussion, 

DOE defines the Proposed Procedure 

Reduced Baseline Energy Use as the 

representative energy use 28 not 

including the icemaking energy use of a 

minimally compliant product measured 

under the proposed new test procedure. 

For a product with a 20 percent 

efficiency level (i.e., with energy use 20 

percent lower than the maximum 

allowable energy use) and with an 

automatic icemaker, the energy use 

measured under the proposed test 

procedure would be equal to the 

icemaking energy use plus 80 percent of 

the Proposed Procedure Reduced 

Baseline Energy Use. Equations 

representing the Proposed Procedure 

Reduced Baseline Energy Use are 

presented in Table 5.4.10 of the 

preliminary TSD. For a product at a 20 

percent efficiency level without an 

automatic icemaker, the energy 

measured under the proposed new test 

procedure would be 80 percent of the 

Proposed Procedure Reduced Baseline 

Energy Use. 

Whirlpool questioned the change in 

adjusted volume for product class 7 

(refrigerator-freezers—automatic defrost 

with side-mounted freezer with 

through-the-door ice service) associated 

with the new test procedure, as reported 

in the preliminary TSD (Tables 5.4.5 

through 5.4.7), suggesting that the new 

volume calculation method, which has 

eliminated the insulating hump and cup 

recess areas from the volume 

calculation, should result in lower 

volumes. The cup recess area is the 

recess on the outside of the product 

under the dispenser, where a cup would 

be placed to fill it with ice or water. The 

insulating hump is the ‘‘bulge’’ towards 

the inside of product that is necessary 

to provide insulation around the back of 

the cup recess and around the ice 

dispensing chute. (Whirlpool, Public 

Meeting Transcript, No. 28 at pp. 58–59) 

DOE notes that the data associated 

with the tables were provided by AHAM 

as aggregated data, which limited the 

extent to which DOE could draw 

conclusions about these data. However, 

the information indicates that the 

average freezer volume for the 24 

examined product class 7 samples 

dropped from 9.3 cubic feet under the 

current test procedure to 9.0 cubic feet 

under the proposed new test procedure, 

consistent with expectations of a 

reduction in volume. The larger volume 

adjustment factor associated with the 

proposed new test temperatures (the 

volume adjustment factor for the freezer 

compartment increases from 1.63 to 1.76 

under the proposed test procedure) 

more than compensates for the 

reduction in volume and results in a 

small increase in adjusted volume. 

b. Change of Energy Use Equation Slope 

The energy standards for refrigeration 

products are expressed as a product’s 

adjusted volume multiplied by a 

parameter called the slope and added to 

another parameter called the intercept. 

Energy use is expressed using an 

equation rather than as a fixed value to 

reflect the fact that a larger product 

consumes more energy. An energy use 

equation with a larger slope means that 

energy use increases more rapidly as the 

size increases (i.e., is more sensitive to 

product size), while a lower slope 

means that energy use increases less 

rapidly. Different slope and intercept 

parameters are established to represent 

the energy standard for each product 

class. Casting the energy standards in 

this fashion allows DOE to set a 

standard for each product class as a 

single relationship applicable for a wide 

range of product volumes, rather than 

providing separate standards for many 

limited volume ranges. 

Based on information derived from 

energy use modeling, the preliminary 

TSD (see chapter 5, section 5.4.2) 

suggested that the slopes for at least 

some of the examined products may 

need adjustment. DOE sought comment 

on whether to adjust the slopes of the 

baseline energy use curves under the 

new test procedure for any of the 

proposed product classes. 

AHAM requested additional 

information on (a) How product classes 

were selected for evaluating the slope 

adjustment, (b) how the modified slopes 

were determined, and (c) how the 

intercepts would change with proposed 

slope changes. (AHAM, No. 34 at p. 6 

and Public Meeting Transcript, No. 28 at 

pp. 68–69) AHAM supported DOE’s 

proposal to increase the slope for 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59504 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

current product class 5 (refrigeratorfreezers—automatic defrost with 

bottom-mounted freezer without 

through-the-door ice service) to 12.3 

assuming the intercept value remains 

the same, since the slope for this 

product class was 16.5 in 1993 and it 

dropped to 4.6 with the 2001 

rulemaking, thus making the standard 

more stringent for large products than 

for small products. (AHAM, No. 34 at p. 

6 and Public Meeting Transcript, No. 28 

at p. 68) AHAM expressed concerns 

about the slopes for the product classes 

the preliminary TSD did not analyze, 

such as product classes 17 (compact 

upright freezers with automatic defrost), 

3A (all-refrigerators—automatic defrost), 

5A (refrigerator-freezer—automatic 

defrost with bottom-mounted freezer 

with through-the-door ice service), 10A 

(chest freezers with automatic defrost), 

and 11A (compact refrigerators and 

refrigerator-freezers with manual 

defrost). However, AHAM’s comments 

regarding product class 17 appear to 

address the magnitude of the energy 

standard rather than the slope of the 

energy use equation for this product 

class. (AHAM, Public Meeting 

Transcript, No. 28 at p. 69) Finally, 

AHAM commented that the slopes 

determined using energy modeling 

should be validated if possible to 

determine if the proposed slope values 

are realistic. (AHAM, Public Meeting 

Transcript, No. 28 at p. 68) Whirlpool 

commented that the preliminary TSD 

provides insufficient information on the 

assessment of energy equation slopes to 

allow the company to either support or 

reject of the proposal. (Whirlpool, No. 

31 at p. 1) 

DOE presented during the preliminary 

analysis meeting background 

information regarding the slopes of 

different product classes based on 

energy modeling. DOE highlighted the 

need to obtain data and feedback to 

properly assess which slopes should 

change and what the new slope and 

intercept values should be. DOE 

explicitly asked for information that 

might help in making slope adjustments 

at the preliminary analysis public 

meeting and as part of the preliminary 

analysis comment period, but did not 

receive any relevant data at that time. 

DOE also asked for data on this topic 

during the NOPR phase manufacturer 

interviews and received information for 

two pairs of product class 5 products. 

As described in the NOPR TSD in 

chapter 5, section 5.4.2, DOE 

incorporated this information into its 

evaluation of the applicable energy 

efficiency equation for this product 

class. DOE proposes to apply the slope 

for product class 7 (refrigeratorfreezers—automatic defrost with sidemounted freezer with through-the-door 

ice service) to product class 4 

(refrigerator-freezers—automatic defrost 

with side-mounted freezer without 

through-the-door ice service) because 

the presence of through-the-door ice 

features for product class 7 products 

should have only a limited impact on 

the increase in energy use associated 

with cabinet growth, which the slope 

represents. These adjustments are also 

described in section 5.4.2 of chapter 5 

of the NOPR TSD. Otherwise, DOE is 

not proposing any slope changes based 

solely on energy modeling information. 

DOE will consider modifying its slope 

and intercept values if sufficient data 

are received. 

In assessing possible slope changes, 

DOE primarily chose products for which 

energy use models had already been 

prepared as part of the preliminary 

analysis. As described in the 

preliminary TSD, chapter 5, section 

5.4.2, the analysis started with the 

energy models of minimally-compliant 

products based on the two reverseengineered products for each product 

class DOE examined. DOE examined the 

trend in calculated energy use as the 

product size changes with insulation 

thickness remaining constant. For the 

smaller of the two reverse-engineered 

products, DOE examined the trend as 

size increases, and for the larger of the 

two products, DOE examined the trend 

as size decreases. DOE averaged these 

two results. 

For the analysis of compact 

refrigerators, DOE considered the 

change in efficiency of typically 

available compressors sized 

appropriately for the products 

examined. For standard-size products, 

DOE used a constant compressor 

efficiency in the analysis. DOE selected 

this approach based on observed data 

indicating that compressor efficiency 

does not vary significantly in the 

capacity range suitable for most 

standard-size products (see, e.g., Figure 

5.8.1 of chapter 5 of the preliminary 

TSD). 

The preliminary TSD did not address 

the approach for determining new 

intercepts for baseline energy use 

equations with modified slopes. 

Changing the slope without a 

corresponding change to the intercept 

value would result in a dramatic 

increase or decrease in the calculated 

baseline energy use. For example, 

consider the preliminary baseline 

energy use equation for product class 5, 

which is 5.32 × AV + 542.5. DOE 

proposes to change this slope from 5.32 

to 11.0. If the intercept remains equal to 

542.5, the calculated energy use of a 

product with an adjusted volume equal 

to 20 would increase from 648.9 to 

762.5, an increase of 17.5 percent. A 

lower intercept would be needed in 

order to offset this change and permit 

the calculated baseline energy use for 

products with typical adjusted volumes 

to remain constant. Without this 

corresponding adjustment, the resulting 

equation would not be representative of 

baseline product energy use. For a 

product with an adjusted volume equal 

to 20, an intercept equal to 428.9 would 

assure that the energy use remains 

648.9. 

Rather than keep the same intercept 

value, as suggested by AHAM (AHAM, 

No. 34 at p. 6), DOE proposes, in 

developing a new baseline energy use 

equation, that the calculated baseline 

energy use for the typically-shipped 

range of products of the class remains 

constant. Ideally, this approach would 

require knowledge of shipment 

quantities for the product class 

disaggregated by adjusted volume. DOE 

does not have access to such shipment 

data and cannot conduct a calculation to 

determine an intercept that is known to 

result in zero change in the shipmentweighted average baseline energy use. 

To work around this limitation, DOE 

proposes to select a new intercept so 

that the increase in the baseline energy 

calculated for the largest adjusted 

volume (based on the new proposed test 

procedure with its modified volume 

adjustment factor) typical for the 

examined product class is equal to the 

decrease in the baseline energy use for 

the smallest adjusted volume typical for 

that product class. For product class 5, 

DOE selected representative minimum 

and maximum adjusted volumes for this 

calculation equal to the adjusted 

volumes of the 18.5 and 25 cubic foot 

reverse engineered products. The 

adjusted volumes for these products are 

22.4 and 29.8 cubic feet. With the 

proposed new intercept of 394.2, the 

baseline energy use for the smaller 

product decreases 21.2 kWh from 661.6 

to 640.4 kWh, while the baseline energy 

use for the larger product increases 21.2 

kWh from 701.3 to 722.5 kWh. A similar 

approach is proposed for product class 

4, as described in section 5.4.2 of 

chapter 5 of the NOPR TSD. The chapter 

also discusses development of a 

baseline energy use equation for product 

class 5A. DOE’s Proposed Procedure 

Reduced Baseline Energy Use equations 

for all of the proposed product classes 

are presented in Table 5.4.12 of chapter 

5 of the NOPR TSD. These equations are 

the basis for development of the energy 

standards in this NOPR. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59505 

DOE requests comment on the 

approach used to develop Proposed 

Procedure Reduced Baseline Energy Use 

equations with adjusted slopes for 

product classes 4, 5, and 5A. DOE also 

seeks relevant data that would allow 

more rigorous adjustment of the curve 

intercept to ensure that the shipmentweighted average impact of the slope 

change would be neutral (i.e., zero 

change) with respect to energy use. DOE 

also seeks any additional information 

that would support similar development 

of adjusted-slope baseline energy curves 

for other product classes. (See Issue 11 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

c. Energy Use Measurement Changes 

Associated With Other Test Procedure 

Changes 

As described in section IV.C.2.a, 

above, DOE developed the Proposed 

Procedure Reduced Baseline Energy Use 

equations based on energy use 

measurement changes associated with 

proposed test procedure changes 

associated with compartment 

temperatures and volume calculation 

methods. DOE calculated the new 

energy conservation standards proposed 

in this notice by applying efficiency 

level percentages to the Proposed 

Procedure Reduced Baseline Energy Use 

equations. Section III. A, above, 

describes the test procedure rulemaking 

and its associated NOPR, which has 

proposed numerous test procedure 

changes in addition to the compartment 

temperature and volume calculation 

method changes. The test procedure 

final rule has not yet been published. 

However, DOE tentatively concludes, 

based on its analysis and the comments 

received in response to the proposed 

procedure, that none of these other 

proposed test procedure changes will 

affect measured energy use. Therefore, 

DOE has used the Proposed Procedure 

Reduced Baseline Energy Use equations 

developed during the preliminary 

analysis (subject to changes in some of 

these equations to address equation 

slope) to establish the proposed 

standards in this notice. 

3. Efficiency Levels Analyzed 

DOE selected baseline products as 

reference points for all of the product 

classes and compared these baselines to 

projected changes resulting from using 

energy saving design options. The 

baseline products in each product class 

represent the common characteristics of 

equipment in that class. 

DOE established a series of 

incremental efficiency levels for which 

it has developed incremental cost data 

and quantified the cost-efficiency 

relationship for each of the eleven 

analyzed product classes. In each 

product class, the highest efficiency 

level is the max-tech level, which 

represents the theoretical maximum 

possible efficiency if all available design 

options are incorporated. Because the 

two products selected for reverse 

engineering for each of the seven 

conventional (free-standing) product 

classes had differing characteristics, the 

max-tech levels for the two products 

were not the same. DOE did not 

consider that the higher of the two maxtech levels would be representative of 

the entire product class. Instead, DOE 

calculated max tech for the product 

class as the average of the max-tech 

levels for the two products analyzed. 

DOE sought comment on the 

incremental efficiency levels and the 

max-tech level for each product class. 

Stakeholders primarily made comments 

about the max-tech levels. The 

comments primarily addressed (a) 

Validity of max tech that is calculated 

based on technology options that are 

used in commercialized products but 

whose combinations in the max-tech 

designs may not be represented by 

products or prototypes, (b) validity of 

DOE’s consideration of variable speed 

compressors for compact products, (c) 

questions regarding whether some of the 

design options, particularly heat 

exchanger size increases, fit physically 

in the products, and (d) questions 

regarding validation of the energy 

modeling predictions. The specific 

comments are detailed below. The 

comments described by topics (b) and 

(c) address the treatment in the 

engineering analysis of design options 

that have been screened-in, and are 

discussed in section IV.C.4, below. DOE 

modified its treatment of some of these 

design options in the NOPR analysis, 

which resulted in adjusting the maxtech levels. The comments described by 

topic (d) address validation of the 

energy modeling tool DOE used in the 

analysis and are discussed in section 

IV.C.5, below. Comments that 

specifically address max-tech levels but 

not energy model validation or 

treatment of design options in the 

analysis are discussed in section III.B.2, 

above. 

4. Engineering Analysis Treatment of 

Design Options 

GE recommended that DOE reevaluate 

its assumptions underlying the 

technologies included in the max-tech 

levels, because some of the design 

options are not feasible for certain 

product classes and some design 

options are not as effective when 

combined with other design options. 

(GE, No. 37 at p. 2) But GE did not 

identify specific options it believed 

were problematic. DOE cannot directly 

respond to comments that do not 

address particular design options in 

question and the specific concerns with 

the way they were evaluated. The 

energy modeling used to determine 

impacts of groups of design options 

modeled the design option groups rather 

than modeling each design option 

individually. The modeling showed the 

reduced effectiveness of design options 

added after other design options had 

already been considered. This resulted 

in less reduction in energy use for such 

design option groups. Hence, the 

analysis captured the reduced 

effectiveness associated with the 

grouping of design options and DOE did 

not modify its analysis in response to 

this comment. 

a. Heat Exchangers 

AHAM, Sub Zero, and GE commented 

that some of the design options 

considered could not be implemented 

due to cabinet size limitations. (AHAM, 

Public Meeting Transcript, No. 28 p. 73; 

Sub Zero, Public Meeting Transcript, 

No. 28 p. 73; GE, Public Meeting 

Transcript, No. 28 p. 74) GE did not 

offer any specifics in its statements or 

comments. When asked to identify 

specific design options that were sizedependent, Sub Zero cited heat 

exchangers (Sub Zero, Public Meeting 

Transcript, No. 28 p. 73) As a result, 

DOE revised its assessment of the 

benefits from increased heat exchanger 

sizes in the NOPR analysis by (a) 

evaluating the potential to increase heat 

exchanger size in each analyzed product 

based on the reverse-engineered product 

details and limiting the size increase— 

in some cases, to no increase—and (b) 

revising the analysis to analyze the heat 

transfer benefit, the increase in 

refrigerant-side pressure drop, and the 

added airside pressure drop and/or 

possible fan power increase associated 

with the change. DOE adopted the latter 

approach rather than applying a factor 

representing an increase in 

performance, as was done for the 

preliminary engineering analysis. This 

revised assessment is discussed in detail 

in chapter 5 of the NOPR TSD in 

sections 5.8.6 and 5.8.7. 

b. Variable Speed Compressors for 

Compact Products 

Whirlpool and Electrolux commented 

that variable speed compressors may not 

be available in the market for product 

class 11 (compact refrigerators and 

refrigerator-freezers with manual 

defrost). (Whirlpool, Public Meeting 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59506 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

Transcript, No. 28 at p. 75; Electrolux, 

Public Meeting Transcript, No. 28 at p. 

75) DOE utilized performance data for 

commercialized variable-speed 

compressors in its analysis. For the 

compact product classes, DOE 

considered the smallest-capacity 

variable speed compressors operating at 

their lowest rated speed. For the 

smallest compact refrigerator analyzed, 

DOE considered replacement of the 

baseline compressor, nominally rated at 

211 Btu/hr capacity and an EER of 3.02 

Btu/hr-W, with a variable speed 

compressor with ratings of 139 Btu/hr 

capacity and 4.96 Btu/hr-W EER at low 

speed (capacity, power input, and EER 

all vary as compressor speed varies). 

DOE confirmed with the compressor 

vendor that these compressors can be 

used in this fashion, although doing so 

may not be cost effective. Based on data 

provided by a manufacturer, DOE also 

degraded the modeled performance of 

variable speed compressors when 

applied to compact products, by 

reducing their modeled capacity by 11 

percent. 

c. Variable Anti-Sweat Heaters 

Whirlpool commented that the 

variable anti-sweat heater design option 

would apply to product class 7 

(refrigerator-freezers—automatic defrost 

with side-mounted freezer with 

through-the-door ice service) and 

possibly 6 (refrigerator-freezers— 

automatic defrost with top-mounted 

freezer with through-the-door ice 

service), in addition to product class 5 

(refrigerator-freezers—automatic defrost 

with bottom-mounted freezer without 

through-the-door ice service). 

(Whirlpool, Public Meeting Transcript, 

No. 28 at pp. 44–45) In response, DOE 

included this design option for analysis 

of product class 7. The design option 

had already been incorporated into the 

analysis for product class 5, with 

respect to the gasket heaters used 

between this product class’s French 

Doors (see Preliminary TSD, chapter 5, 

section 5.8.9). DOE did not develop 

cost-efficiency curves for product class 

6, as this was not one of the directlyanalyzed product classes (see section 

IV.C.1, above). 

d. Vacuum-Insulated Panels 

Section IV.B.1.c, above, discusses 

VIPs from the perspective of the 

screening analysis. As described in that 

section, VIPs were not screened out for 

the NOPR analysis. This section 

addresses comments associated with the 

treatment of VIP technology in the 

engineering analysis. 

AHAM stated that the VIP application 

cost is higher for cabinets than it is for 

doors and questioned whether DOE had 

incorporated the additional cost in its 

analysis (AHAM, Public Meeting 

Transcript, No. 28 at p. 94; AHAM, No. 

34 at p. 7) In addressing this issue, DOE 

assumed for the preliminary analysis 

that VIP installation in a cabinet 

requires 10 times as much labor as 

installation in a door. Information DOE 

obtained during manufacturer 

interviews during the NOPR suggests 

that its labor cost estimates are 

appropriate. DOE used these 

assumptions in calculating its VIP labor 

cost assumptions in the NOPR analysis. 

LG urged DOE to study the 

incremental installation, maintenance, 

and service costs for products using 

VIPs. (LG, No. 41 at p. 4) As discussed 

in more detail in chapter 5 of the NOPR 

TSD, the VIP cost estimate includes 

labor costs and a cost contribution 

attributable to overhead and capital 

costs. As discussed in section IV.B.1.c, 

above, no information is available 

regarding any VIP field failure. DOE is 

also unaware of any specific 

maintenance or service costs associated 

with VIPs. Hence, DOE did not include 

these costs in the analyses for VIPs. 

Sub Zero commented that VIP costs 

offered by three different VIP 

manufacturers are similar, indicating 

that an industry standard has been 

established at present levels of 

technology, maturity, and volume. It 

added that costs may rise to ensure that 

shipping and handling are conducted in 

a way that does not damage the panels. 

(Sub Zero, No. 40 at p. 4) IOU agrees 

with the costs used by DOE in the 

preliminary analysis and expects that 

costs will likely decline in the future 

due to economies-of-scale (IOU, No. 36 

at p. 10) ThermoCor, a VIP vendor 

contacted as part of DOE’s investigation 

of VIP supply issues (see section 

IV.B.1.c, above), expects the increase in 

supply to drive down raw material 

prices and the transition to increased 

automation to reduce production cost. 

DOE did not change the VIP cost 

assumptions from the preliminary 

analysis, because, based on available 

information, (1) DOE expects that VIP 

production capacity can be increased as 

needed within the necessary timeframe, 

thus avoiding a supply/demand 

imbalance that would lead to cost 

increases, and (2) adjustments to 

shipping costs to reduce VIP failure risk 

during transport are insignificant 

compared to overall VIP application 

cost. (DOE projects that if, in order to 

account for the need for special 

handling, transport costs are twice as 

high as normal bulk materials transport 

costs via truck, they would still only 

amount to about 2 percent of total VIP 

costs). 

IOU predicted that the cost premium 

for VIPs could become less significant 

under future regulations that require 

manufacturers to switch from HFC 

blowing agents to alternatives (IOU, No. 

36 at p. 10) DOE does not agree with 

this statement. Information obtained 

through manufacturer interviews and 

discussion with an insulation vendor 

indicates that material cost for 

insulation made using HFC–245fa is 

more expensive than for insulation 

made using the most likely replacement 

blowing agent, cyclopentane. Hence, the 

cost premium for VIPs may more likely 

increase slightly. As an example, HFC– 

245fa may represent 12.5 percent of the 

mass of the foam insulation. At a cost 

of roughly $5/lb and insulation density 

of roughly 2 pounds per cubic foot, the 

blowing agent represents $1.25 per 

cubic foot of insulation. Cyclopentane 

costs roughly $1 per pound. Hence, 

when switching to cyclopentane-blown 

insulation, the blowing agent represents 

$0.25 per cubic foot of insulation. DOE 

used a VIP price in its analysis of $3.19 

per square foot at a thickness of one-half 

inch—this is equal to $76.56 per cubic 

foot on a volume basis. The total cost of 

the displaced HFC–245fa foam 

insulation when applying VIPs is 

roughly 2 percent of the VIP cost, or 

$1.53. Hence, switch from HFC–245fa to 

cyclopentane blowing agent will 

increase the cost of the use of VIPs from 

$75.03 to $76.03 per cubic foot. This 

increase is very small compared to the 

overall cost of implementing VIPs. 

The IOU comment also suggests that 

VIPs could be used to maintain thermal 

performance with reduced impact on 

external size or internal volume (IOU, 

No. 36 at p. 10) DOE agrees with this 

statement, and expects that some 

manufacturers might use this approach 

to maintain internal volume. However, 

this possibility has no bearing on DOE’s 

engineering analysis, in which DOE 

must determine the most cost effective 

groups of screened-in design options 

that are needed to achieve each 

considered efficiency level. 

NRDC stated that VIPs could alleviate 

some of the cost burden associated with 

potential climate change legislation or 

regulation that would increase the cost 

of HFC blowing agents by reducing the 

amount of foam insulation needed 

(NRDC, No. 39 at p. 4) At this time, DOE 

does not believe that a scenario 

involving limits on HFC use would 

involve manufacturers switching to 

increased use of VIPs while continuing 

to use HFC blowing agent. Instead, the 

available information leads DOE to 

predict that manufacturers would 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59507 

instead switch to insulation not 

containing HFC blowing agent, since 

this approach is much more cost 

effective than the adoption of VIPs. This 

result assumes that additional moderatecost design options can be applied to 

make up for any efficiency loss 

associated with the switch to alternative 

blowing agents. DOE believes that VIPs 

would be used only if they are the most 

cost-effective design option for making 

up this efficiency difference. 

DOE requests comment on its 

treatment of design options in the 

engineering analysis. (See Issue 12 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR, below.) 

5. Energy Modeling 

DOE upgraded the ERA program used 

in the previous refrigerator rulemaking 

in preparation for the energy analysis 

conducted for this rulemaking. 

Upgrades, including use of heat 

exchanger models based on more recent 

literature and development for a 

Windows platform are described in 

more detail in appendix 5–B of the 

NOPR TSD. The program has also been 

made available on the DOE rulemaking 

Web site at the following URL: http://

www1.eere.energy.gov/buildings/

appliance_standards/residential/

refrigerators_freezers_prelim_

analytical_spreadsheets.html. 

Sub Zero asked DOE whether and to 

what extent it used actual test data to 

calibrate ERA models, and how well it 

predicted performance over a range of 

operating conditions. (Sub Zero, No. 40 

at p. 8) AHAM questioned the 

evaluation of design options and 

requested that the ERA simulation 

program be made available. (AHAM, No. 

34 at p. 10) Electrolux also posed 

questions regarding calibration of the 

ERA model and asked whether the 

model could be made available. 

(Electrolux, Public Meeting Transcript, 

No. 28 at p. 76) 

DOE notes that the ERA program has 

been posted on the DOE’s rulemaking 

Web site since the end of February 2010. 

Additionally, the preliminary TSD 

described many of the inputs that were 

used in developing of the energy use 

models for the reverse-engineered 

products that served as the basis of 

DOE’s efficiency improvement 

calculations. DOE tested many of the 

reverse-engineered products, including 

tests for standard-size refrigeratorfreezers for both the current test 

procedure compartment temperatures 

and the proposed new compartment 

temperatures. DOE instructed the test 

facility to measure refrigerant tube 

temperatures during these tests to 

indicate refrigerant conditions during 

compressor on-cycles. DOE measured 

the power input of fans as part of the 

reverse-engineering process, and used 

this information as input for the models. 

DOE also used the compressor power 

input during on-cycles during testing to 

help calibrate teardown product energy 

models. DOE adjusted input data for the 

energy models based on all available 

information to obtain energy use 

estimates within a few percentage 

points of the rated or measured energy 

of the products analyzed. In some cases, 

DOE adjusted the input using additional 

load and/or other input factors to 

degrade or improve system or cabinet 

thermal performance to match measured 

energy use or operating parameters. 

Examples include (1) boost of 

performance of one style of condenser to 

match measured condensing 

temperature and compressor power 

input during the on-cycle, and (2) 

addition of thermal load for some 

products, particularly side-mount 

refrigerator-freezers and upright 

freezers, to match total energy use. The 

energy model input data for the reverseengineered products are presented in 

appendix 5–A of the NOPR TSD. 

DOE also examined whether model 

predictions for the design options 

groups required to achieve higher 

efficiency levels matched the design 

options used in actual products, where 

such information was available. For 

example, DOE obtained information 

from manufacturers during the NOPR 

phase discussions regarding the 

combination of design options required 

to achieve a 30 percent reduction in 

energy use in standard-size refrigeratorfreezers as compared with the current 

standard. Achieving this level generally 

required using the highest-efficiency 

single-speed compressors, brushless-DC 

fan motors, and substantial use of VIPs. 

The energy model results were 

consistent with this information. 

DOE requests comments, information, 

and data that would help adjust its 

energy modeling input and/or results 

that would allow more accurate 

representation of the energy use impacts 

of design options using the ERA energy 

model. (See Issue 13 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

VII.E of this NOPR, below.) 

6. Cost-Efficiency Curves 

Chapter 5 of the NOPR TSD provides 

the full list of manufacturer production 

costs (MPCs) and MSPs at each 

efficiency level for each analyzed 

product class. 

ACEEE/ASAP stated that DOE should 

not rely principally on manufacturerprovided cost curves. (ACEEE/ASAP, 

No. 43 at p. 6) This comment addresses 

the variation in the cost information 

provided to DOE by AHAM. ACEEE/ 

ASAP cited (a) the lack of transparency 

of consolidated data provided by AHAM 

and (b) the expectation that such data 

do not accurately predict future costs as 

reasons why DOE should not rely on 

these data. The commenters urged DOE 

to use the lowest cost information 

provided by any manufacturer, since 

other manufacturers would have to 

adopt the lowest-cost design approaches 

to remain competitive, or they would 

lose market share, thus increasing the 

representativeness of the lowest-cost 

designs. (Id.) AHAM expressed concerns 

regarding how manufacturers reported 

cost data and will reevaluate its 

submissions to DOE. (AHAM, Public 

Meeting Transcript, No. 28 at pp. 89–90) 

DOE has not received updated 

information. Because of the questions 

cited above regarding AHAM’s data 

collection and aggregation, DOE has not 

attempted to present comparisons of 

DOE’s NOPR analysis results with the 

preliminary analysis data provided by 

AHAM. DOE has developed curves 

representing the cost of achieving the 

analyzed efficiency levels using 

manufacturing cost modeling and 

energy modeling based on reverse 

engineering. DOE used its own curves in 

the downstream analyses such as the 

LCC/PBP and NIA analyses. 

AHAM and GE requested clarification 

regarding the cost-efficiency curve 

presented on page 55 of the preliminary 

TSD, specifically asking which of the 

two design options labeled ‘‘VIP to FZR 

door’’ was actually the ‘‘VIP to FZR 

door’’ design option. (AHAM, No. 34 at 

p. 10; GE, Public Meeting Transcript, 

No. 28 at p. 85) DOE has since adjusted 

the analyses on which this comment 

was based (see the changes made to 

analyses between the preliminary 

analysis and NOPR phases listed in 

Table IV.10, above). Accordingly, this 

comment has been superseded by 

intervening events. 

7. Development of Standards for LowVolume Products 

DOE sought comment on its approach 

to developing energy standards for lowvolume products. Sub Zero commented 

on the high degree of uncertainty of the 

analysis which was based on computer 

models and selective teardowns, and 

suggested adding margins of uncertainty 

to the results. (Sub Zero, No. 40 at p. 3– 

4) AHAM recommended that DOE 

generate cost-efficiency curves for all 

product classes, since low shipment 

product classes (i.e., low-volume 

compacts) have much smaller 

economies of scale and greater design 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59508 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

29The FFCR represents the market share of the 

four largest firms in the relevant sector. Generally, 

an FFCR of less than 40 percent indicates that a 

sector is not concentrated and an FFCR of more 

than 70 percent indicates that a sector is highly 

concentrated. 

challenges due to size and special 

constraints. As a result, these product 

classes have much higher costs and 

reduced energy efficiency 

improvements compared to the highvolume product classes. AHAM 

suggested that DOE request data to 

estimate cost-efficiency curves for lowvolume products during MIA 

interviews. Finally, AHAM stressed that 

low-volume product classes can make 

up a major portion of a niche 

manufacturer’s sales, so it is critical to 

evaluate these product classes as 

realistically as possible to be fair to 

these manufacturers. (AHAM, Public 

Meeting Transcript, No. 28 at pp. 98, 99 

and No. 34 at pp. 7–8) Whirlpool agreed 

with AHAM and offered to provide data 

for all product classes in an effort to 

help DOE model low-volume product 

classes accurately. (Whirlpool, No. 31 at 

p. 2) 

In response, DOE adopted AHAM’s 

suggestion for certain low-volume 

products such as built-ins, for which 

DOE obtained detailed engineering data 

from a built-in manufacturer to allow 

development of cost-efficiency curves. 

However, because of limited resources, 

DOE cannot conduct a complete 

analysis for every product variation. 

DOE explained the proposed approach 

thoroughly during the framework 

meeting and in the framework 

document and was not urged by 

stakeholders at that time to consider 

detailed analyses of more product 

classes. 

D. Markups To Determine Product Cost 

The markups analysis develops 

appropriate markups in the distribution 

chain to convert the estimates of 

manufacturer cost derived in the 

engineering analysis to consumer prices. 

DOE determined the distribution 

channels for refrigeration products and 

the markups associated with the main 

parties in the distribution chain, 

manufacturers and retailers. DOE 

developed an average manufacturer 

markup by examining the annual 

Securities and Exchange Commission 

(SEC) 10–K reports filed by four 

publicly-traded manufacturers primarily 

engaged in appliance manufacturing 

and whose combined product range 

includes residential refrigeration 

products. For retailers, DOE developed 

separate markups for baseline products 

(baseline markups) and for the 

incremental cost of more-efficient 

products (incremental markups). 

Incremental markups are coefficients 

that relate the change in the 

manufacturer sales price of higherefficiency models to the change in the 

retailer sales price. 

Commenting on the preliminary TSD, 

AHAM filed supplemental comments 

that criticized DOE’s application of 

‘‘incremental’’ markups to the 

incremental manufacturer selling price 

of products more efficient than the 

baseline products. (AHAM, No. 34 at p. 

14) In Exhibit B accompanying this 

comment, AHAM stated that (1) DOE 

provides no empirical evidence to 

validate that retailers obtain only 

incremental markups on products with 

greater features and costs; and (2) DOE 

is asserting a normative approach 

without any support showing that its 

model reflects actual retail practices. 

These comments effectively criticized 

two of the key assumptions in DOE’s 

theoretical construct. The first of these 

assumptions is that the costs incurred 

by appliance retailers can be divided 

into costs that vary in proportion to the 

MSP (variable costs), and costs that do 

not vary with the MSP (fixed costs). The 

second of these assumptions is that 

retailer prices vary in proportion to 

retailer costs that are included in the 

balance sheets. 

Regarding the first assumption, 

AHAM stated that DOE has offered no 

evidence that the fixed/variable cost 

mix of a retailer has anything to do in 

practice with the markups that will be 

earned by a retailer on products that 

meet a new energy conservation 

standard. It added that DOE uses a 

‘‘spurious analogy’’ of HVAC contractors 

as a basis for considering the costs of a 

retailer, and that DOE did not analyze 

the actual drivers of retail costs, where 

the cost structure has considerably 

different characteristics from those of an 

HVAC contractor. It stated that DOE has 

not presented any data or analysis that 

would yield a fixed versus variable cost 

allocation applicable to retailers. 

Regarding DOE’s second assumption, 

AHAM stated that DOE’s approach 

depends on the presence of a relatively 

high level of competition in the retail 

industry. AHAM presented data 

showing that the four firm concentration 

ratio (FFCR) of the sectors that sell 

major appliances ranges from 42 to 65 

percent, which verges on the standard 

definition of an oligopoly.29

In conclusion, AHAM viewed DOE’s 

incremental markup approach as 

lacking a credible theoretical 

underpinning and demonstrated 

reliability and asserted that the data 

required for the approach are not 

available. AHAM stated that DOE 

should return to its traditional practice 

of using average markups for both the 

baseline products and for the added 

costs of efficiency improvements. In 

AHAM’s view, the stability of markups 

in the retailing sectors leads to the 

reasonable inference that such markups 

will continue and apply to higherefficiency products in the future when 

they become the bulk of sales under 

amended standards. (AHAM, No. 34, 

Exhibit B, p. 12) In addition to AHAM’s 

comment, GE expressed concerns with 

the assumptions DOE is using in 

proposing a lower markup on energy 

efficiency improvements. (GE, No. 37 at 

pp. 2–3) 

In response to the above comments, 

DOE extensively reviewed its 

incremental markup approach. It 

assembled and analyzed relevant data 

from other retail sectors, and held 

preliminary discussions with an expert 

retailing consultant. As a result of this 

research, DOE found that empirical 

evidence is lacking with respect to 

appliance retailer markup practices 

when a product increases in cost (due 

to increased efficiency or other factors). 

DOE understands that real-world 

retailer markup practices vary 

depending on market conditions and on 

the magnitude of the change in cost of 

goods sold (CGS) associated with an 

increase in appliance efficiency. 

Given this uncertainty with respect to 

actual markup practices in appliance 

retailing, DOE uses an approach that 

reflects two key concepts. First, changes 

in the efficiency of the appliances sold 

are not expected to increase economic 

profits. Thus, DOE calculates markups/ 

gross margins to allow cost recovery for 

retailers (including changes in the cost 

of capital) without changes in company 

profits. Second, efficiency 

improvements only impact some 

distribution costs. DOE sets markups to 

cover only the variable costs expected to 

change with efficiency. 

DOE’s separation of operating 

expenses into fixed and variable 

components to estimate an incremental 

markup follows from the above 

concepts. DOE defines fixed expenses as 

including labor and occupancy 

expenses because these costs are not 

likely to increase as a result of a rise in 

CGS due to amended efficiency 

standards. All other expenses, as well as 

the net profit, are assumed to vary in 

proportion to the change in CGS. DOE 

acknowledges that its allocation of 

expenses into fixed and variable 

categories is based largely on limited 

information and seeks additional 

information from interested parties to 

help refine its allocation approach. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59509 

30The channels for which AHAM provided gross 

margin data for 1993–2007 are Electronics and 

Appliance Stores, General Merchandise Stores, and 

Building Material and Supplies Dealers. According 

to AHAM, these channels accounted for 43%, 31% 

and 17% of major appliance sales in 2007, 

respectively. 

31For information on RECS, see http:// 

www.eia.doe.gov/emeu/recs/. 

DOE’s method results in an outcome 

in which retailers are assumed to cover 

their costs while maintaining their 

profit margins when the CGS of 

appliances changes. Market competition 

is a main reason why DOE believes that 

profit margins would not change in a 

significant way. Regarding AHAM’s 

assertion that the degree of competition 

in appliance retailing is not sufficient to 

support DOE’s model, DOE believes that 

AHAM’s measure of competition is 

faulty. AHAM measured the FFCR of 

three retail channels: Electronics and 

Appliance Stores, Building and Material 

and Supplies Dealers, and General 

Merchandise Stores. These values 

represent competitiveness within each 

sector, but refrigerators are sold across 

all three sectors, preventing major 

retailers in each sector from exercising 

significant market power. To properly 

measure the competitiveness within 

appliance retailing, DOE believes that 

one should measure the FFCR for only 

the appliance sub-sector within the 

above channels, and accordingly 

estimated the ‘‘appliance sales’’ FFCR, 

equal to the sector FFCR times the 

percent of appliance sales within each 

sector. DOE estimated that these subsector FFCRs are under the 40 percent 

threshold. Furthermore, ‘‘Household 

Appliance Stores,’’ a subsector of the 

Electronics and Appliance Stores sector 

that specifically represents appliance 

retailers, rather than computer or other 

electronics stores, has an FFCR of 17 

percent, signifying an unconcentrated 

sector. 

Regarding AHAM’s observation about 

the relative stability of average markups 

for the major retail channels that sell 

home appliances, DOE believes that the 

usefulness of this information for 

estimating markups on specific product 

lines is limited. The markups implied 

by gross margin at the level of major 

retail channels 30 are averaged over 

multiple product lines and many 

different store types. The empirical data 

at this level do not provide useful 

guidance for estimating what happens to 

the markup on specific products when 

their costs change. Applying the same 

markup as CGS increases, as AHAM 

recommends, would mean that the rise 

in CGS associated with higher-efficiency 

products would translate into higher 

retail gross margins for that product 

line. Since the majority of operating 

expenses would not be affected by the 

rise in CGS, the result would be an 

increase in net profit as a share of sales. 

While such an outcome could occur in 

the short run, DOE believes that 

competitive forces in the market would 

tend to decrease the profit margin over 

time. 

Based on the above considerations, 

DOE has decided to continue to apply 

an incremental markup to the 

incremental MSP of products with 

higher efficiency than the baseline 

products. As part of its review, DOE 

developed a new breakdown into fixed 

and variable components using the 

latest expense data provided by the U.S. 

Census for Electronics and Appliance 

Stores, which cover 2002. The newlyderived incremental markup, which 

would be applied to an incremental 

change in CGS, is 1.17, which is slightly 

higher than the value of 1.15 that DOE 

used in the preliminary analysis. 

Chapter 6 of the NOPR TSD provides a 

description of both the method and its 

current application using the aforementioned data. 

DOE requests information regarding 

the response of retailers to incremental 

change in the CGS of appliances 

associated with energy conservation 

standards. (See Issue 14 under ‘‘Issues 

on Which DOE Seeks Comment’’ in 

section VII.E, below.) 

Chapter 6 of the NOPR TSD provides 

additional detail on the markups 

analysis. 

E. Energy Use Analysis 

DOE’s analysis of the energy use of 

refrigeration products estimated the 

annual energy use of products in the 

field that would meet the considered 

efficiency levels, i.e., as they are 

actually used by consumers. The energy 

use analysis provides the basis for other 

analyses DOE performs, particularly 

assessments of the energy-savings and 

the savings in consumer operating costs 

that could result from DOE’s adoption of 

amended standard levels. In contrast to 

the DOE test procedure, which provides 

standardized results that can serve as 

the basis for comparing the performance 

of different appliances used under the 

same conditions, the energy use analysis 

seeks to capture the range of operating 

conditions for refrigeration products in 

U.S. homes. 

To determine the field energy use of 

products that would meet possible 

amended standard levels, DOE used 

data from the Energy Information 

Administration (EIA)’s 2005 Residential 

Energy Consumption Survey (RECS), 

which was the most recent such survey 

available at the time of DOE’s analysis.31

RECS is a national sample survey of 

housing units that collects statistical 

information on the consumption of and 

expenditures for energy in housing units 

along with data on energy-related 

characteristics of the housing units and 

occupants. RECS provides sufficient 

information to establish the type 

(product class) of refrigeration product 

used in each household, and also 

provides an estimate of the household’s 

energy consumption attributable to 

‘‘refrigerators’’ or ‘‘freezers’’. As a result, 

DOE was able to develop household 

samples for the representative product 

classes for standard-size units. DOE did 

not use RECS for compact refrigerators 

and freezers because a large fraction of 

these products are used outside the 

residential sector. Instead, it based the 

energy use for these products on the 

DOE test procedure. 

The preliminary analysis treated the 

energy consumption attributed by RECS 

to refrigerators or freezers as the field 

energy consumption, referred to as 

FECRECS, of the refrigeration product(s) 

in each sample household. DOE derived 

a multiplicative ‘usage adjustment 

factor’ (UAF) that relates this quantity to 

the estimated test energy consumption 

of the products in each household. To 

develop a UAF for each RECS 

household, DOE utilized information 

that RECS provides on the size (i.e., 

volume), age and the product class of 

the refrigeration product in use. DOE 

determined, for each household’s unit, 

the corresponding maximum allowable 

tested energy consumption, referred to 

as TECSTD, based on the energy 

conservation standard that was in effect 

at the time the household purchased the 

refrigeration product. Using FECRECS

and TECSTD, DOE then developed the 

UAF for each household to capture the 

combined effects of consumer behavior 

(e.g., door openings), operating 

conditions (e.g., room temperature and 

humidity), and product characteristics 

(e.g., efficiency relative to the minimum 

allowable). The UAF represents the 

adjustment that needs to be made to the 

maximum allowable tested energy use 

to arrive at the field energy 

consumption of the refrigeration 

product. 

Commenting on the preliminary TSD, 

AHAM criticized DOE’s proposed 

approach for estimating the energy use 

of refrigerator-freezers, and stated that 

DOE should instead rely on the test 

procedure. (AHAM, No. 34 at pp. 11–12) 

Accompanying its comment, AHAM 

submitted Exhibit A, which elaborated 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59510 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

32Exhibit A: Evaluation of the Proposed Use by 

the Department of Energy of RECS Data in its 

Energy Use Determination Under the Preliminary 

Technical Support Document (TSD) for 

Refrigerators, Freezers and Refrigerator-Freezers. 

on AHAM’s concerns criticisms.32 In 

AHAM’s view: 

1. RECS data has served well as a 

directional, general guidance tool in 

energy policymaking, but the 

preliminary TSD proposes an 

unprecedented use of these data in a 

specific appliance energy efficiency 

rulemaking. 

2. Use of RECS data to set a 

refrigerator/freezer standard is 

improper, legally flawed and is arbitrary 

and capricious. The proposed RECS 

data approach operates as a ‘‘black box,’’ 

the inner workings of which are not 

well understood. The input data are not 

direct and actual measurements of 

energy use, but rather statistical 

inferences. 

3. While the current, long-standing 

methodology that relies on the test 

procedure for determining future energy 

savings and PBP under a new or 

amended efficiency standard has a very 

clear basis in current law, the 

preliminary TSD proposal to use RECS 

data does not. 

4. Because of its statistical 

deficiencies, the UAF approach does not 

permit the Secretary to rationally and 

substantially meet his legal obligation in 

this rulemaking to determine savings in 

operating costs and total projected 

amount of energy savings likely to result 

directly from imposition of the 

standard. 

5. Rather than use RECS data, as the 

preliminary TSD proposes, DOE should 

amend and use the test procedure. 

Whirlpool and LG also questioned 

DOE’s approach, and recommended that 

DOE should use the test procedure and 

drop UAFs from the analysis. 

(Whirlpool, No. 31 at p. 2; LG, No. 41 

at p. 1) 

In response, DOE first addresses the 

appropriateness of using RECS data to 

estimate appliance energy use (AHAM’s 

points 1 and 3, above). As further 

discussed below, DOE has used RECS 

data to help determine the energy use of 

covered products in many residential 

appliance standards rulemakings over 

the past decade. Regarding the legal 

basis for using RECS data, DOE uses 

RECS data because it helps DOE to 

evaluate two of the factors that EPCA 

directs the Secretary to consider in 

determining whether an energy 

conservation standard for a particular 

covered product is economically 

justified. The first of these is the 

economic impact of potential standards 

on the manufacturers and the 

consumers of the covered products. (42 

U.S.C. 6295(o)(2)(B)(i)(I)) The second 

factor is the savings in operating costs 

throughout the estimated average life of 

the covered product in the type (or 

class) compared to any increase in the 

price of, or in the initial charges for, or 

maintenance expenses of, the covered 

products which are likely to result from 

the imposition of the standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II)) 

To evaluate economic impacts on 

consumers and the savings in operating 

costs as accurately as possible, DOE 

needs to determine the energy savings 

that are likely to result from a given 

standard. Such a determination requires 

knowledge of actual use of covered 

products by consumers. RECS provides 

information that helps DOE to 

determine such use. 

In addition, DOE uses RECS data 

because it is consistent with the 

guidance contained in 10 CFR part 430, 

subpart C, appendix A—Procedures, 

Interpretations and Policies for 

Consideration of New or Revised Energy 

Conservation Standards for Consumer 

Products. Specifically, section 11 of 

appendix A lists variation in consumer 

impacts as one of the principles for the 

analysis of impacts on consumers. 

Because RECS is a representative 

sample of U.S. households that provides 

considerable information about each 

household in the sample, it allows DOE 

to evaluate factors that contribute to 

variation in the energy use of covered 

products. In turn, this allows DOE to 

estimate the fraction of consumers that 

will benefit from standards at various 

efficiency levels. 

Consistent with the statute and DOE’s 

regulatory guidance, DOE has used 

RECS data in a variety of ways over the 

past decade. In most cases, DOE has 

used the relevant DOE test procedure or 

a similar procedure as the basis for 

energy use calculation, and used RECS 

data to provide a range for key input 

variables concerning the operation of 

covered products. Examples include the 

standards rulemaking for water heaters 

concluded in 2001 (66 FR 4474 (January 

17, 2001)), and in the recentlyconcluded rulemaking that amended 

standards for water heaters (75 FR 

20112 (April 16, 2010)). In both 

rulemakings, DOE used data for each of 

the households in the RECS sample to 

estimate the amount of household daily 

hot water use, and to specify certain 

factors that affect water heater operating 

conditions. 

Additionally, DOE’s 2001 final rule 

for central air conditioners and heat 

pumps relied on annual energy use 

based on the annual end-use energy 

consumption values in RECS. 66 FR 

7170 (January 22, 2001). DOE 

determined that basing the energy use 

on RECS household data provided a 

more accurate measure of the savings 

possible from more-efficient equipment, 

and accounted for variability due to 

climatic conditions and consumer 

behavior. The particular use of RECS 

data in the preliminary TSD to derive 

UAFs reflected a new analytical 

approach, but it was consistent with the 

purposes underlying DOE’s use of RECS 

in previous rulemakings. 

Regarding AHAM’s recommendation 

that DOE should use the amended test 

procedure for refrigerator-freezers to 

estimate energy use for the purposes of 

its analysis of standards, test procedures 

must be reasonably designed to produce 

test results which measure energy 

efficiency, energy use or estimated 

annual operating cost of a covered 

product during a representative average 

use cycle or period of use. (42 U.S.C. 

6293(b)(3)) Relying solely on a 

representative average use cycle or 

period of use does not provide an 

accurate measure of the possible energy 

savings since this approach 

inadequately evaluates the economic 

impact of the standard on consumers, 

and the savings in operating costs 

throughout the estimated life of the 

product—two factors under EPCA that 

DOE must consider when promulgating 

an amended energy conservation 

standard. Further, the approach 

suggested by AHAM would not account 

for the variability stemming from 

household differences or be consistent 

with the above-cited guidance contained 

in 10 CFR part 430, subpart C, appendix 

A. In contrast, the approach that DOE 

has used in residential product 

rulemakings for over a decade accounts 

for all of these factors. 

DOE applies the test procedure to 

ascertain whether the consumer costs 

associated with the purchase of a 

product that complies with the 

proposed standard level is less than 

three times the value of the energy 

savings the consumer will receive 

during the first year of ownership. (42 

U.S.C. 6295(o)(2)(B)(iii)) This 

calculation is separate from the payback 

periods calculated in the LCC and 

payback period analysis, as the latter is 

intended to assess the economic impact 

of potential standards on the consumers 

of the covered products. Both 

calculations are part of DOE’s routine 

analysis when evaluating potential 

standards for a given product. 

