[Federal Register Volume 75, Number 186 (Monday, September 27, 2010)]
[Proposed Rules]
[Pages 59470-59577]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-23692]



[[Page 59469]]

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Part IV





Department of Energy





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10 CFR Part 430



Energy Conservation Program: Energy Conservation Standards for 
Residential Refrigerators, Refrigerator-Freezers, and Freezers; 
Proposed Rule

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

[[Page 59470]]


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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, Refrigerator-Freezers, and Freezers

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

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

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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, refrigerator-
freezers, 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: <a href="/cdn-cgi/l/email-protection#184a7d6b4a7d7e5e6a7d7d62352a282820354b4c5c352828292a587069367c777d367f776e"><span class="__cf_email__" data-cfemail="e1b38492b38487a79384849bccd3d1d1d9ccb2b5a5ccd1d1d0d3a18990cf858e84cf868e97">[email protected]</span></a>. 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: <a href="/cdn-cgi/l/email-protection#acffd9cec5c882fbcdcbc0c9d5ecc9c982c8c3c982cbc3da"><span class="__cf_email__" data-cfemail="f1a284939895dfa690969d9488b19494df959e94df969e87">[email protected]</span></a> 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: <a href="/cdn-cgi/l/email-protection#9fd2f6fcf7fefaf3b1d4f6fbf0dff7eeb1fbf0fab1f8f0e9"><span class="__cf_email__" data-cfemail="bdf0d4ded5dcd8d193f6d4d9d2fdd5cc93d9d2d893dad2cb">[email protected]</span></a>.
    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: 
<a href="/cdn-cgi/l/email-protection#f1b383949f9590dfb4958690839582b19494df959e94df969e87"><span class="__cf_email__" data-cfemail="88cafaede6ece9a6cdecffe9faecfbc8ededa6ece7eda6efe7fe">[email protected]</span></a>

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 Through-the-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

[[Page 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 Low-Volume 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]
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                                                        Equations for maximum energy use (kWh/yr)
             Product class              ------------------------------------------------------------------------
                                                 based on AV (ft\3\)                    based on av (L)
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1. Refrigerators and refrigerator-       7.99AV + 225.0                       0.282av + 225.0
 freezers with manual defrost.
1A. All-refrigerators--manual defrost..  6.79AV + 193.6                       0.240av + 193.6
2. Refrigerator-freezers--partial        7.99AV + 225.0                       0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic      8.04AV + 232.7                       0.284av + 232.7
 defrost with top-mounted freezer
 without an automatic icemaker.
3-BI. Built-in refrigerator-freezer--    8.57AV + 248.2                       0.303av + 248.2
 automatic defrost with top-mounted
 freezer without an automatic icemaker.

[[Page 59472]]