AHAM also questioned how DOE 

justifies using the test procedure to 

carry out its engineering analysis and 

manufacturing impact analysis while 

using a different set of values for 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59511 

33California Energy Commission, Appliances 

Database—Refrigeration, 1998–2009. http:// 

www.energy.ca.gov/appliances/database/

excel_based_files/Refrigeration/ (Last accessed 

April 25, 2009); The NPD Group, Inc., The NPD 

Group/NPD Houseworld—POS, Refrigerators, 

January–December 2008, 2007–2008, Port 

Washington, NY; and Association of Home 

Appliance Manufacturers, data from 2005–2008, 

memoranda dated January 19, 2009 and March 26, 

2010, Washington, DC. 

carrying out a life-cycle cost and 

national impact analysis. (AHAM, No. 

34 at p. 11) In the engineering analysis, 

DOE uses the test procedure to evaluate 

the relative improvement in energy 

efficiency provided by different design 

options. The manufacturing impact 

analysis uses the same cost-efficiency 

curves developed in the engineering 

analysis to calculate industry revenue. 

DOE does not rely solely on the test 

procedure in the LCC and payback 

period analysis or the national impact 

analysis for the reasons stated above. 

AHAM’s criticism of the statistical 

technique that DOE used to develop 

UAFs for refrigerator-freezers was 

echoed by other interested parties who 

raised issues regarding use of the RECS 

data. Whirlpool and GE stated that DOE 

should refrain from using RECS data for 

the rulemaking because it will be 

outdated and it does not discriminate 

between top- and bottom-mount 

refrigerators. (GE, No. 37 at p. 2; 

Whirlpool, No. 31 at p. 2) LG also 

commented that the RECS data are 

outdated, as many factors involved in 

household usage have changed since 

2005. (LG, No. 41 at p. 2) 

ACEEE supported DOE’s efforts to 

develop UAFs to capture the difference 

between measured energy use in the lab 

and in-field energy use, but commented 

that the suggested approach is flawed. It 

urged DOE to look for any existing sets 

of metered field data that can be used 

to develop UAFs. (ACEEE, No. 43 at p. 

2) NRDC also cautioned against the use 

of RECS data without metered data to 

help justify the conclusions, and urged 

DOE to collect metered data and explore 

all other data sources to keep the UAFs 

in perspective. (NRDC, No. 39 at p. 6) 

The IOUs also supported use of UAFs, 

but stated that ideally they should be 

based on metered data. (IOU, No. 36 at 

p. 10) NEEP expressed its general 

support for DOE’s approach, but 

cautioned that RECS data misrepresents 

refrigeration-only energy use because it 

includes the energy used for icemaking. 

NEEP recommended taking icemaking 

energy use in the RECS data into 

account when developing UAFs. (NEEP, 

No. 38 at p. 2) Similarly, NPCC 

supported DOE’s effort to estimate in 

situ energy use, but stated that DOE’s 

use of statistical regression may result in 

exaggerated differences between test 

and field energy use. It stated that UAFs 

should be based on metered energy use 

or a regression that permits isolation of 

icemaking energy use. (NPCC, No. 33 at 

p. 2) 

For the reasons previously discussed, 

DOE believes that, in general, using 

RECS data in the estimation of field 

energy use of refrigeration products is 

valid. However, it acknowledges that 

the approach used in the preliminary 

analysis has shortcomings. Recognition 

of these shortcomings, combined with 

the urging of several interested parties 

that DOE should look for existing sets of 

metered field data, prompted DOE to 

develop a new approach for the NOPR 

to estimate energy use of refrigeration 

products in U.S. homes. This approach 

involved collecting field-metered 

electricity use data for residential 

refrigeration products. 

DOE was able to obtain data from 

seven studies, including about 100 data 

points that DOE collected itself. A total 

of 1,967 data points were collected that 

included units from all representative 

product classes except compact freezers, 

and spanned a variety of collection 

years, unit ages, U.S. locations and 

household populations, including some 

units used in commercial settings (e.g., 

offices and hotels). DOE made various 

adjustments to the raw data, including 

extrapolation to annual electricity 

consumption where necessary. 

Test energy consumption was 

obtained for each unit. From identifying 

information about each unit, test energy 

consumption was estimated for each 

unit and the UAF was calculated as the 

ratio of metered energy use to test 

energy use. The data were pooled into 

four categories: primary refrigerators, 

secondary refrigerators, freezers and 

compact refrigerators. Although DOE 

considered including data for compact 

refrigerators in the final analysis, it 

decided not to include those data due to 

concerns over data quality and 

representativeness. 

For each category, DOE performed 

weighted least-squares regressions on 

numerous variables of potential interest 

in order to construct a function that 

predicts the UAF based on household 

and climate variables. DOE selected for 

final evaluation a small number of 

variables for which the regression 

results had sufficient statistical 

significance, and that could be obtained 

or reasonably inferred from RECS 

variables. Within each of the three 

product categories modeled, DOE used 

the appropriate set of regression 

coefficients, along with values for the 

relevant variables specific to each 

household to generate UAF estimates for 

each RECS household. For compact 

refrigeration products, a UAF of 1 was 

used. 

Using the UAF derived for each RECS 

household, DOE determined the field 

energy consumption in each household 

of a new refrigeration product at each 

considered efficiency level using the 

following equation: 

FECEL = FECRECS • (1¥R) = UAFRECS

• TECRECS • (1¥R) 

Where: 

FECEL = new refrigeration product’s field 

energy consumption at a given efficiency 

level; 

FECRECS = new refrigeration product’s field 

energy consumption at baseline 

efficiency level; 

R = reduction in energy consumption 

(expressed as fraction) due to efficiency 

improvements; 

UAFRECS = usage adjustment factor specific to 

RECS household; 

TECRECS = maximum allowable test energy 

consumption for the new baseline 

refrigeration product. 

In order to make the 2005 RECS 

sample more representative of current 

refrigeration products, DOE made two 

modifications. First, DOE modified the 

RECS weights for top- vs. bottom-mount 

refrigerators in order to reflect current 

information on the relationship between 

income and refrigerator door style (i.e., 

top- or bottom-mount) provided by 

AHAM in 2010. Second, DOE examined 

recent data from three sources 33 to scale 

the average interior volume of standardsize refrigerator-freezers from the 2005 

RECS data. The average scaled volumes 

for product classes 3 (refrigeratorfreezer—automatic defrost with topmounted freezer without through-thedoor ice service), 5 (refrigeratorfreezers—automatic defrost with 

bottom-mounted freezer without 

through-the-door ice service) and 7 

(refrigerator-freezers—automatic defrost 

with side-mounted freezer with 

through-the-door ice service) are now 

18.3, 20.9 and 24.8 cubic feet, 

respectively (approximately 2, 16 and 

18 percent higher, respectively, than in 

the preliminary analysis). As for other 

factors affecting household usage, the 

field metered data indicate no 

significant differences in UAF with 

respect to survey year after 1993. DOE 

requests comments on the weighting of 

the RECS sample using income 

relationships and volume scaling. (See 

Issue 15 under ‘‘Issues on Which DOE 

Seeks Comment’’ in section VII.E, 

below.) 

For compact refrigerators, DOE used a 

UAF of 1 in the preliminary analysis. 

AHAM commented that it supports 

using UAF of 1 for compact refrigeration 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59512 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

products. (AHAM, No. 34 at p. 12) 

Because DOE has concerns about the 

reliability of the metered data for 

compact refrigerators, it continued to 

use a UAF of 1 for the NOPR analysis. 

Table IV.12 presents a comparison of 

the UAFs calculated using the above 

approach with those calculated for the 

preliminary TSD. The average UAFs in 

the NOPR analysis are less than those 

used in the preliminary TSD, 

particularly for standard-size freezers. 

DOE requests comments on its approach 

for developing UAFs using fieldmetered data. (See Issue 16 under 

‘‘Issues on Which DOE Seeks Comment’’ 

in section VII.E, below.) 

TABLE IV.12—AVERAGE UNIT ADJUSTMENT FACTORS USED IN THE ENERGY USE ANALYSIS

Product class 

Preliminary TSD NOPR 

Number Description 

3 ........... Refrigerator-freezer—automatic defrost with top-mounted freezer without through-thedoor ice service.1.23 0.93 (0.82 to 1.04) * 

5 ........... Refrigerator-freezers—automatic defrost with bottom-mounted freezer without throughthe-door ice service.1.08 0.92 (0.81 to 1.02) * 

7 ........... Refrigerator-freezers—automatic defrost with side-mounted freezer with through-thedoor ice service.1.44 0.94 (0.84 to 1.03) * 

9 ........... Upright freezers with automatic defrost .............................................................................. 1.37 0.85 

10 ......... Chest freezers ..................................................................................................................... 1.48 0.89 

11 ......... Compact refrigerators and refrigerator-freezers with manual defrost ................................. 1.00 1.00 

18 ......... Compact chest freezers ...................................................................................................... 1.00 1.00 

* Averages are based on lifetime distribution and include conversion to 2nd refrigerators. Range indicates average UAF in year 1 (minimum) 

and year 20 (maximum). 

Whirlpool stated that DOE used a 

flawed approach in backing out 

icemaker energy use by identifying 

products with TTD ice as ice-making 

products and counting other types as 

not having an ice maker. (Whirlpool, 

No. 31 at p. 3) In fact, DOE made no 

such adjustments in deriving UAF data 

in the preliminary analysis. However, 

DOE was able to obtain from the fieldmetered data an average value for TTD 

icemaking energy consumption, which 

was subsequently removed for the 

purpose of calculating average UAFs. 

There were no data available in the 

metered data or in the 2005 RECS data 

to indicate whether an automatic 

icemaker was present. The revised UAF 

distributions implicitly include an 

uncertainty due to the possible presence 

of non-TTD automatic icemaking. 

A detailed description of DOE’s 

energy use analysis for refrigeration 

products is given in chapter 7 of the 

NOPR TSD. 

F. Life-Cycle Cost and Payback Period 

Analyses 

DOE conducted LCC and PBP 

analyses to evaluate the economic 

impacts on individual consumers of 

potential energy conservation standards 

for refrigeration products. The LCC is 

the total consumer expense over the life 

of a product, consisting of purchase and 

installation costs plus operating costs 

(expenses for energy use, maintenance 

and repair). To compute the operating 

costs, DOE discounts future operating 

costs to the time of purchase and sums 

them over the lifetime of the product. 

The PBP is the estimated amount of 

time (in years) it takes consumers to 

recover the increased purchase cost 

(including installation) of a more 

efficient product through lower 

operating costs. DOE calculates the PBP 

by dividing the change in purchase cost 

(normally higher) due to a more 

stringent standard by the change in 

average annual operating cost (normally 

lower) that results from the standard. 

For any given efficiency level, DOE 

measures the PBP and the change in 

LCC relative to an estimate of the basecase appliance efficiency levels. The 

base-case estimate reflects the market in 

the absence of amended energy 

conservation standards, including the 

market for products that exceed the 

current energy conservation standards. 

For each considered efficiency level 

in each product class, DOE calculated 

the LCC and PBP for a nationally 

representative set of housing units. For 

the preliminary analysis and the 

analysis for today’s proposed rule, DOE 

developed household samples from the 

2005 RECS. For each sampled 

household, DOE determined the energy 

consumption for the refrigeration 

product and the electricity price. By 

developing a representative sample of 

households, the analysis captured the 

variability in energy consumption and 

energy prices associated with the use of 

residential refrigeration products. 

Inputs to the calculation of total 

installed cost include the cost of the 

product—which includes manufacturer 

selling prices, retailer markups, and 

sales taxes—and installation costs. 

Inputs to the calculation of operating 

costs include annual energy 

consumption, energy prices and price 

projections, repair and maintenance 

costs, product lifetimes, discount rates, 

and the year that proposed standards 

take effect. DOE determined the 

operating costs for each sampled 

household using that household’s 

unique energy consumption and the 

household’s energy price. DOE created 

distributions of values for some inputs, 

with probabilities attached to each 

value, to account for their uncertainty 

and variability. DOE used probability 

distributions to characterize product 

lifetime, discount rates, and sales taxes. 

The computer model DOE uses to 

calculate the LCC and PBP, which 

incorporates Crystal Ball (a 

commercially available software 

program) relies on a Monte Carlo 

simulation to incorporate uncertainty 

and variability into the analysis. The 

Monte Carlo simulations randomly 

sample input values from the 

probability distributions and household 

samples. The model calculated the LCC 

and PBP for products at each efficiency 

level for 10,000 housing units per 

simulation run. Details of the 

spreadsheet model, and of all the inputs 

to the LCC and PBP analyses, are 

contained in TSD chapter 8 and its 

appendices. 

Table IV.13 summarizes the approach 

and data DOE used to derive inputs to 

the LCC and PBP calculations. The table 

provides the data and approach DOE 

used for the preliminary TSD, as well as 

the changes made for today’s NOPR. 

The subsections that follow discuss the 

initial inputs and the changes DOE 

made to them. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59513 

34The spreadsheet tool that DOE used to conduct 

the LCC and PBP analyses allows users to select 

price forecasts from either AEO’s High Economic 

Growth or Low Economic Growth Cases. Users can 

thereby estimate the sensitivity of the LCC and PBP 

results to different energy price forecasts. 

35U.S. Energy Information Administration. 

Annual Energy Outlook 2010. Washington, DC. 

April 2010. 

TABLE IV.13—SUMMARY OF INPUTS AND KEY ASSUMPTIONS IN THE LCC AND PBP ANALYSIS* 

Inputs Preliminary TSD Changes for the proposed rule 

Installed Costs 

Product Cost ............................... Derived by multiplying manufacturer cost by manufacturer and 

retailer markups and sales tax, as appropriate.

Incremental retail markup changed as described in section IV.D. 

Operating Costs 

Annual Energy Use ..................... Based on energy use given in 2005 RECS for refrigerators or 

freezers, adjusted using a ‘usage adjustment factor’ (UAF) that 

adjusts the energy use from its test energy consumption to reflect field conditions.

Based on a multiple linear regression of 

field-metered energy use data, adjusted using a UAF function based on 

2005 RECS household characteristics. 

Energy Prices .............................. Electricity: Based on EIA’s Form 861 data for 2006 ...................... Electricity: Updated using Form 861 data 

for 2007. 

Variability: Regional energy prices determined for 13 regions ...... Variability: No change. 

Energy Price Trends ................... Forecasted using Annual Energy Outlook 2009 AEO2009 ........... Forecasts updated using AEO2010. 

Repair and Maintenance Costs .. Not included .................................................................................... Used repair cost estimation method that 

estimates the rate of failure for selected components along with the incremental cost of repair or replacement 

compared to the baseline product. 

Present Value of Operating Cost Savings 

Product Lifetime .......................... Estimated using survey results from RECS (1990, 1993, 1997, 

2001, 2005) and the U.S. Census American Housing Survey 

(2005, 2007), along with historic data on appliance shipments.

Variability: Characterized using Weibull probability distributions. 

No change. 

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 and 2007.

No change. 

Compliance Date of New Standard.2014 ................................................................................................ No change. 

* 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 manufacturer 

selling prices developed in the 

engineering analysis by the supplychain 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 

MSP increase associated with higherefficiency products. 

2. Installation Cost 

Installation cost includes labor, 

overhead, and any miscellaneous 

materials and parts needed to install the 

equipment. DOE did not include 

installation cost for refrigeration 

products because it understands that 

this cost would be the same at all of the 

considered efficiency levels. 

3. Annual Energy Consumption 

For each sampled household, DOE 

determined the energy consumption for 

a refrigeration product at different 

efficiency levels using the approach 

described above in section IV.E. 

4. Energy Prices 

DOE derived average energy prices for 

13 geographic areas consisting of the 

nine U.S. Census divisions, with four 

large States (New York, Florida, Texas, 

and California) treated separately. For 

Census divisions containing one of 

these large States, DOE calculated the 

regional average excluding the data for 

the large State. 

DOE estimated average residential 

electricity prices for each of the 13 

geographic areas based on data from EIA 

Form 861, ‘‘Annual Electric Power 

Industry Database.’’ DOE calculated an 

average annual regional residential 

electricity price by: (1) Estimating an 

average residential price for each utility 

(by dividing the residential revenues by 

residential sales); and (2) weighting 

each utility by the number of residential 

consumers served in that region (based 

on EIA Form 861). DOE calculated 

average commercial electricity prices in 

a similar manner. For the preliminary 

TSD, DOE used EIA data for 2006. The 

NOPR analysis used the data for 2007. 

5. Energy Price Projections 

To estimate energy prices in future 

years for the preliminary TSD, DOE 

multiplied the above average regional 

electricity prices by the forecast of 

annual average residential electricity 

price changes in the Reference Case 

from AEO2009.34 AEO2009 forecasted 

prices through 2030. For today’s 

proposed rule, DOE updated its energy 

price forecasts using AEO2010, which 

has an end year of 2035.35 To estimate 

the electricity price trend after 2035, 

DOE used the average annual rate of 

change in prices from 2020 to 2035. 

DOE intends to update its energy price 

forecasts for the final rule based on the 

latest available AEO. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59514 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

36Commercial Refrigeration Equipment Final 

Rule Technical Support Document. Available at: 

http://www1.eere.energy.gov/buildings/appliance_

standards/commercial/refrig_equip_final_

rule_tsd.html. 

37U.S. Census Bureau, American Housing 

Survey. Available at: http://www.census.gov/hhes/

www/housing/ahs/ahs.html. 

6. Maintenance and Repair Costs 

Repair costs are associated with 

repairing or replacing components that 

have failed in the appliance, whereas 

maintenance costs are associated with 

maintaining the operation of the 

equipment. In its preliminary analysis, 

DOE did not include repair and 

maintenance costs because it did not 

have information suggesting that these 

costs would change with higher 

efficiency levels. Commenting on this 

approach, Whirlpool stated that 

maintenance and repair costs could be 

at least double current levels if there is 

greater reliance on more complex 

technologies to meet new efficiency 

levels, as such technologies have a 

higher cost of replacement components 

and may require additional training of 

service technicians. (Whirlpool, No. 31 

at p. 3) AHAM stated that higher 

efficiency products typically contain 

more components that may need repair 

and have a higher individual 

component cost. (AHAM, No. 34 at p. 

13) In contrast, ACEEE supported DOE’s 

finding that repair and maintenance 

costs do not vary with efficiency level. 

(ACEEE, No. 43 at p. 6) 

For the NOPR, DOE developed a new 

repair cost estimation method that 

estimates the rate of failure for selected 

components (compressor, evaporator, 

condenser, evaporator fan, condenser 

fan, electronics and automatic 

icemaker). The estimated average 

annual repair cost for a given efficiency 

level can be expressed as the product of 

two elements: the average rate of repair 

of a component (expressed as annual 

probability of failure) times the 

incremental cost of repair or 

replacement compared to the baseline 

product. 

DOE obtained repair rates for some 

components from a prior DOE 

rulemaking for commercial refrigeration 

equipment,36 and used these rates to 

make estimates of repair rates for some 

other components. In addition, DOE 

obtained cumulative total annual repair 

rates for standard-size refrigeratorfreezers for units up to five years old 

from Consumer Reports magazine. DOE 

used these data to adjust the repair rates 

estimated for specific components for 

each product class. DOE was not able to 

determine a clear trend in repair rate 

with age, so it used the average repair 

rate for all years for each product class. 

For product classes not covered by the 

Consumer Reports data, DOE used the 

average repair rate for standard-size 

refrigerator-freezers. 

To estimate the total annual repair 

cost for the baseline products, DOE used 

retail repair costs by component from 

data reported by Best Buy Co., Inc. 

Detailed data on incremental MSP for 

components was available from the 

engineering analysis by product class 

and efficiency level. To convert these 

values to repair costs, DOE derived the 

cost to the contractor, and then scaled 

it to account for the contractor markup. 

Nearly all residential refrigerators are 

sold with a one-year repair warranty. 

Based on this fact, DOE assumed there 

were no repair costs for consumers 

during the first year of operation and the 

annual average incremental repair cost 

as calculated above was imposed for all 

subsequent years of the lifetime of the 

product. Table IV.14 shows the annual 

average incremental repair cost by 

efficiency level for product classes 3 

(refrigerator-freezer—automatic defrost 

with top-mounted freezer without 

through-the-door ice service), 5 

(refrigerator-freezers—automatic defrost 

with bottom-mounted freezer without 

through-the-door ice service), and 7 

(refrigerator-freezers—automatic defrost 

with side-mounted freezer with 

through-the-door ice service). DOE 

requests comments on its derivation of 

repair costs. (See Issue 17 under ‘‘Issues 

on Which DOE Seeks Comment’’ in 

section VII.E, below.) 

TABLE IV.14—ANNUAL AVERAGE INCREMENTAL REPAIR COST BY EFFICIENCY LEVEL FOR STANDARD-SIZE REFRIGERATORFREEZERS

Efficiency level 

(% less than baseline energy use) 

Product class 3 

($) 

Product class 5 

($) 

Product class 7 

($) 

Baseline ..................................................................................................................... .............................. .............................. ..............................

1 (10) ......................................................................................................................... $0.04 $0.22 $0.09 

2 (15) ......................................................................................................................... 0.08 0.33 0.21 

3 (20) ......................................................................................................................... 0.37 0.42 0.36 

4 (25) ......................................................................................................................... 0.40 0.76 0.73 

5 (30) ......................................................................................................................... 0.43 1.32 1.10 

6 (33–36) * ................................................................................................................. 0.67 1.76 1.10 

* Max-tech level varies with product class. 

7. Product Lifetime 

Because the basis for lifetime 

estimates in the literature for 

refrigeration products is uncertain, DOE 

used other data sources to estimate the 

distribution of standard-size refrigerator 

and freezer lifetimes in the field for both 

the preliminary analysis and today’s 

NOPR. By combining survey results 

from various years of RECS and the U.S. 

Census’s American Housing Survey 37

with the known history of appliance 

shipments, DOE estimated the fraction 

of appliances of a given age still in 

operation. The survival function, which 

DOE assumed has the form of a 

cumulative Weibull distribution, 

provides an average and median 

appliance lifetime. 

For compact refrigerators, DOE 

estimated an average lifetime of 5.6 

years in the preliminary analysis using 

data on shipments and the stock-inplace (i.e., the number of units in use). 

NRDC commented that the estimated 

lifetime for compact refrigerators is too 

low and that ‘‘the industry suggested’’ 

life of ten years is more accurate. 

(NRDC, No. 39 at p. 6) In contrast, 

AHAM and Whirlpool supported DOE’s 

estimate. (AHAM, No. 34 at p. 13; 

Whirlpool, No. 31 at p. 3) DOE found 

that, given the data on historic 

shipments of compact refrigerators, 

using a longer lifetime would result in 

an equipment stock that is far larger 

than the stock given by 2005 RECS and 

EIA’s 2003 Commercial Building Energy 

Consumption Survey. Since the estimate 

used in the preliminary analysis 

provides a reasonable match between 

shipments and the stock, DOE used the 

same lifetime distribution for the NOPR. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59515 

See chapter 8 of the NOPR TSD for 

further details on the method and 

sources DOE used to develop product 

lifetimes. 

8. Discount Rates 

To establish discount rates for the 

LCC analysis, DOE identified all debt or 

asset classes that might be used to 

purchase refrigeration products, 

including household assets that might 

be affected indirectly. DOE used data 

from the Federal Reserve Board’s 

‘‘Survey of Consumer Finances’’ (SCF) 

for 1989, 1992, 1995, 1998, 2001, 2004, 

and 2007 to estimate the average 

percentages of the various debt and 

equity classes in the average U.S. 

household portfolios. DOE used SCF 

data and other sources to develop 

distributions of interest or return rates 

associated with each type of equity and 

debt. The average rate across all types of 

household debt and equity, weighted by 

the shares of each class, is 5.1 percent. 

While this value corresponds to the 

average discount rate, DOE assigned 

each sample household a specific 

discount rate drawn from the 

distributions. 

DOE derived the discount rate for 

commercial-sector compact refrigeration 

products from the cost of capital of 

publicly-traded firms in the sectors that 

purchase those products (these include 

lodging and other commercial sectors). 

The firms typically finance equipment 

purchases through debt and/or equity 

capital. DOE estimated the cost of the 

firms’ capital as the weighted average of 

the cost of equity financing and the cost 

of debt financing for recent years for 

which data were available (2001 

through 2008). The estimated average 

discount rate for companies that 

purchase compact refrigeration products 

is 6.2 percent. 

See chapter 8 in the NOPR TSD for 

further details on the development of 

discount rates for refrigeration products. 

9. Compliance Date of Amended 

Standards 

In the context of EPCA, the 

compliance date is the future date when 

parties subject to the requirements of a 

new standard must begin to comply. As 

described in DOE’s semi-annual 

implementation report for energy 

conservation standards activities 

submitted to Congress, a final rule for 

the refrigeration products that are the 

subject of this rulemaking is scheduled 

to be completed by December 31, 2010. 

Compliance with amended standards for 

refrigeration products promulgated by 

DOE would be required three years after 

the final rule is published in the Federal 

Register. DOE calculated the LCC and 

PBP for refrigeration products as if 

consumers would purchase new 

products in the year compliance with 

the standard is required. 

10. Base Case Efficiency Distribution 

To accurately estimate the share of 

consumers that would be affected by a 

standard at a particular efficiency level, 

DOE’s LCC analysis considered the 

projected distribution of product 

efficiencies that consumers purchase 

under the base case (i.e., the case 

without new energy efficiency 

standards). DOE refers to this 

distribution of product of efficiencies as 

a base-case efficiency distribution. DOE 

developed base-case efficiency 

distributions for each of the seven 

representative product classes. These 

distributions were developed from 

industry-supplied data for the year 2007 

and were comprised of product 

efficiencies ranging from existing 

baseline levels (i.e., meeting existing 

energy conservation standards) to levels 

meeting and exceeding ENERGY STAR 

levels. DOE then projected these 

distributions to the year that new 

standards are assumed to become 

effective (2014). To forecast the basecase efficiency distribution for each 

representative product class in the 

preliminary analysis, DOE accounted for 

change in the market shares of ENERGY 

STAR appliances based on historical 

trends. 

In the preliminary analysis public 

meeting, ASAP and Whirlpool 

questioned DOE’s forecast that, in 2014, 

ENERGY STAR products would reach a 

market share of 88 percent for bottommount refrigerator-freezers. (ASAP, No. 

28 at p. 179–180; Whirlpool, No. 28 at 

p. 180) In their comments, AHAM, GE 

and Whirlpool expressed doubt with 

respect to DOE’s forecast, and AHAM 

and GE noted that consumer payback 

diminishes at higher efficiency levels. 

(GE, No. 37 at p. 2; Whirlpool, No. 31 

at p. 3; AHAM, No. 34 at p. 14) 

Based on the comments and 

shipments data for 2008, DOE modified 

its approach for estimating base-case 

efficiency distributions for the NOPR 

analysis. DOE agrees that because the 

current ENERGY STAR efficiency level 

is higher than it was prior to the 

requirements established in 2008, the 

growth in market share may be slower. 

To address this issue, DOE adopted a 

projected market share of ENERGY 

STAR models in 2014 (under current 

requirements) that is equal to the 

average of ENERGY STAR market shares 

in 2007 (the last year under the old 

requirements) and 2008 (when current 

requirements took effect). With this 

approach, the ENERGY STAR market 

shares for product class 3 (refrigeratorfreezer—automatic defrost with topmounted freezer without through-thedoor ice service) and product class 5 

(refrigerator-freezers—automatic defrost 

with bottom-mounted freezer without 

through-the-door ice service) grow more 

slowly between 2008 and 2014 than 

they had under the old requirements 

before 2008. ENERGY STAR products 

reach a market share in 2014 of 8 

percent for product class 3 and 68 

percent for bottom-mount refrigeratorfreezers. For standard-size freezers and 

compact products, DOE maintained the 

same approach for the NOPR as it used 

in the preliminary analysis. 

For further information on DOE’s 

estimate of base-case efficiency 

distributions, see chapter 8 of the NOPR 

TSD. DOE requests comments on its 

approach for estimating base-case 

efficiency distributions. (See Issue 18 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR, below.) 

11. Inputs to Payback Period Analysis 

The payback period is the amount of 

time it takes the consumer to recover the 

additional installed cost of moreefficient products, compared to baseline 

products, through energy cost savings. 

The simple payback period does not 

account for changes in operating 

expense over time or the time value of 

money. Payback periods are expressed 

in years. Payback periods that exceed 

the life of the product mean that the 

increased total installed cost is not 

recovered in reduced operating 

expenses. 

The inputs to the PBP calculation are 

the total installed cost of the equipment 

to the customer for each efficiency level 

and the average annual operating 

expenditures for each efficiency level. 

The PBP calculation uses the same 

inputs as the LCC analysis, except that 

discount rates are not needed. 

12. Rebuttable-Presumption Payback 

Period 

As noted above, EPCA, as amended, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the consumer of purchasing a 

product complying with an energy 

conservation standard level will be less 

than three times the value of the energy 

(and, as applicable, water) savings 

during the first year that the consumer 

will receive as a result of the standard, 

as calculated under the test procedure 

in place for that standard. (42 U.S.C. 

6295(o)(2)(B)(iii)) For each considered 

efficiency level, DOE determined the 

value of the first year’s energy savings 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59516 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

by calculating the quantity of those 

savings in accordance with the 

applicable DOE test procedure, and 

multiplying that amount by the average 

energy price forecast for the year in 

which compliance with the amended 

standard would be required. 

G. National Impact Analysis–National 

Energy Savings and Net Present Value 

Analysis 

DOE’s NIA assessed the national 

energy savings (NES) and the national 

NPV of total consumer costs and savings 

that would be expected to result from 

amended standards at specific efficiency 

levels. (‘‘Consumer’’ in this context 

refers to consumers of the product being 

regulated.) 

To make the analysis more accessible 

and transparent to all interested parties, 

DOE used an MS Excel spreadsheet 

model to calculate the energy savings 

and the national consumer costs and 

savings from each TSL. MS Excel is the 

most widely used spreadsheet 

calculation tool in the United States and 

there is general familiarity with its basic 

features. Thus, DOE’s use of MS Excel 

as the basis for the spreadsheet models 

provides interested parties with access 

to the models within a familiar context. 

In addition, the TSD and other 

documentation that DOE provides 

during the rulemaking help explain the 

models and how to use them, and 

interested parties can review DOE’s 

analyses by changing various input 

quantities within the spreadsheet. 

DOE used the NIA spreadsheet to 

calculate the NES and NPV, based on 

the annual energy consumption and 

total installed cost data from the energy 

use characterization and the LCC 

analysis. DOE forecasted the energy 

savings, energy cost savings, product 

costs, and NPV of consumer benefits for 

each product class for products sold 

from 2014 through 2043. The forecasts 

provided annual and cumulative values 

for all four output parameters. In 

addition, DOE used its NIA spreadsheet 

to analyze scenarios that used inputs 

from the AEO2010 Low Economic 

Growth and High Economic Growth 

cases. These cases have higher and 

lower energy price trends compared to 

the Reference case, as well as higher and 

lower housing starts, which result in 

higher and lower appliance shipments 

to new homes. NIA results based on 

these cases are presented in appendix 

10–A of the NOPR TSD. 

DOE evaluated the impacts of 

amended standards for refrigeration 

products 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 amended energy 

conservation standards. DOE compared 

these projections with projections 

characterizing the market for each 

product class if DOE were to adopt 

amended standards at specific energy 

efficiency levels (i.e., the standards 

cases) for that class. 

Table IV.15 summarizes the approach 

and data DOE used to derive the inputs 

to the NES and NPV analyses for the 

preliminary analysis and the changes to 

the analyses for the proposed rule. A 

discussion of these inputs and changes 

follows the table. See chapter 10 of the 

NOPR TSD for further details. 

TABLE IV.15—APPROACH AND DATA USED FOR NATIONAL ENERGY SAVINGS AND CONSUMER NET PRESENT VALUE

ANALYSES

Inputs Preliminary TSD Changes for the proposed rule 

Shipments ................................... Annual shipments from shipments model ...................................... No change in approach; used 2008 data 

to estimate the ratio of bottom-mount 

share to side-by-side share. 

Compliance Date of Standard ..... 2014 ................................................................................................ No change. 

Base-Case Forecasted Efficiencies.Used a ‘‘roll-up + ENERGY STAR’’ scenario to establish the distribution of efficiencies.No change in basic approach; modified 

efficiency distributions based on new 

information. 

Standards-Case Forecasted Efficiencies.Used a ‘‘roll-up + ENERGY STAR’’ scenario to establish the distribution of efficiencies.No change in basic approach; modified 

efficiency distributions based on new 

information. 

Annual Energy Consumption per 

Unit.

Annual weighted-average values as a function of SWEUF.* No change. 

Total Installed Cost per Unit ....... Annual weighted-average values as a function of SWEUF.* No change. 

Energy Cost per Unit .................. Annual weighted-average values as a function of the annual energy consumption per unit and energy prices.No change. 

Repair and Maintenance Cost 

per Unit.

Annual values as a function of efficiency level .............................. No change. 

Escalation of Energy Prices ........ AEO2009 forecasts (to 2035) and extrapolation through 2043 ..... Updated using AEO2010 forecasts. 

Energy Site-to-Source Conversion Factor.Varies yearly and is generated by DOE/EIA’s NEMS ................... No change. 

Discount Rate .............................. Three and seven percent real ........................................................ No change. 

Present Year ............................... Future expenses are discounted to 2010, when the final rule will 

be published.

No change. 

* Shipments-Weighted Energy Use Factor 

1. Shipments 

The shipments portion of the NIA 

spreadsheet is a model that uses 

historical data as a basis for projecting 

future shipments of the products that 

are the subject of this rulemaking. In 

projecting shipments for refrigeration 

products, DOE accounted for 

installations in new homes and 

replacement of failed equipment. In 

addition, for standard-size refrigeratorfreezers, DOE estimated purchases 

driven by the conversion of a first 

refrigerator to a second refrigerator. It 

also estimated purchases by existing 

households who enter the market as 

new owners for standard-size freezers. 

In the preliminary analysis, DOE 

examined the historical trends in the 

market shares of different refrigeratorfreezer configurations to disaggregate 

the total shipments of refrigeratorfreezers into the three considered 

refrigerator-freezer product categories 

(top-mount, bottom-mount and side-byside configurations). The market share 

of side-by-side refrigerator-freezer 

models has grown significantly during 

the past two decades. Bottom-freezer 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59517 

models historically had a small market 

share, but that share has also grown in 

recent years. However, DOE had 

insufficient data to forecast long-term 

growth of this product class, so DOE 

assumed that consumer behavior related 

to bottom-mount models in the future 

would mirror behavior regarding sideby-side models. DOE developed a model 

to forecast the combined bottom-mount 

and side-by-side market shares 

throughout the 30-year forecast period 

(beginning in 2014), and assumed that 

the ratio of bottom-mount share to sideby-side share would remain constant at 

the 2007 level (the last year for which 

DOE had disaggregated data). 

AHAM commented that DOE’s 

forecasted shares look realistic, but it 

suggested that DOE consider generating 

a separate forecast for bottom-mount 

refrigerator-freezers. (AHAM, No. 34 at 

p. 14) Whirlpool stated that DOE’s 

approach is directionally correct, but in 

recent years the decline in top-mount 

sales and the rise in bottom-mount sales 

have been more pronounced. It also 

suggested that DOE should forecast 

bottom-mount sales separately and 

reassess the proportion of top-mount 

sales. (Whirlpool, No. 31 at p. 4) 

As discussed above, DOE was not able 

to obtain sufficient information to 

separately forecast sales of bottommount refrigerator-freezers. Therefore, it 

retained the approach used for the 

preliminary analysis in conducting the 

NOPR analysis, but it used 2008 data to 

estimate the ratio of bottom-mount share 

to side-by-side share. 

To estimate the effects on product 

shipments from increases in product 

price projected to accompany amended 

standards at higher efficiency levels, 

DOE applied a price elasticity 

parameter. It estimated this parameter 

with a regression analysis that used 

purchase price and efficiency data 

specific to residential refrigerators, 

clothes washers, and dishwashers over 

the period 1980–2002. The estimated 

‘‘relative price elasticity’’ incorporates 

the impacts from purchase price, 

operating cost, and household income, 

and it also declines over time. DOE 

estimated shipments in each standards 

case using the relative price elasticity 

along with the change in the relative 

price between a standards case and the 

base case. 

ACEEE commented that DOE should 

revisit its estimates of price elasticity to 

avoid overstating the impact of 

standards on future refrigerator sales. It 

noted that refrigerators are different 

from clothes washers and dishwashers 

because consumers have few, if any, 

alternatives for storing perishable foods. 

It recommended that DOE consider 

refrigerator shipments for new 

construction to be inelastic and that 

DOE should use a significantly lower 

price elasticity for replacement 

purchases. (ACEEE, No. 43 at p. 5) 

NPCC and the IOUs made similar 

comments. (NPCC, No. 33 at p. 3; IOUs, 

No. 36 at p. 12) Earthjustice commented 

that the price elasticity for refrigerators 

is less elastic than for other white goods 

(i.e., large electrical home appliances 

that are typically finished in white 

enamel), and it should not be applied to 

new construction. (Earthjustice, No. 35 

at p. 6) 

In response, DOE believes that the 

price elasticity calculated using the full 

data set for refrigerators, clothes 

washers, and dishwashers is more 

robust than an elasticity calculated only 

for refrigerators because it is based on a 

larger data sample. Furthermore, the 

elasticity calculated only for 

refrigerators is not very different from 

the value derived from the combined 

appliance regression equation. DOE 

does not agree with the comment that 

there would be no sensitivity to product 

price of refrigerator shipments for new 

homes because there is some discretion 

regarding purchase of a second unit. 

Furthermore, since DOE derived its 

price elasticity using data for all 

shipments, it is appropriate to apply the 

parameter to total shipments (rather 

than total shipments excluding 

shipments to new homes). Based on the 

above considerations, DOE retained the 

approach used for the preliminary 

analysis in the NOPR analysis. 

For details on the shipments analysis, 

see chapter 9 of the NOPR TSD. 

2. Forecasted Efficiency in the Base Case 

and Standards Cases 

A key component of the NIA is the 

trend in energy efficiency forecasted for 

the base case (without new standards) 

and each of the standards cases. To 

forecast the base-case efficiency 

distribution for each representative 

product class, DOE accounted for 

change in the market shares of ENERGY 

STAR appliances based on historical 

trends. For its determination of 

standards-case efficiency distributions, 

DOE used a ‘‘roll-up + ENERGY STAR’’ 

scenario to establish the distribution of 

efficiencies for the year in which 

compliance with amended standards is 

required (i.e., 2014). DOE assumed that 

product efficiencies in the base case that 

did not meet the standard level under 

consideration would ‘‘roll up’’ to meet 

the new standard level in 2014. It 

further assumed that the ENERGY STAR 

program and related efforts would 

continue to promote efficient appliances 

after the introduction of amended 

standards in 2014, and that this would 

lead to increased market shares for 

products with an efficiency level above 

the standard level. 

For the NOPR analysis, DOE used the 

same basic approach, but, as discussed 

below, it modified its base-case and 

standards-case efficiency distributions 

based on information obtained in 

discussion with ENERGY STAR 

program staff. 

To project the efficiency distributions 

after 2014 for the base case, DOE first 

considered the potential for changes in 

ENERGY STAR qualification levels. 

DOE assumed that, in the absence of a 

new standard, the ENERGY STAR 

program would re-examine and possibly 

revise its qualification levels regardless 

of the market share in 2014. When 

setting a minimum product efficiency 

level for ENERGY STAR qualification, 

one important metric is that the average 

payback period compared to the current 

standard level should not exceed five 

years. Using the payback period 

calculation described in section IV.F, 

DOE applied this criterion to all product 

classes to evaluate the extent to which 

the current ENERGY STAR efficiency 

levels would be increased in the future. 

DOE then estimated the market shares 

for ENERGY STAR products in 2021 

based on past experience in the market 

for these products. As in the 

preliminary analysis, rather than make 

long-term projections based on limited 

information, DOE assumed there would 

be no further change in market shares 

between 2021 and the end of the 

forecast period. DOE recognizes that 

some change in shares is likely to occur 

in reality. However, since DOE used the 

same assumption in the standards cases, 

the accuracy of the assumption makes 

no difference to the analysis of energy 

savings. 

For the standards cases (also referred 

to as candidate standard levels, or 

CSLs), DOE used the same approach as 

for the base case and assumed that in 

the case of amended standards, the 

ENERGY STAR program would reevaluate its qualifying levels for all 

product classes using the five-year 

payback period criterion. For each CSL, 

DOE identified the maximum efficiency 

level with a payback of five years or 

less. If that level was below the current 

ENERGY STAR level, DOE maintained 

the current ENERGY STAR level. At 

higher CSLs, there is no efficiency level 

above the standard level with a payback 

period of less than 5 years. DOE 

assumed that the ENERGY STAR 

program would be suspended with 

standards at higher CSLs on a productclass specific basis. This result is 

projected to occur for all product classes 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59518 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

38The National Academies, Board on Energy and 

Environmental Systems, Letter to Dr. John Mizroch, 

Acting Assistant Secretary, U.S. DOE, Office of 

EERE from James W. Dally, Chair, Committee on 

Point-of-Use and Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency Standards, May 

15, 2009. 

39For further information on the NREL studies, 

please see: Spath, Pamela L., Margaret K. Mann, and 

Dawn Kerr, Life Cycle Assessment of Coal-fired 

Power Production, NREL/TP–570–25119, June 

1999; and Spath, Pamela L. and Margaret K. Mann, 

Life Cycle Assessment of a Natural Gas CombinedCycle Power Generation System, NREL/TP–570– 

27715, September 2000. 

at CSL 3 and above; for product classes 

9 (upright freezers with automatic 

defrost) and 10 (chest freezers and all 

other freezers except compact freezers), 

it occurs at lower CSLs. The market 

share estimates for ENERGY STAR 

products in 2021 and beyond were 

based on a similar approach as for the 

base case. 

For further details about the 

forecasted efficiency distributions, see 

chapter 10 of the NOPR TSD. DOE 

requests comments on its approach for 

forecasting base-case and standards-case 

efficiency distributions. (See Issue 19 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR.) 

3. Site-to-Source Energy Conversion 

To estimate the national energy 

savings expected from appliance 

standards, DOE uses a multiplicative 

factor to convert site energy 

consumption (at the home or 

commercial building) into primary or 

source energy consumption (the energy 

required to convert and deliver the site 

energy). These conversion factors 

account for the energy used at power 

plants to generate electricity and losses 

in transmission and distribution, as well 

as for natural gas losses from pipeline 

leakage and energy used for pumping. 

For electricity, the conversion factors 

vary over time due to projected changes 

in generation sources (i.e., the power 

plant types projected to provide 

electricity to the country). The factors 

that DOE developed are marginal 

values, which represent the response of 

the system to an incremental decrease in 

consumption associated with appliance 

standards. 

In the preliminary analysis, DOE used 

annual site-to-source conversion factors 

based on the version of NEMS that 

corresponds to AEO2009. For today’s 

NOPR, DOE updated its conversion 

factors based on AEO2010, which 

provides energy forecasts through 2035. 

For 2036–2043, DOE used conversion 

factors that remain constant at the 2035 

values. 

In response to a request from DOE’s 

Office of Energy Efficiency and 

Renewable Energy (EERE), the National 

Research Council (NRC) appointed a 

committee on ‘‘Point-of-Use and FullFuel-Cycle Measurement Approaches to 

Energy Efficiency Standards’’ to conduct 

a study required by section 1802 of the 

Energy Policy Act of 2005 (Pub. L. 109– 

58 (August 8, 2005)). The fundamental 

task before the committee was to 

evaluate the methodology used for 

setting energy efficiency standards and 

to comment on whether site (point-ofuse) or source (full-fuel-cycle) measures 

of energy savings would better support 

rulemaking efforts to achieve energy 

conservation goals. The NRC committee 

defined site (point-of-use) energy 

consumption as reflecting the use of 

electricity, natural gas, propane, and/or 

fuel oil by an appliance at the site where 

the appliance is operated. Full-fuelcycle energy consumption was defined 

as including, in addition to site energy 

use, the following: energy consumed in 

the extraction, processing, and transport 

of primary fuels such as coal, oil, and 

natural gas; energy losses in thermal 

combustion in power generation plants; 

and energy losses in transmission and 

distribution to homes and commercial 

buildings.38

In evaluating the merits of using 

point-of-use and full-fuel-cycle 

measures, the NRC committee noted 

that DOE uses what the committee 

referred to as ‘‘extended site’’ energy 

consumption to assess the impact of 

energy use on the economy, energy 

security, and environmental quality. 

The extended site measure of energy 

consumption includes the energy 

consumed during the generation, 

transmission, and distribution of 

electricity but, unlike the full-fuel-cycle 

measure, does not include the energy 

consumed in extracting, processing, and 

transporting primary fuels. A majority of 

the NRC committee concluded that 

extended site energy consumption 

understates the total energy consumed 

to make an appliance operational at the 

site. As a result, the NRC committee 

recommended that DOE consider 

shifting its analytical approach over 

time to use a full-fuel-cycle measure of 

energy consumption when assessing 

national and environmental impacts, 

especially with respect to the 

calculation of greenhouse gas emissions. 

The NRC committee also recommended 

that DOE provide more comprehensive 

information to the public through labels 

and other means, such as an enhanced 

Web site. For those appliances that use 

multiple fuels (e.g., water heaters), the 

NRC committee indicated that 

measuring full-fuel-cycle energy 

consumption would provide a more 

complete picture of energy consumed 

and permit comparisons across many 

different appliances, as well as an 

improved assessment of impacts. The 

NRC committee also acknowledged the 

complexities inherent in developing a 

full-fuel-cycle measure of energy use 

and stated that a majority of the 

committee recommended a gradual 

transition from extended site to fullfuel-cycle measurement. 

DOE acknowledges that its site-tosource conversion factors do not capture 

all of the energy consumed in 

extracting, processing, and transporting 

primary fuels. DOE also agrees with the 

NRC committee’s conclusion that 

developing site-to-source conversion 

factors that capture the energy 

associated with the extraction, 

processing, and transportation of 

primary fuels is inherently complex and 

difficult. However, in implementing the 

NRC committee’s recommendation to 

gradually shift its analytical approach, 

DOE has performed some preliminary 

evaluation of a full-fuel-cycle measure 

of energy use. 

Based on two studies completed by 

the National Renewable Energy 

Laboratory (NREL) in 1999 and 2000, 

DOE estimated the ratio of the energy 

used upstream to the energy content of 

the coal or natural gas delivered to 

power plants. For coal, the NREL 

analysis considered typical mining 

practices and mine-to-plant 

transportation distances, and used data 

for the State of Illinois. Based on data 

in this report, the estimated 

multiplicative factor for coal is 1.08 (i.e., 

it takes approximately 1.08 units of coal 

energy equivalent to provide 1 unit of 

coal to a power plant). A similar 

analysis of the energy consumed in 

upstream processes needed to produce 

and deliver natural gas to a power plant 

yielded a multiplicative factor of 1.19.39

While the above factors are indicative 

of the magnitude of the impacts of using 

full-fuel-cycle measures of energy use, 

there are two issues that warrant further 

study. The first is refinement of the 

estimates of the multiplicative factors, 

particularly to incorporate regional 

variation. The second is developing 

forecasts of the multiplicative factors 

over the time frames used in the 

rulemaking analyses, typically ten to 

fifty years. The existing NEMS forecast 

of power plant electricity generation by 

fuel type can be used to estimate the 

impact of a changing mix of fuels. 

However, NEMS provides no 

information on potential changes to the 

relative ease with which the different 

fuels can be extracted and processed, 

which shape the multiplicative factors. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59519 

DOE intends to further evaluate the 

viability of using full-fuel-cycle 

measures of energy consumption for 

assessment of national and 

environmental impacts of appliance 

standards. 

4. Discount Rates 

DOE multiplies monetary values in 

future years by the discount factor to 

determine the present value. For the 

preliminary analysis and today’s NOPR, 

DOE estimated the NPV of appliance 

consumer benefits using both a 3- 

percent and a 7-percent real discount 

rate. DOE uses these discount rates in 

accordance with guidance provided by 

the Office of Management and Budget 

(OMB) to Federal agencies on the 

development of regulatory analysis 

(OMB Circular A–4 (Sept. 17, 2003), 

section E, ‘‘Identifying and Measuring 

Benefits and Costs’’). 

5. Benefits From Effects of Standards on 

Energy Prices 

Reduction in electricity consumption 

associated with amended standards for 

refrigeration products could reduce the 

electricity prices charged to consumers 

in all sectors of the economy and 

thereby reduce their electricity 

expenditures. In chapter 2 of the 

preliminary TSD, DOE explained that, 

because the power industry is a 

complex mix of fuel and equipment 

suppliers, electricity producers and 

distributors, it did not plan to estimate 

the value of potentially reduced 

electricity costs for all consumers 

associated with amended standards for 

refrigeration products. 

Commenting on this decision, NRDC 

urged DOE to not ignore the benefits to 

consumers from reduced electricity 

rates and avoided new capacity 

construction due to amended standards 

for refrigeration products. (NRDC, No. 

39 at pp. 5–6) Earthjustice, NEEP, and 

the IOUs stated that DOE should 

account for the economic value of 

avoided investments in electric utility 

capacity resulting from the standards 

under consideration. (Earthjustice, No. 

35 at p. 6; NEEP, No. 38 at p. 2; IOUs, 

No. 36 at pp. 12–13) Similarly, NPCC 

stated that DOE should estimate the 

economic benefits of the reduced need 

for new electric power plants and 

infrastructure and include these in its 

utility impacts analysis. (NPCC, No. 33 

at pp. 4–5) 

For the NOPR, DOE incorporated the 

same approach that it did in the 

recently-promulgated final rule for 

residential heating products. 75 FR 

20112 (April 16, 2010). As part of the 

utility impact analysis (described in 

section IV.K below), DOE used NEMS– 

BT to assess the impacts of the reduced 

need for new electric power plants and 

infrastructure projected to result from 

standards. In NEMS–BT, changes in 

power generation infrastructure affect 

utility revenue requirements, which in 

turn affect electricity prices. DOE 

estimated the impact on electricity 

prices associated with each considered 

TSL. 

Although the aggregate benefits for all 

electricity users are potentially large, 

there may be negative effects on the 

actors involved in electricity supply. 

The electric power industry is a 

complex mix of power plant providers, 

fuel suppliers, electricity generators, 

and electricity distributors. While the 

distribution of electricity is regulated 

everywhere, the institutional structure 

of the power sector varies, and has 

changed over time. For these reasons, an 

assessment of impacts on the actors 

involved in electricity supply from 

reduction in electricity demand 

associated with energy conservation 

standards is beyond the scope of this 

rulemaking. 

In considering the potential benefits 

to electricity users, DOE takes under 

advisement the guidance provided by 

OMB on the development of regulatory 

analysis. Specifically, at page 38, 

Circular A–4 instructs that transfers 

should be excluded from the estimates 

of the benefits and costs of a regulation. 

Because there is uncertainty about the 

extent to which the calculated impacts 

from reduced electricity prices are a 

transfer from the actors involved in 

electricity supply to electricity 

consumers, DOE has concluded that, at 

present, it should not give a heavy 

weight to this factor in its consideration 

of the economic justification of 

standards on refrigeration products. 

DOE is continuing to investigate the 

extent to which electricity price changes 

projected to result from standards 

represent a net gain to society. 

H. Consumer Subgroup Analysis 

In analyzing the potential impact of 

new or amended standards on 

consumers, DOE evaluates the impact 

on identifiable sub-groups of consumers 

that may be disproportionately affected 

by a national standard. DOE evaluates 

impacts on particular sub-groups of 

consumers primarily by analyzing the 

LCC impacts and PBP for those 

particular consumers from alternative 

standard levels. For the NOPR, DOE 

analyzed the impacts of the considered 

standard levels on low-income 

consumers and senior citizens. DOE did 

not estimate impacts for compact 

refrigeration products because the 

household sample sizes were not large 

enough to yield meaningful results. 

Chapter 2 of the preliminary TSD 

notes that did not plan to analyze 

renters as a sub-group. NRDC disagreed 

with DOE’s view that renters do not 

warrant a sub-group analysis, as they 

may be more positively affected by 

higher standards than the population of 

all consumers. (NRDC, No. 39 at pp. 4– 

5) NRDC provided no supporting data 

for its assertion. DOE notes that, in most 

cases, renters pay the electricity bill but 

do not own the refrigerator in their 

home. To some extent, the higher cost 

of a more-efficient refrigerator-freezer 

incurred by the building owner would 

likely be passed on to the renter through 

increased rent. Because DOE is not 

aware of information that would allow 

it to reliably assess the extent to which 

such ‘‘pass-through’’ would occur, it is 

not able to quantitatively analyze the 

impacts of alternative standard levels on 

renters. To the extent that ‘‘passthrough’’ of the incremental cost of of a 

more-efficient refrigerator-freezer does 

not occur, DOE acknowledges that 

renters would likely experience more 

favorable LCC impacts than non-renters. 

Chapter 11 in the NOPR describes the 

consumer sub-group analysis. 

I. Manufacturer Impact Analysis 

The following sections address the 

various steps taken to analyze the 

impacts of standards on manufacturers. 

These steps include conducting a series 

of analyses, interviewing manufacturers, 

and evaluating the comments received 

from interested parties up to this point 

during the course of this rulemaking. 

1. Overview 

In determining whether an amended 

energy conservation standard for 

residential refrigeration products subject 

to this rulemaking is economically 

justified, the Secretary 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 as determined 

by the Attorney General that is likely to 

result from the adoption of a standard. 

(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 of residential 

refrigeration products, and to assess the 

impacts of such standards on 

employment and manufacturing 

capacity. 

The MIA is both a quantitative and 

qualitative analysis. The quantitative 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59520 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

part of the MIA relies on the 

Government Regulatory Impact Model 

(GRIM), an industry cash-flow model 

customized for the residential 

refrigeration products covered in this 

rulemaking. See section IV.I.2, below, 

for details on the GRIM analysis. The 

qualitative part of the MIA addresses 

factors such as product characteristics, 

characteristics of particular firms, and 

market trends. The qualitative 

discussion also includes an assessment 

of the impacts of standards on 

manufacturer subgroups. 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 refrigeration 

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 

structure and market characteristics of 

each industry. This information 

included market share data, product 

shipments, manufacturer markups, and 

the cost structure for various 

manufacturers. The industry profile 

includes: (1) Further detail on the 

overall market and product 

characteristics; (2) estimated 

manufacturer market shares; (3) 

financial parameters such as net plant, 

property, and equipment; selling, 

general and administrative (SG&A) 

expenses; cost of goods sold, etc.; and 

(4) trends in the number of firms, 

market, and product characteristics. The 

industry profile included a top-down 

cost analysis of residential refrigeration 

manufacturers that DOE used to derive 

preliminary financial inputs for the 

GRIM (e.g., revenues, depreciation, 

SG&A, and research and development 

(R&D) expenses). DOE also used public 

sources of information to further 

calibrate its initial characterization of 

each industry, including Security and 

Exchange Commission 10–K filings 

(available at http://www.sec.gov), 

Standard & Poor’s stock reports 

(available at http://www2.

standardandpoors.com), and corporate 

annual reports. DOE supplemented this 

public information with data released 

by privately held companies. 

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. More stringent 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. To quantify these impacts, 

DOE used the GRIM to perform a cashflow analysis for residential 

refrigerators, freezers, and refrigeratorfreezers. In performing these analyses, 

DOE used the financial values derived 

during Phase 1 and the shipment 

scenarios used in the NIA. 

c. Phase 3: Subgroup 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 manufacturers, niche players, or 

manufacturers exhibiting a cost 

structure that differs significantly from 

the industry average could be more 

negatively affected. To address this 

possible impact, DOE used the results of 

the industry characterization analysis in 

Phase 1 to group manufacturers that 

exhibit similar production and cost 

structure characteristics. During the 

manufacturer interviews, DOE 

discussed financial topics specific to 

each manufacturer and obtained each 

manufacturer’s view of the industry as 

a whole. 

DOE reports the MIA impacts of 

amended energy conservation standards 

by grouping together the impacts on 

manufacturers of certain product 

classes. DOE presents the industry 

impacts by the major product types (i.e., 

standard size refrigerator-freezers, 

standard size freezers, compact 

refrigerators and freezers, and built-in 

refrigeration products). These product 

groupings represent markets that are 

served by the same manufacturers. By 

segmenting the results into these 

product types, DOE is able to discuss 

how these subgroups of manufacturers 

will be impacted by amended energy 

conservation standards. 

DOE also investigated whether small 

business manufacturers should be 

analyzed as a manufacturer subgroup. 

During its research, DOE identified only 

one company which manufactures 

products covered by this rulemaking 

and qualifies as a small business under 

the applicable Small Business 

Administration (SBA) definition. DOE 

did not analyze a separate subgroup of 

small business manufacturer for this 

NOPR because this rulemaking will not 

have a significant economic impact on 

a substantial number of small entities. 

See section VI.B of today’s NOPR, 

below, for more information on this 

determination. 

A second potential subgroup would 

be manufacturers of built-in 

refrigeration products. However, 

because DOE is establishing separate 

product classes for built-in products, 

DOE is already presenting separate 

results and impacts for this potential 

manufacturer subgroup. The impacts on 

the manufacturers of these niche 

products are therefore already 

characterized in the broader MIA and do 

not require an explicit subgroup 

analysis. 

2. GRIM Analysis 

DOE uses the GRIM to quantify the 

changes in cash flow that result in a 

higher or lower industry value. The 

GRIM analysis is a standard, annual 

cash-flow analysis that incorporates 

manufacturer costs, manufacturer 

selling prices, shipments, and industry 

financial information as inputs, and 

models changes in costs, distribution of 

shipments, investments, and 

manufacturer margins that would result 

from amended energy conservation 

standards. The GRIM spreadsheet uses 

the inputs to arrive at a series of annual 

cash flows, beginning with the base year 

of the analysis, 2010 (which accounts 

for the investments needed to bring 

products into compliance by 2014), and 

continuing to 2043. DOE calculated 

INPVs by summing the stream of annual 

discounted cash flows during this 

period. For residential refrigeration 

products, DOE uses a real discount rate 

of 7.2 percent for all products. 

DOE used the GRIM to calculate cash 

flows using standard accounting 

principles and to compare changes in 

INPV between a base case and various 

TSLs (the standards cases). The 

difference in INPV between the base and 

standards cases represents the financial 

impact of the amended standard on 

manufacturers. DOE collected this 

information from a number of sources, 

including publicly available data and 

interviews with a number of 

manufacturers (described in the next 

section). Additional details about the 

GRIM can be found in chapter 12 of the 

NOPR TSD. 

In conducting its analysis, DOE 

treated certain product classes of 

residential refrigeration products 

separately. For example, DOE created 

specialized interview guides for 

different groups of product classes: one 

for standard-size products, one for 

compact products, and one for all 

products. Additionally, DOE grouped 

product classes made by the same 

manufacturers; this allowed DOE to 

better understand the impacts on 

manufacturers of these product classes. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59521 

Similarly, in this notice, DOE presents 

the MIA results for standard-size 

refrigerator-freezers, standard-size 

freezers, compact refrigerators and 

freezers, and built-in refrigeration 

products separately. Each of the four 

groups of product classes and results is 

based on a unique set of considered 

TSLs. DOE describes the TSLs in section 

V.A of today’s NOPR, below. Because 

the combinations of efficiency levels 

that compose a TSL can make it more 

difficult to discuss the required 

efficiencies for each product class, DOE 

presents the MIA results in section 

V.B.2 of today’s NOPR, below and 

chapter 12 of the NOPR TSD by groups 

of manufacturers that make the covered 

products. DOE presents the MIA results 

for standard-size refrigerator-freezers, 

standard-size freezers, compact 

refrigerators and freezers, and built-in 

refrigeration products separately. 

a. GRIM Key Inputs 

i. Manufacturer Production Costs 

Manufacturing a higher-efficiency 

product is typically more expensive 

than manufacturing a baseline product 

due to the use of more complex 

components and higher-cost raw 

materials. The changes in the MPCs of 

the analyzed products can affect 

revenues, gross margins, and cash flow 

of the industry, making these product 

cost data key GRIM inputs for DOE’s 

analysis. 

DOE used the MPCs calculated in the 

engineering analysis for the residential 

refrigeration products, as described in 

section IV.C, above, and further detailed 

in chapter 5, section 5.9, of the NOPR 

TSD. 

To calculate baseline MPCs, DOE 

followed a three step process. First, DOE 

derived each of the baseline products’ 

retail price from the NPD market data 

described in section IV.F.1, above. Next, 

DOE discounted these baseline retail 

prices by the sales tax and retail markup 

to arrive at the baseline MSPs. Next, 

DOE discounted the baseline MSPs by 

the manufacturer markup to arrive at the 

average baseline MPCs. For all nonbuilt-in product classes, DOE used a 

1.26 manufacturer markup to calculate 

baseline MPCs and MSPs. (DOE 

received comments on the manufacturer 

markup and DOE describes the 

methodology used to calculate this 

figure in section IV.I.3.d, below.) 

Because built-in product classes are 

high-end products that are made in 

much lower production volumes, DOE 

used a different cost structure for these 

products than for the other product 

classes. DOE used information 

submitted during manufacturer 

interviews to estimate that a typical 

baseline manufacturer markup for builtin products is 1.40. To calculate 

baseline MPCs for the built-in product 

classes, DOE discounted the NPD 

baseline retail prices by the 1.40 

manufacturer markup and a distributor 

markup to account for products sold 

through that distribution chain. 

DOE also used the information from 

its tear-down analysis to verify the 

accuracy of the markup information and 

cost data for the units it tore down. In 

addition, DOE used the tear-down cost 

data to disaggregate the MPCs into 

material, labor, and overhead costs. To 

calculate the MPCs for products above 

the baseline, DOE added the 

incremental material, labor, and 

overhead costs from the engineering 

cost efficiency curves to the baseline 

MPCs. 

ii. Base-Case Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of these 

values by efficiency level. Changes in 

the efficiency mix at each standard level 

affect manufacturer finances. For this 

analysis, the GRIM uses the NIA 

shipments forecasts from 2010 to 2043, 

the end of the analysis period. In the 

shipments analysis, DOE also estimated 

the distribution of efficiencies in the 

base case for all product classes. See 

section IV.G.1, above, for additional 

details. 

iii. Product and Capital Conversion 

Costs 

Amended energy conservation 

standards will cause manufacturers to 

incur one-time conversion costs to bring 

their production facilities and product 

designs into compliance. For the MIA, 

DOE classified these one-time 

conversion costs into two major groups: 

(1) Product conversion costs and (2) 

capital conversion costs. Product 

conversion costs are one-time 

investments in research, development, 

testing, marketing, and other noncapitalized costs focused on making 

product designs comply with the 

amended energy conservation standard. 

Capital conversion costs are one-time 

investments in property, plant, and 

equipment to adapt or change existing 

production facilities so that new 

product designs can be fabricated and 

assembled. 

DOE based its estimates of the 

product conversion costs that would be 

required to meet each TSL on 

information obtained from manufacturer 

interviews, the design pathways 

analyzed in the engineering analysis, 

and market information about the 

number of platform and product 

families for each manufacturer. DOE 

assigned estimates for the total product 

development required for each design 

option based on the necessary 

engineering resources required to 

implement each design option across a 

product platform. DOE multiplied the 

estimate by the number of platforms and 

product families for each manufacturer. 

DOE also assumed that VIP use and/or 

wall thickness increases would require 

more significant changes to existing 

platforms than other design options that 

amount to component swaps. For wall 

thickness increases, DOE used product 

development efforts that were analogous 

to designing a new platform. For VIPs, 

which are not yet common on largescale production lines for most products 

in the industry, DOE assumed more 

substantial product development costs 

than required for component swaps. 

However, DOE also assumed that 

manufacturers’ recent experience with 

the technology would indicate that less 

effort would be required for 

incorporating VIPs than for designing 

completely new products. Finally, DOE 

estimated industry product conversion 

costs by extrapolating the interviewed 

manufacturers’ product conversion costs 

for each product class to account for the 

market share of companies that were not 

interviewed. DOE’s estimates of the 

product conversion costs for all of the 

refrigeration products addressed in this 

rulemaking can be found in section 

V.B.2, below, of today’s NOPR and in 

chapter 12 of the NOPR TSD. Chapter 12 

of the NOPR TSD also contains more 

detail on the assumptions DOE used to 

calculate the product conversion costs 

for each design option and other details 

about the product conversion costs. 

As discussed above, to calculate 

industry cash flow impacts DOE also 

estimated the capital conversion costs 

manufacturers would incur to comply 

with potential amended energy 

conservation standards. During 

interviews, DOE asked manufacturers to 

estimate the capital conversion costs 

required to expand the production of 

higher-efficiency products or to quantify 

the required tooling and plant changes 

if product lines meeting the potential 

required efficiency level do not 

currently exist. As with product 

conversion costs, DOE based its capital 

conversion cost estimates on these 

interviews and assumptions from the 

engineering analysis. DOE assumed that 

most component changes, while 

requiring moderate product conversion 

costs, would not require changes to 

existing production lines and 

equipment, and therefore not require 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59522 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

additional capital expenditures because 

one-for-one component swaps would 

not require changes to existing 

production equipment. 

However, DOE calculated and 

included in its analysis the capital 

conversion costs required for design 

options that involved VIPs, wall 

thickness increases, and changes to heat 

exchangers. For changes to heat 

exchangers, DOE estimated the tooling 

investment required for the fabrication 

equipment and the consequent slight 

changes to the internal dimensions of 

the existing products. These tooling 

changes would likely include 

purchasing new dies or plastic molds 

for a small change in internal 

dimensions or shelving. For VIPs and 

wall thickness increases, DOE estimated 

the cost of the equipment required to 

manufacture new product lines because 

DOE assumed that these design changes 

would be extremely disruptive to 

current operations. Because the changes 

required to implement these design 

options would greatly change existing 

products, DOE expects that the capital 

conversion costs would be closer to 

purchasing new production equipment. 

DOE also used the assumptions from the 

engineering analysis regarding the 

incremental depreciation costs for 

adding additional VIPs and 

manufacturer market shares to calculate 

incremental equipment necessary for 

adding more VIPs. 

DOE’s estimates of the capital 

conversion costs for all of the residential 

refrigeration products can be found in 

section V.B.2, below, of today’s NOPR 

and in chapter 12 of the NOPR TSD. 

b. GRIM Scenarios 

i. Residential Refrigeration Shipment 

Forecasts 

The GRIM used the shipments 

developed in the NIA for standard-size 

refrigerator-freezers, standard-size 

freezers, compact refrigerators and 

freezers, and built-in refrigeration 

products. To determine efficiency 

distributions for the standards case, 

DOE used a ‘‘roll-up + market shift’’ 

scenario for 2014, the year that revised 

standards are assumed to become 

effective, through 2043. DOE assumed 

that product efficiencies in the base case 

that did not meet the standard under 

consideration would roll up to meet the 

new standard in 2014. DOE further 

assumed that revised standards would 

result in a market shift such that market 

shares of products with efficiency better 

than the standard would gradually 

increase because the ENERGY STAR 

program would continue to promote 

efficient appliances after revised 

standards are introduced in 2014. See 

section IV.G.1 of this NOPR, above, and 

chapter 10 of the NOPR TSD for more 

information on the residential 

refrigeration standards-case shipment 

scenarios. 

ii. Markup Scenarios 

As discussed above, manufacturer 

selling prices (MSPs) include direct 

manufacturing production costs (i.e., 

labor, material, and overhead estimated 

in DOE’s MPCs) and all non-production 

costs (i.e., SG&A, R&D, and interest), 

along with profit. To calculate the MSPs 

in the GRIM, DOE applied markups to 

the MPCs estimated in the engineering 

analysis for each product class and 

efficiency level. Modifying these 

markups in the standards case yields 

different sets of impacts on 

manufacturers. For the MIA, DOE 

modeled two standards-case markup 

scenarios to represent the uncertainty 

regarding the potential impacts on 

prices and profitability for 

manufacturers following the 

implementation of amended energy 

conservation standards: (1) A flat 

markup scenario, and (2) a preservation 

of operation profit scenario. These 

scenarios lead to different markups 

values, which, when applied to the 

inputted MPCs, result in varying 

revenue and cash flow impacts. 

The flat markup scenario assumes that 

the cost of goods sold for each product 

is marked up by a flat percentage to 

cover standard SG&A expenses, R&D 

expenses, and profit. The flat markup 

scenario uses the baseline manufacturer 

markup (discussed in chapter 6 of the 

TSD) for all products in both the base 

case and the standards case. To derive 

this percentage, DOE evaluated publicly 

available financial information for 

manufacturers of white goods. DOE also 

requested feedback on this value during 

manufacturer interviews. This scenario 

represents the upper bound of industry 

profitability in the standards case 

because manufacturers are able to fully 

pass through additional costs due to 

standards to their customers. 

DOE also modeled a lower bound 

profitability scenario. During 

interviews, multiple manufacturers 

stated that higher production costs 

could severely harm profitability. 

Because of the highly competitive 

market, several manufacturers suggested 

that the additional costs required at 

higher efficiencies could not be fully 

passed through to customers. In 

particular, several manufacturers noted 

their customer base is composed of a 

limited number of retailers that have 

substantial buying power. They also 

noted that the average costs of 

refrigeration products within product 

categories have been fairly constant or 

fallen even as new products and 

additional features have been added. 

Finally, manufacturers noted that their 

retail customers price products at fixed 

(or ‘‘sticky’’) price points with stepincreases to premium price points 

reflecting different bundles of features. 

Because of the market dynamics 

among manufacturers and retailers, and 

because of the pressure to keep the 

current price points fixed for a given 

bundle of features, DOE also modeled 

the preservation of operating profit 

markup scenario. In this scenario, the 

manufacturer markups are lowered such 

that, in the standards case, 

manufacturers are only able to maintain 

the base-case total operating profit in 

absolute dollars, despite higher product 

costs and investment. DOE 

implemented this scenario in GRIM by 

lowering the manufacturer markups at 

each TSL to yield approximately the 

same earnings before interest and taxes 

in the standards case in the year after 

the compliance date of the amended 

standards as in the base case. This 

scenario represents the lower bound of 

industry profitability following 

amended energy conservation standards 

because higher production costs and the 

investments required to comply with 

the amended energy conservation 

standard do not yield additional 

operating profit. 

3. Discussion of Comments 

During the December 2009 public 

meeting, interested parties commented 

on the assumptions and results of the 

preliminary analysis. Oral and written 

comments discussed several topics, 

including pending legislation resulting 

in a phase-down of HFCs, manufacturer 

tax credits, the cumulative regulatory 

burden on manufacturers, and 

standards-driven investments. DOE 

addresses these comments below. 

a. Potential Regulation of HFCs 

Several manufacturers expressed 

concern about the impact of a potential 

phase-down of HFCs, a possible 

scenario in light of pending climate 

legislation contained in the bill 

proposing enactment of the American 

Clean Energy and Security Act of 2009 

(H.R. 2454). GE stated that if DOE did 

not recognize the trend toward HFC 

limits in its analysis, the department 

would risk creating a disincentive for 

manufacturers to employ low-GWP 

foams and refrigerants. GE noted the 

industry’s concern about HFC limits 

reflects not only the pending climate 

legislation but also regulation from the 

EPA as well as the Montreal Protocol. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59523 

As such, GE argued DOE should 

evaluate the impact of the potential 

phase-down on the industry from a 

technical and economic perspective. 

(GE, No. 37 at p. 2; GE, Public Meeting 

Transcript, No. 28 at p. 47–48) AHAM 

reiterated that the phase-down of HFCs 

would have a substantial cost impact on 

the industry. (AHAM, Public Meeting 

Transcript, No. 28 at p. 18) Sub Zero 

added that the capital investment of the 

potential switch to hydrocarbons (i.e., 

non-HFCs) should be considered in 

DOE’s analysis. (Sub Zero, Public 

Meeting Transcript, No. 28 at p. 50). 

DOE acknowledges that an HFC 

phase-out or similar legislation 

requiring a refrigerant or blowing agent 

change could necessitate substantial 

changes for residential refrigeration 

products. DOE has monitored legislation 

and rulemakings from UL, EPA, and 

Congress to understand what HFC 

limitations might go into effect in the 

near term and what changes are being 

proposed for use of alternatives. EPA 

has proposed allowing use of isobutane 

refrigerant in residential refrigeration 

products up to a charge limit of 57 

grams. 75 FR 25803 (May 10, 2010). 

DOE has included this refrigerant as a 

design option where appropriate and is 

prepared to evaluate the impact of HFC 

phase-out legislation, if it is enacted. 

b. Manufacturer Tax Credits 

ACEEE stated that manufacturer tax 

credits in the pending climate 

legislation for higher efficiency products 

should be taken into account in DOE’s 

analysis. (ACEEE, Public Meeting 

Transcript, No. 28 at p. 209) NEEP also 

stated that manufacturer tax credits and 

market pull programs reduce transition 

costs for manufacturers as they help 

build the demand and manufacturing 

capabilities at the higher end 

efficiencies. (NEEP, No. 38 at pp. 2–3) 

DOE agrees that manufacturer tax 

credits help offset the costs of 

developing higher efficiency products. 

DOE includes the benefit of tax credits 

earned by the industry in 2010 under 

the provisions of the Energy 

Improvement and Extension Act of 2008 

(EIEA 2008), Pub. L. 110–343, Div. B, 

Sec. 305 (October 3, 2008), in the GRIM 

calculations. Using publicly available 

information and recent SEC filings, DOE 

estimated manufacturers’ market shares 

and shipment projections in 2010 and 

calculated the Federal production tax 

credits based on shipments of 30- 

percent efficiency level units—those 

units which qualified for the tax credit 

in 2010. DOE’s analysis suggests that 

manufacturers will collect 

approximately $37 million in Federal 

production tax credits in 2010 from the 

provisions of EIEA 2008. In the GRIM, 

DOE accounts for the Federal 

production tax credit as a direct cash 

benefit in the base and standards cases 

that directly increases INPV. Because 

2010 is the base year to which industry 

cash flows are discounted, any Federal 

production tax credits received prior to 

2010 fall outside of the analysis period. 

These tax credits are consequently not 

considered in the INPV analysis. 

However, any tax benefit received in 

2010 falls within the analysis period 

and, hence, increases industry value 

(potentially mitigating the impacts on 

manufacturers due to energy 

conservation standards). The estimated 

$37 million benefit to manufacturers 

does not significantly impact the INPV 

calculated by DOE. 

DOE believes that ACEEE, in its 

comments related to pending 

legislation, was referring to the tax 

credits that would impact 

manufacturers of residential 

refrigerators in the American Clean 

Energy and Security Act of 2009 that 

passed the House of Representatives on 

June 26, 2009. That bill (H.R. 2454) 

contained provisions that provide bonus 

payments for the production of 

superefficient best-in-class products for 

years 2011–2013. The impacts of these 

tax credit provisions under H.R. 2454 

are not quantified in the GRIM, as the 

legislation is still pending. It would be 

highly speculative to try to predict the 

passage of such legislation, much less 

the details of its provisions, all of which 

are highly uncertain. Appendix 12–C of 

the NOPR TSD discusses in detail the 

tax credits currently available to 

residential refrigeration product 

manufacturers and their impacts. 

DOE research suggests that Federal 

production tax credits and other market 

pull programs such as ENERGY STAR 

have helped spur the development and 

market acceptance of more advanced 

technologies in residential refrigeration 

products. However, such tax credits and 

other market pull programs would not 

substantially defray the capital 

conversion costs required if all products 

were required to employ a given 

technology. Much higher production 

volumes would be required under a 

national standard and would require 

manufacturers to upgrade each of their 

production lines, rather than selectively 

improve the products that could reach 

the qualifying level most economically. 

Furthermore, the actual design 

pathway manufacturers may take to 

achieve the proposed efficiency levels 

on a national scale could vary from 

those pathways manufacturers have 

taken to produce the much smaller 

subset of tax-credit qualifying products 

today. For example, if manufacturers no 

longer received a production credit for 

products under a national standard, any 

of the additional costs that could not be 

passed to consumers could cause 

manufacturers to consider more capital 

intense design pathways that would 

result in lower per unit costs. Therefore, 

the tax credits have helped to alleviate 

a portion of the product conversion 

costs required by amended energy 

conservation standards by providing 

manufacturers with experience 

implementing more efficient 

technology. DOE has taken this 

experience using advanced technology 

into account in its methodology for 

calculating product conversion costs. 

However, the production tax credits 

have not driven wholesale adoption of 

the new technology or caused 

manufacturers to make substantial 

changes to their production facilities to 

use these technologies on a wide scale. 

c. Standards-Induced Versus Normal 

Capital Conversion Costs 

ASAP noted that not all capital 

investments that manufacturers would 

make to comply with potential amended 

standards should be directly attributed 

to the standards, since a certain amount 

of investment in plants and equipment 

is a necessary cost of doing business. 

ASAP urged DOE to be careful to 

disaggregate incremental impacts due to 

the standards in the MIA. (ASAP, Public 

Meeting Transcript, No. 28 at pp. 209– 

11) 

In its analysis, DOE separates capital 

conversion costs that are directly 

attributable to standards from normal 

capital expenditures. The equipment 

with remaining useful life that is not 

repurposed is counted as stranded 

assets (i.e., net plant, property, and 

equipment that have not been fully 

depreciated that can no longer be used 

in the production of standardscompliant products). DOE estimates that 

capital conversion costs at today’s 

proposed level are $895 million out of 

a net PPE of $1,529 million. Typical 

capital expenditures in the base year are 

$252 million. DOE also notes that the 

promulgation of a standard that would 

require VIPs or wall thickness increases 

could be extremely disruptive to 

existing facilities. These types of capital 

costs would not be attributed to ongoing 

capital expenses (to replace worn 

equipment and tooling for new 

products, for example). These plant 

modification and equipment changes 

would be attributable to a potential 

amended energy conservation standard. 

A discussion of DOE’s methodology in 

developing capital and product 

conversion costs for residential 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59524 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

refrigeration manufacturers is located in 

section IV.I.2.a, above, of today’s NOPR 

and in chapter 12 of the NOPR TSD. 

d. Manufacturer Markups 

AHAM stated that DOE did not show 

any empirical support for the 

manufacturer markup used in the 

preliminary TSD and requested that 

DOE provide more information with 

respect to how the manufacturer 

markup was determined. (AHAM, No. 

34 at p. 14) GE and Sub Zero also 

requested that DOE qualify how it 

determined its markups, including the 

manufacturer markups. (GE, No. 37 at 

p. 2–3; Sub Zero, No. 40 at p. 9; Sub 

Zero, Public Meeting Transcript, No. 28 

at p. 112) 

In developing the baseline 

manufacturer markup of 1.26 used in 

DOE’s analysis, DOE began by 

researching the annual 10–K reports 

filed with the Securities and Exchange 

Commission by residential white goods 

manufacturers to determine an industrywide market-share weighted markup. 

This baseline manufacturer markup was 

used for the 2009 final rule for cooking 

products and the 2010 commercial 

clothes washers final rule. 74 FR 16040 

(April 8, 2009); 75 FR 1122 (January 8, 

2010). Because all publicly traded 

companies that manufacture residential 

refrigeration equipment also 

manufacture a number of other 

appliances, and because the 1.26 

baseline manufacturer markup had 

already been vetted during the 

rulemakings for these other products 

and equipment, DOE used the same 

baseline manufacturer markup as an 

initial estimate for residential 

refrigeration products. A description of 

the methodology used to calculate this 

baseline manufacturer markup can be 

found in the NOPR and NOPR TSD for 

these rulemakings. See 73 FR 62034 

(October 17, 2008) and the related TSD, 

available at http:// 

www1.eere.energy.gov/buildings/ 

appliance_standards/commercial/ 

clothes_washers.html. DOE requested 

manufacturer feedback on the accuracy 

of this estimate and other financial 

assumptions during DOE’s confidential 

manufacturer impact analysis 

interviews. 

Finally, as discussed above in section 

IV.I.2.b, above, in the standards case, 

DOE modeled manufacturers’ concerns 

about potential profitability impacts due 

to amended energy conservation 

standards in its preservation of 

operating profit markup scenario. DOE 

continues to welcome feedback on any 

of the assumptions it used for its 

baseline manufacturer markups and its 

markup scenarios. 

4. Manufacturer Interviews 

DOE interviewed manufacturers 

representing more than 95 percent of 

standard-size refrigerator-freezer sales, 

approximately 95 percent of standardsize freezer sales, about 75 percent of 

compact refrigerator and freezer sales, 

and more than 95 percent of built-in 

refrigeration products. These interviews 

were in addition to those DOE 

conducted as part of the engineering 

analysis. DOE contacted companies 

from its database of manufacturers, 

which provided a representative sample 

of each industry. DOE used these 

interviews to tailor the GRIM to 

incorporate unique financial 

characteristics for the residential 

refrigeration industry. All interviews 

provided information that DOE used to 

evaluate the impacts of potential 

amended energy conservation standards 

on manufacturer cash flows, 

manufacturing capacities, and 

employment levels. Before each 

telephone interview or site visit, DOE 

provided company representatives with 

an interview guide that included the 

topics for which DOE sought input. The 

MIA interview topics included: (1) Key 

issues to this rulemaking; (2) a company 

overview and organizational 

characteristics; (3) engineering analysis 

and life cycle cost analysis follow-up; 

(4) manufacturer markups and 

profitability; (5) shipment projections; 

(6) financial parameters; (7) conversion 

costs; (8) cumulative regulatory burden; 

(9) possible impacts from potential HFC 

regulations; (10) direct employment 

impact assessment; (11) exports, foreign 

competition, and outsourcing; (12) 

consolidation; and (13) impacts on 

small business. Appendix 12–A of the 

NOPR TSD contains the three interview 

guides DOE used to conduct the MIA 

interviews. 

In the manufacturer interviews, DOE 

asked manufacturers to describe their 

major concerns about this rulemaking. 

The following sections describe the 

most significant issues identified by 

manufacturers. These summaries are 

provided in aggregate to protect 

manufacturer confidentiality. DOE also 

includes additional concerns in chapter 

12 of the NOPR TSD. 

a. Potential for Significant Changes to 

Manufacturing Facilities 

A number of manufacturers indicated 

that conversion costs would be 

exponentially greater if the adopted 

standards require significant rather than 

incremental increases in efficiency. 

While DOE does not analyze design 

options that would lower consumer 

utility, manufacturers indicated that for 

some product classes they would 

consider wall thickness increases if they 

resulted in lower per unit costs. 

However, manufacturers also indicated 

that wall thickness increases in 

response to more stringent energy 

standards would be extremely capital 

intensive. Changing the wall thickness 

of refrigeration products would require 

extensive investments to completely 

replace injection molding equipment, 

interior fabrication feeder lines and 

equipment, and foaming fixtures on 

every production line. Such substantial 

changes would require many times the 

investment required for incremental 

efficiency improvements. For example, 

the design and implementation of a new 

heat exchanger design would only 

require new fabrication tooling for the 

component and slight adjustments to 

production line tooling but would leave 

most of the existing production 

equipment intact. Smaller 

manufacturers were generally concerned 

that conversion costs would 

disproportionately impact their 

operations since comparable product 

and capital conversion costs would be 

spread over a smaller shipment volume. 

Additionally, several manufacturers 

stated that new standards could increase 

the total steady state invested capital 

necessary to maintain current 

production levels. As an example, many 

plants leverage economies of scale by 

utilizing a shared front end of 

production (cabinet and door bending, 

for example) to serve multiple product 

lines. These economies would be 

forfeited if amended standards 

disproportionately affected one product 

class utilizing the shared front end. As 

such, manufacturing plants could have 

relatively lower capital intensity 

following standards. 

b. VIPs 

Manufacturers were also concerned 

about potential issues with a standard 

that effectively required the widespread 

adoption of VIPs. In particular, the 

material costs of VIPs would add 

significant costs to the products, 

especially at the retail level. 

Manufacturers were concerned that 

using this design option in product 

classes that historically have been lowcost options could have unintended 

consequences such as inducing 

consumers to prolong the life of the 

products or switch to less profitable 

products. Manufacturers were also 

concerned about the additional labor 

that is required to install VIPs. 

Additional production steps would be 

required with VIPs, which involve 

greater care in handling to prevent 

damaging the components. While less of 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59525 

a concern on lower volume products, 

the additional production steps on highspeed production lines would add 

tremendous complexity. The additional 

production steps and slower line rates 

would lengthen the production lines 

and require additional equipment. 

Manufacturers were also concerned 

about the ability of VIP suppliers to 

ramp up production to meet necessary 

demand from more stringent standards. 

Finally, manufacturers indicated that 

their experience with VIPs has revealed 

a range of efficiency improvements—all 

of which point to lower benefits than 

the theoretical potential of VIPs. They 

also expressed concern about the 

degradation of the panels over the 

lifetime of their products. Because of the 

range of efficiency improvements in 

practice, some manufacturers indicated 

they could elect to employ other design 

pathways that would eliminate these 

potential problems with the technology. 

c. Impact on U.S. Production and Jobs 

Manufacturers generally agreed that 

potential standards that would require 

substantial capital conversion costs 

would lower U.S. production and 

employment. Depending on the level of 

these expenditures, some manufacturers 

stated that new investments would not 

be made in the U.S., given the lower 

labor costs overseas. Margins are already 

thin for certain product classes, and 

manufacturers believed that higher 

standards could further reduce 

profitability. The lower labor costs 

available overseas could offset some of 

the impact on profitability, especially 

for their lower margin product lines. 

Some manufacturers stated they could 

also choose to source or drop altogether 

certain product lines they currently 

manufacture if they did not believe they 

could recoup the capital investments 

required to meet amended energy 

conservation standards on those lines. 

Any decision to drop or source more 

product lines would also lead to less 

domestic production and fewer 

domestic jobs. 

d. Impacts to Product Utility 

Several manufacturers expressed 

concern that more stringent energy 

standards could impact the utility of 

their products. Most residential kitchens 

have standardized size openings for 

refrigerators, which would force any 

wall thickness growth inward and 

decrease internal volume. While this 

scenario was not analyzed as a design 

option for all products, manufacturers 

indicated some in the industry could 

elect to use thicker walls to meet new 

standards for full size refrigeratorfreezers. Finally, several manufacturers 

indicated that other product features 

currently available may have to be 

removed in order to both meet new 

standard levels and maintain product 

prices that would be acceptable to 

consumers. Examples of these features 

that industry cited included ice and 

water dispensers, glass doors, soda can 

dispensers, crisper compartments, antisweat features, and food preservation 

capabilities. 

Manufacturers also expressed concern 

that the energy savings from more 

stringent energy conservation standards 

would not be great enough to justify 

passing through the added costs to 

consumers. Currently, manufacturers 

bundle higher efficiency with other 

desirable features to justify higher prices 

for those ENERGY STAR models. 

According to manufacturers, if amended 

standards cause prices to rise even 

higher, the lower operating costs would 

not justify higher prices, since the 

savings as a percentage of the purchase 

price would be very low. Therefore, the 

increased cost of meeting more stringent 

efficiency requirements may cause 

manufacturers to reduce the number of 

other features bundled with these 

products in order to retain a reasonable 

price point, causing consumer utility to 

decline. 

The value of future ENERGY STAR 

levels is also a concern for 

manufacturers. Many retailers and other 

distribution channels require ENERGY 

STAR products. Since the features 

bundled with ENERGY STAR products 

are the greatest justification for the 

added costs, manufacturers were 

concerned that a higher ENERGY STAR 

level after potentially stricter standards 

would offer less value to consumers. 

Consumers would save less energy 

relative to the added efficiency costs or 

would have a product with fewer 

features. 

Manufacturers also stated that the 

financial burden of developing products 

to meet amended energy conservation 

standards has an opportunity cost due 

to limited capital and R&D dollars. 

Investments incurred to meet amended 

standards reflect foregone investments 

in innovation and the development of 

new features that consumers value and 

on which manufacturers earn a 

premium. 

e. Technical Difficulties Associated 

With Higher Efficiency Levels 

Many manufacturers expressed 

concerns about the technical difficulties 

involved in achieving new standards 

that are significantly more stringent 

than current levels. Manufacturers were 

concerned there might not be adequate 

supplies of particular components. In 

particular they were concerned about 

supplies of high efficiency compressors 

and VIPs, for all product classes, and 

especially at higher efficiency levels 

that would increase the demand for 

these components many times over 

current levels. Manufacturers also stated 

that there are fewer low-cost technology 

improvements available than there were 

during past rulemakings. Compact units, 

in general, pose an additional challenge 

because there are fewer low-capacity 

compressors with sufficiently high EER 

ratings. Specifically, compact freezers 

were cited as a product class in which 

it would be especially difficult to make 

significant energy improvements. 

Current standards for compact freezers 

are already more stringent relative to 

capacity than are standards for compact 

refrigerators. 

f. Changes in Consumer Behavior 

Several manufacturers noted that 

higher consumer prices resulting from 

amended energy conservation standards 

could result in product switching 

between lines of standard-size 

refrigerator-freezers. Currently, topmount refrigerator-freezers are 

inexpensive commodity products, on 

which manufacturers said they make 

little to no profit margin. Instead, 

manufacturers earn a profit on more 

expensive and more feature-loaded sidemount and bottom-mount refrigeratorfreezers. Manufacturers are concerned 

that if amended energy conservation 

standards cause retail prices to increase 

across product classes, many consumers 

will no longer be willing to pay the 

premium for side-mount and bottommount refrigerator-freezers and will 

switch to buying the less expensive and 

less profitable top-mount refrigeratorfreezers. 

Similarly, a number of manufacturers 

expressed concern that higher retail 

prices could alter consumers’ decisions 

to repair or replace their standard-size 

refrigerator-freezers. Many consumers 

who in the base case would buy a new 

refrigerator when their current unit fails 

would instead opt to repair their 

existing unit in the potential standards 

case due to the higher cost of 

purchasing a new unit. This decision 

would result in lower shipments for 

manufacturers and would leave less 

efficient units in the existing stock. 

g. Separate Product Classes for Built-Ins 

Most manufacturers expressed their 

support for separate product classes for 

built-in refrigerators and freezers. 

Manufacturers stated that built-in units 

are inherently less efficient than their 

free-standing counterparts for several 

reasons, including more limited air 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59526 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

40 Data on industry employment, hours, labor 

compensation, value of production, and the implicit 

price deflator for output for these industries are 

available upon request by calling the Division of 

Industry Productivity Studies (202–691–5618) or by 

sending a request by e-mail to dipsweb@bls.gov. 

Available at: http://www.bls.gov/news.release/ 

prin1.nr0.htm. 

41See 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. 

42 J. M. Roop, M. J. Scott, and R. W. Schultz, 

ImSET 3.1: Impact of Sector Energy Technologies, 

PNNL–18412, Pacific Northwest National 

Laboratory, 2009. Available at: http://www.pnl.gov/ 

main/publications/external/technical_reports/

PNNL-18412.pdf. 

flow. Because of such limitations, the 

incremental costs of improving 

efficiency are higher at every efficiency 

level. Built-in manufacturers also 

believed that their components costs per 

unit were higher than for conventional 

products due to less bulk purchasing 

power. Built-in manufacturers also 

argued that their products offer distinct 

utility (i.e., the ability to build products 

into the kitchen cabinetry), justifying 

the need for separate product classes for 

built-ins. Without separate product 

classes for built-ins, depending on the 

stringency of new standards, some or all 

built-in models could disappear from 

the market because of the designs’ 

inability to satisfy the proposed 

standards for free-standing equivalent 

models. Built-in manufacturers also 

suggested that an average correction 

based on conventional free-standing 

products could be an appropriate means 

of accounting for the inherently lower 

efficiency of built-in products. 

h. Test Procedure Concerns 

Many manufacturers expressed 

concerns over the test procedures for 

refrigerators and freezers. Several stated 

that icemaking energy use, which 

represents a large portion of unit energy 

consumption, should be included in the 

amended test procedure to reward more 

efficient icemakers. However, 

manufacturers acknowledged that 

testing icemaker energy use is difficult. 

All manufacturers wanted to ensure that 

tests for icemaking energy are repeatable 

and could be implemented correctly. 

Manufacturers also did not want a test 

for icemaking energy use to result in the 

elimination of TTD units. 

J. Employment Impact Analysis 

DOE considers employment impacts 

in the domestic economy as one factor 

in selecting a proposed standard. 

Employment impacts consist of direct 

and indirect impacts. Direct 

employment impacts are any changes in 

the number of employees of 

manufacturers of the appliance products 

which are the subject of this 

rulemaking, their suppliers, and related 

service firms. Indirect employment 

impacts are changes in national 

employment that occur due to the shift 

in expenditures and capital investment 

caused by the purchase and operation of 

more-efficient appliances. The MIA 

addresses the direct employment 

impacts that concern manufacturers of 

refrigeration products. The employment 

impact analysis addresses the indirect 

employment impacts. 

Indirect employment impacts from 

standards consist of the net jobs created 

or eliminated in the national economy, 

other than in the manufacturing sector 

being regulated, due to: (1) Reduced 

spending by end users on energy; (2) 

reduced spending on new energy 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. DOE expects the net monetary 

savings from standards to be redirected 

to other forms of economic activity. 

DOE also expects these shifts in 

spending and economic activity to affect 

the demand for labor in the short term, 

as explained below. 

One method for assessing the possible 

effects on the demand for labor of such 

shifts in economic activity is to compare 

sectoral employment statistics 

developed by the Labor Department’s 

Bureau of Labor Statistics (BLS).40 The 

BLS regularly publishes its estimates of 

the number of jobs per million dollars 

of economic activity in different sectors 

of the economy, as well as the jobs 

created elsewhere in the economy by 

this same economic activity. Data from 

BLS indicate that expenditures in the 

utility sector generally create fewer jobs 

(both directly and indirectly) than 

expenditures in other sectors of the 

economy. There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital intensive and less 

labor intensive than other sectors.41

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 

refrigeration products. 

For the standards considered in 

today’s NOPR, DOE estimated indirect 

national employment impacts using an 

input/output model of the U.S. economy 

called Impact of Sector Energy 

Technologies (ImSET). ImSET is a 

spreadsheet model of the U.S. economy 

that focuses on 187 sectors most 

relevant to industrial, commercial, and 

residential building energy use.42

ImSET is a special purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which has been 

designed to estimate the national 

employment and income effects of 

energy-saving technologies. The ImSET 

software includes a computer-based I–O 

model with structural coefficients to 

characterize economic flows among the 

187 sectors. ImSET’s national economic 

I–O structure is based on a 2002 U.S. 

benchmark table, specially aggregated to 

the 187 sectors. DOE estimated changes 

in expenditures using the NIA 

spreadsheet. Using ImSET, DOE then 

estimated the net national, indirect 

employment impacts by sector of 

potential amended efficiency standards 

for refrigeration products. 

For more details on the employment 

impact analysis, see TSD chapter 13. 

K. Utility Impact Analysis 

The utility impact analysis estimates 

several important effects on the utility 

industry that would result from the 

adoption of new or amended standards. 

For this analysis, DOE used the NEMS– 

BT model to generate forecasts of 

electricity consumption, electricity 

generation by plant type, and electric 

generating capacity by plant type, that 

would result from each TSL. DOE 

obtained the energy savings inputs 

associated with efficiency 

improvements to considered products 

from the NIA. DOE conducts the utility 

impact analysis as a scenario that 

departs from the latest AEO2010 

Reference case. In other words, the 

estimated impacts of a proposed 

standard are the differences between 

values forecasted by NEMS–BT and the 

values in the AEO2010 Reference case. 

As part of the utility impact analysis, 

DOE used NEMS–BT to assess the 

impacts on electricity prices of the 

reduced need for new electric power 

plants and infrastructure projected to 

result from the considered standards. In 

NEMS–BT, changes in power generation 

infrastructure affect utility revenue 

requirements, which in turn affect 

electricity prices. DOE estimated the 

change in electricity prices projected to 

result over time from each TSL. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59527 

Chapter 14 of the TSD accompanying 

this notice describes the utility impact 

analysis. 

L. Environmental Analysis 

Pursuant to the National 

Environmental Policy Act of 1969 and 

the requirements of 42 U.S.C. 

6295(o)(2)(B)(i)(VI) and 6316(a), DOE 

has prepared a draft environmental 

assessment (EA) of the impacts of the 

potential standards for refrigeration 

products in today’s proposed rule, 

which it has included as chapter 15 of 

the NOPR TSD. 

In the EA, DOE estimated the 

reduction in power sector emissions of 

CO2, NOX, and Hg using the NEMS–BT 

computer model. In the EA, NEMS–BT 

is run similarly to the AEO NEMS, 

except that refrigeration product energy 

use is reduced by the amount of energy 

saved (by fuel type) due to each TSL. 

The inputs of national energy savings 

come from the NIA spreadsheet model, 

and the output is the forecasted physical 

emissions. NEMS–BT tracks CO2

emissions using a detailed module that 

provides results with broad coverage of 

all sectors and inclusion of interactive 

effects. The net benefit of the standards 

in today’s proposed rule is the 

difference between the forecasted 

emissions estimated by NEMS–BT at 

each TSL and the AEO2010 Reference 

Case. For the final rule, DOE intends to 

revise the emissions analysis using the 

most current AEO. 

DOE has preliminarily determined 

that sulfur dioxide (SO2) emissions from 

affected Electric Generating Units 

(EGUs) are subject to nationwide and 

regional emissions cap and trading 

programs that create uncertainty about 

the standards’ impact on SO2 emissions. 

Title IV of the Clean Air Act sets an 

annual emissions cap on SO2 for all 

affected EGUs. SO2 emissions from 28 

eastern States and the District of 

Columbia (DC) are also limited under 

the Clean Air Interstate Rule (CAIR). 

Published in the Federal Register on 

May 12, 2005, CAIR creates an 

allowance-based trading program that 

will gradually replace the Title IV 

program in those States and DC. 70 FR 

25162. (The recent legal history 

surrounding CAIR is discussed below.) 

The attainment of the emissions caps is 

flexible among EGUs and is enforced 

through the use of emissions allowances 

and tradable permits. Under existing 

EPA regulations, any excess SO2

emission allowances resulting from the 

lower electricity demand caused by the 

imposition of an efficiency standard 

could be used to permit offsetting 

increases in SO2 emissions by any 

regulated EGU. However, if the standard 

resulted in a permanent increase in the 

quantity of unused emission 

allowances, there would be an overall 

reduction in SO2 emissions from the 

standards. While there remains some 

uncertainty about the ultimate effects of 

efficiency standards on SO2 emissions 

covered by the existing cap and trade 

system, the NEMS–BT modeling system 

that DOE uses to forecast emissions 

reductions currently indicates that no 

physical reductions in power sector 

emissions would occur for SO2. 

NEMS–BT also has an algorithm for 

estimating NOX emissions from power 

generation. The impact of these 

emissions, however, will be affected by 

the CAIR. Much like SO2, NOX

emissions from 28 eastern States and DC 

are limited under the CAIR. Although 

CAIR has been remanded to EPA by the 

DC Circuit, it will remain in effect until 

it is replaced by a rule consistent with 

the Court’s July 11, 2008, opinion in 

North Carolina v. EPA, 531 F.3d 896 

(DC Cir. 2008); see also North Carolina 

v. EPA, 550 F.3d 1176 (DC Cir. 2008). 

Because all States covered by CAIR 

opted to reduce NOX emissions through 

participation in cap-and-trade programs 

for electric generating units, emissions 

from these sources are capped across the 

CAIR region. 