 
3I. Refrigerator-freezers--automatic     8.04AV + 316.7                       0.284av + 316.7
 defrost with top-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
3I-BI. Built-in refrigerator-freezers--  8.57AV + 332.2                       0.303av + 332.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A. All-refrigerators--automatic         7.07AV + 201.6                       0.250av + 201.6
 defrost.
3A-BI. Built-in All-refrigerators--      7.55AV + 215.1                       0.266av + 215.1
 automatic defrost.
4. Refrigerator-freezers--automatic      8.48AV + 296.5                       0.299av + 296.5
 defrost with side-mounted freezer
 without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers--   9.04AV + 316.2                       0.319av + 316.2
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic     8.48AV + 380.5                       0.299av + 380.5
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
4I-BI. Built-In Refrigerator-freezers--  9.04AV + 400.2                       0.319av + 400.2
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5. Refrigerator-freezers--automatic      8.80AV + 315.4                       0.311av + 315.4
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers--   9.35AV + 335.1                       0.330av + 335.1
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic     8.80AV + 399.4                       0.311av + 399.4
 defrost with bottom-mounted freezer
 with an automatic icemaker without
 through-the-door ice service.
5I-BI. Built-In Refrigerator-freezers--  9.35AV + 419.1                       0.330av + 419.1
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A. Refrigerator-freezer--automatic      9.15AV + 471.3                       0.323av + 471.3
 defrost with bottom-mounted freezer
 with through-the-door ice service.
5A-BI. Built-in refrigerator-freezer--   9.72AV + 4955.                       0.343av + 495.5
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
6. Refrigerator-freezers--automatic      8.36AV + 384.1                       0.295av + 384.1
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic      8.50AV + 431.1                       0.300av + 431.1
 defrost with side-mounted freezer with
 through-the-door ice service.
7-BI. Built-In Refrigerator-freezers--   9.07AV + 454.3                       0.320av + 454.3
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
8. Upright freezers with manual defrost  5.57AV + 193.7                       0.197av + 193.7
9. Upright freezers with automatic       8.62AV + 228.3                       0.305av + 228.3
 defrost without an automatic icemaker.
9-BI. Built-In Upright freezers with     9.24AV + 244.6                       0.326av + 244.6
 automatic defrost without an automatic
 icemaker.
10. Chest freezers and all other         7.29AV + 107.8                       0.257av + 107.8
 freezers except compact freezers.
10A. Chest freezers with automatic       10.24AV + 148.1                      0.362av + 148.1
 defrost.
11. Compact refrigerators and            9.03AV + 252.3                       0.319av + 252.3
 refrigerator-freezers with manual
 defrost.
11A.Compact refrigerators and            7.84AV + 219.1                       0.277av + 219.1
 refrigerator-freezers with manual
 defrost.
12. Compact refrigerator-freezers--      5.91AV + 335.8                       0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--      11.80AV + 339.2                      0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13A. Compact all-refrigerator--          9.17AV + 259.3                       0.324av + 259.3
 automatic defrost.
14. Compact refrigerator-freezers--      6.82AV + 456.9                       0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
15. Compact refrigerator-freezers--      12.88AV + 368.7                      0.455av + 368.7
 automatic defrost with bottom-mounted
 freezer.
16. Compact upright freezers with        8.65AV + 225.7                       0.306av + 225.7
 manual defrost.
17. Compact upright freezers with        10.17AV + 351.9                      0.359av + 351.9
 automatic defrost.
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

[[Page 59473]]

amount to 19 to 38 times the total estimated industry losses.
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    \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.
---------------------------------------------------------------------------

    The projected economic impacts of the proposed standards on 
individual consumers are generally positive. For example, the estimated 
average life-cycle cost (LCC) savings are $22 for top-mount 
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\
---------------------------------------------------------------------------

    \2\ 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.
---------------------------------------------------------------------------

    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 (CO<INF>2</INF>) in 2014-2043. During this period, the proposed 
standards would result in emissions reductions of 245 kilotons (kt) of 
nitrogen oxides (NO<INF>X</INF>) and 1.55 tons (t) of mercury (Hg). DOE 
estimates the net present monetary value of the CO<INF>2</INF> 
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 NO<INF>X</INF> 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.
---------------------------------------------------------------------------

    \3\ A metric ton is equivalent to 1.1 short tons. Results for 
NO<INF>X</INF> and Hg are given in short tons.
---------------------------------------------------------------------------

    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$, of the benefits from operating products that 
meet the proposed standards (consisting primarily of operating cost 
savings from using less energy, minus increases in equipment purchase 
costs, which is another way of representing consumer NPV), and (2) the 
monetary value of the benefits of emission reductions, including 
CO<INF>2</INF> emission reductions.\4\ The value of the CO<INF>2</INF> 
reductions, otherwise known as the Social Cost of Carbon (SCC), is 
calculated using a range of values per metric ton of CO<INF>2</INF> 
developed by a recent interagency process. The monetary costs and 
benefits of cumulative emissions reductions are reported in 2009$ 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO<INF>2</INF> 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 CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO<INF>2</INF> 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.
    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 CO<INF>2</INF> reductions, and $7 
million in reduced NO<INF>X</INF> 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 CO<INF>2</INF> 
reductions, and $33 million in reduced NO<INF>X</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                                               Monetized (million 2009$/year)
                                                                          --------------------------------------
                                                Discount rate                Primary        Low          High
                                                                            estimate*    estimate*    estimate*
----------------------------------------------------------------------------------------------------------------
                                                    Benefits
----------------------------------------------------------------------------------------------------------------
Operating Cost Savings...........  7%....................................        2,112        1,852        2,377

[[Page 59474]]