In the 28 eastern States and DC where 

CAIR is in effect, DOE’s forecasts 

indicate that because of the permanent 

cap no NOX emissions reductions will 

occur due to energy conservation 

standards. If their impact on electricity 

demand is large enough energy 

conservation standards have the 

potential to produce an 

environmentally-related economic 

impact in the form of lower prices for 

NOX emissions allowances. However, 

DOE has preliminarily concluded the 

proposed standard would not have such 

an effect because the estimated 

reduction in NOX emissions or the 

corresponding allowance credits in 

States covered by the CAIR cap would 

be too small to affect allowance prices 

for NOX under the CAIR. The proposed 

standards would reduce NOX emissions 

in those 22 States not affected by the 

CAIR. As a result, DOE used NEMS–BT 

to forecast emission reductions from the 

standards that are considered in today’s 

NOPR. 

Similar to emissions of SO2 and NOX, 

future emissions of Hg would have been 

subject to emissions caps. The Clean Air 

Mercury Rule (CAMR) would have 

permanently capped emissions of 

mercury for new and existing coal-fired 

plants in all States beginning in 2010. 

70 FR 28606 (May 18, 2005). However, 

the CAMR was vacated by the DC 

Circuit in its decision in New Jersey v. 

Environmental Protection Agency. 517 F 

3d 574 (DC Cir. 2008) Thus, DOE was 

able to use the NEMS–BT model, which 

reflects the fact that CAMR was vacated 

and does not incorporate CAMR 

emission caps, to estimate the changes 

in Hg emissions resulting from the 

proposed rule. However, DOE continues 

to review the impact of rules that reduce 

energy consumption on Hg emissions, 

and may revise its assessment of Hg 

emission reductions in future 

rulemakings. 

Commenting on the preliminary 

analysis, Whirlpool stated that analysis 

of CO2 emissions is only complete if the 

changes in CO2 emissions resulting from 

manufacturing and transporting the 

higher efficiency products are also 

included. (Whirlpool, No. 31 at p. 5) 

AHAM made a similar point. (AHAM, 

No. 34 at p. 15) In response, DOE notes 

that the inputs to the EA for national 

energy savings come from the NIA. In 

the NIA, DOE only accounts for primary 

energy savings associated with 

considered standards. In so doing, EPCA 

directs DOE to consider (when 

determining whether a standard is 

economically justified) ‘‘the total 

projected amount of energy * * * 

savings likely to result directly from the 

imposition of the standard.’’ 42 U.S.C. 

6295(o)(2)(B)(i)(III) DOE interprets 

‘‘directly from the imposition of the 

standard’’ to include energy used in the 

generation, transmission, and 

distribution of fuels used by appliances. 

In addition, DOE is evaluating the fullfuel-cycle measure, which includes the 

energy consumed in extracting, 

processing, and transporting primary 

fuels (see section IV.G.3). Both DOE’s 

current accounting of primary energy 

savings and the full-fuel-cycle measure 

are directly linked to the energy used by 

appliances. In contrast, energy used in 

manufacturing and transporting 

appliances is a step removed from the 

energy used by appliances. Thus, DOE 

did not consider such energy use in 

either the NIA or the EA. 

M. Monetizing Carbon Dioxide and 

Other Emissions Impacts 

As part the development of this 

proposed rule, DOE considered the 

estimated monetary benefits likely to 

result from the reduced emissions of 

CO2 and other pollutants that are 

expected to result from each of the TSLs 

considered. This section summarizes 

the basis for the estimated monetary 

values used for each of these emissions 

and presents the benefits estimates 

considered. 

For today’s NOPR, DOE is relying on 

a set of values for the social cost of 

carbon (SCC) that were developed by an 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59528 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

43National Research Council. Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use. National Academies Press: 

Washington, DC. 2009. 

interagency process. A summary of the 

basis for these new values is provided 

below, and a more detailed description 

of the methodologies used is provided 

in appendix 15–A of the NOPR TSD. 

1. Social Cost of Carbon 

Under Executive Order 12866, 

agencies must, to the extent permitted 

by law, ‘‘assess both the costs and the 

benefits of the intended regulation and, 

recognizing that some costs and benefits 

are difficult to quantify, propose or 

adopt a regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs.’’ 

The purpose of the SCC estimates 

presented here is to allow agencies to 

incorporate the social monetized 

benefits of reducing CO2 emissions into 

cost-benefit analyses of regulatory 

actions that have small, or ‘‘marginal,’’ 

impacts on cumulative global emissions. 

The estimates are presented with an 

acknowledgement of the many 

uncertainties involved and with a clear 

understanding that they should be 

updated over time to reflect increasing 

knowledge of the science and 

economics of climate impacts. 

As part of the interagency process that 

developed these SCC estimates, 

technical experts from numerous 

agencies met on a regular basis to 

consider public comments, explore the 

technical literature in relevant fields, 

and discuss key model inputs and 

assumptions. The main objective of this 

process was to develop a range of SCC 

values using a defensible set of input 

assumptions grounded in the existing 

scientific and economic literatures. In 

this way, key uncertainties and model 

differences transparently and 

consistently inform the range of SCC 

estimates used in the rulemaking 

process. 

The interagency group selected four 

SCC values for use in regulatory 

analyses. Three values are based on the 

average SCC from three integrated 

assessment models, at discount rates of 

2.5, 3, and 5 percent. The fourth value, 

which represents the 95th percentile 

SCC estimate across all three models at 

a 3 percent discount rate, is included to 

represent higher-than-expected impacts 

from temperature change further out in 

the tails of the SCC distribution. For 

emissions (or emission reductions) that 

occur in later years, these values grow 

in real terms over time, as depicted in 

Table IV.16. 

TABLE IV.16—SOCIAL COST OF CO2, 

2010–2050 

[In 2007 dollars per metric ton] 

Discount rate 

5% 

Avg 

3% 

Avg 

2.5% 

Avg 

3% 

95th 

2010 4.7 21.4 35.1 64.9 

2015 5.7 23.8 38.4 72.8 

2020 6.8 26.3 41.7 80.7 

2025 8.2 29.6 45.9 90.4 

2030 9.7 32.8 50.0 100.0 

2035 11.2 36.0 54.2 109.7 

2040 12.7 39.2 58.4 119.3 

2045 14.2 42.1 61.7 127.8 

2050 15.7 44.9 65.0 136.2 

a. Monetizing Carbon Dioxide Emissions 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

social cost of carbon are provided in 

dollars per metric ton of carbon dioxide. 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of serious challenges. A recent 

report from the National Research 

Council 43 points out that any 

assessment will suffer from uncertainty, 

speculation, and lack of information 

about (1) Future emissions of 

greenhouse gases, (2) the effects of past 

and future emissions on the climate 

system, (3) the impact of changes in 

climate on the physical and biological 

environment, and (4) the translation of 

these environmental impacts into 

economic damages. As a result, any 

effort to quantify and monetize the 

harms associated with climate change 

will raise serious questions of science, 

economics, and ethics and should be 

viewed as provisional. 

Despite the serious limits in the areas 

of both quantification and monetization, 

SCC estimates can be useful in 

estimating the social benefits of 

reducing carbon dioxide emissions. 

Under Executive Order 12866, agencies 

are required, to the extent permitted by 

law, ‘‘to 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 make it possible for 

agencies to incorporate the social 

benefits from reducing carbon dioxide 

emissions into cost-benefit analyses of 

regulatory actions that have small, or 

‘‘marginal,’’ impacts on cumulative 

global emissions. Most Federal 

regulatory actions can be expected to 

have marginal impacts on global 

emissions. 

For such policies, the benefits from 

reduced (or costs from increased) 

emissions in any future year can be 

estimated by multiplying the change in 

emissions in that year by the SCC value 

appropriate for that year. The net 

present value of the benefits can then be 

calculated by multiplying each of these 

future benefits by an appropriate 

discount factor and summing across all 

affected years. This approach assumes 

that the marginal damages from 

increased emissions are constant for 

small departures from the baseline 

emissions path, an approximation that 

is reasonable for policies that have 

effects on emissions that are small 

relative to cumulative global carbon 

dioxide emissions. For policies that 

have a large (non-marginal) impact on 

global cumulative emissions, there is a 

separate question of whether the SCC is 

an appropriate tool for calculating the 

benefits of reduced emissions. DOE does 

not attempt to answer that question 

here. 

At the time of the preparation of this 

notice, the most recent interagency 

estimates of the potential global benefits 

resulting from reduced CO2 emissions in 

2010 were $4.7, $21.4, $35.1, and $64.9 

per metric ton in 2007 dollars. These 

values were adjusted to 2009$ using the 

standard GDP deflator value for 2008 

and 2009. For emissions (or emission 

reductions) that occur in later years, 

these values grow in real terms over 

time. Additionally, the interagency 

group determined that a range of values 

from 7 percent to 23 percent should be 

used to adjust the global SCC to 

calculate domestic effects, although 

preference is given to consideration of 

the global benefits of reducing CO2

emissions. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. Specifically, the 

interagency group has set a preliminary 

goal of revisiting the SCC values within 

two years or at such time as 

substantially updated models become 

available, and to continue to support 

research in this area. In the meantime, 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59529 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

b. Social Cost of Carbon Values Used in 

Past Regulatory Analyses 

To date, economic analyses for 

Federal regulations have used a wide 

range of values to estimate the benefits 

associated with reducing carbon dioxide 

emissions. In the final model year 2011 

CAFE rule, the Department of 

Transportation (DOT) used both a 

‘‘domestic’’ SCC value of $2 per ton of 

CO2 and a ‘‘global’’ SCC value of $33 per 

ton of CO2 for 2007 emission reductions 

(in 2007 dollars), increasing both values 

at 2.4 percent per year. It also included 

a sensitivity analysis at $80 per ton of 

CO2. A domestic SCC value is meant to 

reflect the value of damages in the 

United States resulting from a unit 

change in carbon dioxide emissions, 

while a global SCC value is meant to 

reflect the value of damages worldwide. 

A 2008 regulation proposed by DOT 

assumed a domestic SCC value of $7 per 

ton CO2 (in 2006 dollars) for 2011 

emission reductions (with a range of 

$0¥$14 for sensitivity analysis), also 

increasing at 2.4 percent per year. A 

regulation finalized by DOE in October 

of 2008 used a domestic SCC range of 

$0 to $20 per ton CO2 for 2007 emission 

reductions (in 2007 dollars). In addition, 

EPA’s 2008 Advance Notice of Proposed 

Rulemaking for Greenhouse Gases 

identified what it described as ‘‘very 

preliminary’’ SCC estimates subject to 

revision. EPA’s global mean values were 

$68 and $40 per ton CO2 for discount 

rates of approximately 2 percent and 3 

percent, respectively (in 2006 dollars for 

2007 emissions). 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

agencies, the interagency group sought 

to develop a transparent and defensible 

method, specifically designed for the 

rulemaking process, to quantify avoided 

climate change damages from reduced 

CO2 emissions. The interagency group 

did not undertake any original analysis. 

Instead, it combined SCC estimates from 

the existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. 

The outcome of the preliminary 

assessment by the interagency group 

was a set of five interim values: global 

SCC estimates for 2007 (in 2006 dollars) 

of $55, $33, $19, $10, and $5 per ton of 

CO2. The $33 and $5 values represented 

model-weighted means of the published 

estimates produced from the most 

recently available versions of three 

integrated assessment models—DICE, 

PAGE, and FUND—at approximately 3 

and 5 percent discount rates. The $55 

and $10 values were derived by 

adjusting the published estimates for 

uncertainty in the discount rate (using 

factors developed by Newell and Pizer 

(2003)) at 3 and 5 percent discount 

rates, respectively. The $19 value was 

chosen as a central value between the $5 

and $33 per ton estimates. All of these 

values were assumed to increase at 3 

percent annually to represent growth in 

incremental damages over time as the 

magnitude of climate change increases. 

These interim values represent the 

first sustained interagency effort within 

the U.S. government to develop an SCC 

for use in regulatory analysis. The 

results of this preliminary effort were 

presented in several proposed and final 

rules and were offered for public 

comment in connection with proposed 

rules, including the joint EPA–DOT fuel 

economy and CO2 tailpipe emission 

proposed rules. 

c. Current Approach and Key 

Assumptions 

Since the release of the interim 

values, the interagency group 

reconvened on a regular basis to 

generate improved SCC estimates. 

Specifically, the group considered 

public comments and further explored 

the technical literature in relevant 

fields. 

It is important to recognize that a 

number of key uncertainties remain, and 

that current SCC estimates should be 

treated as provisional and revisable 

since they will evolve with improved 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The National Research 

Council report mentioned above points 

out that there is tension between the 

goal of producing quantified estimates 

of the economic damages from an 

incremental ton of carbon and the limits 

of existing efforts to model these effects. 

There are a number of concerns and 

problems that should be addressed by 

the research community, including 

research programs housed in many of 

the agencies participating in the 

interagency process to estimate the SCC. 

The U.S. Government will 

periodically review and reconsider 

estimates of the SCC used for costbenefit analyses to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. In this 

context, statements recognizing the 

limitations of the analysis and calling 

for further research take on exceptional 

significance. The interagency group 

offers the new SCC values with all due 

humility about the uncertainties 

embedded in them and with a sincere 

promise to continue work to improve 

them. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

most recent values identified by the 

interagency process, adjusted to 2009$ 

using the standard GDP deflator values 

for 2008 and 2009. For each of the four 

cases specified, the values used for 

emissions in 2010 were $4.9, $22.1, 

$36.3, and $67.1 per metric ton avoided 

(expressed in 2009$). To monetize the 

CO2 emissions reductions expected to 

result from amended standards for 

refrigeration products in 2014–2043, 

DOE used the values identified in Table 

A1 of the ‘‘Social Cost of Carbon for 

Regulatory Impact Analysis Under 

Executive Order 12866,’’ which is 

reprinted in appendix 15–A of the 

NOPR TSD for the full range of annual 

SCC estimates from 2010 to 2050. To 

calculate a present value of the stream 

of monetary values, DOE discounted the 

values in each of the four cases using 

the discount rates that had been used to 

obtain the SCC values in each case. 

2. Valuation of Other Emissions 

Reductions 

As previously stated, DOE’s analysis 

assumed the presence of nationwide 

emission caps on SO2 and caps on NOX

emissions in the 28 States covered by 

the CAIR. In the presence of these caps, 

the NEMS–BT modeling system that 

DOE used to forecast emissions 

reduction indicated that no physical 

reductions in power sector emissions 

would occur for SO2, but that the 

standards could put slight downward 

pressure on the prices of emissions 

allowances in cap-and-trade markets. 

Estimating this effect is very difficult 

because such factors as credit banking 

can change the trajectory of prices. From 

its modeling to date, DOE is unable to 

estimate a benefit from SO2 emissions 

reductions at this time. See the 

environmental assessment, chapter 15 

in the NOPR TSD for further details. 

DOE also investigated the potential 

monetary benefit of reduced NOX

emissions from the TSLs it considered. 

As noted above, new or amended energy 

conservation standards would reduce 

NOX emissions in those 22 States that 

are not affected by the CAIR, in addition 

to the reduction in site NOX emissions 

nationwide. DOE estimated the 

monetized value of NOX emissions 

reductions resulting from each of the 

TSLs considered for today’s NOPR 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59530 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

44Refer to the OMB, Office of Information and 

Regulatory Affairs, ‘‘2006 Report to Congress on the 

Costs and Benefits of Federal Regulations and 

Unfunded Mandates on State, Local, and Tribal 

Entities,’’ Washington, DC, for additional 

information. 

45OMB, Circular A–4: Regulatory Analysis (Sept. 

17, 2003). 

based on environmental damage 

estimates from the available literature. 

Available estimates suggest a very wide 

range of monetary values, ranging from 

$370 per ton to $3,800 per ton of NOX

from stationary sources, measured in 

2001$ (equivalent to a range of $447 to 

$4,591 per ton in 2009$).44 In 

accordance with U.S. Office of 

Management and Budget (OMB) 

guidance,45 DOE conducted two 

calculations of the monetary benefits 

derived using each of the economic 

values used for NOX, one using a real 

discount rate of 3 percent and another 

using a real discount rate of 7 percent. 

DOE is aware of multiple agency 

efforts to determine the appropriate 

range of values to use in evaluating the 

potential economic benefits of reduced 

Hg emissions. DOE has decided to await 

further guidance regarding consistent 

valuation and reporting of Hg emissions 

before it once again monetizes Hg in its 

rulemakings. 

N. Demand Response 

This section discusses comments 

received regarding demand response or 

smart grid controls. These are controls 

that can react to signals from utilities or 

other external organizations and adapt 

the product operation. This capability 

might be used to allow utilities to 

reduce energy use during peak demand 

hours by reducing the power input of 

many connected appliances. 

DOE received comments from LG 

urging consideration of smart grid 

controls for refrigeration products when 

setting standards. LG commented that 

the investment required to meet new 

energy standards may displace the 

investment to develop and implement 

smart grid refrigeration products, thus 

limiting the potential to meet DOE’s 

goals for establishment of a smart grid. 

(LG, No. 41 at p. 5) DOE received some 

additional information regarding smart 

grid issues during NOPR phase 

interviews with manufacturers. This 

information did not clearly indicate that 

smart grid controls could provide 

significant benefits when used in 

refrigeration products that are 

comparable to the benefits associated 

with energy use reductions that are 

proposed in this notice. Some of the 

potential benefits, such as the initiation 

of defrost only during off-peak periods 

could be implemented without the use 

of smart grid controls. Because of the 

uncertain value of the smart grid 

benefits, DOE did not consider the 

possible offset of smart grid 

development investment when selecting 

proposed standard levels. 

The U.S. Navy (USN) commented that 

DOE should consider implementing a 

credit or other form of encouragement 

for demand response technologies in the 

energy conservation standard or other 

standards, or in voluntary programs 

such as ENERGY STAR. (USN, No. 

FDMS Draft 0022.1 at p. 2) IOU 

commented that DOE should include as 

part of any standard a requirement that 

refrigeration products include a demand 

response feature. (IOU, No. 36 at p. 13) 

IOU asked for a response to this 

comment and requested that the 

response indicate whether States would 

be allowed to implement demand 

response requirements if DOE does not 

do so. (Id.) 

The requirement to include demand 

response capability in a product 

constitutes a design requirement that a 

product include such a feature. EPCA 

allows establishment of design 

requirements, but only for certain 

products. EPCA defines ‘‘energy 

conservation standard’’ as: 

(A) a performance standard which 

prescribes a minimum level of energy 

efficiency or a maximum quantity of energy 

use, or, in the case of showerheads, faucets, 

water closets, and urinals, water use, for a 

covered product, determined in accordance 

with test procedures prescribed under 

section 6293 of this title; or 

(B) a design requirement for the products 

specified in paragraphs (6), (7), (8), (10), (15), 

(16), (17), and (19) of section 6292(a) of this 

title * * * 

42 U.S.C. 6291(6) 

Refrigeration products do not belong 

to the group of products for which DOE 

can set design requirements (such as 

demand response capability) under 

6291(6)(B). Based on this limitation and 

the available facts, it is DOE’s tentative 

view that a demand response 

requirement cannot be included as part 

of today’s NOPR. 

DOE next considered whether a credit 

may be allowed for demand response 

features. DOE understands that such 

features, when applied to refrigeration 

products, could be used to reduce 

energy costs by shifting portions of the 

energy use associated with defrost or 

icemaking to times when the electricity 

cost is lower, but that they would not 

contribute significantly to reduction of 

energy use. EPCA does not allow 

establishment of energy conservation 

standards if, ‘‘the establishment of such 

standard will not result in significant 

conservation of energy’’ (42 U.S.C. 

6295(o)(3)(B)). Hence, DOE cannot 

consider implementing a credit in the 

energy conservation standards for 

refrigeration products to encourage use 

of this technology. 

DOE and other agencies are not 

prohibited from developing voluntary 

programs to encourage use of demand 

response technology. However, such 

programs are not the subject matter of 

this notice. 

EPCA’s requirement on preemption 

on or after the compliance date for 

Federal energy conservation standards 

for a given product states that ‘‘no State 

regulation concerning the energy 

efficiency, energy use, or water use of 

such covered product shall be effective 

with respect to such product * * *’’ (42 

U.S.C. 6297(c)). EPCA provides a 

number of exceptions to this 

requirement, but none of these apply to 

refrigeration products. DOE interprets 

‘‘regulation concerning energy use’’ to be 

equivalent to ‘‘energy conservation 

standard’’. The title of section 6297(c), 

‘‘General rule of preemption for energy 

conservation standards when Federal 

standard becomes effective for product,’’ 

further clarifies that this section 

addresses energy conservation 

standards, which would mean, in this 

instance, a performance-based standard. 

Based on the limited facts made 

available to DOE, a design requirement 

would not likely meet this requirement. 

Preemption under these conditions 

would not likely apply. 

V. Analytical Results 

The following section addresses the 

results from DOE’s analyses with 

respect to potential energy efficiency 

standards for the various product 

classes examined as part of this 

rulemaking. Issues discussed include 

the trial standard levels examined by 

DOE, the projected impacts of each of 

these levels if adopted as energy 

efficiency standards for refrigeration 

products, and the standards levels that 

DOE is tentatively proposing in today’s 

NOPR. Additional details regarding the 

analyses conducted by the agency are 

contained in the publicly available 

NOPR TSD supporting this notice. 

A. Trial Standard Levels 

DOE analyzed the benefits and 

burdens of a number of TSLs for the 

refrigeration products that are the 

subject of today’s proposed rule. A 

description of each TSL DOE analyzed 

is provided below. DOE attempted to 

limit the number of TSLs considered for 

the NOPR by excluding efficiency levels 

that do not exhibit significantly 

different economic and/or engineering 

characteristics from the efficiency levels 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59531 

already selected as a TSL. While DOE 

only presents the results for those 

efficiency levels in TSL combinations in 

today’s NOPR, DOE presents the results 

for all efficiency levels that it analyzed 

in the NOPR TSD. 

Table V.1 presents the TSLs and the 

corresponding product class efficiencies 

for standard-size refrigerator-freezers. 

TSL 1 consists of those efficiency levels 

that meet current ENERGY STAR 

criteria. TSL 2 consists of the highest 

efficiency levels for which the consumer 

NPV is positive, using a 7-percent 

discount rate. TSL 3 consists of the 

highest efficiency levels for which the 

consumer NPV is positive, using a 3- 

percent discount rate, as well as the 

levels recommended in the Joint 

Comments. TSL 4 consists of those 

efficiency levels that yield energy use 30 

percent below the baseline products. 

TSL 5 consists of the max-tech 

efficiency levels. 

TABLE V.1—TRIAL STANDARD LEVELS FOR STANDARD-SIZE REFRIGERATOR-FREEZERS

Trial standard level 

Top-mount 

refrigerator-freezers 

Bottom-mount 

refrigerator-freezers 

Side-by-side 

refrigerator-freezers 

Product classes 1, 1A, 2, 

3, 3A, 3I and 6 

Product classes 5, 5A, 

and 5I 

Product classes 4, 4I, 

and 7 

Efficiency Level (% less than baseline energy use) 

1 ....................................................................................... 3 (20) 3 (20) 3 (20) 

2 ....................................................................................... 3(20) 3 (20) 4 (25) 

3 ....................................................................................... 4 (25) * 3 (20) 4 (25) 

4 ....................................................................................... 5 (30) 5 (30) 5 (30) 

5 ....................................................................................... 6 (36) 6 (36) 6 (33) 

* Level for product classes 1, 1A, and 2 is 20%. 

Table V.2 presents the TSLs and the 

corresponding product class efficiencies 

for standard-size freezers. TSL 1 

consists of those efficiency levels that 

yield energy use 20 percent below the 

baseline products. TSL 2 consists of the 

levels recommended in the Joint 

Comments. TSL 3 consists of 

incrementally higher efficiency levels 

than the preceding TSL. TSL 4 consists 

of the efficiency levels for which the 

consumer NPV is positive, using a 7- 

percent discount rate. TSL 5 consists of 

the max-tech efficiency levels, which 

are also the efficiency levels for which 

the consumer NPV is positive, using a 

3-percent discount rate. 

TABLE V.2—TRIAL STANDARD LEVELS FOR STANDARD-SIZE FREEZERS

Trial standard level 

Upright freezers Chest freezers 

Product 

class 9 

Product 

class 8 

Product classes 

10 and 10A 

Efficiency Level (% less than baseline energy use) 

1 ....................................................................................... 3 (20) 3 (20) 3 (20) 

2 ....................................................................................... 5 (30) 4 (25) *4 (25) 

3 ....................................................................................... 6 (35) 5 (30) 5 (30) 

4 ....................................................................................... 7 (40) 6 (35) 6 (35) 

5 ....................................................................................... 8 (44) 7 (41) 7 (41) 

* Level for product class 10A is 30%. 

Table V.3 presents the TSLs and the 

corresponding product class efficiencies 

for compact refrigeration products. TSL 

1 consists of efficiency levels that meet 

current ENERGY STAR criteria for some 

compact refrigerators (product classes 

11, 11A, 12 and 13A), and efficiency 

levels that are 10 percent below the 

baseline energy use for other compact 

refrigerators (product classes 13, 14, and 

15) and compact freezers (product 

classes 16, 17, and 18). TSL 2 consists 

of the levels recommended in the Joint 

Comments. TSL 3 consists of the highest 

efficiency levels for which the consumer 

NPV is positive, using both a 3-percent 

and a 7-percent discount rate. TSL 4 

consists of incrementally higher 

efficiency levels than TSL 3. TSL 5 

consists of the max-tech efficiency 

levels. 

TABLE V.3—TRIAL STANDARD LEVELS FOR COMPACT REFRIGERATION PRODUCTS

Trial standard level 

Compact refrigerators and refrigerator-freezers Compact freezers 

Product classes 11, 11A, 

12, and 13A 

Product classes 13, 14, 

and 15 Product classes 16, 17, 18 

Efficiency Level (% less than baseline energy use) 

1 ....................................................................................... 3 (20) 1 (10) 1 (10) 

2 ....................................................................................... 4 (25) *2 (15) 1 (10) 

3 ....................................................................................... 5 (30) 2 (15) 2 (15) 

4 ....................................................................................... 7 (40) 4 (25) 4 (25) 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59532 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.3—TRIAL STANDARD LEVELS FOR COMPACT REFRIGERATION PRODUCTS—Continued 

Trial standard level 

Compact refrigerators and refrigerator-freezers Compact freezers 

Product classes 11, 11A, 

12, and 13A 

Product classes 13, 14, 

and 15 Product classes 16, 17, 18 

5 ....................................................................................... 10 (59) 7 (42) 7 (42) 

* Level for product class 14 is 20%. 

Table V.4 presents the TSLs and the 

corresponding product class efficiencies 

for built-in refrigeration products. TSL 1 

consists of the efficiency levels that are 

10 percent better than the current 

standard. TSL 2 consists of the highest 

efficiency levels for which the consumer 

NPV is positive, using both a 3-percent 

and a 7-percent discount rate. TSL 3 

consists of the levels recommended in 

the Joint Comments. TSL 4 consists of 

incrementally higher efficiency levels 

than TSL 3. TSL 5 consists of the maxtech efficiency levels. 

TABLE V.4—TRIAL STANDARD LEVELS FOR BUILT-IN REFRIGERATION PRODUCTS

Trial standard level 

Built-in 

all-refrigerators 

Built-in bottommount refrigeratorfreezers Built-in side-by-side 

refrigerator-freezers 

Built-in 

upright 

freezers 

Product class 

3A–BI Product classes 

5–BI and 5I–BI 

Product classes 4–BI, 

4I–BI and 7–BI Product 

class 9–BI 

Efficiency Level (% less than baseline energy use) 

1 ................................................................................................. 1 (10) 1 (10) 1 (10) 1 (10) 

2 ................................................................................................. 2 (15) 2 (15) 1 (10) 3 (20) 

3 ................................................................................................. 3 (20) 2 (15) 3 (20) 4 (25) 

4 ................................................................................................. 4 (25) 4 (25) 3 (20) 4 (25) 

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

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Consumers 

a. Life-Cycle Cost and Payback Period 

Consumers affected by new or 

amended standards usually experience 

higher purchase prices and lower 

operating costs. DOE evaluates these 

impacts on individual consumers by 

calculating changes in life-cycle costs 

(LCC) and the payback period (PBP) 

associated with potential standard 

levels. Using the approach described in 

section IV.F, DOE calculated the LCC 

impacts and PBPs for the efficiency 

levels considered in this rulemaking. 

For each representative product class, 

DOE’s analysis provided several outputs 

for each TSL, which are reported in 

Table V.5 through Table V.15. Each 

table includes the average total LCC and 

the average LCC savings, as well as the 

fraction of product consumers for which 

the LCC will either decrease (net 

benefit), increase (net cost), or exhibit 

no change (no impact) relative to the 

product purchased in the base case. The 

last output in the tables is the median 

PBP for the consumer purchasing a 

design that complies with a given TSL. 

The results for each TSL are relative to 

the energy efficiency distribution in the 

base case (no amended standards). DOE 

based the LCC and PBP analyses on 

energy consumption under conditions 

of actual product use, whereas it based 

the rebuttable presumption PBPs on 

energy consumption under conditions 

prescribed by the DOE test procedure, as 

required by EPCA. (42 U.S.C. 

6295(o)(2)(B)(iii)) 

TABLE V.5—PRODUCT CLASS 3, TOP-MOUNT REFRIGERATOR-FREEZERS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback period (years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Median Net cost No impact Net benefit 

Baseline ... $543 $750 $1,293 

1 (10) ....... 555 696 1,251 $42 1.7% 21.6% 76.8% 2.7 

2 (15) ....... 563 668 1,231 62 2.3 17.4 80.3 3.0 

1, 2 ............. 3 (20) ....... 624 640 1,264 29 42.3 8.1 49.6 9.2 

3 ................. 4 (25) ....... 667 605 1,272 22 54.9 0.0 45.1 10.9 

4 ................. 5 (30) ....... 759 571 1,330 ¥37 73.8 0.0 26.2 15.4 

5 ................. 6 (36) ....... 892 535 1,427 ¥133 85.4 0.0 14.6 20.5 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59533 

TABLE V.6—PRODUCT CLASS 5, BOTTOM-MOUNT REFRIGERATOR-FREEZERS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback period (years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Median Net cost No impact Net benefit 

Baseline ... $945 $917 $1,862 

1 (10) ....... 947 908 1,856 $8 0.2 86.9 12.9 2.5 

2 (15) ....... 949 904 1,853 12 0.3 86.9 12.9 2.7 

1, 2, 3 ......... 3 (20) ....... 955 892 1,847 19 4.5 67.8 27.7 4.9 

4 (25) ....... 1,020 853 1,873 ¥8 75.0 0.0 25.0 17.5 

4 ................. 5 (30) ....... 1,127 817 1,945 ¥79 88.2 0.0 11.8 24.8 

5 ................. 6 (36) ....... 1,276 770 2,046 ¥180 93.3 0.0 6.7 29.0 

TABLE V.7—PRODUCT CLASS 7, SIDE-BY-SIDE REFRIGERATOR-FREEZERS WITH THROUGH-THE-DOOR ICE SERVICE: LCC 

AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Net cost No impact Net benefit Median 

Baseline ... $1,152 $1,178 $2,330 

1 (10) ....... 1,155 1,156 2,310 $20 0.1 78.1 21.8 1.5 

2 (15) ....... 1,160 1,132 2,292 40 0.5 51.7 47.8 2.4 

1 ................. 3 (20) ....... 1,179 1,100 2,279 53 7.3 36.9 55.8 4.8 

2, 3 ............. 4 (25) ....... 1,244 1,051 2,295 37 50.8 0.0 49.2 10.9 

4 ................. 5 (30) ....... 1,385 1,002 2,387 ¥55 77.7 0.0 22.3 18.6 

5 ................. 6 (33) ....... 1,496 970 2,466 ¥134 86.2 0.0 13.9 22.6 

TABLE V.8—PRODUCT CLASS 9, UPRIGHT FREEZERS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Net cost No impact Net benefit Median 

Baseline ... $560 $969 $1,529 

1 (10) ....... 571 897 1,468 $62 1.7 19.9 78.5 2.3 

2 (15) ....... 592 852 1,445 85 9.7 1.7 88.6 4.3 

1 ................. 3 (20) ....... 611 807 1,418 111 11.7 0.6 87.8 4.8 

4 (25) ....... 640 760 1,401 128 16.2 0.4 83.4 5.8 

2 ................. 5 (30) ....... 667 714 1,381 148 18.7 0.2 81.1 6.2 

3 ................. 6 (35) ....... 727 673 1,399 130 30.8 0.0 69.2 8.4 

4 ................. 7 (40) ....... 810 632 1,442 87 45.0 0.0 55.0 11.0 

5 ................. 8 (44) ....... 994 599 1,593 ¥63 70.2 0.0 29.8 17.4 

TABLE V.9—PRODUCT CLASS 10, CHEST FREEZER: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Net cost No impact Net benefit Median 

Baseline ... $407 $578 $985 

1 (10) ....... 414 533 946 $38 0.0 16.2 83.8 2.1 

2 (15) ....... 424 506 930 55 0.7 1.2 98.1 3.4 

1 ................. 3 (20) ....... 436 479 915 70 1.6 0.2 98.2 4.2 

2 ................. 4 (25) ....... 483 451 935 50 25.8 0.2 74.0 8.7 

3 ................. 5 (30) ....... 504 424 928 56 28.3 0.2 71.5 9.1 

4 ................. 6 (35) ....... 565 404 968 17 53.5 0.0 46.5 13.1 

5 ................. 7 (41) ....... 687 369 1,055 ¥71 79.0 0.0 21.0 19.3 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59534 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.10—PRODUCT CLASS 11, COMPACT REFRIGERATORS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Net cost No impact Net benefit Median 

Baseline ... $146 $165 $311 

1 (10) ....... 151 150 301 $10 11.9 1.6 86.5 2.0 

2 (15) ....... 156 142 297 13 17.0 1.4 81.6 2.3 

1 ................. 3 (20) ....... 162 134 296 15 24.4 1.4 74.2 2.8 

2 ................. 4 (25) ....... 174 126 300 10 43.3 1.0 55.7 3.9 

3 ................. 5 (30) ....... 184 118 302 8 50.6 0.9 48.5 4.4 

6 (35) ....... 212 111 324 ¥13 77.2 0.0 22.8 6.7 

4 ................. 7 (40) ....... 221 103 324 ¥13 76.1 0.0 23.9 6.5 

8 (45) ....... 255 97 351 ¥41 87.4 0.0 12.6 8.6 

9 (50) ....... 274 88 362 ¥51 88.8 0.0 11.2 9.0 

5 ................. 10 (59) ..... 341 75 416 ¥105 93.8 0.0 6.2 11.6 

TABLE V.11—PRODUCT CLASS 18, COMPACT FREEZERS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback period (years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Median Net cost No impact Net benefit 

Baseline ... $202 $200 $402 

1, 2 ............. 1 (10) ....... 209 182 391 $11 9.9 4.7 85.4 2.5 

3 ................. 2 (15) ....... 223 172 395 7 40.6 0.0 59.4 4.6 

3 (20) ....... 268 163 430 ¥29 91.1 0.0 8.9 10.9 

4 ................. 4 (25) ....... 279 153 432 ¥30 88.5 0.0 11.5 10.0 

5 (30) ....... 312 146 458 ¥57 94.6 0.0 5.4 12.6 

6 (35) ....... 320 137 457 ¥55 92.7 0.0 7.3 11.5 

5 ................. 7 (42) ....... 399 124 523 ¥121 97.8 0.0 2.3 15.9 

TABLE V.12—PRODUCT CLASS 3A–BI, BUILT-IN ALL-REFRIGERATORS: LCC AND PBP RESULTS

Trial standard level 

Efficiency 

level 

(% less 

than baseline energy 

use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) 

Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of households that experience 

Net cost No impact Net benefit Median 

Baseline ... $4,676 $776 $5,451 

1 ................. 1 (10) ....... 4,683 721 5,404 $47 0.3 22.6 77.2 1.6 

2 ................. 2 (15) ....... 4,696 693 5,388 63 2.6 18.4 79.0 3.0 

3 ................. 3 (20) ....... 4,826 660 5,486 ¥34 69.1 9.1 21.9 15.9 

4 ................. 4 (25) ....... 5,017 629 5,646 ¥195 94.5 0.0 5.5 29.7 

5 ................. 5 (29) ....... 5,162 607 5,769 ¥318 97.2 0.0 2.8 36.7 

TABLE V.13—PRODUCT CLASS 5–BI, BUILT-IN BOTTOM-MOUNT REFRIGERATOR-FREEZERS: LCC AND PBP RESULTS

Trial 

standard 

level 

Efficiency level 

(% less than 

baseline 

energy use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of Households that experience 

Net cost No impact Net benefit Median 

Baseline ............ $5,386 $908 $6,294 

1 ............... 1 (10) ................ 5,390 899 6,289 $7 1.2 87.1 11.7 4.4 

2, 3 .......... 2 (15) ................ 5,401 906 6,307 0 8.2 87.0 4.8 12.9 

3 (20) ................ 5,435 892 6,328 ¥21 29.3 67.5 3.3 26.2 

4 ............... 4 (25) ................ 5,607 864 6,471 ¥164 99.0 0.0 1.1 62.8 

5 ............... 5 (27) ................ 5,706 845 6,551 ¥244 99.3 0.0 0.7 61.8 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59535 

TABLE V.14—PRODUCT CLASS 7–BI, BUILT-IN SIDE-BY-SIDE REFRIGERATOR-FREEZERS WITH THROUGH-THE-DOOR ICE

SERVICE: LCC AND PBP RESULTS

Trial 

standard 

level 

Efficiency level 

(% less than 

baseline 

energy use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of Households that experience 

Net cost No impact Net benefit Median 

Baseline ............ $7,887 $1,293 $9,180 

1, 2 .......... 1 (10) ................ 7,902 1,276 9,178 $7 8.0 78.5 13.5 8.7 

.................. 2 (15) ................ 7,947 1,261 9,208 ¥18 39.8 52.4 7.8 21.0 

3, 4 .......... 3 (20) ................ 8,078 1,228 9,306 ¥116 60.2 37.2 2.5 36.7 

5 ............... 4 (22) ................ 8,197 1,211 9,409 ¥219 98.8 0.0 1.2 60.0 

TABLE V.15—PRODUCT CLASS 9–BI, BUILT-IN UPRIGHT FREEZERS: LCC AND PBP RESULTS

Trial 

standard 

level 

Efficiency level 

(% less than 

baseline 

energy use) 

Life-cycle cost 2009$ Life-cycle cost savings Payback 

period 

(years) Installed 

cost 

Discounted 

operating 

cost 

LCC 

Average 

savings 

2009$ 

% of Households that experience 

Net cost No impact Net benefit Median 

Baseline ............ $4,383 $947 $5,330 

1 ............... 1 (10) ................ 4,400 876 5,276 $54 4.3 19.9 75.8 3.4 

.................. 2 (15) ................ 4,415 834 5,249 82 8.6 1.7 89.7 4.3 

2 ............... 3 (20) ................ 4,509 797 5,306 24 53.1 0.6 46.3 12.8 

3, 4 .......... 4 (25) ................ 4,657 752 5,409 ¥78 78.2 0.5 21.3 21.1 

5 ............... 5 (27) ................ 4,770 730 5,500 ¥169 87.1 0.3 12.6 26.8 

b. Consumer Subgroup Analysis 

As described in section IV.H, DOE 

determined the impact of the considered 

TSLs on low-income households and 

senior-only households. DOE did not 

estimate impacts for compact 

refrigeration products because the 

household sample sizes were not large 

enough to yield meaningful results. 

Table V.16 through Table V.18 

compare the average LCC savings at 

each efficiency level for the two 

consumer subgroups with the average 

LCC savings for the entire sample for 

each representative product class. In 

general, the average LCC savings for 

low-income households and senior-only 

households at the considered efficiency 

levels are not substantially different 

from the average for all households. 

Chapter 11 of the NOPR TSD presents 

the complete LCC and PBP results for 

the two subgroups. 

TABLE V.16—STANDARD-SIZE REFRIGERATOR-FREEZERS: COMPARISON OF AVERAGE LCC SAVINGS FOR CONSUMER

SUBGROUPS AND ALL HOUSEHOLDS

Efficiency level 

(% less than 

baseline 

energy use) 

Top-mount refrigerator-freezers Bottom-mount refrigerator-freezers Side-by-side refrigerator-freezers 

Product class 3 Product class 5 Product class 7 

Senior Low-income All Senior Low-income All Senior Low-income All 

1 (10) .............. $40 $44 $42 $53 $9 $8 $20 $21 $20 

2 (15) .............. 58 65 61 77 13 12 40 41 40 

3 (20) .............. 22 32 28 90 20 19 53 55 53 

4 (25) .............. 12 25 20 62 ¥7 ¥8 37 36 37 

5 (30) .............. ¥49 ¥33 ¥38 ¥2 ¥78 ¥79 ¥55 ¥59 ¥55 

6 (36/36/33) .... ¥149 ¥129 ¥135 ¥29 ¥180 ¥180 ¥134 ¥140 ¥134 

TABLE V.17—STANDARD-SIZE FREEZERS: COMPARISON OF AVERAGE LCC SAVINGS FOR CONSUMER SUBGROUPS AND

ALL HOUSEHOLDS

Efficiency level 

(% less than baseline energy use) 

Upright freezers Chest freezers 

Product class 9 Product class 10 

Senior Low-income All Senior Low-income All 

1 (10) ................................................................................ $62 $58 $61 $38 $37 $38 

2 (15) ................................................................................ 85 79 83 55 53 55 

3 (20) ................................................................................ 111 102 109 70 68 70 

4 (25) ................................................................................ 128 117 126 50 47 50 

5 (30) ................................................................................ 148 134 146 56 53 56 

6 (35) ................................................................................ 130 113 127 17 12 17 

7 (40/41) ........................................................................... 87 68 84 ¥71 ¥76 ¥71 

8 (44) ................................................................................ ¥63 ¥85 ¥71 .................... .................... ....................

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59536 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.18—BUILT-IN REFRIGERATION PRODUCTS: COMPARISON OF AVERAGE LCC SAVINGS FOR CONSUMER

SUBGROUPS AND ALL HOUSEHOLDS

Efficiency level 

(% less than 

baseline 

energy use) 

Built-in all 

refrigerators 

Built-in bottom-mount 

refrigerator-freezers 

Built-in side-by-side 

refrigerator-freezers 

Built-in upright 

freezers 

Product class 3A–BI Product class 5–BI Product class 7–BI Product class 9–BI 

Senior Lowincome All Senior Lowincome All Senior Lowincome All Senior Lowincome All 

1 (10) ................ $44 $49 $47 $6 $7 $7 $7 $6 $7 $54 $50 $54 

2 (15) ................ 58 65 63 ¥3 ¥1 0 ¥18 ¥24 ¥18 82 74 82 

3 (20) ................ ¥47 ¥37 ¥34 ¥26 ¥24 ¥21 ¥116 ¥135 ¥116 24 13 24 

4 (25) ................ ¥211 ¥198 ¥195 ¥173 ¥167 ¥164 ¥219 ¥239 ¥219 ¥78 ¥93 ¥78 

5 (29/27/22/27) ¥337 ¥321 ¥318 ¥255 ¥247 ¥244 ............. ............. ............. ¥169 ¥185 ¥169 

c. Rebuttable Presumption Payback 

As discussed in section III.D.2, EPCA 

provides a rebuttable presumption that 

an energy conservation standard is 

economically justified if the increased 

purchase cost for a product that meets 

the standard is less than three times the 

value of the first-year energy savings 

resulting from the standard. In 

calculating a rebuttable presumption 

payback period for the considered 

standard levels, DOE used discrete 

values rather than distributions for 

input values, and, as required by EPCA, 

based the energy use calculation on the 

DOE test procedures for refrigeration 

products. As a result, DOE calculated a 

single rebuttable presumption payback 

value, and not a distribution of payback 

periods, for each efficiency level. Tables 

V.19 through V.22 present the average 

rebuttable presumption payback periods 

for those efficiency levels where the 

increased purchase cost for a product 

that meets a standard at that level is less 

than three times the value of the firstyear energy savings resulting from the 

standard. 

TABLE V.19—STANDARD-SIZE REFRIGERATOR-FREEZERS: EFFICIENCY LEVELS WITH REBUTTABLE PAYBACK PERIOD LESS

THAN THREE YEARS

Product class 3: Top-mount 

refrigerator-freezer 

Product class 5: Bottom-mount 

refrigerator-freezer 

Product class 7: Side-by-side refrigerator-freezer 

with TTD* 

Efficiency 

level 

(% less 

than baseline energy 

use) 

PBP 

years 

Efficiency level 

(% less than baseline 

energy use) 

PBP 

years 

Efficiency level 

(% less than baseline 

energy use) 

PBP 

years 

1 (10) ....... 2.4 1 (10) 2.1 1 (10) 1.4 

2 (15) ....... 2.6 2 (15) 2.4 2 (15) 1.7 

....................................... ....................................... ....................................... 3 (20) 2.9

* Through-the-door ice service. 

TABLE V.20—STANDARD-SIZE FREEZERS: EFFICIENCY LEVELS WITH REBUTTABLE PAYBACK PERIOD LESS THAN THREE

YEARS

Product class 9: upright freezer Product class 10: chest freezer 

Efficiency level 

(% less than baseline energy use) PBP years 

Efficiency level 

(% less than baseline 

energy use) 

PBP years 

1 (10) ........................................................................................... 1.9 1 (10) 1.8 

........................................ 2 (15) 2.7 

TABLE V.21—COMPACT REFRIGERATION PRODUCTS: EFFICIENCY LEVELS WITH REBUTTABLE PAYBACK PERIOD LESS

THAN THREE YEARS

Product class 11: 

compact refrigerator 

Product class 18: 

compact freezer 

Efficiency level 

(% less than baseline energy use) PBP years 

Efficiency level 

(% less than baseline 

energy use) 

PBP years 

1 (10) ........................................................................................... 1.8 1 (10) 2.0 

2 (15) ........................................................................................... 2.1 ........................................ ........................................

3 (20) ........................................................................................... 2.7 ........................................ ........................................

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59537 

TABLE V.22—BUILT-IN REFRIGERATION PRODUCTS: EFFICIENCY LEVELS WITH REBUTTABLE PAYBACK PERIOD LESS THAN

THREE YEARS

Product class 3A–BI: built-in all-refrigerator Product class 5–BI: built-in 

bottom-mount refrigeratorfreezer 

Product class 7–BI: built-in 

side-by-side refrigeratorfreezer with TTD * 

Product class 9–BI: builtin upright freezer 

Efficiency level 

(% less than baseline energy use) PBP years 

Efficiency 

level 

(% less than 

baseline energy use) 

PBP years 

Efficiency 

level 

(% less than 

baseline energy use) 

PBP years 

Efficiency 

level 

(% less than 

baseline energy use) 

PBP years 

1 (10) ........................................................ 1.5 1 (10) .................... 1 (10) .................... 1 (10) 2.7 

2 (15) ........................................................ 2.6 .................... .................... .................... .................... .................... ....................

* Through-the-door ice service. 

While DOE examined the rebuttablepresumption criterion, it considered 

whether the standard levels considered 

for today’s rule are economically 

justified through a more detailed 

analysis of the economic impacts of 

these levels pursuant to 42 U.S.C. 

6295(o)(2)(B)(i). The results of this 

analysis serve as the basis for DOE to 

definitively evaluate the economic 

justification for a potential standard 

level (thereby supporting or rebutting 

the results of any preliminary 

determination of economic 

justification). 

2. Economic Impacts on Manufacturers 

DOE performed an MIA to estimate 

the impact of amended energy 

conservation standards on 

manufacturers of residential 

refrigeration products. The section 

below describes the expected impacts 

on manufacturers at each potential TSL. 

a. Cash-Flow Analysis Results 

The tables below depict the financial 

impacts on manufacturers (represented 

by changes in INPV) and the conversion 

costs DOE estimates manufacturers 

would incur at each TSL. DOE shows 

four sets of results, corresponding to the 

four sets of TSLs considered in this 

rulemaking. Each set of TSLs reflect the 

impacts on manufacturers of a certain 

group of product classes. 

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 (2010) through the end of the 

analysis period. 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 a proxy for the magnitude of 

the required conversion costs, relative to 

the cash flow generated by the industry 

in the base case. In its discussion of the 

MIA results, DOE frequently references 

the common technology options that 

achieve the efficiencies required by a 

given TSL in the relevant representative 

product classes. To find to a complete 

description of technology options and 

the required efficiencies at each TSL, 

see section IV.B.2 of today’s NOPR and 

appendix 5–A of the TSD. 

Each set of results below shows two 

tables of INPV impacts: The first table 

reflects the lower (less severe) bound of 

impacts and the second represents the 

upper bound. To evaluate this range of 

cash-flow impacts on the residential 

refrigeration products industry, DOE 

modeled two different scenarios using 

different markup assumptions. These 

assumptions correspond to the bounds 

of a range of market responses that DOE 

anticipates could occur in the standards 

case. Each scenario results in a unique 

set of cash flows and corresponding 

industry value at each TSL. 

To assess the lower (less severe) end 

of the range of potential impacts, DOE 

modeled the flat markup scenario. The 

flat markup scenario assumes that in the 

standards case manufacturers would be 

able to pass the higher production costs 

required for more efficient products on 

to their customers. Specifically, the 

industry would be able to maintain its 

average base-case gross margin, as a 

percentage of revenue, despite higher 

product costs. In general, the larger the 

product price increases, the less likely 

manufacturers are to achieve the cash 

flow from operations calculated in this 

scenario because the less likely it is that 

manufacturers would be able to fully 

markup these larger cost increases. 

Through its discussions with 

manufacturers, DOE found that overall 

profit is driven more by bundles of 

product features, such as stainless steel 

exteriors, ice dispensers, and digital 

displays, than by energy efficiency 

characteristics. In other words, more 

efficient products command higher 

prices, but these prices are driven by the 

many other features that are also 

bundled with efficiency. However, the 

overall profit margin percentage does 

widely vary even if the dollar profit per 

unit increases for products with these 

additional features. Manufacturers are 

skeptical that customers would accept 

higher prices for increased energy 

efficiency because it does not command 

higher margins in the current market. 

Under such a scenario, it follows that 

the large retailers that compose the 

relatively concentrated customer base of 

the industry would not accept 

manufacturers fully passing through the 

additional cost of improved efficiency 

because consumers would be wary of 

higher prices without additional 

features. Therefore, to assess the higher 

(more severe) end of the range of 

potential impacts, DOE modeled the 

preservation of operating profit markup 

scenario in which higher energy 

conservation standards result in lower 

manufacturer markups. This scenario 

models manufacturers’ concerns that the 

higher costs of more efficient technology 

would harm profitability if the full cost 

increases cannot be passed on. The 

scenario represents the upper end of the 

range of potential impacts on 

manufacturers because no additional 

operating profit is earned on the 

investments required to meet the 

proposed amended energy conservation 

standards, while higher production 

costs erode profit margins and result in 

lower cash flows from operations. 

DOE used the main NIA shipment 

scenario for both the lower- and higherbound MIA scenarios that were used to 

characterize the potential INPV impacts. 

The shipment forecast is an important 

driver of the INPV results below. The 

main NIA shipment scenario includes a 

price elasticity effect, meaning higher 

prices in the standards case result in 

lower shipments. Lower shipments also 

reduce industry revenue, and, in turn, 

INPV. 

i. Cash-Flow Analysis Results for 

Standard-Size Refrigerator-Freezers 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59538 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.23—MANUFACTURER IMPACT ANALYSIS FOR STANDARD-SIZE REFRIGERATOR-FREEZERS—FLAT MARKUP

SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 3,173 3,088 2,997 2,886 2,530 2,344 

Change in INPV ................ (2009$ millions) ................ .................... (84.8) (175.9) (287.5) (643.0) (828.9) 

(%) .................................... .................... ¥2.7% ¥5.5% ¥9.1% ¥20.3% ¥26.1% 

Product Conversion Costs (2009$ millions) ................ .................... 153 197 229 348 406 

Capital Conversion Costs (2009$ millions) ................ .................... 229 393 620 1,405 2,013 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 382 590 848 1,753 2,419 

TABLE V.24—MANUFACTURER IMPACT ANALYSIS FOR STANDARD-SIZE REFRIGERATOR-FREEZERS—PRESERVATION OF

OPERATING PROFIT MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 3,173 2,871 2,713 2,511 1,676 1,018 

Change in INPV ................ (2009$ millions) ................ .................... (301.7) (459.8) (662.1) (1,496.8) (2,154.7) 

(%) .................................... .................... ¥9.5% ¥14.5% ¥20.9% ¥47.2% ¥67.9% 

Product Conversion Costs (2009$ millions) ................ .................... 153 197 229 348 406 

Capital Conversion Costs (2009$ millions) ................ .................... 229 393 620 1,405 2,013 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 382 590 848 1,753 2,419 

TSL 1 represents the current ENERGY 

STAR level for standard-size 

refrigerator-freezers or a 20 percent 

reduction in measured energy 

consumption over the current energy 

conservation standards for the analyzed 

product class 3 (automatic defrost with 

top-mounted freezer without throughthe-door ice service), product class 5 

(automatic defrost with bottom-mounted 

freezer without through-the-door ice 

service), and product class 7 (automatic 

defrost with side-mounted freezer with 

through-the-door ice service). At TSL 1, 

DOE estimates impacts on INPV to range 

¥$84.8 million to -$301.7 million, or a 

change in INPV of ¥2.7 percent to ¥9.5 

percent. At this proposed level, industry 

free cash flow is estimated to decrease 

by approximately 64.8 percent to $71.3 

million, compared to the base-case 

value of $202.6 million in the year 

leading up to the proposed energy 

conservation standards. 

The INPV impacts at TSL 1 are 

relatively minor, in part because the 

vast majority of manufacturers produce 

ENERGY STAR units in significant 

volumes, particularly for product class 5 

and 7. Approximately 42 percent of 

product class 7 shipments and 47 

percent of product class 5 shipments 

currently meet this TSL. By contrast, the 

vast majority of product class 3 

shipments are baseline units. 

Additionally, most of the design options 

DOE analyzed at this proposed level are 

one-for-one component swaps, 

including more efficient compressors 

and brushless DC condenser and 

evaporator fan motors, which require 

only modest changes to the 

manufacturing process at TSL 1. As 

such, DOE estimated total product 

conversion costs of $153 million and 

capital conversion costs of $229 million. 

While substantial on a nominal basis, 

the total conversion costs are relatively 

low compared to the industry value of 

$3.2 billion. The total conversion costs 

at TSL 1 are mostly driven by the design 

options that manufacturers could use to 

improve the efficiency of the smallersized units of the product classes 

analyzed. For example, the analyzed 

design options for the 22 cubic foot 

product class 7 unit included a VIP in 

the freezer door, while the 26 cubic foot 

product class 7 unit only analyzed less 

costly component swaps. VIP 

implementation would require 

significant capital and product 

conversion costs because additional 

production steps are required to hold 

and bind each panel in its location 

before the product is foamed. Each 

additional step requires more 

equipment to lengthen production lines 

and, because of lower throughput, more 

production lines for each manufacturer 

to maintain similar shipment volumes. 

Some manufacturers have experience 

with VIPs, but DOE expects substantial 

engineering and testing resources would 

be required for their use in new 

platforms and/or at higher production 

volumes. 

Similarly, the 16 cubic foot product 

class 3 unit uses a variable speed 

compressor as a design option. While 

not a capital intensive solution, variable 

speed compressors would require 

substantial engineering time to integrate 

the complex component, especially if 

electronic control systems would also be 

required. Because these changes are 

more complex than the other analyzed 

design options, more than three-quarters 

of the conversion costs for TSL 1 are 

attributable to the use of the VIPs and 

variable speed compressors in the 

smaller-volume product class 7 and 

product class 3 units, respectively. 

The flat markup scenario shows 

slightly negative impacts at TSL 1, 

indicating that the outlays for 

conversion costs marginally outweigh 

any additional profit earned on 

incrementally higher variable costs. On 

a shipment-weighted basis, the average 

MPC for standard-size refrigeratorfreezers increases by 10 percent at TSL 

1. These small component cost changes 

are not significant enough to fully 

recoup these investments even if 

manufacturers earn additional profit on 

these costs, as the flat markup scenario 

assumes. Hence, there is a slight 

negative impact, even in the upperbound scenario, at TSL 1. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59539 

The efficiency requirements for 

product class 3 and product class 5 

refrigerator-freezers are the same at TSL 

2 as TSL 1. However, the efficiency 

requirements for product class 7 

increase to a 25 percent reduction in 

measured energy consumption from 

current energy conservation standards. 

DOE estimates the INPV impacts at TSL 

2 range from ¥$175.9 million to 

¥$459.8 million, or a change in INPV 

of ¥5.5 percent to ¥14.5 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by 

approximately 102.8 percent to ¥$5.7 

million, compared to the base-case 

value of $202.6 million in the year 

leading up to the proposed energy 

conservation standard. 

The additional impacts at TSL 2 

relative to TSL 1 result from the further 

improvements manufacturers must 

make to product class 7 refrigeratorfreezers to achieve a 25 percent energy 

reduction, as very few shipments of 

product class 7 currently exceed the 

ENERGY STAR level. Specifically, for 

the 22-cubic foot product, the design 

options DOE analyzed include a 

variable speed compressor and a VIP in 

the freezer cabinet, instead of the door 

as in TSL 1. For the 26-cubic foot 

product class 7 unit, the design options 

analyzed include a VIP in the freezer 

door in addition to additional 

component swaps and the component 

swaps needed to meet TSL 1. Total 

conversion costs increase by $208 

million compared to TSL 1, which is 

largely driven by the initial use of VIPs 

in the 26-cubic foot product class 7 unit. 

Besides these specific changes to sideby-side units, at TSL 2 most production 

lines of standard-size refrigeratorfreezers do not use of VIPs or other very 

costly components, mitigating some of 

the disruption to current facilities. 

Consequently, the INPV impacts, while 

greater than at TSL 1, are still relatively 

moderate compared to the value of the 

industry. 

At TSL 2, the INPV in the flat markup 

is lower than at TSL 1, which means the 

additional conversion costs to add more 

VIPs leaves manufacturers worse off 

even if they can earn additional profit 

on these costly components. In the 

preservation of operating profit markup 

scenario, the industry earns no 

additional profit on this greater 

investment, lowering cash flow from 

operations in the standards case and 

resulting in greater INPV impacts. 

The efficiency requirements for 

product class 5 and product class 7 

refrigerator-freezers are the same at TSL 

3 as TSL 2. However, the efficiency 

requirements for product class 3 

increase to a 25 percent reduction in 

measured energy consumption from 

current energy conservation standards. 

TSL 3 represents a 25 percent reduction 

in measured energy consumption over 

the current energy conservation 

standards both product class 3 and 

product class 7. In addition, TSL 3 

represents a 20 percent reduction in 

measured energy consumption for the 

unanalyzed product classes 1, 1A, and 

2. DOE estimates the INPV impacts at 

TSL 3 to range from ¥$287.5 million to 

¥$662.1 million, or a change in INPV 

of ¥9.1 percent to ¥20.9 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by 

approximately 151.6 percent to ¥$104.5 

million, compared to the base-case 

value of $202.6 million in the year 

leading up to the standards. 

The additional negative impacts on 

industry cash flow result from the 

changes to product class 3 refrigeratorfreezers to reach a 25 percent reduction 

in energy use (side-by-side products met 

this proposed level at TSL 2). 

Specifically, the design options DOE 

analyzes at TSL 3 for 16 cubic foot topmount refrigerator-freezers include the 

use of VIPs for the first time (in the 

freezer cabinet), in addition to the 

component swaps discussed above. In 

total, DOE estimates product conversion 

costs of $229 million and capital 

conversion costs of $620 million at TSL 

3. The high cost to purchase new 

production equipment and the large 

engineering effort to manufacture new 

platforms for these smaller-sized 

product class 3 units drive the vast 

majority of this additional $258 million 

in conversion costs that DOE estimates 

manufacturers would incur at TSL 3. 

Because the smaller size top-mounts 

account for a large percentage of total 

shipments, the production equipment 

necessary to implement new platforms 

for these products is costly. 

While production of units meeting 

TSL 3 is fairly limited, several 

manufacturers have introduced 

products that meet this proposed level 

in response to Federal production tax 

credits. This experience mitigates some 

of the product conversion costs by 

giving manufacturers some experience 

with the newer technologies. However, 

the more severe impacts at TSL 3, 

relative to TSL 2, are due to the 

incremental outlays for conversion costs 

to make the changes described above. In 

particular, any experience with VIPs on 

some products does not lower the 

substantial capital conversion necessary 

to purchase production equipment 

necessary to manufacture products that 

are substantially different from existing 

products. 

As mentioned above, the preservation 

of operating profit markup scenario 

assumes no additional profit is earned 

on the higher production costs, which 

lower profit margins as a percentage of 

revenue and leads to worse impacts on 

INPV. In the flat markup scenario, the 

impact of the investments is mitigated 

by the assumption that manufacturers 

can earn a similar profit margin as a 

percentage of revenues on their higher 

variable costs. At TSL 3 MPCs increase 

by an average of 16 percent over the 

base case, leading to additional per-unit 

profit in this scenario. However, the 

magnitude of the conversion 

investments still leads to negative INPV 

impacts even if additional profit is 

earned on the incremental 

manufacturing costs. The lower industry 

shipments driven by the relative price 

elasticity assumption account for 

approximately 19 percent of the impact 

in the flat markup scenario. 

TSL 4 represents a 30 percent 

reduction in measured energy 

consumption over the current energy 

conservation standards for product class 

3, product class 5, and product class 7. 

DOE estimates the INPV impacts at TSL 

4 to range from ¥$643.0 million to 

¥$1,496.8 million, or a change in INPV 

of ¥20.3 percent to ¥47.2 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by 

approximately a factor of 3.2 to ¥$449.6 

million, compared to the base-case 

value of $202.6 million in the year 

leading up to the proposed energy 

conservation standards. 

At TSL 4, significant changes to the 

manufacturing process are necessary for 

all refrigerator-freezers. A 30 percent 

reduction in energy consumption is the 

max available top-mount on the market; 

the maximum available side-by-side and 

bottom-mount only slightly exceed a 30 

percent reduction. The design options 

DOE analyzed for all standard-size 

products—with the exception of the 25 

cubic foot product class 5 unit—use 

multiple VIPs in the fresh food 

compartment, freezer doors, and 

cabinets to reach 30 percent efficiency 

level. The design options also include 

the use of variable speed compressors 

for all units analyzed except the 21 

cubic foot product class 3 unit. These 

product changes substantially increase 

the variable costs across nearly all 

platforms at this TSL. 

While products that meet the 

efficiency requirements of TSL 4 are not 

in widespread production, several 

manufacturers produce units at these 

efficiencies due to tax credit incentives. 

However, at TSL 4 most manufacturers 

expect to completely redesign existing 

production lines if the proposed energy 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59540 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

conservation standards were set at 

levels that necessitated these changes 

across most or all of their products. 

Manufacturers would need to purchase 

injection molding equipment, cabinet 

bending equipment, and other 

equipment for interior tooling as they 

would need to create new molds for 

these production lines. These changes 

drive DOE’s estimate of the large 

product and capital conversion costs at 

TSL 4 ($348 million and $1,405 million, 

respectively). The significant 

incremental investment relative to TSL 

3 results, in large part, from the design 

option of adding VIPs to the 21 cubic 

foot analyzed product class 3 unit. This 

top-mounted refrigerator-freezer 

represents a substantial portion of the 

market and manufacturers would have 

to completely redesign these platforms. 

As a result of the large investment 

necessary to meet this proposed level, 

some manufacturers could move 

production to Mexico or other lowerlabor-costs countries to achieve cost 

savings for labor expenditures. (More 

information on employment impacts is 

provided in section V.B.2.b.) In addition 

to the large capital conversion costs, the 

shipment-weighted average MPC 

increases by approximately 36 percent 

at TSL 4 compared to the base case. 

However, the magnitude of the 

conversion costs at TSL 4 are so large 

that even if manufacturers can reap 

additional profit from these higher 

product costs (as in the flat markup 

scenario), they would still be 

substantially impacted, as shown by the 

negative INPV results in the flat markup 

scenario. Additionally, the 36 percent 

increase in MPC drives shipments lower 

due to the price elasticity. Lower 

industry volume due to the decline in 

shipments accounts for approximately 

one-quarter of the change in industry 

value in the flat markup scenario. The 

large, negative impact on INPV is even 

greater under the preservation of 

operating profit markup scenario due to 

the inability to pass on the higher costs 

of expensive design options such as 

variable speed compressors and VIPs. 

TSL 5 represents max tech for all 

standard-size refrigerator-freezers. The 

max-tech level corresponds to 

reductions in measured energy 

consumption of 36 percent, 36 percent, 

and 33 percent over the current energy 

conservation standards for product class 

3, product class 5, and product class 7, 

respectively. DOE estimates the INPV 

impacts at TSL 5 to range from ¥$828.9 

million to ¥$2,154.7 million, or a 

change in INPV of ¥26.1 percent to 

¥67.9 percent. At this proposed level, 

the industry cash flow is estimated to 

decrease by a factor of approximately 

4.5 to ¥$707.8 million, compared to the 

base-case value of $202.6 million in the 

year leading up to the proposed energy 

conservation standards. 

No products that meet TSL 5 are 

currently offered on the U.S. market. At 

TSL 5, the changes required to meet this 

proposed level are similar to those at 

TSL 4, as complete redesigns of all 

platforms would be required.TSL 5 

requires much more extensive use of 

VIPs, however. The higher conversion 

costs at TSL 5 are primarily due to the 

use of VIPs in additional locations in 

the door, cabinet and freezer, whereas at 

TSL 4 some of the analyzed design 

options of the larger-sized units 

included limited or no VIP use. This 

would require manufacturers to further 

lengthen assembly lines and even 

modify or move their entire facilities, 

driving the $2,419 million conversion 

cost estimate at this proposed level. As 

with TSL 4, at TSL 5 some 

manufacturers could elect to move 

production out of the U.S. to offset some 

of the addition product costs. At TSL 5, 

DOE estimates MPCs increase by 

approximately 58 percent compared to 

the base case. Similar to TSL 4, this 

substantially reduces shipments due to 

the price elasticity effect and 

exacerbates the industry impacts in both 

markup scenarios. 

As with other TSLs, the impact on 

INPV is mitigated under the flat markup 

scenario because manufacturers are able 

to fully pass on the large increase in 

MPC to consumers, thereby increasing 

manufacturers’ gross profit in absolute 

terms. However, even assuming 

manufacturers could earn the same 

gross margin percentage per unit on 

those higher costs, the capital and 

product conversion costs cause negative 

INPV impacts, as shown by the 26.15 

percent decline in INPV in the flat 

markup scenario. This large impact even 

in the lower bound scenario 

demonstrates that the large conversion 

costs to redesign all existing platforms 

results in substantial harm even if 

manufacturers earn a historical margin 

on these additional costs. Due to the 

extremely large cost increases at the 

max-tech level, it is more unlikely at 

TSL 5 that manufacturers could fully 

pass through the increase production 

costs. If margins are impacted, TSL 5 

would result in a substantial INPV loss 

under this scenario. 

ii. Cash-Flow Analysis Results for 

Standard-Size Freezers 

TABLE V.25—MANUFACTURER IMPACT ANALYSIS FOR STANDARD-SIZE FREEZERS—FLAT MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 403 378 292 308 344 300 

Change in INPV ................ (2009$ millions) ................ .................... (24.9) (110.6) (94.5) (59.0) (102.4) 

(%) .................................... .................... ¥6.2% ¥27.5% ¥23.5% ¥14.6% ¥25.4% 

Product Conversion Costs (2009$ millions) ................ .................... 22 51 55 63 70 

Capital Conversion Costs (2009$ millions) ................ .................... 50 175 182 183 320 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 72 226 237 247 390 

TABLE V.26—MANUFACTURER IMPACT ANALYSIS FOR STANDARD-SIZE FREEZERS—PRESERVATION OF OPERATING PROFIT

MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV ................................. (2009$ millions) ................. 403 345 217 202 184 37 

Change in INPV ............... (2009$ millions) ................. .................... (57.3) (186.0) (201.1) (218.9) (365.1) 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59541 

TABLE V.26—MANUFACTURER IMPACT ANALYSIS FOR STANDARD-SIZE FREEZERS—PRESERVATION OF OPERATING PROFIT

MARKUP SCENARIO—Continued 

Units Base case 

Trial standard level 

1 2 3 4 5 

(%) ..................................... .................... ¥14.2% ¥46.2% ¥49.9% ¥54.4% ¥90.7% 

Product Conversion Costs (2009$ millions) ................. .................... 22 51 55 63 70 

Capital Conversion Costs (2009$ millions) ................. .................... 50 175 182 183 320 

Total Conversion 

Costs.

(2009$ millions) ................. .................... 72 226 237 247 390 

TSL 1 represents a 20 percent 

reduction in measured energy use over 

the current energy conservation 

standards for the analyzed product class 

9 (upright freezers with automatic 

defrost) and product class 10 (chest 

freezers and all other freezers except 

compact freezers). DOE estimates the 

INPV impacts at TSL 1 to range from 

¥$24.9 million to ¥$57.3 million, or a 

change in INPV of ¥6.2 percent to 

¥14.2 percent. At this proposed level, 

the industry cash flow is estimated to 

decrease by approximately 100.4 

percent to ¥$0.1 million, compared to 

the base-case value of $25.7 million in 

the year leading up to the proposed 

energy conservation standards. 

While products meeting TSL 1 are 

only currently produced in limited 

volumes, the changes in the 

manufacturing process would not 

require completely new platforms to 

meet the energy requirements at this 

TSL. For most standard-size freezer 

platforms, the design options DOE 

analyzed include the use of brushless 

DC evaporator fan motors and 

compressors with higher EERs. 

However, the design options to meet 

this efficiency level also include 

increasing door insulation thickness for 

all analyzed products except the 20 

cubic foot product class 10 unit. 

Increasing door insulation thickness 

drives the majority of the conversion 

cost outlay DOE estimates 

manufacturers would incur at TSL 1. To 

increase door insulation thickness, 

manufacturers would need to purchase 

new equipment tooling equipment for 

their door assembly. DOE estimates that 

these changes would result in product 

conversion costs of $22 million and 

capital conversion costs of $50 million 

at TSL 1. However, the conversion costs 

are somewhat mitigated at TSL 1 

because the design options analyzed 

would not change the production 

equipment for the cabinet. 

At TSL 1, variable costs increase by 

approximately 10 percent relative to 

base case MPCs. The flat markup 

scenario shows less severe impacts 

because it assumes manufacturers can 

pass on these substantially higher 

product costs and maintain gross margin 

percentages. Additionally, the reduction 

in shipments due to the price elasticity 

has only a marginally negative effect at 

this proposed level. The relatively large 

conversion costs decrease industry 

value under both markup scenarios and 

account for a substantial portion of the 

INPV impacts especially if 

manufacturers are not able to earn any 

additional profit on the higher 

production costs (the preservation of 

operating profit scenario). 

TSL 2 represents a 30 percent 

reduction in measured energy 

consumption over the current energy 

conservation standards for product class 

9 and 25 percent for product class 10. 

TSL 2 also represents a 25 percent 

reduction in measured energy 

consumption for the unanalyzed 

product class 8 (upright freezers with 

manual defrost) and a 30 percent 

reduction for the analyzed product class 

10A (chest freezers with automatic 

defrost). DOE estimates the INPV 

impacts at TSL 2 to range from ¥$110.6 

million to ¥186.0 million, or a change 

in INPV of ¥27.5 percent to ¥46.2 

percent. At this proposed level, the 

industry cash flow is estimated to 

decrease by approximately a factor of 

3.2 to ¥$57.5 million, compared to the 

base-case value of $25.7 million in the 

year leading up to the proposed energy 

conservation standards. 

The vast majority of the standard-size 

freezer market does not currently meet 

the efficiency requirements at TSL 2. 

DOE’s design options assume that, in 

addition to the component swaps noted 

above, manufacturers would increase 

the insulation thickness of both the door 

and cabinet. As a result, product 

redesigns are expected across most 

platforms, which could substantially 

disrupting current manufacturing 

processes. These changes account for 

the majority of DOE’s estimates for total 

product conversion costs of $51 million 

and capital conversion costs of $175 

million, an increase over TSL 1 of $29 

million and $125 million, respectively. 

The magnitude of the investments, 

relative to the industry value, results in 

severe INPV impacts. Even if 

manufacturers are able to pass on the 

estimated 24 percent increase in 

product costs onto their customers, the 

large product and capital conversion 

costs resulting from increased insulation 

thickness decrease INPV. If 

manufacturers are not able to pass on 

these costs, as shown by the 

preservation of operating profit 

scenario, INPV impacts are projected to 

be severe. 

TSL 3 represents a 35 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 9 and a 30 

percent reduction for product class 10. 

DOE estimates the INPV impacts at TSL 

3 to range from ¥$94.5 million to 

¥$201.1 million, or a change in INPV 

of ¥23.5 percent to ¥49.9 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by a factor 

of approximately 3.4 to ¥$61.3 million, 

compared to the base-case value of 

$25.7 million in the year leading up to 

the proposed energy conservation 

standards. 

The efficiency requirements at TSL 3 

are more stringent than the max 

available products in the market for 

product class 9 and product class 10. 

The impacts at TSL 3 are similar to 

those at TSL 2 because the design 

options analyzed by DOE already 

required platform redesigns at TSL 2. 

However, the additional design options 

analyzed at TSL 3 also include a 

variable speed compressor in the 14- 

cubic foot product class 9 unit and VIPs 

in the bottom wall of the 20-cubic foot 

product class 10 unit. These design 

options substantially increase the 

variable costs associated with these 

products but do not greatly change the 

product and capital conversion costs. 

The average MPC of a standard-size 

freezer shipped at TSL 3 is estimated to 

be approximately 34 percent more 

expensive than in the base case, leading 

to a 9 percent decline in shipments due 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59542 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

to the price elasticity assumption in 

2014 alone. 

The impacts at TSL 3 under the flat 

markup scenario become less severe 

than at TSL 2 because the scenario 

assumes manufacturers can fully pass 

on the added cost to consumers, while 

investments do not significantly 

increase from TSL 2 to TSL 3. However, 

under the preservation of operating 

profit markup scenario, manufacturers 

do not receive any extra profit on units 

of higher cost, resulting in worse INPV 

impacts at TSL 3 than at TSL 2. 

TSL 4 represents a 40 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 9 and a 35 

percent reduction for product class 10. 

DOE estimates the INPV impacts at TSL 

4 to range from ¥$59.0 million to 

¥$218.9 million, or a change in INPV 

of ¥14.6 percent to ¥54.4 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by a factor 

of approximately 3.5 to ¥$64.0 million, 

compared to the base-case value of 

$25.7 million in the year leading up to 

the proposed energy conservation 

standards. 

At TSL 4, the design options DOE 

analyzed include the addition of a 

variable speed compressor for the 20- 

cubic foot product class 9 unit, the 15- 

cubic foot product class 10 unit, and the 

20-cubic foot product class 10 unit. For 

the 14 cubic foot product class 9 unit, 

the design options analyzed were even 

thicker wall cabinet insulation and the 

implementation of VIPs. 

The relative impacts at TSL 4 are also 

caused by the incremental MPCs 

compared to the conversion costs to 

implement these design options. 

Outlays for conversion costs increase 

only slightly at TSL 4 (by 4 percent, 

compared to TSL 3) while variable costs 

increase substantially (by approximately 

50 percent compared to the baseline) 

due to the addition of variable speed 

compressors and VIPs. Because 

manufacturers earn incrementally more 

profit on each unit at TSL 4 compared 

to TSL 3 in the flat markup scenario— 

without substantial changes to 

conversion costs—further declines in 

industry value, though still substantial, 

are mitigated in this scenario. However, 

manufacturers expressed skepticism 

that such large cost increases could be 

passed on. This view is reflected by the 

severely negative results in the 

preservation of operating profit 

scenario. 

TSL 5 represents max tech for the 

standard-size freezer product classes. 

This TSL reflects a 44 percent reduction 

in measured energy use for product 

class 9 and a 41 percent reduction for 

product class 10. DOE estimates the 

INPV impacts at TSL 5 to range from 

¥$102.4 million to ¥$365.1 million, or 

a change in INPV of ¥25.4 percent to 

¥90.7 percent. At this proposed level, 

the industry cash flow is estimated to 

decrease by a factor of approximately 

5.7 to ¥$120.3 million, compared to the 

base-case value of $25.7 million in the 

year leading up to the proposed energy 

conservation standards. 

To achieve the max-tech level at TSL 

5, DOE analyzed design options that 

include the widespread implementation 

of multiple VIPs on all standard-size 

freezers, in addition to the use of more 

efficient components and thicker 

insulation already necessary to achieve 

the efficiency requirements at TSL 4. 

DOE estimated that TSL 5 would require 

product and capital conversion costs of 

$70 million and $320 million, 

respectively. These large conversion 

costs result from the changes associated 

with multiple VIP implementation and 

wall thickness increases. In addition, 

DOE estimates that product costs would 

almost double base-case MPCs, driven 

by the use of variable speed 

compressors and VIPs in the doors and 

cabinet of all product lines. As a result, 

INPV decreases substantially from TSL 

4 to TSL 5. 

iii. Cash-Flow Analysis Results for 

Compact Refrigeration Products 

TABLE V.27—MANUFACTURER IMPACT ANALYSIS FOR COMPACT REFRIGERATION PRODUCTS—FLAT MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 200 185 169 143 170 67 

Change in INPV ................ (2009$ millions) ................ .................... (14.3) (30.8) (56.8) (29.6) (133.0) 

(%) .................................... .................... ¥7.2% ¥15.4% ¥28.4% ¥14.8% ¥66.6% 

Product Conversion Costs (2009$ millions) ................ .................... 15 35 41 48 67 

Capital Conversion Costs (2009$ millions) ................ .................... 24 46 76 71 220 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 39 80 118 119 287 

TABLE V.28—MANUFACTURER IMPACT ANALYSIS FOR COMPACT REFRIGERATION PRODUCTS—PRESERVATION OF

OPERATING PROFIT MARKUP SCENARIO

Units Base Case 

Trial Standard Level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 200 168 133 101 85 (96) 

Change in INPV ................ (2009$ millions) ................ .................... (32.1) (66.7) (99.2) (114.4) (295.6) 

(%) .................................... .................... ¥16.1% ¥33.4% ¥49.6% ¥57.3% ¥148.0% 

Product Conversion Costs (2009$ millions) ................ .................... 15 35 41 48 67 

Capital Conversion Costs (2009$ millions) ................ .................... 24 46 76 71 220 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 39 80 118 119 287 

TSL 1 represents a 20 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 11 (compact 

refrigerators and refrigerator-freezers 

with manual defrost) and a 10 percent 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59543 

reduction for product class 18 (compact 

chest freezers). DOE estimates the INPV 

impacts at TSL 1 to range from ¥$14.3 

million to ¥$32.1 million, or a change 

in INPV of ¥7.2 percent to ¥16.1 

percent. At this proposed level, industry 

cash flow is estimated to decrease by 

approximately 112.9 percent to ¥$1.5 

million, compared to the base-case 

value of $11.9 million in the year 

leading up to the proposed energy 

conservation standards. A small 

percentage of product class 18 

shipments currently meet this TSL, but 

most product class 11 shipments are 

baseline units. 

The design options analyzed by DOE 

at TSL 1 assumed that more significant 

changes in the manufacturing process 

would be required for product class 11, 

while product class 18 would only 

require increased compressor efficiency. 

For product class 11, DOE analyzed 

several design options that represent 

component changes, such as a more 

efficient compressor and increased heat 

exchanger area, which do not have a 

significant impact on consumer prices 

or conversion costs. However, DOE also 

analyzed increasing door insulation 

thickness for product class 11, which 

drives the bulk of the estimated $15 

million and $24 million outlays for 

product conversion and capital 

conversion costs, respectively. As 

described for standard-size refrigeratorfreezers and standard-size freezers, 

increasing insulation thickness requires 

manufacturers to invest in injection 

molding equipment and other 

equipment for interior tooling to 

manufacturer products with different 

door dimensions. The overall impacts at 

TSL 1 are relatively moderate because 

the conversion costs are still small 

compared to the industry value of $200 

million. 

The higher production costs at TSL 1 

do not have a substantial impact on 

INPV at TSL 1. The MPC of compact 

refrigeration products on a shipmentweighted basis increases 11 percent over 

the base case at TSL 1. The combined 

INPV impacts are greater under the 

preservation of operating profit scenario 

since manufacturers cannot pass on any 

of the added cost to consumers under 

that scenario, resulting in lower cash 

flows from operations. However, 

because production costs do not greatly 

increase at TSL 1, the impacts on INPV 

are relatively low under this scenario as 

well. 

TSL 2 represents a 25 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 11 and a 10 

percent reduction for product class 18. 

TSL 2 also represents a 15 percent 

reduction in measured energy 

consumption for the analyzed product 

classes 13 and 15, and a 20 percent 

reduction for the unanalyzed product 

class 14. DOE estimates the INPV 

impacts at TSL 2 to range from ¥$30.8 

million to ¥$66.7 million, or a change 

in INPV of ¥15.4 percent to ¥33.4 

percent. At this proposed level, the 

industry cash flow is estimated to 

decrease by approximately 230.1 

percent to ¥$15.4 million, compared to 

the base-case value of $11.9 million in 

the year leading up to the proposed 

energy conservation standards. 

At TSL 2, further changes are required 

for product class 11. In addition to 

component swaps, the design options 

analyzed by DOE also include thicker 

cabinet insulation. As discussed for TSL 

1, increasing insulation thickness 

significantly impacts product and 

capital conversion costs, but much more 

so when adding insulation to the 

cabinet (as opposed to the door). To 

increase the insulation thickness of the 

cabinet, manufacturers must replace 

virtually all stamping equipment which 

greatly increases the capital conversion 

costs. Additionally, DOE analyzed the 

use of isobutane refrigerant as a design 

option for the 4-cubic foot product class 

11 unit. At TSL 2, a substantial portion 

of the investment to reach TSL 2 would 

likely go towards training service 

technicians to handle the explosive 

refrigerant. As a result of thicker cabinet 

insulation and conversion to isobutane, 

product conversion and capital 

conversion costs roughly double at TSL 

2 (to $35 million for product conversion 

costs and $46 million for capital 

conversion costs). The shipmentweighted MPC increased 22 percent at 

TSL 2 compared to baseline costs, 

which also contributed to the more 

severe impacts projected under the 

preservation of operation profit scenario 

if manufacturers do not earn additional 

profit on these higher costs. 

TSL 3 represents a 30 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 11 and a 15 

percent reduction for product class 18. 

DOE estimates the INPV impacts at TSL 

3 to range from ¥$56.8 million to 

¥$99.2 million, or a change in INPV of 

¥28.4 percent to ¥49.6 percent. At this 

proposed level, the industry cash flow 

is estimated to decrease by a factor of 

approximately 3.5 to ¥$29.4 million, 

compared to the base-case value of 

$11.9 million in the year leading up to 

the proposed energy conservation 

standards. 

At TSL 3, the design options analyzed 

for both product class 18 units include 

thicker door insulation, which further 

increases the capital conversion costs 

over TSL 1 and TSL 2, where this was 

not analyzed as a design option. The 

additional impacts at TSL 3 are also due 

to more stringent requirements for 

product class 11. A 30 percent reduction 

for product class 11 is greater than the 

most efficient units on the market today. 

For both analyzed sizes of product class 

11, DOE analyzed the design option of 

thicker insulation in the cabinet for both 

units analyzed. The net effect is a large 

increase in conversion costs due to the 

much higher cost of the equipment 

necessary to manufacture the cabinet. At 

TSL 3, DOE estimated total product 

conversion costs of $41 million and 

capital conversion costs of $76 million, 

a 46 percent total increase in conversion 

costs over TSL 2. The effect of the 

design changes at TSL 3 on shipmentweighted unit cost is a 27 percent 

increase over the baseline MPC. The 

magnitude of the investments relative to 

the industry value leads to significant 

impacts, although they are moderated 

somewhat in the flat markup because 

manufacturers earn additional profit on 

the investments. 

TSL 4 represents a 40 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 11 and a 25 

percent reduction for product class 18. 

DOE estimates the INPV impacts at TSL 

4 to range from ¥$29.6 million to 

¥$114.4 million, or a change in INPV 

of ¥14.8 percent to ¥57.3 percent. At 

this proposed level, the industry cash 

flow is estimated to decrease by 

approximately 344.1 percent to ¥$29.0 

million, compared to the base-case 

value of $11.9 million in the year 

leading up to the proposed energy 

conservation standards. 

The design options analyzed at TSL 4 

would also severely disrupt current 

manufacturing processes. For the 1.7- 

cubic foot product class 11 unit, DOE 

analyzed a variable speed compressor 

and isobutane refrigerant as design 

options. For the 4 cubic foot product 

class 11 unit and the 7-cubic foot 

product class 18 unit, DOE analyzed 

thicker insulation in the cabinets. For 

3.4-cubic foot product class 18 unit, 

DOE analyzed both an increase to 

cabinet insulation thickness and VIPs in 

the bottom wall as design options. 

Although increasing insulation 

thickness, converting to isobutane, and 

implementing VIPs all would 

necessitate large conversion costs, 

capital conversion costs decrease 

slightly from TSL 3 to TSL 4 because of 

the removal of all previous design 

options in the 1.7-cubic foot unit. In 

other words, the design options 

analyzed for this unit cause less 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59544 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

substantial changes to existing 

production equipment, but would also 

require a large investment by 

manufacturers to train service 

technicians to deal with the explosive 

refrigerant. Because this would require 

a large outlay for product conversion 

costs, total conversion costs are roughly 

the same at TSL 3 and TSL 4. The 

addition of a variable speed compressor 

in the smaller product class 11 unit 

analyzed also has a substantial impact 

on unit price because of its high 

component cost. At TSL 4, the 

shipment-weighted MPC is 60 percent 

higher than the baseline MPC. These 

cost increases are projected to cause a 

16 percent decrease in shipments at TSL 

4 in 2014 alone. Over time, the decline 

in shipments is a big contributor to the 

negative impacts on INPV in both 

markup scenarios. 

The large conversion costs and higher 

prices leading to lower shipments cause 

a decrease in INPV from TSL 3 to TSL 

4 under the preservation of operating 

profit markup scenario (since this 

scenario assumes higher production 

costs are not passed on to consumers). 

However, under the flat markup 

scenario, manufacturers are able to earn 

additional profit on the new high-cost 

components such as variable speed 

compressors, resulting in an increase in 

INPV from TSL 3 to TSL 4. 

TSL 5 represents max tech for both 

product classes 11 and 18. The max-tech 

level corresponds to a 59 percent and 42 

percent reduction in measured energy 

use for product class 11 and product 

class 18, respectively. DOE estimates the 

INPV impacts at TSL 5 to range from 

¥$133.0 million to ¥$295.6 million, or 

a change in INPV of ¥66.6 percent to 

¥148.0 percent. At this proposed level, 

the industry cash flow is estimated to 

decrease approximately nine-fold to 

¥$95.7 million, compared to the basecase value of $11.9 million in the year 

leading up to the proposed energy 

conservation standards. 

The design options DOE analyzed 

include the use of VIPs for all analyzed 

product class 11 and 18 units to reach 

max-tech efficiency levels. Additionally, 

the design options analyzed for some 

products also included other costly 

changes. For the 1.7-cubic foot product 

class 11 unit, the design options 

analyzed included multiple VIPs, a 

larger heat exchanger, and thicker 

insulation. The design options analyzed 

for the 4-cubic foot product class 11 unit 

also included a variable speed 

compressor and thicker insulation. For 

product class 18, DOE assumed that 

manufacturers would remove the design 

options necessary to meet TSLs 1 

through 4 and add a variable speed 

compressor and thicker insulation for 

both analyzed products. These 

significant changes greatly increase the 

investment required to manufacture 

standards-compliant products. DOE 

estimated that product conversion costs 

would be $67 million at TSL 5, an 

increase of almost 40 percent over TSL 

4. DOE also estimated that capital 

conversion costs would be $220 million, 

a more than three-fold increase over 

TSL 4. This drastic increase in 

conversion costs demonstrates the 

significant investments required by 

implementing widespread use of VIPs 

and increasing wall thickness. 

At TSL 5, the shipment-weighted 

MPC increases by over 150 percent over 

the baseline due to the high material 

costs of VIPs and variable speed 

compressors. These large jumps cause 

shipments to decrease by 42 percent due 

to the price elasticity in 2014 alone. As 

a result of lower industry shipments and 

extremely high conversion costs, INPV 

decreases substantially from TSL 4 to 

TSL 5 and becomes negative under the 

preservation of operating profit 

scenario, which indicates the industry 

loses more than its base-case value in 

the standards case under this scenario. 

iv. Cash-Flow Analysis Results for BuiltIn Refrigeration Products 

TABLE V.29—MANUFACTURER IMPACT ANALYSIS FOR BUILT-IN REFRIGERATION PRODUCTS—FLAT MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 658 607 604 593 579 574 

Change in INPV ................ (2009$ millions) ................ .................... (51.7) (54.7) (65.8) (79.7) (84.9) 

(%) .................................... .................... ¥7.9% ¥8.3% ¥10.0% ¥12.1% ¥12.9% 

Product Conversion Costs (2009$ millions) ................ .................... 41 51 65 75 87 

Capital Conversion Costs (2009$ millions) ................ .................... 40 38 55 74 84 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 81 89 119 149 171 

TABLE V.30—MANUFACTURER IMPACT ANALYSIS FOR BUILT-IN REFRIGERATION PRODUCTS—PRESERVATION OF

OPERATING PROFIT MARKUP SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 5 

INPV .................................. (2009$ millions) ................ 658 606 601 578 555 538 

Change in INPV ................ (2009$ millions) ................ .................... (52.9) (57.0) (80.5) (103.0) (120.3) 

(%) .................................... .................... ¥8.0% ¥8.7% ¥12.2% ¥15.6% ¥18.3% 

Product Conversion Costs (2009$ millions) ................ .................... 41 51 65 75 87 

Capital Conversion Costs (2009$ millions) ................ .................... 40 38 55 74 84 

Total Conversion 

Costs.

(2009$ millions) ................ .................... 81 89 119 149 171 

TSL 1 represents a 10 percent 

reduction in measured energy use over 

the current energy conservation 

standards for product class 3A–BI (builtin all-refrigerators—automatic defrost), product class 5–BI (built-in refrigeratormstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59545 

freezers—automatic defrost with 

bottom-mounted freezer without an 

automatic icemaker), product class 7–BI 

(built-in refrigerator-freezers—automatic 

defrost with side-mounted freezer with 

through-the-door ice service), and 

product class 9–BI (built-in upright 

freezers with automatic defrost without 

an automatic icemaker). DOE estimates 

the INPV impacts at TSL 1 to range from 

¥$51.7 million to ¥$52.9 million, or a 

change in INPV of ¥7.9 percent to ¥8.0 

percent. At this proposed level, the 

industry cash flow is estimated to 

decrease by approximately 63.9 percent 

to $15.0 million, compared to the basecase value of $41.5 million in the year 

leading up to the proposed energy 

conservation standards. 

At TSL 1, the design options that DOE 

analyzes result in moderate changes in 

the manufacturing process for built-in 

refrigeration products. For product 

classes 3A–BI and 9–BI, the design 

options that DOE analyzed to reach TSL 

1 included the use of more efficient 

components that do not require 

significant changes to the manufacturing 

process. However, for product class 5– 

BI and product class 7–BI, the design 

options DOE analyzed also include the 

use of VIPs in the freezer door. While 

these components add to the overall 

costs of production, the added costs 

represent a small percentage of the total 

cost of a built-in refrigeration product. 

These cost deltas are low compared to 

the overall cost of the products and 

result in small impacts even if no 

additional profit is earned on the 

incremental MPCs. The estimated 

product conversion costs for all built-in 

refrigeration products at TSL 1 are $41 

million and the estimated capital 

conversion costs are $40 million. The 

implementation of VIPs represents a 

substantial part of the conversion costs, 

but several built-in refrigeration 

manufacturers have products that use 

similar technology, which helps to 

mitigate some of the product conversion 

costs that would be required to design 

products from the ground up. 

TSL 2 represents a 15 percent 

reduction in measured energy use for 

product class 3A–BI and product class 

5–BI. For product classes 7–BI and 9–BI, 

TSL 2 represents a reduction of 10 

percent and 20 percent, respectively. 

DOE estimates the INPV impacts at TSL 

2 to range from ¥$54.7 million to 

¥$57.0 million, or a change in INPV of 

¥8.3 percent to ¥8.7 percent. At this 

proposed level, the industry cash flow 

is estimated to decrease by 

approximately 68.0 percent to $13.3 

million, compared to the base-case 

value of $41.5 million in the year 

leading up to the proposed energy 

conservation standards. 

The efficiency requirements for 

product class 7–BI refrigerator-freezers 

do not change from TSL 1 to TSL 2, but 

the efficiency requirements for all other 

analyzed built-in product classes 

increase. The design options that DOE 

analyzes at TSL 2 for product classes 

3A–BI and 7–BI still only include 

component swaps to reach a 15 percent 

efficiency improvement. Product class 

5–BI uses a variable speed compressor 

in the freezer with a brushless DC 

condenser fan motor, but no longer use 

the VIPs used to reach TSL 1. The 

design options analyzed for product 

class 9–BI include a brushless DC 

evaporator and condenser fan motor, a 

larger condenser, a variable speed 

compressor, and a VIP in the upper 

door. Because product class 5–BI no 

longer uses VIPs and fewer changes to 

existing products are necessary, the 

overall impact is a slight decrease in 

capital conversion costs from $40 

million at TSL 1 to $38 million at TSL 

2. Product conversion costs increase to 

$51 million at TSL 2 because additional 

engineering time would be required to 

implement the additional component 

changes. However, because the 

complexity of the changes to the 

products and production facilities are 

similar at TSL 1 and TSL 2, there is only 

a small decrease in INPV from TSL 1 to 

TSL 2. 

TSL 3 represents a 20 percent 

reduction in measured energy use for 

product class 3A–BI and product class 

7–BI. For product classes 5–BI and 9–BI, 

TSL 2 represents a reduction of 15 

percent and 25 percent, respectively. 

DOE estimates the INPV impacts at TSL 

3 to range from ¥$65.8 million to 

¥$80.5 million, or a change in INPV of 

¥10.0 percent to ¥12.2 percent. At this 

proposed level, the industry cash flow 

is estimated to decrease by 

approximately 93.0 percent to $2.9 

million, compared to the base-case 

value of $41.5 million in the year 

leading up to the proposed energy 

conservation standards. 

The efficiency requirements for 

product class 5–BI do not change from 

TSL 2 to TSL 3. However, the design 

options for all other built-in 

refrigeration products at TSL 3 include 

the implementation of VIPs. The 

widespread implementation of VIPs 

increases product and capital 

conversion costs, which are estimated to 

be $65 million and $55 million at TSL 

3, respectively. Substantial changes to 

existing production facilities would be 

required to manufacture products that 

meet the required efficiencies at TSL 3. 

Most of the capital conversion costs 

involve purchasing new production 

equipment and would result in high 

stranded assets. The extensive changes 

that manufacturers would be required to 

make to existing facilities and the 

projected erosion of profitability if the 

additional production cost of 

implementing VIPs does not yield 

additional profit result in a projected 

decrease in INPV from TSL 3 to TSL 4. 

However, the industry value is high 

relative to the required capital 

conversion costs and the cost of the 

additional VIP panels is relatively small 

compared to the overall cost of the 

products, which helps to mitigate some 

of the negative impacts caused by these 

changes. 

TSL 4 represents a 25 percent 

reduction in measured energy use over 

the current energy conservation 

standards for the following product 

classes: 3A–BI, 5–BI, and 9–BI. For 

product class 7–BI, TSL 4 represents a 

20 percent reduction in measured 

energy use from current energy 

conservation standards. DOE estimates 

the INPV impacts at TSL 4 to range from 

¥$79.7 million to ¥$103.0 million, or 

a change in INPV of ¥12.1 percent to 

¥15.6 percent. At this proposed level, 

the industry cash flow is estimated to 

decrease by approximately 117.8 

percent to ¥$7.4 million, compared to 

the base-case value of $41.5 million in 

the year leading up to the proposed 

energy conservation standards. 

The efficiency requirements for 

product class 7–BI do not change from 

TSL 3 to TSL 4. The design options for 

the other built-in refrigeration products 

all include the addition of more VIPs to 

reach TSL 4. The design options 

analyzed for product classes 3A–BI and 

5–BI also include using a variable speed 

compressor. The complexity of 

implementing multiple component 

swaps and the additional production 

equipment necessary to use additional 

VIPs increases both the product and 

capital conversion costs. These costs are 

estimated to be $75 million and $74 

million at TSL 4, respectively, and 

result in a decrease in INPV from TSL 

3 to TSL 4. 

TSL 5 represents max tech for the four 

built-in product classes. This proposed 

level represents a reduction in measured 

energy use of 29 percent, 27 percent, 22 

percent, and 27 percent, respectively, 

for product classes 3A–BI, 5–BI, 7–BI, 

and 9–BI. DOE estimates the INPV 

impacts at TSL 5 to range from ¥$84.9 

million to ¥$120.3 million, or a change 

in INPV of ¥12.9 percent to ¥18.3 

percent. At this proposed level, the 

industry cash flow is estimated to 

decrease by approximately 135.1 

percent to ¥$14.6 million, compared to 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59546 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

the base-case value of $41.5 million in 

the year leading up to the proposed 

energy conservation standards. 

The design options analyzed by DOE 

include the widespread use of VIPs to 

achieve the max-tech efficiency levels at 

TSL 5. Additionally, product class 3A– 

BI uses multiple variable speed 

compressors. Since the implementation 

of VIPs is both research and capital 

intensive, product and capital 

conversion costs increase to $87 million 

and $84 million, respectively. The 

complexity of implementing multiple 

component swaps and the additional 

production equipment necessary to use 

additional VIPs increases both the 

product and capital costs. 

b. Impacts on Employment 

DOE quantitatively assessed the 

impacts of potential amended energy 

conservation standards on employment. 

DOE used the GRIM to estimate the 

domestic labor expenditures and 

number of domestic production workers 

in the base case and at each TSL from 

2010 to 2043. DOE used statistical data 

from the most recent U.S. Census 

Bureau’s 2007 Economic Census, the 

results of the engineering analysis, and 

interviews with manufacturers to 

determine the inputs necessary to 

calculate industry-wide labor 

expenditures and domestic employment 

levels. Labor expenditures involved 

with the manufacture of the product are 

a function of the labor intensity of the 

product, the sales volume, and an 

assumption that wages remain fixed in 

real terms over time. 

In each GRIM, DOE used the labor 

content of each product and the 

manufacturing production costs from 

the engineering analysis to estimate the 

annual labor expenditures in the 

residential refrigeration product 

industry. DOE used Census data and 

interviews with manufacturers to 

estimate the portion of the total labor 

expenditures that is attributable to U.S. 

(i.e., domestic) labor. 

The production worker estimates in 

this section only cover workers up to 

the line-supervisor level who are 

directly involved in fabricating and 

assembling a product within an Original 

Equipment Manufacturer (OEM) facility. 

Workers performing services that are 

closely associated with production 

operations, such as material handing 

with a forklift, are also included as 

production labor. DOE’s estimates only 

account for production workers who 

manufacture the specific products 

covered by this rulemaking. For 

example, a worker on a wine cooler line 

would not be included with the estimate 

of the number of residential 

refrigeration workers. 