 
                                   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          7% plus CO2 range.....................  2,204-3,082  1,944-2,822  2,469-3,348
     Savings, CO2 Reduction and
     NOX Reduction) [dagger].
                                   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          7% plus CO2 range.....................    363-1,241    211-1,089    519-1,397
     Savings, CO2 Reduction and
     NOX Reduction, minus
     Incremental Product Costs)
     [dagger].
                                   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.
[dagger] 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

[[Page 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.)
---------------------------------------------------------------------------

    \5\ This part was titled Part B in EPCA, but was subsequently 
codified as Part A in the U.S. Code for editorial reasons.
---------------------------------------------------------------------------

    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.

[[Page 59476]]

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
------------------------------------------------------------------------
                                          Energy standard equations for
                                          maximum energy use  (kWh/yr)
             Product class             ---------------------------------
                                        Made effective by the 1997 final
                                                      rule
------------------------------------------------------------------------
1. Refrigerators and refrigerator-      8.82AV+248.4
 freezers with manual defrost.          0.31av+248.4
2. Refrigerator-freezers--partial       8.82AV+248.4
 automatic defrost.                     0.31av+248.4
3. Refrigerator-freezers--automatic     9.80AV+276.0
 defrost with top-mounted freezer       0.35av+276.0
 without through-the-door ice service
 and all-refrigerator--automatic
 defrost.
4. Refrigerator-freezers--automatic     4.91AV+507.5
 defrost with side-mounted freezer      0.17av+507.5
 without through-the-door ice service.
5. Refrigerator-freezers--automatic     4.60AV+459.0
 defrost with bottom-mounted freezer    0.16av+459.0
 without through-the-door ice service.
6. Refrigerator-freezers--automatic     10.20AV+356.0
 defrost with top-mounted freezer with  0.36av+356.0
 through-the-door ice service.
7. Refrigerator-freezers--automatic     10.10AV+406.0
 defrost with side-mounted freezer      0.36av+406.0
 with through-the-door ice service.
8. Upright freezers with manual         7.55AV+258.3
 defrost.                               0.27av+258.3
9. Upright freezers with automatic      12.43AV+326.1
 defrost.                               0.44av+326.1
10. Chest freezers and all other        9.88AV+143.7
 freezers except compact freezers.      0.35av+143.7
11. Compact refrigerators and           10.70AV+299.0
 refrigerator-freezers with manual      0.38av+299.0
 defrost.
12. Compact refrigerator-freezer--      7.00AV+398.0
 partial automatic defrost.             0.25av+398.0
13. Compact refrigerator-freezers--     12.70AV+355.0
 automatic defrost with top-mounted     0.45av+355.0
 freezer and compact all-refrigerator--
 automatic defrost.
14. Compact refrigerator-freezers--     7.60AV+501.0
 automatic defrost with side-mounted    0.27av+501.0
 freezer.
15. Compact refrigerator-freezers--     13.10AV+367.0
 automatic defrost with bottom-mounted  0.46av+367.0
 freezer.
16. Compact upright freezers with       9.78AV+250.8
 manual defrost.                        0.35av+250.8
17. Compact upright freezers with       11.40AV+391.0
 automatic defrost.                     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     5.0AV+539.0
 defrost with bottom-mounted freezer    0.18av+539.0
 with through-the-door ice service.
10A. Chest freezers with automatic      14.76AV+211.5
 defrost.                               0.52av+211.5
------------------------------------------------------------------------
AV: Adjusted Volume in ft\3\; av: Adjusted Volume in liters (L).


[[Page 59477]]

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 refrigerator-freezers.\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))
---------------------------------------------------------------------------

    \6\ The petition, submitted June 1, 2004, can be viewed at 
http://www.standardsasap.org/documents/rfdoe.pdf (last accessed 
August 18, 2010).
---------------------------------------------------------------------------

    DOE initiated this rulemaking on September 18, 2008, by publishing 
on its Web site its ``Rulemaking Framework Document for Refrigerators, 
Refrigerator-Freezers, 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:
    <bullet> 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;
    <bullet> 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;
    <bullet> An engineering analysis estimated the increases in 
manufacturer selling prices (MSPs) associated with more energy-
efficient refrigeration products;
    <bullet> An energy use analysis estimated the annual energy use in 
the field of refrigeration products as a function of efficiency levels;
    <bullet> A markups analysis converted estimated manufacturer 
selling price (MSP) increases derived from the engineering analysis to 
consumer prices;
    <bullet> 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;
    <bullet> 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;
    <bullet> A shipments analysis estimated shipments of the 
refrigeration products over the 30-year analysis period (2014-