The employment impacts shown in 

Table V.31 through Table V.34 represent 

the potential production employment 

that could result following amended 

energy conservation standards. The 

upper end of the results in these tables 

estimates the maximum change in the 

number of production workers after 

amended energy conservation standards 

must be met. The upper end of the 

results assumes manufacturers would 

continue to produce the same scope of 

covered products in the same 

production facilities. The upper end of 

the range also assumes that domestic 

production does not shift to lower-laborcost countries. Because there is a real 

risk of manufacturers evaluating 

sourcing decisions in response to 

amended energy conservation 

standards, the lower end of the range of 

employment results in Table V.31 

through Table V.34 includes the 

estimated total number of U.S. 

production workers in the industry who 

could lose their jobs if all existing 

production were moved outside of the 

U.S. While the results present a range of 

employment impacts following the 

compliance date of amended energy 

conservation standards, the discussion 

below also includes a qualitative 

discussion of the likelihood of negative 

employment impacts at the various 

TSLs. Finally, the employment impacts 

shown are independent of the 

employment impacts from the broader 

U.S. economy, which are documented 

in chapter 13, Employment Impact 

Analysis, of the NOPR TSD. 

i. Standard-Size Refrigerator-Freezer 

Employment Impacts 

Using the GRIM, DOE estimates that 

in the absence of amended energy 

conservation standards, there would be 

8,517 domestic production workers 

involved in manufacturing standard-size 

refrigerator-freezers in 2014. Using 2007 

Census Bureau data and interviews with 

manufacturers, DOE estimates that 

approximately 42 percent of standardsize refrigerator-freezers sold in the 

United States are manufactured 

domestically. Table V.31 shows the 

range of the impacts of potential 

amended energy conservation standards 

on U.S. production workers in the 

standard-size refrigerator-freezer market. 

TABLE V.31—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC STANDARD-SIZE REFRIGERATOR-FREEZER

PRODUCTION WORKERS IN 2014 

Trial standard level 

Base case 1 2 3 4 5 

Total Number of Domestic Production Workers in 2014 (without changes in production locations) ......................................... 8,517 8,300 8,258 8,309 8,236 8,088 

Potential Changes in Domestic 

Production Workers in 2014 * ... .......................... (217)–(8,517) (259)–(8,517) (208)–(8,517) (281)–(8,517) (429)–(8,517) 

* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers. 

All examined TSLs show relatively 

minor impacts on domestic employment 

levels at the lower end of the range. 

Most of the design options used in the 

engineering analysis involve the 

swapping of components in baseline 

units with more efficient parts for topmounted, side-by-side, and bottommounted refrigerator-freezers. These 

component swaps for these design 

options add primarily material costs and 

do not greatly impact the labor content 

of the baseline products. The relatively 

small decreases in domestic production 

employment for the lower end of the 

range of the employment impacts arise 

from higher product prices lowering 

shipments the year the standard 

becomes effective. At these higher TSLs, 

the effects of lower shipments more 

than offset the additional product labor 

that is required to manufacture products 

that use VIP panels. 

During interviews, manufacturers 

indicated that their domestic 

employment levels could be impacted 

under two scenarios: (1) The 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59547 

widespread adoption of VIPs or (2) 

significant capital conversion costs that 

would force them to consider nondomestic manufacturing locations once 

the compliance date for the amended 

energy conservation standards arrive. 

The widespread adoption of VIPs would 

increase the labor content of today’s 

products. The labor content of products 

with VIPs increases because of the extra 

handling steps that would be required to 

ensure that VIPs are not damaged during 

production. Because of the competitive 

nature of the industry, manufacturers 

believed the extra labor costs could 

force them to move their remaining 

domestic production to Mexico to take 

advantage of the cheaper labor. 

Manufacturers also indicated that 

large conversion costs would likely 

force them to consider investing in 

lower-labor-cost countries. For most 

product categories, there is a range of 

efficiency levels that can be met with 

relatively low-cost components (as 

analyzed in the engineering analysis). 

Beyond these levels, manufacturers 

would need to decide to follow the MPC 

design options analyzed in the 

engineering analysis for each product 

category. Manufacturers indicated the 

analyzed design options that use 

multiple VIPs would involve significant 

capital conversion costs and add very 

large material costs to their products 

that would likely result in the relocation 

of their production facilities abroad. 

However, manufacturers indicated they 

would face even larger capital 

conversion costs at lower efficiencies if 

they redesigned their products with 

thicker walls. While not analyzed as a 

design option for standard-size 

refrigerator-freezers, increasing wall 

thickness would likely result in moving 

domestic production outside of the U.S. 

at lower efficiency levels. 

ii. Standard-Size Freezer Employment 

Impacts 

Using the GRIM, DOE estimates that, 

in the absence of amended energy 

conservation standards, there would be 

1,904 standard-size freezer production 

workers in the U.S. in 2014. Using the 

2007 Census data and interviews with 

manufacturers, DOE estimates that 

approximately 80 percent of standardsize freezers sold in the United States 

are manufactured domestically. Table 

V.32 shows the impacts of amended 

energy conservation standards on U.S. 

production workers in the standard-size 

freezer market. 

TABLE V.32—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC STANDARD-SIZE FREEZER PRODUCTION

WORKERS IN 2014 

Trial standard level 

Base case 1 2 3 4 5 

Total Number of Domestic Production Workers in 2014 (without changes in production locations) ......................................... 1,904 1,850 1,781 1,734 1,634 1,508 

Potential Changes in Domestic 

Production Workers in 2014 * ... .......................... (54)–(1,904) (123)–(1,904) (170)–(1,904) (270)–(1,904) (396)–(1,904) 

* DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers. 

Similar to standard-size refrigeratorfreezers, there are relatively small 

decreases in employment at the lower 

end of the range of employment 

impacts. These slight declines are 

caused by higher prices that drive lower 

shipments once manufacturers must 

meet the amended energy conservation 

standard. Standard-size freezer 

manufacturers also indicated that 

domestic production could be shifted 

abroad with any efficiency level that 

required large capital conversion costs. 

At TSL 1, DOE does not expect 

substantial changes to domestic 

employment in the standard-size freezer 

market if manufacturers use the design 

options listed in the engineering 

analysis to reach the efficiency 

requirements at this TSL. 

However, at TSL 2 through TSL 5, 

manufacturers indicated that there 

could be domestic employment impacts 

depending on the design pathway used 

to reach the required efficiencies. At 

TSL 2 and above, the engineering 

analysis assumes that manufacturers 

would have to use wall thickness 

changes to reach the required 

efficiencies. Manufacturers indicated 

that because these products are typically 

low-end, they would likely follow the 

design pathways in the engineering 

analysis and increase the wall 

insulation thickness to reach higher 

efficiencies in order to avoid having to 

pass large price increases on to 

consumers. While this would result in 

extremely large conversion costs and 

would more likely lead to 

manufacturers moving production 

abroad, manufacturers believed this 

strategy would help to maintain sales 

volumes. 

iii. Compact Refrigeration Product 

Employment Impacts 

DOE’s research suggests that a limited 

percentage of compact refrigerators and 

refrigerator-freezers are made 

domestically (see Table V.33). The 

overwhelming majority of products are 

imported. Manufacturers with domestic 

manufacturing facilities tend to source 

or import their compact products. The 

small employment numbers are mostly 

from remaining domestic production of 

compact chest freezers. As a result, 

amended energy conservation standards 

for compact refrigerators or refrigeratorfreezers are unlikely to noticeably alter 

domestic employment levels. 

TABLE V.33—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC COMPACT REFRIGERATION PRODUCT

PRODUCTION WORKERS IN 2014 

Trial standard level 

Base case 1 2 3 4 5 

Total Number of Domestic Production Workers in 2014 

(without changes in production locations) .................... 31 30 29 29 28 46 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59548 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.33—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC COMPACT REFRIGERATION PRODUCT

PRODUCTION WORKERS IN 2014—Continued 

Trial standard level 

Base case 1 2 3 4 5 

Potential Changes in Domestic Production Workers in 

2014* ............................................................................ .................... (1)–(31) (2)–(31) (2)–(31) (3)–(31) 15–(31) 

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers. 

iv. Built-In Refrigeration Product 

Employment Impacts 

Using the GRIM, DOE estimates that, 

in the absence of amended energy 

conservation standards, there would be 

1,320 U.S. workers manufacturing builtin refrigeration products in 2014. Using 

the 2007 Census data and interviews 

with manufacturers, DOE estimates that 

approximately 94 percent of the built-in 

refrigeration products sold in the United 

States are manufactured domestically. 

Table V.34 shows the impacts of 

amended energy conservation standards 

on U.S. production workers in the builtin refrigeration market. 

TABLE V.34—POTENTIAL CHANGES IN THE TOTAL NUMBER OF DOMESTIC BUILT-IN REFRIGERATION PRODUCT

PRODUCTION WORKERS IN 2014 

Trial standard level 

Base case 1 2 3 4 5 

Total Number of Domestic Production 

Workers in 2014 (without changes in 

production locations) ............................ 1,320 1,320 1,319 1,327 1,331 1,357 

Potential Changes in Domestic Production Workers in 2014* ........................... ........................ 0–(1,320) (1)–(1,320) 7–(1,320) 11–(1,320) 37–(1,320) 

*DOE presents a range of potential employment impacts. Numbers in parentheses indicate negative numbers. 

Employment in the built-in 

refrigeration market follows a pattern 

similar to that seen in the market for 

standard-size refrigerator-freezers and 

standard-size freezers at lower TSLs. At 

TSL 1 and TSL 2, higher prices result 

in fewer shipments, and a consequent 

reduction in labor expenditures that 

more than offsets the additional labor 

required to manufacture products with 

VIPs. However, at TSL 3 and above, the 

use of additional VIPs in built-in 

refrigeration products requires enough 

additional labor to cause a slight 

increase in the number of domestic 

production workers. Because built-in 

products are high-end products with far 

fewer shipments, it is less likely that 

manufacturers would choose to move all 

production facilities in response to 

amended energy conservation 

standards. The higher margins and 

profit earned in this market also make 

it more likely that manufacturers could 

earn a return on the investments 

required to reach the amended energy 

conservation standards and invest in 

existing facilities rather than move 

production abroad. 

c. Impacts on Manufacturing Capacity 

Manufacturers indicated that design 

changes involving thicker walls or 

multiple VIP panels would require 

substantial changes to their current 

manufacturing process. While these 

technologies would require the 

purchase of millions of dollars of 

production equipment, most 

manufacturers indicated they would 

likely be able to make the required 

changes in between the announcement 

of the final rule and compliance date of 

an amended energy conservation 

standard. For most product classes, the 

design changes and investments 

required by the proposed rule are 

similar in magnitude to the introduction 

of a new product line. Manufacturers 

have experience with the design options 

involving VIPs, but not at the scale that 

would be required if the proposed rule’s 

provisions are adopted. The primary 

capacity concern of manufacturers is the 

ability of their suppliers, particularly 

manufacturers of VIPs and more 

efficient compressors, to ramp up 

production in time to meet the amended 

energy conservation standard. DOE 

analyzed VIP supply issues in section 

IV.B.1.c. Issues associated with supply 

of compressors are discussed in section 

IV.B.1, above. 

d. Impacts on Sub-Group of 

Manufacturers 

As discussed in section IV.I.1.c, using 

average cost assumptions to develop an 

industry cash-flow estimate is 

inadequate for assessing differential 

impacts among manufacturer subgroups. 

Small manufacturers, niche equipment 

manufacturers, and manufacturers that 

exhibit a cost structure substantially 

different from the industry average 

could be affected disproportionately. 

For this rulemaking, DOE used the 

results of the industry characterization 

to identify any subgroups of refrigerator 

manufacturers that exhibit similar 

characteristics different from the 

industry as a whole. The only such 

subgroup DOE identified was built-in 

manufacturers. 

However, as discussed previously, 

DOE is proposing to establish separate 

product classes for built-in products and 

is presenting separate analytical results 

for those products classes. Therefore, 

the MIA results DOE presents for those 

product classes already allow DOE to 

examine the MIA impacts on this 

potential manufacturer subgroup. 

Section V.B.2 presents a more detailed 

discussion of the results for built-in 

product classes. 

e. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several impending regulations may have 

serious consequences for some 

manufacturers, groups of manufacturers, 

or an entire industry. Assessing the 

impact of a single regulation may 

overlook this cumulative regulatory 

burden. In addition to energy 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59549 

46The schedule for all DOE rulemakings can be 

found at http://www1.eere.energy.gov/buildings/

appliance_standards/schedule_setting.html. 

conservation standards, other 

regulations can significantly affect 

manufacturers’ financial health. 

Multiple regulations affecting the same 

manufacturer can strain profits and can 

lead companies to abandon product 

lines or markets with lower expected 

future returns than competing products. 

For these reasons, DOE conducts an 

analysis of cumulative regulatory 

burden as part of its rulemakings 

pertaining to appliance efficiency. 

During previous stages of this 

rulemaking DOE identified a number of 

requirements with which manufacturers 

of these refrigeration products must 

comply and which take effect within 

three years of the anticipated effective 

date of the amended standards. The 

following section briefly addresses 

comments DOE received with respect to 

cumulative regulatory burden and 

summarizes other key related concerns 

manufacturers raised during interviews. 

Sub Zero stated that the cumulative 

regulatory burden is a serious concern 

for appliance manufacturers. Sub Zero 

recommended that DOE include the cost 

and burden of these upcoming 

requirements when assessing 

manufacturers’ capacity to meet 

proposed new standards. (Sub Zero, No. 

40 at p. 9) 

DOE notes that it routinely assesses 

the cumulative regulatory burden on 

manufacturers in its analysis and the 

results of this assessment are discussed 

in this section of today’s NOPR and in 

chapter 12 of the NOPR TSD. The 

cumulative regulatory burden section of 

the TSD shows that manufacturers of 

residential refrigeration products also 

have significant market shares of other 

products will be affected by either 

ongoing or pending rulemakings that 

will establish amended energy 

conservation standards. These parallel 

rulemakings will likely require 

manufacturers to comply with amended 

standards within three years of the 

anticipated compliance date for 

residential refrigeration products. 

Part of this assessment included 

investigating and tracking what 

manufacturers expressed during 

interviews as one of the most critical 

potential elements of regulatory 

burden—the near-term possibility of 

changes to HFC availability. As stated in 

section IV.B.1.b, DOE is prepared to 

address this issue by evaluating the 

efficiency improvement and trial 

standard levels for products using 

alternative foam insulation materials, if 

legislation or some other legal 

requirements banning HFCs should be 

enacted or otherwise effective. A further 

complication that DOE tracked was the 

use of isobutane refrigerant as a design 

option. Isobutane could be used as an 

alternative refrigerant to the HFC-based 

refrigerants currently used by the 

industry. The current limit for an 

isobutane charge appears to be sufficient 

as a design option only for smaller 

products (see the discussion in section 

IV.B.1.a). 

Several manufacturers also expressed 

concern during interviews about the 

overall volume of DOE energy 

conservation standards with which they 

must comply. Most refrigerator 

manufacturers also make a full range of 

appliances and share engineering and 

other resources with these other internal 

manufacturing divisions for different 

appliances (including certification 

testing for regulatory compliance). Many 

of these other appliances, such as 

kitchen ranges and ovens, clothes 

washers, clothes dryers, and microwave 

ovens, are also subject to recently 

amended or soon-to-be amended 

Federal energy conservation standards. 

Some of the test procedures for these 

other products are also currently being 

amended through ongoing rulemakings 

that would, if adopted, incorporate 

standby and off mode energy 

consumption measurements.46

Manufacturers were concerned that the 

other products facing amended or new 

energy conservation standards would 

compete for the same engineering and 

financial resources, especially if the 

proposed refrigeration product 

standards would cause manufacturers to 

build new production lines instead of 

repurposing existing ones. 

While DOE acknowledges that 

rulemakings for other covered products 

could affect the resources available to 

residential refrigeration manufacturers, 

DOE has not included manufacturers’ 

conversion costs related to complying 

with other rulemakings as a cash 

outflow in the GRIM. This method is 

consistent with how DOE treats revenue 

generated from sales of those products. 

However, DOE addresses the residential 

refrigeration manufacturers’ conversion 

costs related to complying with other 

DOE rulemakings that have compliance 

dates falling within three years of the 

anticipated compliance date of this 

rulemaking in chapter 12 of the NOPR 

TSD. DOE has quantified these other 

conversion costs where applicable and 

considered those costs in its decision to 

propose the levels presented in today’s 

rulemaking. 

Manufacturers also expressed concern 

about the increasing stringency of 

international energy efficiency 

standards and materials requirements. 

Specifically, changing energy standards 

in Canada and elsewhere abroad also 

increase the regulatory burden on 

manufacturers by duplicating testing 

requirements. Many manufacturers 

would prefer more global 

standardization and harmonization of 

standards and testing. Variations among 

testing requirements often require that 

manufacturers refit or redesign test 

facilities so that tests tailored for 

specific testing requirements can be 

performed. The resources expended on 

these refits or redesigns could have been 

used for new product development. 

Examples of European standards that 

create additional compliance costs for 

manufacturers that compete in Europe 

include the Restriction on the use of 

Hazardous Substances (RoHS), Waste 

Electrical and Electronic Equipment 

(WEEE), and the Registration, 

Evaluation, Authorization, and 

restriction of Chemicals (REACH). 

DOE discusses these and other 

requirements, and includes the full 

details of the cumulative regulatory 

burden, in chapter 12 of the NOPR TSD. 

3. National Impact Analysis 

a. Significance of Energy Savings 

To estimate the national energy 

savings attributable to potential 

standards for refrigeration products, 

DOE compared the energy consumption 

of these products under the base case to 

their anticipated energy consumption 

under each TSL. Tables V.35 through 

V.38 present DOE’s forecasts of the 

national energy savings for each TSL, 

which were calculated using the 

approach described in section IV.G. 

Chapter 10 of the NOPR TSD presents 

tables that also show the magnitude of 

the energy savings if the savings are 

discounted at rates of seven and three 

percent. Discounted energy savings 

represent a policy perspective in which 

energy savings realized farther in the 

future are less significant than energy 

savings realized in the nearer term. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59550 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.35—STANDARD-SIZE REFRIGERATOR-FREEZERS: CUMULATIVE NATIONAL ENERGY SAVINGS IN QUADS

Trial standard level 

Top-mount 

refrigerator-freezers 

Bottom-mount 

refrigerator-freezers 

Side-by-side 

refrigerator-freezers 

Product classes 1, 1A, 2, 3, 

3A, 3I and 6 Product classes 5, 5A, and 5I Product classes 4, 4I, and 7 

1 ..................................................................... 1.62 0.09 0.54 

2 ..................................................................... 1.62 0.09 0.88 

3 ..................................................................... 2.07 0.09 0.88 

4 ..................................................................... 2.49 0.45 1.20 

5 ..................................................................... 2.90 0.65 1.39 

TABLE V.36—STANDARD-SIZE FREEZERS: CUMULATIVE NATIONAL ENERGY SAVINGS IN QUADS

Trial standard level 

Upright freezers Chest freezers 

Product classes 

8 and 9 

Product classes 

10 and 10A 

1 ........................................................................................................................................................................... 0.43 0.28 

2 ........................................................................................................................................................................... 0.66 0.36 

3 ........................................................................................................................................................................... 0.77 0.43 

4 ........................................................................................................................................................................... 0.86 0.49 

5 ........................................................................................................................................................................... 0.89 0.56 

TABLE V.37—COMPACT REFRIGERATION PRODUCTS: CUMULATIVE NATIONAL ENERGY SAVINGS IN QUADS

Trial standard level 

Compact 

refrigerators 

Compact 

freezers 

Product classes 

11, 11A, 12, 13, 

13A, 14, and 15 

Product classes 

16, 17, 18 

1 ........................................................................................................................................................................... 0.27 0.03 

2 ........................................................................................................................................................................... 0.34 0.03 

3 ........................................................................................................................................................................... 0.39 0.04 

4 ........................................................................................................................................................................... 0.47 0.07 

5 ........................................................................................................................................................................... 0.50 0.09 

TABLE V.38—BUILT-IN REFRIGERATION PRODUCTS: CUMULATIVE NATIONAL ENERGY SAVINGS IN QUADS

Trial standard level 

Built-in all 

refrigerators 

Built-in bottom-mount 

refrigerator-freezers 

Built-in side-by-side 

refrigerator-freezers 

Built-in upright 

freezers 

Product class 3A–BI Product classes 5–BI and 

5I–BI 

Product classes 4–BI, 

4I–BI and 7–BI Product class 9–BI 

1 ....................................... 0.00 0.00 0.01 0.00 

2 ....................................... 0.01 0.00 0.01 0.01 

3 ....................................... 0.01 0.00 0.03 0.01 

4 ....................................... 0.01 0.01 0.03 0.01 

5 ....................................... 0.01 0.02 0.04 0.01 

b. Net Present Value of Consumer Costs 

and Benefits 

DOE estimated the cumulative NPV to 

the Nation of the total costs and savings 

for consumers that would result from 

particular standard levels for 

refrigeration products. In accordance 

with the OMB’s guidelines on regulatory 

analysis (OMB Circular A–4, section E, 

September 17, 2003), DOE calculated 

NPV using both a 7-percent and a 3- 

percent real discount rate. The 7-percent 

rate is an estimate of the average beforetax rate of return on private capital in 

the U.S. economy, and reflects the 

returns on real estate and small business 

capital as well as corporate capital. DOE 

used this discount rate to approximate 

the opportunity cost of capital in the 

private sector, since recent OMB 

analysis has found the average rate of 

return on capital to be near this rate. In 

addition, DOE used the 3-percent rate to 

capture the potential effects of standards 

on private consumption (e.g., through 

higher prices for products and the 

purchase of reduced amounts of energy). 

This rate represents the rate at which 

society discounts future consumption 

flows to their present value. It can be 

approximated by the real rate of return 

on long-term government debt (i.e., 

yield on Treasury notes minus annual 

rate of change in the Consumer Price 

Index), which has averaged about 3 

percent on a pre-tax basis for the last 30 

years. 

Tables V.39 through V.46 show the 

consumer NPV results for each TSL 

DOE considered for refrigeration 

products, using both a 7-percent and a 

3-percent discount rate. In each case, 

the impacts cover the lifetime of 

products purchased in 2014–2043. See 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59551 

chapter 10 of the NOPR TSD for more 

detailed NPV results. 

TABLE V.39—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR STANDARD-SIZE REFRIGERATORFREEZERS, 3-PERCENT DISCOUNT RATE

Trial standard level 

Top-mount refrigeratorfreezers Bottom-mount 

refrigerator-freezers 

Side-by-side 

refrigerator-freezers 

Product class 1, 1A, 2, 3, 

3A, 3I and 6 

Product classes 5, 5A, 

and 5I 

Product classes 4, 4I, and 

7 

billion 2009 dollars 

1 ............................................................................................. 6.68 0.79 4.37 

2 ............................................................................................. 6.68 0.79 3.62 

3 ............................................................................................. 6.00 0.79 3.62 

4 ............................................................................................. (1.95 ) (3.22 ) (2.35 ) 

5 ............................................................................................. (14.63 ) (7.32 ) (7.38 ) 

TABLE V.40—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR STANDARD-SIZE REFRIGERATORFREEZERS, 7-PERCENT DISCOUNT RATE

Trial standard level 

Top-mount 

refrigerator-freezers 

Bottom-mount 

refrigerator-freezers 

Side-by-side 

refrigerator-freezers 

Product classes 1, 1A, 2, 

3, 3A, 3I and 6 

Product classes 5, 5A, 

and 5I 

Product classes 4, 4I, and 

7 

billion 2009 dollars 

1 ............................................................................................. 0.85 0.27 1.42 

2 ............................................................................................. 0.85 0.27 0.46 

3 ............................................................................................. (0.32 ) 0.27 0.46 

4 ............................................................................................. (5.36 ) (2.43 ) (3.26 ) 

5 ............................................................................................. (12.86 ) (4.95 ) (6.26 ) 

TABLE V.41—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR STANDARD-SIZE FREEZERS, 3-PERCENT

DISCOUNT RATE

Trial standard level 

Upright freezers Chest freezers 

Product classes 

8 and 9 

Product classes 

10 and 10A 

billion 2009 dollars 

1 ......................................................................................................................................................................... 3.91 2.74 

2 ......................................................................................................................................................................... 5.42 2.37 

3 ......................................................................................................................................................................... 5.13 2.75 

4 ......................................................................................................................................................................... 4.20 1.82 

5 ......................................................................................................................................................................... 0.67 (0.16 ) 

TABLE V.42—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR STANDARD-SIZE FREEZERS, 7-PERCENT

DISCOUNT RATE

Trial standard level 

Upright freezers Chest freezers 

Product classes 

8 and 9 

Product classes 

10 and 10A 

billion 2009 dollars 

1 ....................................................................................................................................................................... 1.25 0.90 

2 ....................................................................................................................................................................... 1.57 0.54 

3 ....................................................................................................................................................................... 1.22 0.59 

4 ....................................................................................................................................................................... 0.55 0.00 

5 ....................................................................................................................................................................... (1.42 ) (1.21 ) 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59552 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.43—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR COMPACT REFRIGERATION PRODUCTS,

3-PERCENT DISCOUNT RATE

Trial standard level 

Compact 

refrigerators 

Compact 

freezers 

Product classes 

11, 11A, 12, 13, 

13A, 14, and 15 

Product classes 

16, 17, 18 

billion 2009 dollars 

1 ....................................................................................................................................................................... 1.25 0.17 

2 ....................................................................................................................................................................... 0.69 0.17 

3 ....................................................................................................................................................................... 0.82 0.14 

4 ....................................................................................................................................................................... (0.64 ) (0.25 ) 

5 ....................................................................................................................................................................... (4.49 ) (0.96 ) 

TABLE V.44—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR COMPACT REFRIGERATION PRODUCTS,

7-PERCENT DISCOUNT RATE

Trial standard level 

Compact 

refrigerators 

Compact 

freezers 

Product classes 

11, 11A, 12, 13, 

13A, 14, and 15 

Product classes 

16, 17, 18 

billion 2009 dollars 

1 ....................................................................................................................................................................... 0.50 0.07 

2 ....................................................................................................................................................................... 0.18 0.07 

3 ....................................................................................................................................................................... 0.22 0.04 

4 ....................................................................................................................................................................... (0.59 ) (0.19 ) 

5 ....................................................................................................................................................................... (2.68 ) (0.60 ) 

TABLE V.45—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR BUILT-IN REFRIGERATION PRODUCTS, 3- 

PERCENT DISCOUNT RATE

Trial standard level 

Built-in all 

refrigerators 

Built-in bottom-mount 

refrigerator-freezers 

Built-in side-by-side 

refrigerator-freezers 

Built-in upright 

freezers 

Product class 3A–BI Product classes 5–BI and 

5I–BI 

Product classes 

4–BI, 4I–BI and 

7–BI 

Product class 

9–BI 

billion 2009 dollars 

1 ............................... 0.03 0.02 0.04 0.04 

2 ............................... 0.05 0.00 0.04 0.04 

3 ............................... (0.01 ) 0.00 (0.43 ) (0.02 ) 

4 ............................... (0.10 ) (0.36 ) (0.43 ) (0.02 ) 

5 ............................... (0.17 ) (0.54 ) (0.83 ) (0.07 ) 

TABLE V.46—CUMULATIVE NET PRESENT VALUE OF CONSUMER BENEFITS FOR BUILT-IN REFRIGERATION PRODUCTS, 7- 

PERCENT DISCOUNT RATE

Trial standard level 

Built-in all refrigerators 

(3A–BI) 

Built-in bottom-mount 

refrigerator-freezers 

Built-in side-by-side 

refrigerator-freezers 

Built-in upright freezers 

(9–BI) 

Product class 3A–BI Product classes 5–BI and 

5I–BI 

Product classes 

4–BI, 4I–BI and 

7–BI 

Product class 

9–BI 

billion 2009 dollars 

1 ............................... 0.01 0.01 0.01 0.02 

2 ............................... 0.02 (0.00 ) 0.01 0.00 

3 ............................... (0.02 ) (0.00 ) (0.28 ) (0.03 ) 

4 ............................... (0.07 ) (0.21 ) (0.28 ) (0.03 ) 

5 ............................... (0.11 ) (0.32 ) (0.51 ) (0.06 ) 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59553 

c. Indirect Impacts on Employment 

DOE develops estimates of the 

indirect employment impacts of 

potential standards on the economy in 

general. As discussed above, DOE 

expects amended energy conservation 

standards for refrigeration products to 

reduce energy bills for consumers and 

the resulting net savings to be redirected 

to other forms of economic activity. 

These expected shifts in spending and 

economic activity could affect the 

demand for labor. As described in 

section IV.J, above, to estimate these 

effects DOE used an input/output model 

of the U.S. economy. Table V.47 

presents the estimated net indirect 

employment impacts in 2020 and 2043 

for the TSLs that DOE considered in this 

rulemaking. Chapter 13 of the NOPR 

TSD presents more detailed results. 

TABLE V.47—NET INCREASE IN JOBS FROM INDIRECT EMPLOYMENT EFFECTS UNDER REFRIGERATION PRODUCT TSLS

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

thousands 

Standard-Size Refrigerator-Freezers: 

2020 .............................................................................. 1.30 1.07 0.74 ¥2.87 ¥7.16 

2043 .............................................................................. 10.99 12.05 13.49 12.95 10.34 

Standard-Size Freezers: 

2020 .............................................................................. 0.72 0.69 0.69 0.18 ¥0.97 

2043 .............................................................................. 4.34 5.79 5.79 6.77 5.80 

Compact Refrigeration Products: 

2020 .............................................................................. 0.46 0.43 0.49 0.29 ¥0.45 

2043 .............................................................................. 1.24 1.26 1.44 1.21 0.14 

Built-In Refrigeration Products: 

2020 .............................................................................. 0.02 0.01 ¥0.10 ¥0.18 ¥0.31 

2043 .............................................................................. 0.10 0.13 0.08 0.01 ¥0.13 

The input/output model suggests that 

today’s proposed standards are likely to 

increase the net demand for labor in the 

economy. However, the model suggests 

that the projected gains are very small 

relative to total national employment 

(currently approximately 120 million). 

Moreover, neither the BLS data nor the 

input/output model DOE uses includes 

the quality or wage level of the jobs. 

Therefore, because the analysis 

indicates an increased demand for labor 

would likely result from the amended 

energy conservation standards under 

consideration in this rulemaking, DOE 

has tentatively concluded that the 

proposed standards are likely to 

produce employment benefits sufficient 

to offset fully any adverse impacts on 

employment in the manufacturing 

industry for the refrigeration products 

that are the subject of this rulemaking. 

4. Impact on Utility or Performance of 

Products 

As presented in section III.D.1.d of 

this notice, DOE concluded that none of 

the TSLs considered in this notice 

would substantially reduce the utility or 

performance of the products under 

consideration in this rulemaking. 

However, manufacturers may reduce the 

availability of features that increase 

energy use, such as multiple drawers. 

Manufacturers currently offer 

refrigeration products that meet or 

exceed the proposed standards for most 

of the product classes. (42 U.S.C. 

6295(o)(2)(B)(i)(IV)) 

5. Impact of Any Lessening of 

Competition 

DOE has also considered any 

lessening of competition that is likely to 

result from amended standards. The 

Attorney General determines the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard, and transmits such 

determination to the Secretary, together 

with an analysis of the nature and 

extent of such impact. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and (B)(ii)) 

To assist the Attorney General in 

making such determination, DOE has 

provided DOJ with copies of this NOPR 

and the TSD for review. DOE will 

consider DOJ’s comments on the 

proposed rule in preparing the final 

rule, and DOE will publish and respond 

to DOJ’s comments in that document. 

6. Need of the Nation to Conserve 

Energy 

An improvement in the energy 

efficiency of the products subject to 

today’s rule is likely to improve the 

security of the Nation’s energy system 

by reducing overall demand for energy. 

Reduced electricity demand may also 

improve the reliability of the electricity 

system. As a measure of this reduced 

demand, Table V.48 presents the 

estimated reduction in generating 

capacity in 2043 for the TSLs that DOE 

considered in this rulemaking. 

TABLE V.48—REDUCTION IN ELECTRIC GENERATING CAPACITY IN 2043 UNDER REFRIGERATION PRODUCT TSLS

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Gigawatts 

Standard-Size Refrigerator-Freezers ......................... 2 .28 2 .63 3 .10 4 .23 5 .07 

Standard-Size Freezers ............................................. 0 .740 0 .740 1 .25 1 .42 1 .53 

Compact Refrigeration Products ................................ 0 .271 0 .324 0 .383 0 .475 0 .506 

Built-In Refrigeration Products ................................... 0 .019 0 .027 0 .054 0 .067 0 .080 

DOE used NEMS–BT to assess the 

impacts on electricity prices of the 

reduced need for new electric power 

plants and infrastructure projected to 

result from standards. The projected 

impacts on prices, and their value to 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59554 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

electricity consumers, are presented in 

chapter 14 and chapter 10, respectively, 

of the NOPR TSD. Although the 

aggregate benefits for all electricity users 

are potentially large, there may be 

negative effects on the actors involved 

in electricity supply. Because there is 

uncertainty about the extent to which 

the calculated impacts from reduced 

electricity prices would be a transfer 

from the actors involved in electricity 

supply to electricity consumers, DOE 

has concluded that, at present, it should 

not assign a heavy weight to this factor 

in considering the economic 

justification of standards on 

refrigeration products. 

Energy savings from amended 

standards for refrigeration products 

could also produce environmental 

benefits in the form of reduced 

emissions of air pollutants and 

greenhouse gases associated with 

electricity production. Table V.49 

provides DOE’s estimate of cumulative 

CO2, NOX, and Hg emissions reductions 

projected to result from the TSLs 

considered in this rulemaking. DOE 

reports annual CO2, NOX, and Hg 

emissions reductions for each TSL in 

chapter 15 of the NOPR TSD. 

As discussed in section IV.M, DOE 

did not report SO2 emissions reductions 

from power plants because there is 

uncertainty about the effect of energy 

conservation standards on the overall 

level of SO2 emissions in the United 

States due to SO2 emissions caps. DOE 

also did not include NOX emissions 

reduction from power plants in States 

subject to CAIR because an energy 

conservation standard would not affect 

the overall level of NOX emissions in 

those States due to the emissions caps 

mandated by CAIR. 

TABLE V.49—SUMMARY OF EMISSIONS REDUCTION ESTIMATED FOR REFRIGERATION PRODUCT TSLS (CUMULATIVE FOR

2014 THROUGH 2043) 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Standard-Size Refrigerator-Freezers: 

CO2 (Mt) ............................................................. 154 177 208 283 338 

NOX (kt) .............................................................. 124 142 168 228 272 

Hg (t) ................................................................... 0 .79 0 .91 1 .07 1 .45 1 .73 

Standard-Size Freezers: 

CO2 (Mt) ............................................................. 48 69 81 92 99 

NOX (kt) .............................................................. 39 55 65 74 79 

Hg (t) ................................................................... 0 .24 0 .34 0 .41 0 .47 0 .50 

Compact Refrigeration Products: 

CO2 (Mt) ............................................................. 20 24 28 35 39 

NOX (kt) .............................................................. 16 19 23 28 31 

Hg (t) ................................................................... 0 .10 0 .12 0 .15 0 .19 0 .21 

Built-In Refrigeration Products: 

CO2 (Mt) ............................................................. 1 .23 1 .79 3 .58 4 .45 5 .32 

NOX (kt) .............................................................. 0 .99 1 .44 2 .88 3 .58 4 .28 

Hg (t) ................................................................... 0 .01 0 .01 0 .02 0 .02 0 .03 

As part 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. As discussed in section 

IV.M, DOE used values for the SCC 

developed by an interagency process. 

The four values for CO2 emissions 

reductions resulting from that process 

(expressed in 2007$) are $4.7/ton (the 

average value from a distribution that 

uses a 5-percent discount rate), $21.4/ 

ton (the average value from a 

distribution that uses a 3-percent 

discount rate), $35.1/ton (the average 

value from a distribution that uses a 2.5- 

percent discount rate), and $64.9/ton 

(the 95th-percentile value from a 

distribution that uses a 3-percent 

discount rate). These values correspond 

to the value of emission reductions in 

2010; the values for later years are 

higher due to increasing damages as the 

magnitude of climate change increases. 

Table V.50 through Table V.53 

present the global values of CO2

emissions reductions at each TSL. For 

each of the four cases, DOE calculated 

a present value of the stream of annual 

values using the same discount rate as 

was used in the studies upon which the 

dollar-per-ton values are based. DOE 

calculated domestic values as a range 

from 7 percent to 23 percent of the 

global values, and these results are 

presented in Table V.54 through Table 

V.57. 

TABLE V.50—STANDARD-SIZE REFRIGERATOR-FREEZERS: ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ 

5% discount rate, 

average * 

3% discount rate, 

average * 

2.5% discount 

rate, average * 

3% discount rate, 

95th 

percentile * 

1 ....................................................................................................... 526 2,696 4,570 8,223 

2 ....................................................................................................... 605 3,104 5,261 9,465 

3 ....................................................................................................... 713 3,653 6,192 11,140 

4 ....................................................................................................... 970 4,975 8,432 15,170 

5 ....................................................................................................... 1,160 5,947 10,080 18,135 

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59555 

TABLE V.51—STANDARD-SIZE FREEZERS: ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS REDUCTION IN

2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ 

5% discount 

rate, average * 

3% discount 

rate, average * 

2.5% discount 

rate, average * 

3% discount 

rate, 95th 

percentile * 

1 ....................................................................................................................... 164 840 1,425 2,562 

2 ....................................................................................................................... 234 1,205 2,043 3,673 

3 ....................................................................................................................... 277 1,421 2,409 4,332 

4 ....................................................................................................................... 314 1,615 2,738 4,923 

5 ....................................................................................................................... 337 1,733 2,938 5,283 

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

TABLE V.52—COMPACT REFRIGERATION PRODUCTS: ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ 

5% discount 

rate, average * 

3% discount 

rate, average * 

2.5% discount 

rate, average * 

3% discount 

rate, 95th 

percentile * 

1 ....................................................................................................................... 65 333 564 1,015 

2 ....................................................................................................................... 78 400 678 1,220 

3 ....................................................................................................................... 93 475 804 1,448 

4 ....................................................................................................................... 117 598 1,013 1,823 

5 ....................................................................................................................... 130 665 1,126 2,029 

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

TABLE V.53—BUILT-IN REFRIGERATION PRODUCTS: ESTIMATES OF GLOBAL PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ 

5% discount 

rate, average * 

3% discount 

rate, average * 

2.5% discount 

rate, average * 

3% discount 

rate, 95th 

percentile * 

1 ....................................................................................................................... 4 22 37 66 

2 ....................................................................................................................... 6 31 53 96 

3 ....................................................................................................................... 12 63 106 191 

4 ....................................................................................................................... 15 78 132 238 

5 ....................................................................................................................... 18 93 158 284 

* Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

TABLE V.54—STANDARD-SIZE REFRIGERATOR-FREEZERS: ESTIMATES OF DOMESTIC PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ * 

5% discount rate, 

average ** 

3% discount rate, 

verage ** 

2.5% discount rate, 

average ** 

3% discount rate, 95th 

percentile ** 

1 ......................................... 37 to 121 ........................... 189 to 620 ......................... 320 to 1,051 ...................... 576 to 1,891. 

2 ......................................... 42 to 139 ........................... 217 to 714 ......................... 368 to 1,210 ...................... 663 to 2,177. 

3 ......................................... 50 to 164 ........................... 256 to 840 ......................... 433 to 1,424 ...................... 780 to 2,562. 

4 ......................................... 68 to 223 ........................... 348 to 1,144 ...................... 590 to 1,939 ...................... 1,062 to 3,489. 

5 ......................................... 81 to 267 ........................... 416 to 1,368 ...................... 706 to 2,318 ...................... 1,269 to 4,171. 

* Domestic values are presented as a range between 7% and 23% of the global values. 

** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59556 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.55—STANDARD-SIZE FREEZERS: ESTIMATES OF DOMESTIC PRESENT VALUE OF CO2 EMISSIONS REDUCTION IN

2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ * 

5% discount rate, 

average ** 

3% discount rate, 

average ** 

2.5% discount rate, 

average ** 

3% discount rate, 95th 

percentile ** 

1 ......................................... 11 to 38 ............................. 59 to 193 ........................... 100 to 328 ......................... 179 to 589. 

2 ......................................... 16 to 54 ............................. 84 to 277 ........................... 143 to 470 ......................... 257 to 845. 

3 ......................................... 19 to 64 ............................. 99 to 327 ........................... 169 to 554 ......................... 303 to 996. 

4 ......................................... 22 to 72 ............................. 113 to 371 ......................... 192 to 630 ......................... 345 to 1,132. 

5 ......................................... 24 to 78 ............................. 121 to 398 ......................... 206 to 676 ......................... 370 to 1,215. 

* Domestic values are presented as a range between 7% and 23% of the global values. 

** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

TABLE V.56—COMPACT REFRIGERATION PRODUCTS: ESTIMATES OF DOMESTIC PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ * 

5% discount rate, 

average ** 

3% discount rate, 

average ** 

2.5% discount rate, 

average ** 

3% discount rate, 95th 

percentile ** 

1 ......................................... 5 to 15 ............................... 23 to 77 ............................. 39 to 130 ........................... 71 to 233. 

2 ......................................... 5 to 18 ............................... 28 to 92 ............................. 47 to 156 ........................... 85 to 281. 

3 ......................................... 6 to 21 ............................... 33 to 109 ........................... 56 to 185 ........................... 101 to 333. 

4 ......................................... 8 to 27 ............................... 42 to 137 ........................... 71 to 233 ........................... 128 to 419. 

5 ......................................... 9 to 30 ............................... 47 to 153 ........................... 79 to 259 ........................... 142 to 467. 

* Domestic values are presented as a range between 7% and 23% of the global values. 

** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

TABLE V.57—BUILT-IN REFRIGERATION PRODUCTS: ESTIMATES OF DOMESTIC PRESENT VALUE OF CO2 EMISSIONS

REDUCTION IN 2014–2043 UNDER TRIAL STANDARD LEVELS

TSL 

Million 2009$ * 

5% discount rate, 

average** 

3% discount rate, 

average** 

2.5% discount rate, 

average** 

3% discount rate, 95th 

percentile** 

1 ......................................... 0 to 1 ................................. 2 to 5 ................................. 3 to 8 ................................. 5 to 15. 

2 ......................................... 0 to 1 ................................. 2 to 7 ................................. 4 to 12 ............................... 7 to 22. 

3 ......................................... 1 to 3 ................................. 4 to 14 ............................... 7 to 24 ............................... 13 to 43. 

4 ......................................... 1 to 4 ................................. 5 to 18 ............................... 9 to 30 ............................... 17 to 55. 

5 ......................................... 1 to 4 ................................. 7 to 21 ............................... 11 to 36 ............................. 20 to 65. 

* Domestic values are presented as a range between 7% and 23% of the global values. 

** Columns are labeled by the discount rate used to calculate the SCC and whether it is an average value or drawn from a different part of the 

distribution. Values presented in the table are based on escalating 2007$ to 2009$ for consistency with other values presented in this notice, and 

incorporate the escalation of the SCC over time. 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other GHG 

emissions to changes in the future 

global climate and the potential 

resulting damages to the world economy 

continues to evolve rapidly. Thus, any 

value placed in this rulemaking on 

reducing CO2 emissions is subject to 

change. DOE, together with other 

Federal agencies, will continue to 

review various methodologies for 

estimating the monetary value of 

reductions in CO2 and other GHG 

emissions. This ongoing review will 

consider the comments on this subject 

that are part of the public record for this 

and other rulemakings, as well as other 

methodological assumptions and issues. 

However, consistent with DOE’s legal 

obligations, and taking into account the 

uncertainty involved with this 

particular issue, DOE has included in 

this NOPR the most recent values and 

analyses resulting from the ongoing 

interagency review process. 

DOE also estimated a range for the 

cumulative monetary value of the 

economic benefits associated with NOX

emissions reductions anticipated to 

result from amended standards for 

refrigeration products. The dollar-perton values that DOE used are discussed 

in section IV.M. Table V.58 presents the 

cumulative present values for each TSL 

calculated using seven-percent and 

three-percent discount rates. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59557 

TABLE V.58—ESTIMATES OF PRESENT VALUE OF NOX EMISSIONS REDUCTION IN 2014–2043 UNDER REFRIGERATION

PRODUCT TRIAL STANDARD LEVELS

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

million 2009$ 

Standard-Size Refrigerator-Freezers: 

Using 7% discount rate.11 to 117 ................... 13 to 135 ................... 15 to 159 ................... 21 to 217 ................... 25 to 260. 

Using 3% discount rate.27 to 278 ................... 31 to 320 ................... 37 to 376 ................... 50 to 513 ................... 60 to 614. 

Standard-Size Freezers: 

Using 7% discount rate.3.5 to 36 .................... 5.0 to 52 .................... 5.9 to 61 .................... 6.8 to 69 .................... 7.3 to 75. 

Using 3% discount rate.8.4 to 86 .................... 12 to 123 ................... 14 to 146 ................... 16 to 166 ................... 17 to 178. 

Compact Refrigeration 

Products: 

Using 7% discount rate.1.3 to 13 .................... 1.5 to 16 .................... 1.8 to 19 .................... 2.3 to 24 .................... 2.7 to 28. 

Using 3% discount rate.3.3 to 33 .................... 3.9 to 40 .................... 4.7 to 48 .................... 5.9 to 60 .................... 6.6 to 68. 

Built-In Refrigeration 

Products: 

Using 7% discount rate.0.1 to 0.9 ................... 0.1 to 1.4 ................... 0.3 to 2.7 ................... 0.3 to 3.4 ................... 0.4 to 4.0.

Using 3% discount rate.0.2 to 2.2 ................... 0.3 to 3.2 ................... 0.6 to 6.5 ................... 0.8 to 8.0 ................... 0.9 to 9.6.

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the consumer savings calculated 

for each TSL considered in this 

rulemaking. Table V.59 shows an 

example of the calculation of the 

combined NPV including benefits from 

emissions reductions for the case of TSL 

3 for standard-size refrigerator-freezers. 

Table V.60 and Table V.61 present the 

NPV values that would result if DOE 

were to add the estimates of the 

potential economic benefits resulting 

from reduced CO2 and NOX emissions 

in each of four valuation scenarios to 

the NPV of consumer savings calculated 

for each TSL considered in this 

rulemaking, at both a seven-percent and 

three-percent discount rate. The CO2

values used in the columns of each table 

correspond to the four scenarios for the 

valuation of CO2 emission reductions 

presented in section IV.M. 

TABLE V.59—ADDING NET PRESENT VALUE OF CONSUMER SAVINGS TO PRESENT VALUE OF MONETIZED BENEFITS FROM

CO2 AND NOX EMISSIONS REDUCTIONS AT TSL 3 FOR STANDARD-SIZE REFRIGERATOR-FREEZERS

Category Present value 

billion 2009$ 

Discount rate 

(in percent) 

Benefits: 

Operating Cost Savings ......................................................................................................................... 13 .62 7 

34 .75 3 

CO2 Reduction Monetized Value (at $4.7/Metric Ton)* ......................................................................... 0 .713 5 

CO2 Reduction Monetized Value (at $21.4/Metric Ton)* ....................................................................... 3 .65 3 

CO2 Reduction Monetized Value (at $35.1/Metric Ton)* ....................................................................... 6 .19 2.5 

CO2 Reduction Monetized Value (at $64.9/Metric Ton)* ....................................................................... 11 .14 3 

NOX Reduction Monetized Value (at $2,519/Ton)* ............................................................................... 0 .087 7 

0 .206 3 

Total Monetary Benefits** ............................................................................................................... 17 .36 7 

38 .61 3 

Costs: 

Total Incremental Installed Costs ........................................................................................................... 13 .21 7 

24 .35 3 

Net Benefits/Costs: 

Including CO2 and NOX** ....................................................................................................................... 4 .15 7 

14 .26 3 

* These values represent global values (in 2007$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of $4.7, 

$21.4, and $35.1 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The value of 

$64.9 per ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. See section IV.M for details. The value 

for NOX (in 2009$) is the average of the low and high values used in DOE’s analysis. 

** Total Monetary Benefits for both the 3% and 7% cases utilize the central estimate of social cost of CO2 emissions calculated at a 3% discount rate, which is equal to $21.4/ton in 2010 (in 2007$). 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59558 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.60—ESTIMATES OF ADDING NET PRESENT VALUE OF CONSUMER SAVINGS (AT 7% DISCOUNT RATE) TO NET

PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS AT TRIAL STANDARD LEVELS FOR REFRIGERATION PRODUCTS

TSL 

Consumer NPV at 7% discount rate added with: 

SCC value of 

$4.7/metric ton 

CO2* and low 

value for NOX** 

billion 2009$ 

SCC value of 

$21.4/metric ton 

CO2* and medium 

value for NOX** 

billion 2009$ 

SCC value of 

$35.1/metric ton 

CO2* and Medium 

Value for NOX** 

billion 2009$ 

SCC value of 

$64.9/metric ton 

CO2* and High 

Value for NOX** 

billion 2009$ 

1 ............................................................................................... 6.07 9.28 11.98 17.33 

2 ............................................................................................... 5.03 8.94 12.24 18.75 

3 ............................................................................................... 3.27 7.90 11.81 19.52 

4 ............................................................................................... (10.43 ) (4.43 ) 0.62 10.60 

5 ............................................................................................... (29.30 ) (22.33 ) (16.47 ) (4.86 ) 

* These label values represent the global SCC of CO2 in 2010, in 2007$. Their present values have been calculated with scenario-consistent 

discount rates. See section IV.M for a discussion of the derivation of these values. 

** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX emissions. High Value corresponds to $4,591 per ton of NOX emissions. 

TABLE V.61—ESTIMATES OF ADDING NET PRESENT VALUE OF CONSUMER SAVINGS (AT 3% DISCOUNT RATE) TO NET

PRESENT VALUE OF MONETIZED BENEFITS FROM CO2 AND NOX EMISSIONS REDUCTIONS AT TRIAL STANDARD LEVELS FOR REFRIGERATION PRODUCTS

TSL 

Consumer NPV at 3% discount rate added with: 

SCC value of 

$4.7/metric ton 

CO2* and low 

value for NOX** 

billion 2009$ 

SCC value of 

$21.4/metric ton 

CO2* and medium 

value for NOX** 

billion 2009$ 

SCC value of 

$35.1/metric ton 

CO2* and Medium 

Value for NOX** 

billion 2009$ 

SCC value of 

$64.9/metric ton 

CO2* and High 

Value for NOX** 

billion 2009$ 

1 ............................................................................................... 20.82 24.14 26.85 32.30 

2 ............................................................................................... 21.04 25.09 28.39 35.04 

3 ............................................................................................... 19.93 24.72 28.62 36.49 

4 ............................................................................................... (1.80 ) 4.40 9.45 19.65 

5 ............................................................................................... (34.16 ) (26.96 ) (21.09 ) (9.25 ) 

* These label values represent the global SCC of CO2 in 2010, in 2007$. Their present values have been calculated with scenario-consistent 

discount rates. See section IV.M for a discussion of the derivation of these values. 

** Low Value corresponds to $447 per ton of NOX emissions. Medium Value corresponds to $2,519 per ton of NOX emissions. High Value corresponds to $4,591 per ton of NOX emissions. 

Although adding the value of 

consumer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. consumer 

monetary savings that occur as a result 

of market transactions while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use quite different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

refrigeration products shipped in 2014– 

2043. The SCC values, on the other 

hand, reflect the present value of all 

future climate-related impacts resulting 

from the emission of one ton of carbon 

dioxide in each year. These impacts go 

well beyond 2100. 

7. Other Factors 

The Secretary, in determining 

whether a standard is economically 

justified, may consider any other factors 

that he deems to be relevant. (42 U.S.C. 

6295(o)(2)(B)(i)(VI))) DOE is aware of 

pending legislation that proposes to 

phase out substances with significant 

GWP and that HFCs are included in the 

list of substances to be phased out. DOE 

recognizes the significance that such 

legislation would have to the 

refrigeration products industry and the 

impact it would have on the ability of 

manufacturers to meet energy 

conservation standards. Given the 

uncertainty regarding such legislation, 

however, DOE did not factor the impact 

of potential HFC limitations in 

developing the proposed levels 

presented in today’s NOPR. 

C. Proposed Standards 

When considering proposed 

standards, the new or amended energy 

conservation standard that DOE adopts 

for any type (or class) of covered 

product shall be designed to achieve the 

maximum improvement in energy 

efficiency that the Secretary determines 

is technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A)) In determining whether a 

standard is economically justified, the 

Secretary must determine whether the 

benefits of the standard exceed its 

burdens to the greatest extent 

practicable, in light of the seven 

statutory factors discussed previously. 

(42 U.S.C. 6295(o)(2)(B)(i)) The new or 

amended standard must also ‘‘result in 

significant conservation of energy.’’ (42 

U.S.C. 6295(o)(3)(B)) 

For today’s NOPR, DOE considered 

the impacts of standards at each trial 

standard level, beginning with the 

maximum technologically feasible level, 

to determine whether that level was 

economically justified. Where the maxtech level was not justified, DOE then 

considered the next most efficient level 

and undertook the same evaluation until 

it reached the most efficient level that 

is both technologically feasible and 

economically justified and saves a 

significant amount of energy. 

For ease of presentation, DOE 

separately discusses the benefits and/or 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59559 

burdens of each trial standard level for 

standard-size refrigerator-freezers, 

standard-size freezers, compact 

refrigeration products, and built-in 

refrigeration products. 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. These 

include the impacts on identifiable 

subgroups of consumers, such as lowincome households and seniors, who 

may be disproportionately affected by a 

national standard. Section V.B.1 

presents the estimated impacts of each 

TSL for these subgroups. 

DOE notes that the proposed 

standards set forth in the Joint 

Comments were also carefully 

considered by the agency. These 

suggested standards, along with the 

comments from all interested parties 

and the agency’s analytical work 

developed in preparation of today’s 

NOPR, were considered during the 

development of the standards being 

proposed today. DOE is giving serious 

consideration to these suggested 

standards as well as alternative 

standards that differ from them. As with 

other aspects of this proposal, the 

agency solicits comments from 

interested parties on these proposed 

standards as well as any other issues 

commenters believe merit 

consideration. 

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 

savings to warrant delaying or altering 

purchases (e.g. an inefficient ventilation 

fan in a new building or the delayed 

replacement of a water pump), (3) 

inconsistent (e.g. excessive short-term) 

weighting of future energy cost savings 

relative to available returns on other 

investments, (4) computational or other 

difficulties associated with the 

evaluation of relevant tradeoffs, and (5) 

a divergence in incentives (e.g. renter 

versus owner; builder v. 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. 

While DOE is not prepared at present to 

provide a fuller quantifiable framework 

for this discussion at this time, DOE 

seeks comments on how to assess these 

possibilities. 

1. Standard-Size Refrigerator-Freezers 

Table V.62 presents a summary of the 

quantitative impacts estimated for each 

TSL for standard-size refrigeratorfreezers. The efficiency levels contained 

in each TSL are described in section 

V.A. 

TABLE V.62—SUMMARY OF RESULTS FOR STANDARD-SIZE REFRIGERATOR-FREEZERS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National Energy Savings 

(quads).

2.25 ........................ 2.59 ........................ 3.05 ........................ 4.14 ........................ 4.94 

NPV of Consumer Benefits 

(2009$ billion): 

3% discount rate ................. 11.83 ...................... 11.08 ...................... 10.40 ...................... (7.51) ..................... (29.33) 

7% discount rate ................. 2.53 ........................ 1.58 ........................ 0.41 ........................ (11.05) ................... (24.08) 

Industry Impacts: 

Standard-Size RefrigeratorFreezers: 

Industry NPV (2009$ 

million).

(84.8) to (301.7) ..... (175.9) to (459.8) ... (287.5) to (662.1) ... (643.0) to (1,496.8) (828.9) to (2,154.7) 

Industry NPV (% 

change).

(2.7) to (9.5) ........... (5.5) to (14.5) ......... (9.1) to (20.9) ......... (20.3) to (47.2) ....... (26.1) to (67.9) 

Cumulative Emissions Reduction: 

CO2 (Mt) .............................. 154 ......................... 177 ......................... 208 ......................... 283 ......................... 338 

NOX (kt) .............................. 124 ......................... 142 ......................... 168 ......................... 228 ......................... 272 

Hg (t) ................................... 0.79 ........................ 0.91 ........................ 1.07 ........................ 1.45 ........................ 1.73 

Value of Cumulative Emissions 

Reduction: 

CO2 (2009$ billion)* ............ 0.53 to 8.22 ........... 0.61 to 9.47 ........... 0.71 to 11.14 ......... 0.97 to 15.17 ......... 1.16 to 18.14 

NOX—3% discount rate 

(2009$ million).

27 to 278 ............... 31 to 320 ............... 37 to 376 ............... 50 to 513 ............... 60 to 614 

NOX—7% discount rate 

(2009$ million).

11 to 117 ............... 13 to 135 ............... 15 to 159 ............... 21 to 217 ............... 25 to 260 

Mean LCC Savings** (2009$): 

Top-Mount RefrigeratorFreezers.29 ........................... 29 ........................... 22 ........................... (37) ........................ (133) 

Bottom-Mount RefrigeratorFreezers.19 ........................... 19 ........................... 19 ........................... (79) ........................ (180) 

Side-by-Side RefrigeratorFreezers.53 ........................... 37 ........................... 37 ........................... (55) ........................ (134) 

Median PBP (years): 

Top-Mount RefrigeratorFreezers 9.2 .......................... 9.2 .......................... 10.9 ........................ 15.4 ........................ 20.5 

Bottom-Mount RefrigeratorFreezers.4.9 .......................... 4.9 .......................... 4.9 .......................... 24.8 ........................ 29.0 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59560 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.62—SUMMARY OF RESULTS FOR STANDARD-SIZE REFRIGERATOR-FREEZERS—Continued 

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Side-by-Side RefrigeratorFreezers.4.8 .......................... 10.9 ........................ 10.9 ........................ 18.6 ........................ 22.6 

Distribution of Consumer LCC 

Impacts: 

Top-Mount RefrigeratorFreezers: 

Net Cost (%) ................ 42.3 ........................ 42.3 ........................ 54.9 ........................ 73.8 ........................ 85.4 

No Impact (%) ............. 8.1 .......................... 8.1 .......................... 0.0 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 49.6 ........................ 49.6 ........................ 45.1 ........................ 26.2 ........................ 14.6 

Bottom-Mount RefrigeratorFreezers: 

Net Cost (%) ................ 4.5 .......................... 4.5 .......................... 4.5 .......................... 88.2 ........................ 93.3 

No Impact (%) ............. 67.8 ........................ 67.8 ........................ 67.8 ........................ 0.0 .......................... 0.0 

Net Benefit (%) ............ 27.7 ........................ 27.7 ........................ 27.7 ........................ 11.8 ........................ 6.7 

Side-by-Side RefrigeratorFreezers: 

Net Cost (%) ................ 7.3 .......................... 50.8 ........................ 50.8 ........................ 77.7 ........................ 86.2 

No Impact (%) ............. 36.9 ........................ 0.0 .......................... 0.0 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 55.8 ........................ 49.2 ........................ 49.2 ........................ 22.3 ........................ 13.9 

Generation Capacity Reduction 

(GW).† 

2.28 ........................ 2.63 ........................ 3.10 ........................ 4.23 ........................ 5.07 

Employment Impacts: 

Total Potential Changes in 

Domestic Production 

Workers in 2014 (thousands).

(0.22) to (8.52) ....... (0.26) to (8.52) ....... (0.21) to (8.52) ....... (0.28) to (8.52) ....... (0.43) to (8.52) 

Indirect Domestic Jobs 

(thousands).† 

10.99 ...................... 12.05 ...................... 13.49 ...................... 12.95 ...................... 10.34 

Parentheses indicate negative (¥) values. 

* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

** For LCCs, a negative value means an increase in LCC by the amount indicated. 

† Changes in 2043. 

DOE first considered TSL 5, which 

represents the max-tech efficiency 

levels. TSL 5 would save 4.94 quads of 

energy, an amount DOE considers 

significant. Under TSL 5, the NPV of 

consumer benefit would be –$24.08 

billion, using a discount rate of 7 

percent, and –$29.33 billion, using a 

discount rate of 3 percent. 

The cumulative emissions reductions 

at TSL 5 are 338 Mt of CO2, 272 kt of 

NOX, and 1.73 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 5 ranges 

from $1.16 billion to $18.14 billion. 

Total generating capacity in 2043 is 

estimated to decrease by 5.07 GW under 

TSL 5. 

At TSL 5, the average LCC impact is 

a cost (LCC increase) of $133 for topmount refrigerator-freezers, a cost of 

$180 for bottom-mount refrigeratorfreezers, and a cost of $134 for side-byside refrigerator-freezers. The median 

payback period is 21 years for topmount refrigerator-freezers, 29 years for 

bottom-mount refrigerator-freezers, and 

23 years for side-by-side refrigeratorfreezers. The fraction of consumers 

experiencing an LCC benefit is 15 

percent for top-mount refrigeratorfreezers, 7 percent for bottom-mount 

refrigerator-freezers, and 14 percent for 

side-by-side refrigerator-freezers. The 

fraction of consumers experiencing an 

LCC cost is 85 percent for top-mount 

refrigerator-freezers, 93 percent for 

bottom-mount refrigerator-freezers, and 

86 percent for side-by-side refrigeratorfreezers. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $828.9 

million to a decrease of $2,154.7 

million. At TSL 5, DOE recognizes the 

risk of very large negative impacts if 

manufacturers’ expectations concerning 

reduced profit margins are realized. If 

the high end of the range of impacts is 

reached as DOE expects, TSL 5 could 

result in a net loss of 68 percent in INPV 

to standard-size refrigerator-freezer 

manufacturers. 

The Secretary tentatively concludes 

that at TSL 5 for standard-size 

refrigerator-freezers, the benefits of 

energy savings, generating capacity 

reductions, emission reductions, and 

the estimated monetary value of the CO2

emissions reductions would be 

outweighed by the negative NPV of 

consumer benefits, the economic burden 

on a significant fraction of consumers 

due to the large increases in product 

cost, and the capital conversion costs 

and profit margin impacts that could 

result in a very large reduction in INPV 

for the manufacturers. Consequently, 

the Secretary has tentatively concluded 

that TSL 5 is not economically justified. 

DOE then considered TSL 4. TSL 4 

would save 4.14 quads of energy, an 

amount DOE considers significant. 

Under TSL 4, the NPV of consumer 

benefit would be ¥$11.05 billion, using 

a discount rate of 7 percent, and ¥$7.51 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 4 are 283 Mt of CO2, 228 kt of 

NOX, and 1.45 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 4 ranges 

from $0.97 billion to $15.17 billion. 

Total generating capacity in 2043 is 

estimated to decrease by 4.23 GW under 

TSL 4. 

At TSL 4, DOE projects that the 

average LCC impact is a cost (LCC 

increase) of $37 for top-mount 

refrigerator-freezers, a cost of $79 for 

bottom-mount refrigerator-freezers, and 

a cost of $55 for side-by-side 

refrigerator-freezers. The median 

payback period is 15 years for topmount refrigerator-freezers, 25 years for 

bottom-mount refrigerator-freezers, and 

19 years for side-by-side refrigeratorfreezers. The fraction of consumers 

experiencing an LCC benefit is 26 

percent for top-mount refrigeratorfreezers, 12 percent for bottom-mount 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59561 

refrigerator-freezers, and 22 percent for 

side-by-side refrigerator-freezers. The 

fraction of consumers experiencing an 

LCC cost is 74 percent for top-mount 

refrigerator-freezers, 88 percent for 

bottom-mount refrigerator-freezers, and 

78 percent for side-by-side refrigeratorfreezers. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $643.0 

million to a decrease of $1,496.8 

million. DOE recognizes the risk of large 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. If the high end of 

the range of impacts is reached as DOE 

expects, TSL 4 could result in a net loss 

of 47 percent in INPV to standard-size 

refrigerator-freezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 4 for standard-size 

refrigerator-freezers, the benefits of 

energy savings, generating capacity 

reductions, and emission reductions 

and the estimated monetary value of the 

CO2 emissions reductions would be 

outweighed by the negative NPV of 

consumer benefits, the economic burden 

on a significant fraction of consumers 

due to the large increases in product 

cost, and the capital conversion costs 

and profit margin impacts that could 

result in a substantial reduction in INPV 

for the manufacturers. Consequently, 

the Secretary has tentatively concluded 

that TSL 4 is not economically justified. 

DOE then considered TSL 3. TSL 3 

would save 3.05 quads of energy, an 

amount DOE considers significant. 

Under TSL 3, the NPV of consumer 

benefit would be $0.41 billion, using a 

discount rate of 7 percent, and $10.40 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 3 are 208 Mt of CO2, 168 kt of 

NOX, and 1.07 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 3 ranges 

from $0.71 billion to $11.14 billion. 

Total generating capacity in 2043 is 

estimated to decrease by 3.10 GW under 

TSL 3. 

At TSL 3, the average LCC impact is 

a gain (consumer savings) of $22 for topmount refrigerator-freezers, a gain of $19 

for bottom-mount refrigerator-freezers, 

and a gain of $37 for side-by-side 

refrigerator-freezers. The median 

payback period is 11 years for topmount refrigerator-freezers, 5 years for 

bottom-mount refrigerator-freezers, and 

11 years for side-by-side refrigeratorfreezers. The fraction of consumers 

experiencing an LCC benefit is 45 

percent for top-mount refrigeratorfreezers, 28 percent for bottom-mount 

refrigerator-freezers, and 49 percent for 

side-by-side refrigerator-freezers. The 

fraction of consumers experiencing an 

LCC cost is 55 percent for top-mount 

refrigerator-freezers, 5 percent for 

bottom-mount refrigerator-freezers, and 

51 percent for side-by-side refrigeratorfreezers. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $287.5 

million to a decrease of $662.1 million. 

DOE recognizes the risk of negative 

impacts if manufacturers’ expectations 

concerning reduced profit margins are 

realized. If the high end of the range of 

impacts is reached as DOE expects, TSL 

3 could result in a net loss of 21 percent 

in INPV to standard-size refrigeratorfreezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 3 for standard-size 

refrigerator-freezers, the benefits of 

energy savings, positive NPV of 

consumer benefits, generating capacity 

reductions, emission reductions, and 

the estimated monetary value of the CO2

emissions reductions outweigh the 

economic burden on a significant 

fraction of consumers due to the 

increases in product cost, and the 

capital conversion costs and profit 

margin impacts that could result in a 

reduction in INPV for the 

manufacturers. In addition to the 

aforementioned benefits of the proposed 

standards, DOE notes that the efficiency 

levels in TSL 3 correspond to the 

recommended levels in the Joint 

Comments. 

After considering the analysis, 

comments to the November 2009 notice 

and the preliminary TSD, and the 

benefits and burdens of TSL 3, the 

Secretary tentatively concludes that this 

trial standard level will offer the 

maximum improvement in efficiency 

that is technologically feasible and 

economically justified, and will result 

in the significant conservation of 

energy. Therefore, DOE today proposes 

to adopt TSL 3 for standard-size 

refrigerator-freezers. The proposed 

amended energy conservation standards 

for standard-size refrigerator-freezers, 

expressed as equations for maximum 

energy use, are shown in Table V.63. 

TABLE V.63—PROPOSED STANDARDS FOR STANDARD-SIZE REFRIGERATORS AND REFRIGERATOR-FREEZERS

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

1. Refrigerators and refrigerator-freezers with manual defrost ..................................................................... 7.99AV + 225.0 .. 0.282av + 225.0 

1A. All-refrigerators—manual defrost ............................................................................................................. 6.79AV + 193.6 .. 0.240av + 193.6 

2. Refrigerator-freezers—partial automatic defrost ........................................................................................ 7.99AV + 225.0 .. 0.282av + 225.0 

3. Refrigerator-freezers—automatic defrost with top-mounted freezer without an automatic icemaker ....... 8.04AV + 232.7 .. 0.284av + 232.7 

3I. Refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without 

through-the-door ice service.

8.04AV + 316.7 .. 0.284av + 316.7 

3A. All-refrigerators—automatic defrost ......................................................................................................... 7.07AV + 201.6 .. 0.250av + 201.6 

4. Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker ..... 8.48AV + 296.5 .. 0.299av + 296.5 

4I. Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without through-the-door ice service.8.48AV + 380.5 .. 0.299av + 380.5 

5. Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker 8.80AV + 315.4 .. 0.311av + 315.4 

5I. Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker 

without through-the-door ice service.

8.80AV + 399.4 .. 0.311av + 399.4 

5A. Refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door ice service.9.15AV + 471.3 .. 0.323av + 471.3 

6. Refrigerator-freezers—automatic defrost with top-mounted freezer with through-the-door ice service ... 8.36AV + 384.1 .. 0.295av + 384.1 

7. Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service .. 8.50AV + 431.1 .. 0.300av + 431.1 

AV = adjusted volume in cubic feet; av = adjusted volume in liters. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59562 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

2. Standard-Size Freezers 

Table V.64 presents a summary of the 

quantitative impacts estimated for each 

TSL for standard-size freezers. The 

efficiency levels contained in each TSL 

are described in section V.A. 

TABLE V.64—SUMMARY OF RESULTS FOR STANDARD-SIZE FREEZERS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National Energy Savings 

(quads).

0.71 ........................ 1.01 ........................ 1.19 ........................ 1.35 ........................ 1.45 

NPV of Consumer Benefits 

(2009$ billion): 

3% discount rate ................. 6.64 ........................ 7.78 ........................ 7.87 ........................ 6.02 ........................ 0.51 

7% discount rate ................. 2.14 ........................ 2.12 ........................ 1.81 ........................ 0.55 ........................ (2.63) 

Industry Impacts: 

Standard-Size Freezers: 

Industry NPV (2009$ 

million).

(24.9) to (57.3) ....... (110.6) to (186.0) ... (94.5) to (201.1) ..... (59.0) to (218.9) ..... (102.4) to (365.1) 

Industry NPV (% 

change).

(6.2) to (14.2) ......... (27.5) to (46.2) ....... (23.5) to (49.9) ....... (14.6) to (54.4) ....... (25.4) to (90.7) 

Cumulative Emissions Reduction: 

CO2 (Mt) .............................. 48 ........................... 69 ........................... 81 ........................... 92 ........................... 99 

NOX (kt) .............................. 39 ........................... 55 ........................... 65 ........................... 74 ........................... 79 

Hg (t) ................................... 0.24 ........................ 0.34 ........................ 0.41 ........................ 0.47 ........................ 0.50 

Value of Cumulative Emissions 

Reduction: 

CO2 (2009$ billion)* ............ 0.16 to 2.56 ........... 0.23 to 3.67 ........... 0.27 to 4.33 ........... 0.31 to 4.92 ........... 0.33 to 5.28 

NOX—3% discount rate 

(2009$ million).

8.4 to 86 ................ 12 to 123 ............... 14 to 143 ............... 16 to 166 ............... 17 to 178 

NOX—7% discount rate 

(2009$ million).

3.5 to 36 ................ 5.0 to 52 ................ 5.9 to 61 ................ 6.8 to 69 ................ 7.3 to 75 

Mean LCC Savings** (2009$): 

Upright Freezers ................. 111 ......................... 148 ......................... 130 ......................... 87 ........................... (63) 

Chest Freezers ................... 70 ........................... 50 ........................... 56 ........................... 17 ........................... (71) 

Median PBP (years): 

Upright Freezers ................. 4.8 .......................... 6.2 .......................... 8.4 .......................... 11.0 ........................ 17.4 

Chest Freezers ................... 4.2 .......................... 8.7 .......................... 9.1 .......................... 13.1 ........................ 19.3 

Distribution of Consumer LCC 

Impacts: 

Upright Freezers: 

Net Cost (%) ................ 11.7 ........................ 18.7 ........................ 30.8 ........................ 45.0 ........................ 70.2 

No Impact (%) ............. 0.6 .......................... 0.2 .......................... 0.0 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 87.8 ........................ 81.1 ........................ 69.2 ........................ 55.0 ........................ 29.8 

Chest Freezers: ................................ ................................ ................................ ................................

Net Cost (%) ................ 1.6 .......................... 25.8 ........................ 28.3 ........................ 53.5 ........................ 79.0 

No Impact (%) ............. 0.2 .......................... 0.2 .......................... 0.2 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 98.2 ........................ 74.0 ........................ 71.5 ........................ 46.5 ........................ 21.0 

Generation Capacity Reduction 

(GW)†.

0.74 ........................ 0.74 ........................ 1.25 ........................ 1.42 ........................ 1.53 

Employment Impacts: 

Total Potential Changes in 

Domestic Production 

Workers in 2014 (thousands).

(0.05) to (1.90) ....... (0.12) to (1.90) ....... (0.17) to (1.90) ....... (0.27) to (1.90) ....... (0.40) to (1.90) 

Indirect Domestic Jobs 

(thousands)†.

4.34 ........................ 5.79 ........................ 5.79 ........................ 6.77 ........................ 5.80 

Parentheses indicate negative (¥) values. 

*Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

**For LCCs, a negative value means an increase in LCC by the amount indicated. 

† Changes in 2043. 

DOE first considered TSL 5, which 

represents the max-tech efficiency 

levels. TSL 5 would save 1.45 quads of 

energy, an amount DOE considers 

significant. Under TSL 5, the NPV of 

consumer benefit would be –$2.63 

billion, using a discount rate of 7 

percent, and $0.51 billion, using a 

discount rate of 3 percent. 

The cumulative emissions reductions 

at TSL 5 are 99 Mt of CO2, 79 kt of NOX, 

and 0.50 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 5 ranges 

from $0.33 billion to $5.28 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 1.53 GW under TSL 5. 

At TSL 5, the average LCC impact is 

a cost (LCC increase) of $63 for upright 

freezers, and a cost of $71 for chest 

freezers. The median payback period is 

17 years for upright freezers and 19 

years for chest freezers. The fraction of 

consumers experiencing an LCC benefit 

is 30 percent for upright freezers and 21 

percent for chest freezers. The fraction 

of consumers experiencing an LCC cost 

is 70 percent for upright freezers and 79 

percent for chest freezers. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59563 

At TSL 5, the projected change in 

INPV ranges from a decrease of $102.4 

million to a decrease of $365.1 million. 

DOE recognizes the risk of very large 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. Standards at TSL 

5 would require efficiency levels that 

are far higher than the most efficient 

products currently available on the 

market. Manufacturing products to meet 

standards at TSL 5 would require large 

investments in product redesign and 

conversion of facilities. Because 

standard-size freezers are currently lowcost, low-margin products, there is a 

limited ability to pass on to consumers 

the required conversion costs and added 

product costs associated with efficiencyimproving technologies for freezers. If 

the high end of the range of impacts is 

reached as DOE expects, TSL 5 could 

result in a net loss of 91 percent in INPV 

to standard-size freezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 5 for standard-size freezers, 

the benefits of energy savings, positive 

NPV of consumer benefits, generating 

capacity reductions, emission 

reductions, and the estimated monetary 

value of the CO2 emissions reductions 

would be outweighed by the economic 

burden on a significant fraction of 

consumers due to the large increases in 

product cost, and the capital conversion 

costs and profit margin impacts that 

could result in a very large reduction in 

INPV for the manufacturers. 

Consequently, the Secretary has 

tentatively concluded that TSL 5 is not 

economically justified. 

DOE then considered TSL 4. TSL 4 

would save 1.35 quads of energy, an 

amount DOE considers significant. 

Under TSL 4, the NPV of consumer 

benefit would be $0.55 billion, using a 

discount rate of 7 percent, and $6.02 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 4 are 92 Mt of CO2, 74 kt of NOX, 

and 0.47 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 4 ranges 

from $0.31 billion to $4.92 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 1.42 GW under TSL 4. 

At TSL 4, the average LCC impact is 

a gain (consumer savings) of $87 for 

upright freezers and a gain of $17 for 

chest freezers. The median payback 

period is 11 years for upright freezers 

and 13 years for chest freezers. The 

fraction of consumers experiencing an 

LCC benefit is 55 percent for upright 

freezers and 47 percent for chest 

freezers. The fraction of consumers 

experiencing an LCC cost is 45 percent 

for upright freezers and 54 percent for 

chest freezers. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $59.0 

million to a decrease of $218.9 million. 

DOE recognizes the risk of very large 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. Standards at TSL 

4 would require efficiency levels that 

are substantially higher than the most 

efficient products currently available on 

the market. Manufacturing products to 

meet standards at TSL 4 would require 

large investments in product redesign 

and conversion of facilities. Because 

standard-size freezers are currently lowcost, low-margin products, there is a 

limited ability to pass on to consumers 

the required conversion costs and added 

product costs associated with efficiencyimproving technologies for freezers. If 

the high end of the range of impacts is 

reached as DOE expects, TSL 4 could 

result in a net loss of 54 percent in INPV 

to standard-size freezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 4 for standard-size freezers, 

the benefits of energy savings, positive 

NPV of consumer benefits, generating 

capacity reductions, emission 

reductions, the estimated monetary 

value of the cumulative CO2 emissions 

reductions, and the economic benefit on 

a significant fraction of upright freezer 

consumers would be outweighed by the 

economic burden on a significant 

fraction of chest freezer consumers due 

to the increase in product cost, and the 

large capital conversion costs and 

margin impacts that could result in a 

large reduction in INPV for the 

manufacturers. 

DOE then considered TSL 3. TSL 3 

would save 1.19 quads of energy, an 

amount DOE considers significant. 

Under TSL 3, the NPV of consumer 

benefit would be $1.81 billion, using a 

discount rate of 7 percent, and $7.87 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 3 are 81 Mt of CO2, 65 kt of NOX, 

and 0.41 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 3 ranges 

from $0.27 billion to $4.33 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 1.25 GW under TSL 3. 

At TSL 3, the average LCC impact is 

a gain (consumer savings) of $130 for 

upright freezers and a gain of $56 for 

chest freezers. The median payback 

period is 8 years for upright freezers and 

9 years for chest freezers. The fraction 

of consumers experiencing an LCC 

benefit is 69 percent for upright freezers 

and 72 percent for chest freezers. The 

fraction of consumers experiencing an 

LCC cost is 31 percent for upright 

freezers and 28 percent for chest 

freezers. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $94.5 

million to a decrease of $201.1 million. 

DOE recognizes the risk of very large 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. Standards at TSL 

3 would require efficiency levels that 

are substantially higher than the most 

efficient products currently available on 

the market. Similar to the case of TSL 

4, manufacturing products to meet 

standards at TSL 3 would require large 

investments in product redesign and 

conversion of facilities. Because 

standard-size freezers are currently lowcost, low-margin products, there is a 

limited ability to pass on to consumers 

the required conversion costs and added 

product costs associated with efficiencyimproving technologies for freezers. If 

the high end of the range of impacts is 

reached as DOE expects, TSL 3 could 

result in a net loss of 50 percent in INPV 

to standard-size freezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 3 for standard-size freezers, 

the benefits of energy savings, positive 

NPV of consumer benefits, generating 

capacity reductions, emission 

reductions, the estimated monetary 

value of the cumulative CO2 emissions 

reductions, and the economic benefit for 

a significant fraction of freezer 

consumers would be outweighed by the 

large capital conversion costs and profit 

margin impacts that could result in a 

large reduction in INPV for the 

manufacturers. 

DOE then considered TSL 2. TSL 2 

would save 1.01 quads of energy, an 

amount DOE considers significant. 

Under TSL 2, the NPV of consumer 

benefit would be $2.12 billion, using a 

discount rate of 7 percent, and $7.78 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 2 are 69 Mt of CO2, 55kt of NOX, 

and 0.34 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 2 ranges 

from $0.23 billion to $3.67 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.74 GW under TSL 2. 

At TSL 2, the average LCC impact is 

a gain (consumer savings) of $148 for 

upright freezers and a gain of $50 for 

chest freezers. The median payback 

period is 6 years for upright freezers and 

9 years for chest freezers. The fraction 

of consumers experiencing an LCC 

benefit is 81 percent for upright freezers 

and 74 percent for chest freezers. The 

fraction of consumers experiencing an 

LCC cost is 19 percent for upright 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59564 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

freezers and 26 percent for chest 

freezers. 

DOE estimated the projected change 

in INPV ranges from a decrease of 

$110.6 million to a decrease of $186.0 

million. At TSL 2, DOE recognizes the 

risk of negative impacts if 

manufacturers’ expectations concerning 

reduced profit margins are realized. 

Standards at TSL 2 would pose many of 

the same issues as discussed above for 

TSL3, but the projected negative 

impacts are somewhat less. If the high 

end of the range of impacts is reached 

as DOE expects, TSL 2 could result in 

a net loss of 46 percent in INPV to 

standard-size freezer manufacturers. 

The Secretary tentatively concludes 

that at TSL 2 for standard-size freezers, 

the benefits of energy savings, positive 

NPV of consumer benefits, generating 

capacity reductions, emission 

reductions, the estimated monetary 

value of the cumulative CO2 emissions 

reductions, and the economic benefit for 

a significant fraction of freezer 

consumers would outweigh the capital 

conversion costs and profit margin 

impacts that could result in a reduction 

in INPV for the manufacturers. In 

addition to the aforementioned benefits 

of the proposed standards, DOE notes 

that the efficiency levels in TSL 2 

correspond to the recommended levels 

in the Joint Comments. 

After considering the analysis, 

comments on the November 2009 notice 

and the preliminary TSD, and the 

benefits and burdens of TSL 2, the 

Secretary tentatively concludes that this 

trial standard level will offer the 

maximum improvement in efficiency 

that is technologically feasible and 

economically justified, and will result 

in significant conservation of energy. 

Therefore, DOE today proposes to adopt 

TSL 2 for standard-size freezers. The 

proposed amended energy conservation 

standards for standard-size freezers, 

expressed as equations for maximum 

energy use, are shown in Table V.65. 

TABLE V.65—PROPOSED STANDARDS FOR STANDARD-SIZE FREEZERS

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft 3) based on av (L) 

8. Upright freezers with manual defrost ......................................................................................................... 5.57AV + 193.7 0.197av + 193.7 

9. Upright freezers with automatic defrost without an automatic icemaker .................................................. 8.62AV + 228.3 0.305av + 228.3 

10. Chest freezers and all other freezers except compact freezers ............................................................. 7.29AV + 107.8 0.257av + 107.8 

10A. Chest freezers with automatic defrost ................................................................................................... 10.24AV + 148.1 0.362av + 148.1 

AV= adjusted volume in cubic feet; av = adjusted volume in liters. 

3. Compact Refrigeration Products 

Table V.66 presents a summary of the 

quantitative impacts estimated for each 

TSL for compact refrigeration products. 

The efficiency levels contained in each 

TSL are described in section V.A. 

TABLE V.66—SUMMARY OF RESULTS FOR COMPACT REFRIGERATION PRODUCTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National Energy Savings 

(quads).

0.30 ........................ 0.37 ........................ 0.43 ........................ 0.54 ........................ 0.59 

NPV of Consumer Benefits 

(2009$ billion): 

3% discount rate ................. 1.42 ........................ 0.86 ........................ 0.96 ........................ (0.89) ..................... (5.45) 

7% discount rate ................. 0.58 ........................ 0.25 ........................ 0.27 ........................ (0.78) ..................... (3.28) 

Industry Impacts 

Compact Refrigeration Products: 

Industry NPV (2009$ million).(14.3) to (32.1) ....... (30.8) to (66.7) ....... (56.8) to (99.2) ....... (29.6) to (114.4) ..... (133.0) to (295.6) 

Industry NPV (% change) ... (7.2) to (16.1) ......... (15.4) to (33.4) ....... (28.4) to (49.6) ....... (14.8) to (57.3) ....... (66.6) to (148.0) 

Cumulative Emissions Reduction: 

CO2 (Mt) .............................. 20 ........................... 24 ........................... 28 ........................... 35 ........................... 39 

NOX (kt) .............................. 16 ........................... 19 ........................... 23 ........................... 28 ........................... 31 

Hg (t) ................................... 0.10 ........................ 0.12 ........................ 0.15 ........................ 0.19 ........................ 0.21 

Value of Cumulative Emissions 

Reduction: 

CO2 (2009$ billion)* ............ 0.07 to 1.02 ........... 0.08 to 1.22 ........... 0.10 to 1.45 ........... 0.12 to 1.82 ........... 0.13 to 2.03 

NOX—3% discount rate 

(2009$ million).

3.3 to 33 ................ 3.9 to 40 ................ 4.7 to 48 ................ 5.9 to 60 ................ 6.6 to 68 

NOX—7% discount rate 

(2009$ million).

1.3 to 13 ................ 1.5 to 16 ................ 1.8 to 19 ................ 2.3 to 24 ................ 2.7 to 28 

Mean LCC Savings** (2009$): 

Compact Refrigerators ........ 15 ........................... 10 ........................... 8 ............................. (13) ........................ (105) 

Compact Freezers .............. 11 ........................... 11 ........................... 7 ............................. (30) ........................ (121) 

Median PBP (years): 

Compact Refrigerators ........ 2.8 .......................... 3.9 .......................... 4.4 .......................... 6.5 .......................... 11.6 

Compact Freezers .............. 2.5 .......................... 2.5 .......................... 4.6 .......................... 10.0 ........................ 15.9 

Distribution of Consumer LCC 

Impacts: 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59565 

TABLE V.66—SUMMARY OF RESULTS FOR COMPACT REFRIGERATION PRODUCTS—Continued 

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Compact Refrigerators 

Net Cost (%) ................ 24.4 ........................ 43.3 ........................ 50.6 ........................ 76.1 ........................ 93.8 

No Impact (%) ............. 1.4 .......................... 1.0 .......................... 0.9 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 74.2 ........................ 55.7 ........................ 48.5 ........................ 23.9 ........................ 6.2 

Compact Freezers 

Net Cost (%) ................ 9.9 .......................... 9.9 .......................... 40.6 ........................ 88.5 ........................ 97.8 

No Impact (%) ............. 4.7 .......................... 4.7 .......................... 0.0 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ............ 85.4 ........................ 85.4 ........................ 59.4 ........................ 11.5 ........................ 2.3 

Generation Capacity Reduction 

(GW) †.

0.02 ........................ 0.32 ........................ 0.38 ........................ 0.48 ........................ 0.51 

Employment Impacts: 

Total Potential Changes in 

Domestic Production 

Workers in 2014 (thousands).

(0.00) to (0.03) ....... (0.00) to (0.03) ....... (0.00) to (0.03) ....... (0.00) to (0.03) ....... (0.02) to (0.03) 

Indirect Domestic Jobs 

(thousands) †.

1.24 ........................ 1.26 ........................ 1.44 ........................ 1.21 ........................ 0.14 

Parentheses indicate negative (¥) values. 

* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

** For LCCs, a negative value means an increase in LCC by the amount indicated. 

† Changes in 2043. 

DOE first considered TSL 5, which 

represents the max-tech efficiency 

levels. TSL 5 would save 0.59 quads of 

energy, an amount DOE considers 

significant. Under TSL 5, the NPV of 

consumer benefit would be ¥$3.28 

billion, using a discount rate of 7 

percent, and ¥$5.45 billion, using a 

discount rate of 3 percent. 

The cumulative emissions reductions 

at TSL 5 are 39 Mt of CO2, 31 kt of NOX, 

and 0.21 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 5 ranges 

from $0.13 billion to $2.03 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.51 GW under TSL 5. 

At TSL 5, the average LCC impact is 

a cost (LCC increase) of $105 for 

compact refrigerators and a cost of $121 

for compact freezers. The median 

payback period is 12 years for compact 

refrigerators and 16 years for compact 

freezers. The fraction of consumers 

experiencing an LCC benefit is 6 percent 

for compact refrigerators and 2 percent 

for compact freezers. The fraction of 

consumers experiencing an LCC cost is 

94 percent for compact refrigerators and 

98 percent for compact freezers. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $133.0 

million to a decrease of $295.6 million. 

DOE recognizes the risk of very large 

negative impacts if manufacturers’ 

expectations concerning reduced profit 

margins are realized. Manufacturing 

products to meet standards at TSL 5 

would require large investments in 

product redesign and conversion of 

facilities. Because compact refrigeration 

products are currently low-cost, lowmargin products, there is a limited 

ability to pass on to consumers the 

required conversion costs and added 

product costs associated with efficiencyimproving technologies. If the high end 

of the range of impacts is reached as 

DOE expects, TSL 5 could result in a net 

loss of 148.0 percent in INPV to 

compact refrigeration product 

manufacturers. 

The Secretary tentatively concludes 

that at TSL 5 for compact refrigeration 

products, the benefits of energy savings, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the CO2 emissions 

reductions would be outweighed by the 

negative NPV of consumer benefits, the 

economic burden on a significant 

fraction of consumers due to the 

increases in product cost, the capital 

conversion costs and profit margin 

impacts that could result in a large 

reduction in INPV for the 

manufacturers. Consequently, the 

Secretary has tentatively concluded that 

TSL 5 is not economically justified. 

DOE then considered TSL 4. TSL 4 

would save 0.54 quads of energy, an 

amount DOE considers significant. 

Under TSL 4, the NPV of consumer 

benefit would be ¥$0.78 billion, using 

a discount rate of 7 percent, and ¥$0.89 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 4 are 35 Mt of CO2, 28 kt of NOX, 

and 0.19 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 4 ranges 

from $0.12 billion to $1.82 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.48 GW under TSL 4. 

At TSL 4, the average LCC impact is 

a cost (LCC increase) of $13 for compact 

refrigerators and a cost of $30 for 

compact freezers. The median payback 

period is 7 years for compact 

refrigerators and 10 years for compact 

freezers. The fraction of consumers 

experiencing an LCC benefit is 24 

percent for compact refrigerators and 12 

percent for compact freezers. The 

fraction of consumers experiencing an 

LCC cost is 76 percent for compact 

refrigerators and 89 percent for compact 

freezers. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $29.6 

million to a decrease of $114.4 million. 

DOE recognizes the risk of very large 

negative impacts if manufacturers’ 

expectations about reduced profit 

margins are realized. Manufacturing 

products to meet standards at TSL 4 

would require large investments in 

product redesign and conversion of 

facilities. Because compact refrigeration 

products are currently low-cost, lowmargin products, there is a limited 

ability to pass on to consumers the 

required conversion costs and added 

product costs associated with efficiencyimproving technologies. If the high end 

of the range of impacts is reached as 

DOE expects, TSL 4 could result in a net 

loss of 57 percent in INPV to compact 

refrigeration product manufacturers. 

The Secretary tentatively concludes 

that at TSL 4 for compact refrigeration 

products, the benefits of energy savings, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the CO2 emissions 

reductions would be outweighed by the 

negative NPV of consumer benefits, the 

economic burden on a significant 

fraction of consumers due to the 

increases in product costs, and the 

capital conversion costs and profit 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59566 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

margin impacts that could result in a 

large reduction in INPV for the 

manufacturers. Consequently, the 

Secretary has tentatively concluded that 

TSL 4 is not economically justified. 

DOE then considered TSL 3. TSL 3 

would save 0.43 quads of energy, an 

amount DOE considers significant. 

Under TSL 3, the NPV of consumer 

benefit would be $0.27 billion, using a 

discount rate of 7 percent, and $0.96 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 3 are 28 Mt of CO2, 23 kt of NOX, 

and 0.15 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 3 ranges 

from $0.10 billion to $1.45 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.38 GW under TSL 3. 

At TSL 3, the average LCC impact is 

a gain (consumer savings) of $8 for 

compact refrigerators and a gain of $7 

for compact freezers. The median 

payback period is 4 years for compact 

refrigerators and 5 years for compact 

freezers. The fraction of consumers 

experiencing an LCC benefit is 49 

percent for compact refrigerators and 59 

percent for compact freezers. The 

fraction of consumers experiencing an 

LCC cost is 51 percent for compact 

refrigerators and 41 percent for compact 

freezers. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $56.8 

million to a decrease of $99.2 million. 

DOE recognizes the risk of large 

negative impacts if manufacturers’ 

expectations about reduced profit 

margins are realized. Manufacturing 

products to meet standards at TSL 3 

would require large investments in 

product redesign and conversion of 

facilities. Because compact refrigeration 

products are currently low-cost, lowmargin products, there is a limited 

ability to pass on to consumers the 

required conversion costs and added 

product costs associated with efficiencyimproving technologies. If the high end 

of the range of impacts is reached as 

DOE expects, TSL 3 could result in a net 

loss of 50 percent in INPV to compact 

refrigeration product manufacturers. 

The Secretary tentatively concludes 

that at TSL 3 for compact refrigeration 

products, the benefits of energy savings, 

positive NPV of consumer benefits, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the cumulative CO2

emissions reductions would be 

outweighed by the economic burden on 

a significant fraction of consumers due 

to the increases in product costs, and by 

the capital conversion costs and profit 

margin impacts that could result in a 

large reduction in INPV for the 

manufacturers. Consequently, the 

Secretary has tentatively concluded that 

TSL 3 is not economically justified. 

DOE then considered TSL 2. TSL 2 

would save 0.37 quads of energy, an 

amount DOE considers significant. 

Under TSL 2, the NPV of consumer 

benefit would be $0.25 billion, using a 

discount rate of 7 percent, and $0.86 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 2 are 24 Mt of CO2, 19 kt of NOX, 

and 0.12 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 2 ranges 

from $0.08 billion to $1.22 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.32 GW under TSL 2. 

At TSL 2, the average LCC impact is 

a gain (consumer savings) of $10 for 

compact refrigerators and a gain of $11 

for compact freezers. The median 

payback period is 4 years for compact 

refrigerators and 3 years for compact 

freezers. The fraction of consumers 

experiencing an LCC benefit is 56 

percent for compact refrigerators and 85 

percent for compact freezers. The 

fraction of consumers experiencing an 

LCC cost is 43 percent for compact 

refrigerators and 10 percent for compact 

freezers. 

At TSL 2, the projected change in 

INPV ranges from a decrease of $30.8 

million to a decrease of $66.7 million. 

DOE recognizes the risk of negative 

impacts if manufacturers’ expectations 

about reduced profit margins are 

realized. Manufacturing products to 

meet standards at TSL 2 would require 

investments in product redesign and 

conversion of facilities. Because 

compact refrigeration products are 

currently low-cost, low-margin 

products, there is a limited ability to 

pass on to consumers the required 

conversion costs and added product 

costs associated with efficiencyimproving technologies. If the high end 

of the range of impacts is reached as 

DOE expects, TSL 2 could result in a net 

loss of 33 percent in INPV to compact 

refrigeration product manufacturers. 

The Secretary tentatively concludes 

that at TSL 2 for compact refrigeration 

products, the benefits of energy savings, 

positive NPV of consumer benefits, 

generating capacity reductions, 

emission reductions, the estimated 

monetary value of the cumulative CO2

emissions reductions, and the economic 

benefit to a significant fraction of 

consumers would outweigh the capital 

conversion costs that could result in a 

reduction in INPV for the 

manufacturers. In addition to the 

aforementioned benefits of the proposed 

standards, DOE notes that the efficiency 

levels in TSL 2 correspond to the 

recommended levels in the Joint 

Comments. 

After considering the analysis, 

comments on the November 2009 notice 

and the preliminary TSD, and the 

benefits and burdens of TSL 2, the 

Secretary tentatively concludes that this 

trial standard level will offer the 

maximum improvement in efficiency 

that is technologically feasible and 

economically justified, and will result 

in significant conservation of energy. 

Therefore, DOE today proposes to adopt 

TSL 2 for compact refrigeration 

products. The proposed amended 

energy conservation standards for 

compact refrigeration products, 

expressed as equations for maximum 

energy use, are shown in Table V.67. 

TABLE V.67—PROPOSED STANDARDS FOR COMPACT REFRIGERATION PRODUCTS

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

11. Compact refrigerators and refrigerator-freezers with manual defrost ..................................................... 9.03AV + 252.3 0.319av + 252.3 

11A. Compact refrigerators and refrigerator-freezers with manual defrost ................................................... 7.84AV + 219.1 0.277av + 219.1 

12. Compact refrigerator-freezers—partial automatic defrost ....................................................................... 5.91AV + 335.8 0.209av + 335.8 

13. Compact refrigerator-freezers—automatic defrost with top-mounted freezer ......................................... 11.80AV + 339.2 0.417av + 339.2 

13A. Compact all-refrigerator—automatic defrost ......................................................................................... 9.17AV + 259.3 0.324av + 259.3 

14. Compact refrigerator-freezers—automatic defrost with side-mounted freezer ....................................... 6.82AV + 456.9 0.241av + 456.9 

15. Compact refrigerator-freezers—automatic defrost with bottom-mounted freezer ................................... 12.88AV + 368.7 0.455av + 368.7 

16. Compact upright freezers with manual defrost ........................................................................................ 8.65AV + 225.7 0.306av + 225.7 

17. Compact upright freezers with automatic defrost .................................................................................... 10.17AV + 351.9 0.359av + 351.9 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59567 

TABLE V.67—PROPOSED STANDARDS FOR COMPACT REFRIGERATION PRODUCTS—Continued 

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

18. Compact chest freezers ........................................................................................................................... 9.25AV + 136.8 0.327av + 136.8 

AV = adjusted volume in cubic feet; av = adjusted volume in liters 

4. Built-In Refrigeration Products 

Table V.68 presents a summary of the 

quantitative impacts estimated for each 

TSL for built-in refrigeration products. 

The efficiency levels contained in each 

TSL are described in section V.A. 

TABLE V.68—SUMMARY OF RESULTS FOR BUILT-IN REFRIGERATION PRODUCTS

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

National Energy Savings 

(quads).

0.02 ........................ 0.03 ........................ 0.05 ........................ 0.07 ........................ 0.08 

NPV of Consumer Benefits 

(2009$ billion): 

3% discount rate ............... 0.13 ........................ 0.12 ........................ (0.46) ..................... (0.91) ..................... (1.62) 

7% discount rate ............... 0.04 ........................ 0.02 ........................ (0.34) ..................... (0.60) ..................... (1.00) 

Industry Impacts: 

Built-in Refrigeration Products: 

Industry NPV (2009$ 

million).

(51.7) to (52.9) ....... (54.7) to (57.0) ....... (65.8) to (80.5) ....... (79.7) to (103.0) ..... (84.9) to (120.3) 

Industry NPV (% 

change).

(7.9) to (8.0) ........... (8.3) to (8.7) ........... (10.0) to (12.2) ....... (12.1) to (15.6) ....... (12.9) to (18.3) 

Cumulative Emissions Reduction: 

CO2 (Mt) ............................ 1 ............................. 2 ............................. 4 ............................. 5 ............................. 5 

NOX (kt) ............................. 1 ............................. 1 ............................. 3 ............................. 4 ............................. 4 

Hg (t) ................................. 0.01 ........................ 0.01 ........................ 0.02 ........................ 0.02 ........................ 0.03 

Value of Cumulative Emissions 

Reduction 

CO2 (2009$ billion)* .......... 0.00 to 0.07 ........... 0.01 to 0.10 ........... 0.01 to 0.19 ........... 0.02 to 0.24 ........... 0.02 to 0.28 

NOX—3% discount rate 

(2009$ million).

0 to 2 ..................... 0 to 3 ..................... 1 to 7 ..................... 1 to 8 ..................... 1 to 10 

NOX—7% discount rate 

(2009$ million).

0 to 1 ..................... 0 to 1 ..................... 0 to 3 ..................... 0 to 3 ..................... 0 to 4 

Mean LCC Savings** (2009$): 

Built-in All-Refrigerators: 47 ........................... 63 ........................... (34) ........................ (195) ...................... (318) 

Built-in Bottom-Mount Refrigerator-Freezers: 7 ............................. 0 ............................. 0 ............................. (164) ...................... (244) 

Built-in Side-by-Side Refrigerator-Freezers: 7 ............................. 7 ............................. (116) ...................... (116) ...................... (219) 

Built-in Upright Freezers: 54 ........................... 24 ........................... (78) ........................ (78) ........................ (169) 

Median PBP (years): 

Built-in All-Refrigerators ..... 1.6 .......................... 3.0 .......................... 15.9 ........................ 29.7 ........................ 36.7 

Built-in Bottom-Mount Refrigerator-Freezers.4.4 .......................... 12.9 ........................ 12.9 ........................ 62.8 ........................ 61.8 

Built-in Side-by-Side Refrigerator-Freezers.8.7 .......................... 8.7 .......................... 36.7 ........................ 36.7 ........................ 60.0 

Built-in Upright Freezers ... 3.4 .......................... 12.8 ........................ 21.1 ........................ 21.1 ........................ 26.8 

Distribution of Consumer LCC 

Impacts: 

Built-in All-Refrigerators 

Net Cost (%) .............. 0.3 .......................... 2.6 .......................... 69.1 ........................ 94.5 ........................ 97.2 

No Impact (%) ............ 22.6 ........................ 18.4 ........................ 9.1 .......................... 0.0 .......................... 0.0 

Net Benefit (%) ........... 77.2 ........................ 79.0 ........................ 21.9 ........................ 5.5 .......................... 2.8 

Built-in Bottom-Mount Refrigerator-Freezers 

Net Cost (%) .............. 1.2 .......................... 8.2 .......................... 8.2 .......................... 99.0 ........................ 99.3 

No Impact (%) ............ 87.1 ........................ 87.0 ........................ 87.0 ........................ 0.0 .......................... 0.0 

Net Benefit (%) ........... 11.7 ........................ 4.8 .......................... 4.8 .......................... 1.1 .......................... 0.7 

Built-in Side-by-Side Refrigerator-Freezers 

Net Cost (%) .............. 8.0 .......................... 8.0 .......................... 60.2 ........................ 60.2 ........................ 98.8 

No Impact (%) ............ 78.5 ........................ 78.5 ........................ 37.2 ........................ 37.2 ........................ 0.0 

Net Benefit (%) ........... 13.5 ........................ 13.5 ........................ 2.5 .......................... 2.5 .......................... 1.2 

Built-in Upright Freezers 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59568 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

TABLE V.68—SUMMARY OF RESULTS FOR BUILT-IN REFRIGERATION PRODUCTS—Continued 

Category TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 

Net Cost (%) .............. 4.3 .......................... 53.1 ........................ 78.2 ........................ 78.2 ........................ 87.1 

No Impact (%) ............ 19.9 ........................ 0.6 .......................... 0.5 .......................... 0.5 .......................... 0.3 

Net Benefit (%) ........... 75.8 ........................ 46.3 ........................ 21.3 ........................ 21.3 ........................ 12.6 

Generation Capacity Reduction 

(GW) †.

0.02 ........................ 0.03 ........................ 0.05 ........................ 0.07 ........................ 0.08 

Employment Impacts: 

Total Potential Changes in 

Domestic Production 

Workers in 2014 (thousands).

0.00 to (1.32) ......... (0.00) to (1.32) ....... 0.01 to (1.32) ......... 0.01 to (1.32) ......... 0.04 to (1.32) 

Indirect Domestic Jobs 

(thousands) †.

0.10 ........................ 0.13 ........................ 0.08 ........................ 0.01 ........................ (0.13) 

Parentheses indicate negative (¥) values. 

* Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

** For LCCs, a negative value means an increase in LCC by the amount indicated. 

† Changes in 2043. 

DOE first considered TSL 5, which 

represents the max-tech efficiency 

levels. TSL 5 would save 0.08 quads of 

energy, an amount DOE considers 

significant. Under TSL 5, the NPV of 

consumer benefit would be ¥$1.00 

billion, using a discount rate of 7 

percent, and ¥$1.62 billion, using a 

discount rate of 3 percent. 

The cumulative emissions reductions 

at TSL 5 are 5 Mt of CO2, 4 kt of NOX, 

and 0.03 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 5 ranges 

from $0.02 billion to $0.28 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.08 GW under TSL 5. 

At TSL 5, the average LCC impact is 

a cost (LCC increase) of $318 for builtin all-refrigerators, a cost of $244 for 

built-in bottom-mount refrigeratorfreezers, a cost of $219 for built-in sideby-side refrigerator-freezers, and a cost 

of $169 for built-in upright freezers. The 

median payback period is 37 years for 

built-in all-refrigerators, 62 years for 

built-in bottom-mount refrigeratorfreezers, 60 years for built-in side-byside refrigerator-freezers, and 27 years 

for built-in upright freezers. The fraction 

of consumers experiencing an LCC 

benefit is 3 percent for built-in allrefrigerators, 1 percent for built-in 

bottom-mount refrigerator-freezers, 1 

percent for built-in side-by-side 

refrigerator-freezers, and 13 percent for 

built-in upright freezers. The fraction of 

consumers experiencing an LCC cost is 

97 percent for built-in all-refrigerators, 

99 percent for built-in bottom-mount 

refrigerator-freezers, 99 percent for 

built-in side-by-side refrigeratorfreezers, and 87 percent for built-in 

upright freezers. 

At TSL 5, the projected change in 

INPV ranges from a decrease of $84.9 

million to a decrease of $120.3 million. 

If the high end of the range of impacts 

is reached as DOE expects, TSL 5 could 

result in a net loss of 18 percent in INPV 

to built-in refrigeration product 

manufacturers. 

The Secretary tentatively concludes 

that at TSL 5 for built-in refrigeration 

products, the benefits of energy savings, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the CO2 emissions 

reductions would be outweighed by the 

negative NPV of consumer benefits, the 

economic burden on a significant 

fraction of consumers due to the large 

increases in product cost, and the 

capital conversion costs and profit 

margin impacts that could result in a 

reduction in INPV for the 

manufacturers. Consequently, the 

Secretary has tentatively concluded that 

TSL 5 is not economically justified. 

DOE then considered TSL 4. TSL 4 

would save 0.07 quads of energy, an 

amount DOE considers significant. 

Under TSL 4, the NPV of consumer 

benefit would be ¥$0.60 billion, using 

a discount rate of 7 percent, and ¥$0.91 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 4 are 5 Mt of CO2, 4 kt of NOX, 

and 0.02 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reductions at TSL 4 ranges 

from $0.02 billion to $0.24 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.07 GW under TSL 4. 

At TSL 4, DOE projects that the 

average LCC impact is a cost (LCC 

increase) of $195 for built-in allrefrigerators, a cost of $164 for built-in 

bottom-mount refrigerator-freezers, a 

cost of $116 for built-in side-by-side 

refrigerator-freezers, and a cost of $78 

for built-in upright freezers. The median 

payback period is 30 years for built-in 

all-refrigerators, 63 years for built-in 

bottom-mount refrigerator-freezers, 37 

years for built-in side-by-side 

refrigerator-freezers, and 21 years for 

built-in upright freezers. The fraction of 

consumers experiencing an LCC benefit 

is 6 percent for built-in all-refrigerators, 

1 percent for built-in bottom-mount 

refrigerator-freezers, 3 percent for builtin side-by-side refrigerator-freezers, and 

21 percent for built-in upright freezers. 

The fraction of consumers experiencing 

an LCC cost is 95 percent for built-in allrefrigerators, 99 percent for built-in 

bottom-mount refrigerator-freezers, 60 

percent for built-in side-by-side 

refrigerator-freezers, and 78 percent for 

built-in upright freezers. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $79.7 

million to a decrease of $103.0 million. 

If the high end of the range of impacts 

is reached as DOE expects, TSL 4 could 

result in a net loss of 16 percent in INPV 

to built-in refrigeration product 

manufacturers. 

The Secretary tentatively concludes 

that at TSL 4 for built-in refrigeration 

products, the benefits of energy savings, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the CO2 emissions 

reductions would be outweighed by the 

negative NPV of consumer benefits, the 

economic burden on a significant 

fraction of consumers due to the 

increases in product cost, and the 

capital conversion costs and profit 

margin impacts that could result in a 

reduction in INPV for the 

manufacturers. Consequently, the 

Secretary has tentatively concluded that 

TSL 4 is not economically justified. 

DOE then considered TSL 3. TSL 3 

would save 0.05 quads of energy, an 

amount DOE considers significant. 

Under TSL 3, the NPV of consumer 

benefit would be ¥$0.34 billion, using 

a discount rate of 7 percent, and ¥$0.46 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59569 

47 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value for the time-series of costs and benefits using 

a discount rate of either three or seven percent. 

Continued 

billion, using a discount rate of 3 

percent. 

The cumulative emissions reductions 

at TSL 3 are 4 Mt of CO2, 3 kt of NOX, 

and 0.02 t of Hg. The estimated 

monetary value of the cumulative CO2

emissions reduction at TSL 3 ranges 

from $0.01 billion to $0.19 billion. Total 

generating capacity in 2043 is estimated 

to decrease by 0.05 GW under TSL 3. 

At TSL 3, the average LCC impact is 

a cost (LCC increase) of $34 for built-in 

all-refrigerators, a cost of $0 for built-in 

bottom-mount refrigerator-freezers, a 

cost of $116 for built-in side-by-side 

refrigerator-freezers, and a cost of $78 

for built-in upright freezers. The median 

payback period is 16 years for built-in 

all-refrigerators, 13 years for built-in 

bottom-mount refrigerator-freezers, 37 

years for built-in side-by-side 

refrigerator-freezers, and 21 years for 

built-in upright freezers. The fraction of 

consumers experiencing an LCC benefit 

is 22 percent for built-in allrefrigerators, 5 percent for built-in 

bottom-mount refrigerator-freezers, 3 

percent for built-in side-by-side 

refrigerator-freezers, and 21 percent for 

built-in upright freezers. The fraction of 

consumers experiencing an LCC cost is 

69 percent for built-in all-refrigerators, 8 

percent for built-in bottom-mount 

refrigerator-freezers, 60 percent for 

built-in side-by-side refrigeratorfreezers, and 78 percent for built-in 

upright freezers. Although a significant 

fraction of consumers would experience 

an LCC cost, in the majority of cases the 

cost as a percentage of the purchase 

price (which ranges from approximately 

$4,500 to $8,000) is small. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $65.8 

million to a decrease of $80.5 million. 

If the high end of the range of impacts 

is reached as DOE expects, TSL 3 could 

result in a net loss of 12 percent in INPV 

to built-in refrigeration product 

manufacturers. 

The Secretary tentatively concludes 

that at TSL 3 for built-in refrigeration 

products, the benefits of energy savings, 

generating capacity reductions, 

emission reductions, and the estimated 

monetary value of the CO2 emissions 

reductions would outweigh the negative 

NPV of consumer benefits, the slight 

economic burden on a significant 

fraction of consumers due to the 

increases in product cost, and the 

capital conversion costs and profit 

margin impacts that could result in a 

reduction in INPV for the 

manufacturers. In addition to the 

aforementioned benefits of the proposed 

standards, DOE notes that the efficiency 

levels in TSL 3 correspond to the 

recommended levels in the Joint 

Comments. 

After considering the analysis, 

comments on the November 2009 notice 

and the preliminary TSD, and the 

benefits and burdens of TSL 3, the 

Secretary tentatively concludes that this 

trial standard level will offer the 

maximum improvement in efficiency 

that is technologically feasible and 

economically justified, and will result 

in significant conservation of energy. 

Therefore, DOE today proposes to adopt 

TSL 3 for built-in refrigeration products. 

The proposed amended energy 

conservation standards for built-in 

refrigeration products, expressed as 

equations for maximum energy use, are 

shown in Table V.69. 

DOE requests comment on the 

considerations leading to the above 

conclusion, particularly regarding the 

negative net consumer impacts of the 

proposed standards for built-in 

refrigeration products. (See Issue 20 

under ‘‘Issues on Which DOE Seeks 

Comment’’ in section VII.E of this 

NOPR, below.) 

TABLE V.69—PROPOSED STANDARDS FOR BUILT-IN REFRIGERATION PRODUCTS

Product class 

Equations for maximum energy use 

(kWh/yr) 

Based on AV 

(ft3) Based on av (L) 

3–BI. Built-in refrigerator-freezer—automatic defrost with top-mounted freezer without an automatic icemaker.8.57AV + 248.2 0.303av + 248.2 

3I–BI. Built-in refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without through-the-door ice service.8.57AV + 332.2 0.303av + 332.2 

3A–BI. Built-in all-refrigerators—automatic defrost ........................................................................................ 7.55AV + 215.1 0.266av + 215.1 

4–BI. Built-in refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic 

icemaker.

9.04AV + 316.2 0.319av + 316.2 

4I–BI. Built-in refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without through-the-door ice service.9.04AV + 400.2 0.319av + 400.2 

5–BI. Built-in refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic 

icemaker.

9.35AV + 335.1 0.330av + 335.1 

5I–BI. Built-in refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic 

icemaker without through-the-door ice service.

9.35AV + 419.1 0.330av + 419.1 

5A–BI. Built-in refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door 

ice service.

9.72AV + 495.5 0.343av + 495.5 

7–BI. Built-in refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door 

ice service.

9.07AV + 454.3 0.320av + 454.3 

9–BI. Built-in upright freezers with automatic defrost without an automatic icemaker ................................. 9.24AV + 244.6 0.326av + 244.6 

AV = adjusted volume in cubic feet; av = adjusted volume in liters 

5. Summary of Benefits and Costs 

(Annualized) of Proposed Standards 

The benefits and costs of today’s 

proposed standards can also be 

expressed in terms of annualized values 

over the 2014–2043 period. Estimates of 

annualized values are shown in Table 

V.70. The annualized monetary values 

are the sum of (1) the annualized 

national economic value, expressed in 

2009$, of the benefits from operating 

products that meet the proposed 

standards (consisting primarily of 

operating cost savings from using less 

energy, minus increases in equipment 

purchase costs, which is another way of 

representing consumer NPV), and (2) 

the monetary value of the benefits of 

emission reductions, including CO2

emission reductions.47 The value of the 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59570 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

From the present value, DOE then calculated the 

fixed annual payment over the analysis time period 

(2014 through 2043) that yielded the same present 

value. The fixed annual payment is the annualized 

value. Although DOE calculated annualized values, 

this does not imply that the time-series of cost and 

benefits from which the annualized values were 

determined is a steady stream of payments. 

CO2 reductions, otherwise known as the 

Social Cost of Carbon (SCC), is 

calculated using a range of values per 

metric ton of CO2 developed by a recent 

interagency process. The monetary costs 

and benefits of cumulative emissions 

reductions are reported in 2009$ to 

permit comparisons with the other costs 

and benefits in the same dollar units. 

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 CO2 savings are performed with 

different methods that use quite 

different timeframes for analysis. The 

national operating cost savings is 

measured for the lifetime of refrigeration 

products shipped in 2014–2043. The 

SCC values, on the other hand, reflect 

the present value of all future climaterelated impacts resulting from the 

emission of one ton of carbon dioxide in 

each year. These impacts go well 

beyond 2100. 

Using a 7-percent discount rate and 

the SCC value of $21.40/ton in 2010 (in 

2007$), the cost of the standards 

proposed in today’s rule is $1,841 

million per year in increased equipment 

costs, while the annualized benefits are 

$2,112 million per year in reduced 

equipment operating costs, $316 million 

in CO2 reductions, and $7 million in 

reduced NOX emissions. In this case, the 

net benefit amounts to $594 million per 

year. Using a 3-percent discount rate 

and the SCC value of $21.40/ton in 2010 

(in 2007$), the cost of the standards 

proposed in today’s rule is $1,849 

million per year in increased equipment 

costs, while the benefits are $2,929 

million per year in reduced operating 

costs, $316 million in CO2 reductions, 

and $33 million in reduced NOX

emissions. At a 3-percent discount rate, 

the net benefit amounts to $1,429 

million per year. 

TABLE V.70—ANNUALIZED BENEFITS AND COSTS OF PROPOSED STANDARDS FOR REFRIGERATION PRODUCTS FOR 2014– 

2043 PERIOD

Discount rate Primary 

estimate * Low estimate * High estimate * 

Monetized (million 2009$/year) 

Benefits: 

Operating Cost Savings .................... 7% ............................................................ 2112 1852 2377 

3% ............................................................ 2929 2520 3335 

CO2 Reduction at $4.7/t ** ................. 5% ............................................................ 85 85 85 

CO2 Reduction at $21.4/t ** ............... 3% ............................................................ 316 316 316 

CO2 Reduction at $35.1/t ** ............... 2.5% ......................................................... 492 492 492 

CO2 Reduction at $64.9/t ** ............... 3% ............................................................ 963 963 963 

NOX Reduction at $2,519/t ** ............ 7% ............................................................ 7 7 7 

3% ............................................................ 33 33 33 

Total † ......................................... 7% plus CO2 range .................................. 2204–3082 1944–2822 2469–3348 

7% ............................................................ 2435 2175 2700 

3% ............................................................ 3278 2869 3684 

3% plus CO2 range .................................. 3047–3925 2638–3516 3453–4331 

Costs: 

Incremental Product Costs ................ 7% ............................................................ 1841 1733 1950 

3% ............................................................ 1849 1729 1969 

Net Benefits/Costs: 

Total † ................................................ 7% plus CO2 range .................................. 363–1241 211–1089 519–1397 

7% ............................................................ 594 442 750 

3% ............................................................ 1429 1140 1714 

3% plus CO2 range .................................. 1198–2076 909–1787 1483–2362 

* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010 Reference case, Low Economic Growth case, and Low Economic Growth case, respectively. 

** The CO2 values represent global values (in 2007$) of the social cost of CO2 emissions in 2010 under several scenarios. The values of 

$4.70, $21.40, and $35.10 per ton are the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The 

value of $64.90 per ton represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The value for NOX (in 2009$) 

is the average of the low and high values used in DOE’s analysis. NOX savings are in addition to the regulatory emissions reductions modeled in 

the Annual Energy Outlook forecast. 

† Total Benefits for both the 3% and 7% cases are derived using the SCC value calculated at a 3% discount rate, which is $21.40/ton in 2010 

(in 2007$). 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 with the $4.70/ton value at the low end, and the $64.90/ton 

value at the high end. 

6. Energy Standard Round-Off 

The rounding off of energy use 

measurements for refrigeration products 

is discussed in the test procedure NOPR 

published on May 27, 2010. 75 FR 

29824, 29849. Comments received from 

stakeholders during the test procedure 

rulemaking comment period support 

rounding off such measurements to the 

nearest kWh per year. (Whirlpool, 

Refrigerator Test Procedure Rulemaking 

No. 12 at p. 7; AHAM, Refrigerator Test 

Procedure Rulemaking No. 16 at pp. 10, 

11) The test procedure NOPR mentions 

that, if the test procedure calls for such 

round off, the energy standard would 

also need to include round off, in order 

to avoid noncompliance associated with 

inconsistency between the two rules. 

For example, if the energy standard was 

500.7 kWh for a product whose energy 

use measurement was 500.6 kWh, 

rounding the measurement to 501 kWh 

might appear to show energy use higher 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59571 

than the maximum allowable under the 

standard. 

DOE expects to implement rounding 

off of energy use measurements in the 

refrigeration product test procedure. 

Hence, DOE also proposes such round 

off for the energy standard. DOE 

proposes to implement this by including 

in 10 CFR part 430.32(a) the following 

statement: ‘‘The energy standards as 

determined by the equations of the 

following table shall be rounded off to 

the nearest kWh per year.’’ 

DOE requests comment on this 

proposal for round off of the energy 

standard. (See Issue 21 under ‘‘Issues on 

Which DOE Seeks Comment’’ in section 

VII.E of this NOPR, below.) 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems that today’s 

standards address are as follows: 

(1) There is a lack of consumer 

information and/or information 

processing capability about energy 

efficiency opportunities in the home 

appliance market. 

(2) There is asymmetric information 

(one party to a transaction has more and 

better information than the other) and/ 

or high transactions costs (costs of 

gathering information and effecting 

exchanges of goods and services). 

(3) There are external benefits 

resulting from improved energy 

efficiency of heating products 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 an 

‘‘economically significant regulatory 

action’’ under section 3(f)(1) of 

Executive Order 12866. Accordingly, 

section 6(a)(3) of the Executive Order 

requires that DOE prepare a regulatory 

impact analysis (RIA) on today’s rule 

and that the Office of Information and 

Regulatory Affairs (OIRA) in the Office 

of Management and Budget (OMB) 

review this rule. DOE presented to OIRA 

for review the draft rule and other 

documents prepared for this 

rulemaking, including the RIA, and has 

included these documents in the 

rulemaking record. The assessments 

prepared pursuant to Executive Order 

12866 can be found in the technical 

support document (Chapter 16) for this 

rulemaking. They are available for 

public review in the Resource Room of 

DOE’s Building Technologies Program, 

950 L’Enfant Plaza, SW., Suite 600, 

Washington, DC 20024, (202) 586–2945, 

between 9 a.m. and 4 p.m., Monday 

through Friday, except Federal holidays. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking,’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of the General 

Counsel’s Web site (http:// 

www.gc.doe.gov). 

For manufacturers of residential 

refrigerators, refrigerator-freezers, and 

freezers, the Small Business 

Administration (SBA) has set a size 

threshold, which defines those entities 

classified as ‘‘small businesses’’ for the 

purposes of the statute. DOE used the 

SBA’s small business size standards to 

determine whether any small entities 

would be subject to the requirements of 

the rule. 65 FR 30836, 30850 (May 15, 

2000), as amended at 65 FR 53533, 

53545 (September 5, 2000) and codified 

at 13 CFR part 121. The size standards 

are listed by North American Industry 

Classification System (NAICS) code and 

industry description and are available at 

http://www.sba.gov/idc/groups/public/ 

documents/sba_homepage/ 

serv_sstd_tablepdf.pdf. Residential 

refrigeration product manufacturing is 

classified under NAICS 335222, 

‘‘Household Refrigerator and Home 

Freezer Manufacturing.’’ The SBA sets a 

threshold of 1,000 employees or less for 

an entity to be considered as a small 

business for this category. 

DOE reviewed the potential standard 

levels considered in today’s NOPR 

under the provisions of the Regulatory 

Flexibility Act and the procedures and 

policies published on February 19, 

2003. To better assess the potential 

impacts of this rulemaking on small 

entities, DOE conducted a more focused 

inquiry of the companies that could be 

small business manufacturers of 

products covered by this rulemaking. 

During its market survey, DOE used all 

available public information to identify 

potential small manufacturers. DOE’s 

research involved industry trade 

association membership directories 

(including AHAM), product databases 

(e.g., FTC, The Thomas Register, CEC, 

and ENERGY STAR databases), 

individual company Web sites, and 

marketing research tools (e.g., Dunn and 

Bradstreet reports) to create a list of 

every company that manufactures or 

sells residential refrigeration products 

covered by this rulemaking. DOE also 

asked stakeholders and industry 

representatives if they were aware of 

any additional small manufacturers 

during manufacturer interviews and at 

DOE public meetings. DOE reviewed all 

publicly-available data and contacted 

various companies on its complete list 

of manufacturers, as necessary, to 

determine whether they met the SBA’s 

definition of a small business 

manufacturer of covered residential 

refrigeration products. DOE screened 

out companies that do not offer 

products covered by this rulemaking, do 

not meet the definition of a ‘‘small 

business,’’ or are foreign owned and 

operated. 

DOE initially identified at least 65 

distinct brands of residential 

refrigeration products sold in the U.S. 

by 47 parent companies. Out of these 47 

companies, DOE determined that the 

majority (31 of 47) were distributors or 

resellers of branded products rather 

than original equipment manufacturers. 

Of the 16 manufacturers, DOE found 15 

to be either large manufacturers or 

foreign-owned and operated. Thus, DOE 

identified one small residential 

refrigeration product manufacturer that 

produces covered products and can be 

considered a small business. Next, DOE 

contacted this potential small business 

manufacturer to request an interview 

about the possible impacts on small 

business manufacturers generally. From 

these discussions, DOE determined the 

expected impacts of the rule on affected 

small entities and whether an initial 

regulatory flexibility analysis was 

needed (i.e., whether DOE could certify 

that this rulemaking would not have a 

significant economic impact on a 

substantial number of small entities). 

The majority of residential 

refrigeration products are currently 

manufactured in the United States, 

though production for the domestic 

market has increasingly been relocated 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59572 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

to Mexico. For standard-size 

refrigerator-freezers, three large 

manufacturers control the 

overwhelming majority of sales. Many 

foreign-owned manufacturers of 

standard-size refrigerator-freezers offer 

products for sale in the United States 

and constitute part of the remaining 

domestic standard-size refrigeratorfreezer market. These products are 

either manufactured domestically or 

imported depending on the specific 

manufacturer. Additionally, several 

domestic companies focus on premium 

built-in standard-size refrigeratorfreezers, which represent the remainder 

of the market. None of the standard-size 

refrigerator manufacturers DOE 

identified are small business 

manufacturers. 

For standard-size freezers, one large 

manufacturer controls the majority of 

the market. Another domestic 

manufacturer with a significant 

standard-size freezer market share 

recently went out of business, but its 

market share is expected to be taken by 

other large manufacturers of 

refrigeration products. The remaining 

market share is spread in small 

percentages across foreign-owned and 

foreign-operated manufacturers and 

some of the same niche manufacturers 

that produce premium built-in standardsize refrigerator-freezers. None of the 

standard-size freezer manufacturers 

identified by DOE are small business 

manufacturers. 

The majority of compact refrigeration 

products are imported, and market share 

is divided among many domestic and 

foreign manufacturers. Several 

manufacturers who still produce 

compact products domestically focus on 

the premium niche market of 

undercounter refrigerators and freezers. 

Undercounter refrigerator and freezers 

are high-end products that are meant to 

be either free-standing or recessed. 

Based on its market research, the one 

small business manufacturer of 

residential refrigeration products 

identified by DOE is a niche 

manufacturer that produces these 

premium undercounter units. The 

company manufactures primarily 

products that are covered by this 

rulemaking, such as undercounter 

refrigerators and refrigerator-freezers, 

plus several products outside of the 

scope of coverage for this rulemaking, 

such as ice makers and wine coolers. 

The small business manufacturer 

currently offers five basic ENERGY 

STAR models (13 individual products) 

but many of its product lines may need 

upgrading or may be discontinued in 

response to the proposed energy 

conservation standards. 

DOE does not believe the small 

business manufacturer will be 

differentially impacted by the proposed 

energy conservation standard. The small 

business manufacturer has the largest 

market share of undercounter 

refrigerator and freezers. Since 

undercounter units are a very small 

segment of compact refrigerators and 

freezers, the small business 

manufacturer is the market leader of a 

very small segment of compact 

products. The company represents an 

even smaller percentage of total 

shipments of covered products. Many of 

the other undercounter manufacturers, 

while not technically small businesses 

by the SBA definition, also have low 

overall production volumes. Finally, the 

undercounter market is a niche market 

that does not compete with overall 

compact refrigeration sales. 

Undercounter products are luxury items 

purchased by consumers that are 

typically less concerned about first costs 

compared to purchasers of other 

residential refrigeration products. While 

most compact sales are inexpensive 

products with retail prices in the low 

hundreds of dollars, undercounter 

products typically cost many times that. 

Despite the small size of this niche 

market, the much higher sales price and 

lower volumes indicate that profit 

margins are likely higher. 

Since only one small business 

manufacturer would potentially be 

impacted by the proposed energy 

conservation standards in today’s rule 

and that manufacturer represents a 

small percentage of covered products is 

a leader in a niche market, DOE believes 

that these combined factors make it 

likely that the manufacturer would not 

be differentially impacted compared to 

its competition. As a result, DOE 

certifies that the standards for 

residential refrigeration products set 

forth in the proposed rule, if 

promulgated, would not have a 

significant economic impact on a 

substantial number of small entities. 

Accordingly, DOE has not prepared a 

regulatory flexibility analysis for this 

rulemaking. DOE will transmit the 

certification and supporting statement 

of factual basis to the Chief Counsel for 

Advocacy of the Small Business 

Administration for review under 5 

U.S.C. 605(b). 

DOE requests comment on the above 

analysis, as well as any information 

concerning small businesses that could 

be impacted by this rulemaking and the 

nature and extent of those potential 

impacts of the proposed energy 

conservation standards on small 

residential refrigeration product 

manufacturers. (See Issue 22 under 

‘‘Issues on Which DOE Seeks Comment’’ 

in section VII.E of this NOPR, below.) 

C. Review Under the Paperwork 

Reduction Act 

This rulemaking will impose no new 

information or record keeping 

requirements. Accordingly, OMB 

clearance is not required under the 

Paperwork Reduction Act. (44 U.S.C. 

3501 et seq.) 

D. Review Under the National 

Environmental Policy Act of 1969 

DOE has prepared a draft 

environmental assessment (EA) of the 

impacts of the proposed rule pursuant 

to the National Environmental Policy 

Act of 1969 (42 U.S.C. 4321 et seq.), the 

regulations of the Council on 

Environmental Quality (40 CFR parts 

1500–1508), and DOE’s regulations for 

compliance with the National 

Environmental Policy Act of 1969 (10 

CFR part 1021). This assessment 

includes an examination of the potential 

effects of emission reductions likely to 

result from the rule in the context of 

global climate change, as well as other 

types of environmental impacts. The 

draft EA has been included as chapter 

15 of the NOPR TSD. Before issuing a 

final rule for refrigeration products, 

DOE will consider public comments 

and, as appropriate, determine whether 

to issue a finding of no significant 

impact (FONSI) as part of a final EA or 

to prepare an environmental impact 

statement (EIS) for this rulemaking. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (August 10, 1999) imposes 

certain requirements on agencies 

formulating and implementing policies 

or regulations that preempt State law or 

that have federalism implications. The 

Executive Order requires agencies to 

examine the constitutional and statutory 

authority supporting any action that 

would limit the policymaking discretion 

of the States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have federalism implications. On March 

14, 2000, DOE published a statement of 

policy describing the intergovernmental 

consultation process it will follow in the 

development of such regulations. 65 FR 

13735. EPCA governs and prescribes 

Federal preemption of State regulations 

as to energy conservation for the 

products that are the subject of today’s 

proposed rule. States can petition DOE 

for exemption from such preemption to 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59573 

the extent, and based on criteria, set 

forth in EPCA. (42 U.S.C. 6297) No 

further action is required by Executive 

Order 13132. 

F. Review Under Executive Order 12988 

With respect to the review of existing 

regulations and the promulgation of 

new regulations, section 3(a) of 

Executive Order 12988, ‘‘Civil Justice 

Reform,’’ imposes on Federal agencies 

the general duty to adhere to the 

following requirements: (1) Eliminate 

drafting errors and ambiguity; (2) write 

regulations to minimize litigation; and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. 61 FR 4729 

(February 7, 1996). Section 3(b) of 

Executive Order 12988 specifically 

requires that Executive agencies make 

every reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 

General. Section 3(c) of Executive Order 

12988 requires Executive agencies to 

review regulations in light of applicable 

standards in section 3(a) and section 

3(b) to determine whether they are met 

or it is unreasonable to meet one or 

more of them. DOE has completed the 

required review and determined that, to 

the extent permitted by law, this 

proposed rule meets the relevant 

standards of Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Public Law 104–4, sec. 

201 (codified at 2 U.S.C. 1531). For a 

proposed regulatory action likely to 

result in a rule that may cause the 

expenditure by State, local, and Tribal 

governments, in the aggregate, or by the 

private sector of $100 million or more 

in any one year (adjusted annually for 

inflation), section 202 of UMRA requires 

a Federal agency to publish a written 

statement that estimates the resulting 

costs, benefits, and other effects on the 

national economy. (2 U.S.C. 1532(a), (b)) 

The UMRA also requires a Federal 

agency to develop an effective process 

to permit timely input by elected 

officers of State, local, and Tribal 

governments on a proposed ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect small governments. On March 18, 

1997, DOE published a statement of 

policy on its process for 

intergovernmental consultation under 

UMRA. 62 FR 12820; also available at 

http://www.gc.doe.gov. 

Although today’s proposed rule does 

not contain a Federal intergovernmental 

mandate, it may impose expenditures of 

$100 million or more on the private 

sector. Specifically, the proposed rule 

will likely result in a final rule that 

could impose expenditures of $100 

million or more. Such expenditures may 

include (1) investment in research and 

development and in capital 

expenditures by refrigeration product 

manufacturers in the years between the 

final rule and the compliance date for 

the new standard, and (2) incremental 

additional expenditures by consumers 

to purchase higher-efficiency 

refrigeration products, starting in 2014. 

Section 202 of UMRA authorizes an 

agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

SUPPLEMENTARY INFORMATION section of 

the notice of proposed rulemaking and 

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 rule unless DOE publishes an 

explanation for doing otherwise or the 

selection of such an alternative is 

inconsistent with law. As required by 42 

U.S.C. 6295(h) and (o), 6313(e), and 

6316(a), today’s proposed rule would 

establish energy conservation standards 

for residential refrigeration products 

that are designed to achieve the 

maximum improvement in energy 

efficiency that DOE has determined to 

be both technologically feasible and 

economically justified. A full discussion 

of the alternatives considered by DOE is 

presented in the ‘‘Regulatory Impact 

Analysis’’ section of the TSD for today’s 

proposed rule. 

H. Review Under the Treasury and 

General Government Appropriations 

Act, 1999 

Section 654 of the Treasury and 

General Government Appropriations 

Act, 1999 (Pub. L. 105–277) requires 

Federal agencies to issue a Family 

Policymaking Assessment for any rule 

that may affect family well-being. This 

rule would not have any impact on the 

autonomy or integrity of the family as 

an institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

DOE has determined, under Executive 

Order 12630, ‘‘Governmental Actions 

and Interference with Constitutionally 

Protected Property Rights’’ 53 FR 8859 

(March 18, 1988), that this regulation 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516, note) 

provides for agencies to review most 

disseminations of information to the 

public under guidelines established by 

each agency pursuant to general 

guidelines issued by OMB. OMB’s 

guidelines were published at 67 FR 

8452 (February 22, 2002), and DOE’s 

guidelines were published at 67 FR 

62446 (October 7, 2002). DOE has 

reviewed today’s NOPR under the OMB 

and DOE guidelines and has concluded 

that it is consistent with applicable 

policies in those guidelines. 

K. Review Under Executive Order 13211 

Executive Order 13211, ‘‘Actions 

Concerning Regulations That 

Significantly Affect Energy Supply, 

Distribution, or Use’’ 66 FR 28355 (May 

22, 2001), requires Federal agencies to 

prepare and submit to OIRA at OMB, a 

Statement of Energy Effects for any 

proposed significant energy action. A 

‘‘significant energy action’’ is defined as 

any action by an agency that 

promulgates or is expected to lead to 

promulgation of a final rule, and that (1) 

Is a significant regulatory action under 

Executive Order 12866, or any successor 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59574 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

order; and (2) is likely to have a 

significant adverse effect on the supply, 

distribution, or use of energy, or (3) is 

designated by the Administrator of 

OIRA as a significant energy action. For 

any proposed significant energy action, 

the agency must give a detailed 

statement of any adverse effects on 

energy supply, distribution, or use 

should the proposal be implemented, 

and of reasonable alternatives to the 

action and their expected benefits on 

energy supply, distribution, and use. 

DOE has tentatively concluded that 

today’s regulatory action, which sets 

forth energy conservation standards for 

refrigeration products, 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 (OSTP), issued its Final 

Information Quality Bulletin for Peer 

Review (the Bulletin). 70 FR 2664 

(January 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as ‘‘scientific 

information the agency reasonably can 

determine will have or does have a clear 

and substantial impact on important 

public policies or private sector 

decisions.’’ 70 FR 2667. 

In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report’’ dated February 2007 has been 

disseminated and is available at the 

following Web site: http:// 

www1.eere.energy.gov/buildings/ 

appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at Public Meeting 

The time, date and location of the 

public meeting are listed in the DATES

and ADDRESSES sections at the beginning 

of this document. 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. 

B. Procedure for Submitting Requests To 

Speak 

Any person who has an interest in 

today’s NOPR, or who is a 

representative of a group or class of 

persons that has an interest in these 

issues, may request an opportunity to 

make an oral presentation. Such persons 

may hand-deliver requests to speak, 

along with a computer diskette or CD in 

WordPerfect, Microsoft Word, PDF, or 

text (ASCII) file format, to the address 

shown in the ADDRESSES section at the 

beginning between the hours of 9 a.m. 

and 4 p.m., Monday through Friday, 

except Federal holidays. Requests may 

also be sent by mail, or by e-mail to: 

Brenda.Edwards@ee.doe.gov. 

Persons requesting an opportunity to 

speak should briefly describe the nature 

of their interest in this rulemaking and 

provide a telephone number for contact. 

DOE requests persons scheduled to 

make an oral presentation to submit an 

advance copy of their statements at least 

one week before the public meeting. At 

its discretion, DOE may permit any 

person who cannot supply an advance 

copy of their statement to participate, if 

that person has made advance 

alternative arrangements with the 

Building Technologies Program. The 

request to give an oral presentation 

should ask for such alternative 

arrangements. 

C. Conduct of 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 5 U.S.C. 553 and 

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 presentations by 

participants, and encourage all 

interested parties to share their views on 

issues affecting this rulemaking. Each 

participant will be allowed to make a 

prepared general statement (within time 

limits determined by DOE), before the 

discussion of specific topics. DOE will 

permit 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. 

DOE will make the entire record of 

this proposed rulemaking, including the 

transcript from the public meeting, 

available for inspection at the U.S. 

Department of Energy, Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., Washington, 

DC 20024, (202) 586–2945, between 9 

a.m. and 4 p.m., Monday through 

Friday, except Federal holidays. 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 the proposed rule 

before or after the public meeting, but 

no later than the date provided at the 

beginning of this NOPR. Comments, 

data, and other information submitted to 

DOE’s e-mail address for this 

rulemaking should be provided in 

WordPerfect, Microsoft Word, PDF, or 

text (ASCII) file format. Interested 

parties should avoid the use of special 

characters or any form of encryption 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59575 

and, wherever possible, comments 

should carry the electronic signature of 

the author. Absent an electronic 

signature, comments submitted 

electronically must be followed and 

authenticated by submitting a signed 

original paper document to the address 

provided at the beginning of this notice. 

Comments, data, and information 

submitted to DOE via mail or hand 

delivery/courier should include one 

signed original paper copy. No 

telefacsimiles (faxes) will be accepted. 

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 two copies: one copy of 

the document including all the 

information believed to be confidential, 

and one copy of the document with the 

information believed to be confidential 

deleted. 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. 

E. Issues on Which DOE Seeks Comment 

In addition to the issues that DOE has 

identified throughout the earlier 

portions of this preamble, DOE is 

particularly interested in receiving 

comments and views of interested 

parties concerning the following issues: 

1. DOE requests comment on its 

baseline treatment of regulatory 

emissions reductions. 

2. DOE requests comment on the maxtech levels identified, and on the 

combinations of design options 

considered applicable to achieve maxtech designs. DOE requests that 

comments also address as appropriate 

the differences in applicable design 

options for different product classes. 

3. DOE requests comments on the 

establishment of product classes for 

refrigeration products with automatic 

icemakers, including comment on the 

approach DOE proposes to use to 

account for icemakers in the product 

class structure. 

4. DOE requests comment on the 

proposal to establish separate product 

classes for built-in refrigeration 

products. DOE also requests comment 

on the proposed definition for built-in 

products, including what changes could 

be made to further strengthen it while 

not disqualifying any true built-in 

products, and whether any adjustment 

of the 24-inch dimension specified in 

the proposed definition should be made. 

5. DOE requests comment on whether 

any additional product classes are 

required to fully address icemaking and 

built-in products. 

6. DOE requests comment on the 

proposal to combine product class 2 

(refrigerator-freezer—partial automatic 

defrost) with product class 1 

(refrigerators and refrigerator-freezers 

with manual defrost) and the proposal 

to combine product class 12 (compact 

refrigerator-freezer—partial automatic 

defrost) with product class 11 (compact 

refrigerators and refrigerator-freezers 

with manual defrost). 

7. DOE requests comment on the 

proposal to eliminate the current 36- 

inch height limitation for compact 

products. 

8. DOE requests comment on DOE’s 

findings regarding projections regarding 

supply of high-efficiency and variablespeed compressors. In particular, DOE 

seeks information that would confirm or 

cast doubt on DOE’s conclusions 

regarding compressor supply. 

9. DOE requests comment on the 

consideration of use of isobutane 

refrigerant as a design option only for 

compact refrigerators. 

10. DOE requests comment and 

information on aspects of VIP 

technology that affect its suitability for 

consideration as a design option. DOE 

in particular seeks any new information 

not already discussed or considered in 

the rulemaking. 

11. DOE requests comment on the 

approach used to develop Proposed 

Procedure Reduced Baseline Energy Use 

equations with adjusted slopes for 

product classes 4 (refrigerator-freezers— 

automatic defrost with side-mounted 

freezer without through-the-door ice 

service), 5 (refrigerator-freezers— 

automatic defrost with bottom-mounted 

freezer without through-the-door ice 

service), and 5A (refrigerator-freezers— 

automatic defrost with bottom-mounted 

freezer with through-the-door ice 

service). DOE also seeks relevant data 

that would allow adjustment of the 

curve intercept so that the shipmentweighted average impact of the slope 

change would be neutral (i.e., zero 

change) with respect to energy use. DOE 

also seeks any additional information 

that would support similar development 

of adjusted-slope baseline energy curves 

for other product classes. 

12. DOE requests comment on its 

treatment of design options in the 

engineering analysis. 

13. DOE requests comments, 

information, and data that would inform 

adjustment of energy modeling input 

and/or results that would allow more 

accurate representation of the energy 

use impacts of design options using the 

ERA energy model. 

14. DOE requests information 

regarding the response of retailers to 

incremental change in the CGS of 

appliances associated with proposed 

energy conservation standards. 

15. DOE requests comment on the 

weighting of the 2005 RECS sample 

using income relationships and volume 

scaling. 

16. DOE requests comments on its 

approach for developing UAFs using 

field-metered data. 

17. DOE requests comment on the 

approach used for estimating repair 

costs. 

18. DOE requests comments on its 

approach for estimating base-case 

efficiency distributions. 

19. DOE requests comments on its 

approach for forecasting base-case and 

standards-case efficiency distributions. 

20. DOE requests comment on its 

considerations leading to the proposed 

standards for built-in refrigeration 

products, particularly regarding the 

negative net consumer impacts of the 

proposed standards. 

21. DOE requests comment on the 

proposal for round off of the energy 

standard. 

22. DOE requests comment on the 

regulatory flexibility determination, as 

well as any information concerning 

small businesses that could be impacted 

by this rulemaking and the nature and 

extent of those potential impacts of the 

proposed energy conservation standards 

on small residential refrigeration 

product manufacturers. 

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 

information, Energy conservation, 

Household appliances, Reporting and 

recordkeeping requirements, and Small 

businesses. 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

59576 Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 

Issued in Washington, DC, on August 27, 

2010. 

Cathy Zoi, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend 

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 

1. The authority citation for part 430 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6309; 28 U.S.C. 

2461 note. 

2. In § 430.2, add the definition for 

‘‘Built-in refrigerator/refrigeratorfreezer/freezer,’’ in alphabetical order, 

and revise the definition for ‘‘Compact 

refrigerator/refrigerator-freezer/freezer’’ 

to read as follows: 

§ 430.2 Definitions. 

* * * * * 

Built-in refrigerator/refrigeratorfreezer/freezer means any refrigerator, 

refrigerator-freezer or freezer with 7.75 

cubic feet or greater total volume and 24 

inches or less depth not including 

handles and not including custom front 

panels; is designed to be encased on the 

sides and rear by cabinetry; is designed 

to be securely fastened to adjacent 

cabinetry, walls or floor; and has sides 

which are not fully finished and are not 

designed to be visible after installation. 

* * * * * 

Compact refrigerator/refrigeratorfreezer/freezer means any refrigerator, 

refrigerator-freezer or freezer with total 

volume less than 7.75 cubic foot (220 

liters) (rated volume as determined in 

appendix A1 and B1 of subpart B of this 

part). 

* * * * * 

3. In § 430.32 revise paragraph (a) to 

read as follows: 

§ 430.32 Energy and water conservation 

standards and their effective dates. 

* * * * * 

(a) Refrigerators/refrigerator-freezers/ 

freezers. These standards do not apply 

to refrigerators and refrigerator-freezers 

with total refrigerated volume exceeding 

39 cubic foot (1104 liters) or freezers 

with total refrigerated volume exceeding 

30 cubic foot (850 liters). The energy 

standards as determined by the 

equations of the following table shall be 

rounded off to the nearest kWh per year. 

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

1. Refrigerators and refrigerator-freezers with manual defrost ..................................................................... 7.99AV + 225.0 0.282av + 225.0 

1A. All-refrigerators—manual defrost ............................................................................................................. 6.79AV + 193.6 0.240av + 193.6 

2. Refrigerator-freezers—partial automatic defrost ........................................................................................ 7.99AV + 225.0 0.282av + 225.0 

3. Refrigerator-freezers—automatic defrost with top-mounted freezer without an automatic icemaker ....... 8.04AV + 232.7 0.284av + 232.7 

3–BI. Built-in refrigerator-freezer—automatic defrost with top-mounted freezer without an automatic icemaker.8.57AV + 248.2 0.303av + 248.2 

3I. Refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without 

through-the-door ice service.

8.04AV + 316.7 0.284av + 316.7 

3I–BI. Built-in refrigerator-freezers—automatic defrost with top-mounted freezer with an automatic icemaker without through-the-door ice service.8.57AV + 332.2 0.303av + 332.2 

3A. All-refrigerators—automatic defrost ......................................................................................................... 7.07AV + 201.6 0.250av + 201.6 

3A–BI. Built-in All-refrigerators—automatic defrost ....................................................................................... 7.55AV + 215.1 0.266av + 215.1 

4. Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic icemaker ..... 8.48AV + 296.5 0.299av + 296.5 

4–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer without an automatic 

icemaker.

9.04AV + 316.2 0.319av + 316.2 

4I. Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without through-the-door ice service.8.48AV + 380.5 0.299av + 380.5 

4I–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer with an automatic icemaker without through-the-door ice service.9.04AV + 400.2 0.319av + 400.2 

5. Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic icemaker 8.80AV + 315.4 0.311av + 315.4 

5–BI. Built-In Refrigerator-freezers—automatic defrost with bottom-mounted freezer without an automatic 

icemaker.

9.35AV + 335.1 0.330av + 335.1 

5I. Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic icemaker 

without through-the-door ice service.

8.80AV + 399.4 0.311av + 399.4 

5I–BI. Built-In Refrigerator-freezers—automatic defrost with bottom-mounted freezer with an automatic 

icemaker without through-the-door ice service.

9.35AV + 419.1 0.330av + 419.1 

5A. Refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door ice service.9.15AV + 471.3 0.323av + 471.3 

5A–BI. Built-in refrigerator-freezer—automatic defrost with bottom-mounted freezer with through-the-door 

ice service.

9.72AV + 495.5 0.343av + 495.5 

6. Refrigerator-freezers—automatic defrost with top-mounted freezer with through-the-door ice service ... 8.36AV + 384.1 0.295av + 384.1 

7. Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door ice service .. 8.50AV + 431.1 0.300av + 431.1 

7–BI. Built-In Refrigerator-freezers—automatic defrost with side-mounted freezer with through-the-door 

ice service.

9.07AV + 454.3 0.320av + 454.3 

8. Upright freezers with manual defrost ......................................................................................................... 5.57AV + 193.7 0.197av + 193.7 

9. Upright freezers with automatic defrost without an automatic icemaker .................................................. 8.62AV + 228.3 0.305av + 228.3 

9–BI. Built-In Upright freezers with automatic defrost without an automatic icemaker ................................. 9.24AV + 244.6 0.326av + 244.6 

10. Chest freezers and all other freezers except compact freezers ............................................................. 7.29AV + 107.8 0.257av + 107.8 

10A. Chest freezers with automatic defrost ................................................................................................... 10.24AV + 148.1 0.362av + 148.1 

11. Compact refrigerators and refrigerator-freezers with manual defrost ..................................................... 9.03AV + 252.3 0.319av + 252.3 

11A. Compact refrigerators and refrigerator-freezers with manual defrost ................................................... 7.84AV + 219.1 0.277av + 219.1 

12. Compact refrigerator-freezers—partial automatic defrost ....................................................................... 5.91AV + 335.8 0.209av + 335.8 

13. Compact refrigerator-freezers—automatic defrost with top-mounted freezer ......................................... 11.80AV + 339.2 0.417av + 339.2 

13A. Compact all-refrigerator—automatic defrost ......................................................................................... 9.17AV + 259.3 0.324av + 259.3 

14. Compact refrigerator-freezers—automatic defrost with side-mounted freezer ....................................... 6.82AV + 456.9 0.241av + 456.9 

15. Compact refrigerator-freezers—automatic defrost with bottom-mounted freezer ................................... 12.88AV + 368.7 0.455av + 368.7 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3

Federal Register / Vol. 75, No. 186 / Monday, September 27, 2010 / Proposed Rules 59577 

Product class 

Equations for maximum energy use 

(kWh/yr) 

based on AV (ft3) based on av (L) 

16. Compact upright freezers with manual defrost ........................................................................................ 8.65AV + 225.7 0.306av + 225.7 

17. Compact upright freezers with automatic defrost .................................................................................... 10.17AV + 351.9 0.359av + 351.9 

18. Compact chest freezers ........................................................................................................................... 9.25AV + 136.8 0.327av + 136.8 

AV = Total adjusted volume, expressed in ft3, as determined in Appendices A and B of subpart B of this part. 

av = Total adjusted volume, expressed in Liters. 

* * * * * 

[FR Doc. 2010–23692 Filed 9–20–10; 4:15 pm] 

BILLING CODE 6450–01–P 

mstockstill on DSKH9S0YB1PROD with PROPOSALS3