[[Page 59478]]

2043), which were used in performing the national impact analysis 
(NIA);
    <bullet> 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;
    <bullet> 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.
---------------------------------------------------------------------------

    \7\ An ``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 [deg]F (0.0 
[deg]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).
---------------------------------------------------------------------------

    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, Sub-
Zero 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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

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

[[Page 59479]]

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)
---------------------------------------------------------------------------

    \9\ Comments 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]).
---------------------------------------------------------------------------

    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)
---------------------------------------------------------------------------

    \10\ Written comments are cited as (Commenter acronym, No. 
[assigned comment number in the docket] at p. [page number at which 
the comment appears]).
---------------------------------------------------------------------------

    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 [deg]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 [deg]F (the 
standardized temperature for the fresh food compartment in the HRF-1-
2008 test procedure), and a refrigeration system EER \12\ 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.
---------------------------------------------------------------------------

    \11\ Based 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.).
    \12\ EER, 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.
---------------------------------------------------------------------------

    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

[[Page 59480]]

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.
---------------------------------------------------------------------------

    \13\ Coefficient 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).
---------------------------------------------------------------------------

    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.

[[Page 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:
    <bullet> 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)
    <bullet> 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)
    <bullet> The test procedure should require compartment temperatures 
to be within a smaller range of acceptable values, such as within +/-
2[deg] F of ideal storage values. (Consumers Union, No. 44 at p. 5)
    <bullet> 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 electricity-consuming 
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 anti-
sweat 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 
anti-sweat 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

[[Page 59482]]

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    DOE used the full set of design options considered applicable for 
these products classes to determine the max-tech 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
----------------------------------------------------------------------------------------------------------------
                                                                                     Efficiency level (percent
                                                                                       energy use reduction)
                                                                                 -------------------------------
             Product class                             Description                                   Max tech
                                                                                   DOE analysis    commercially
                                                                                   (in percent)    available (in
                                                                                                     percent)
----------------------------------------------------------------------------------------------------------------
                                       Standard-Size Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
3......................................  Refrigerator-freezers--automatic                     36              30
                                          defrost with top-mounted freezer
                                          without through-the-door ice service.
5......................................  Refrigerator-freezers--automatic                     36              33
                                          defrost with bottom-mounted freezer
                                          without through-the-door ice service.
7......................................  Refrigerator-freezers--automatic                     33              32
                                          defrost with side-mounted freezer with
                                          through-the-door ice service.
----------------------------------------------------------------------------------------------------------------

[[Page 59483]]

 
                                             Standard-Size Freezers
----------------------------------------------------------------------------------------------------------------
9......................................  Upright freezers with automatic defrost              44              27
10.....................................  Chest freezers and all other freezers                41              16
                                          except compact freezers.
----------------------------------------------------------------------------------------------------------------
                                                Compact Products
----------------------------------------------------------------------------------------------------------------
11.....................................  Compact refrigerators and refrigerator-              59              27
                                          freezers with manual defrost.
18.....................................  Compact chest freezers.................              42              23
----------------------------------------------------------------------------------------------------------------
                                                Built-In Products
----------------------------------------------------------------------------------------------------------------
3A-BI..................................  Built-In All-refrigerators--automatic                28              31
                                          defrost.
5-BI...................................  Built-In Refrigerator-freezers--                     27              27
                                          automatic defrost with bottom-mounted
                                          freezer without through-the-door ice
                                          service.
7-BI...................................  Built-In Refrigerator-freezers--                     22              21
                                          automatic defrost with side-mounted
                                          freezer with through-the-door ice
                                          service.
9-BI...................................  Built-In Upright freezers with                       27              27
                                          automatic defrost.
----------------------------------------------------------------------------------------------------------------

    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     Design option
                              --------------------------------------------------------------------------------------------------------------------------
        Product class                               Heat                           Vacuum        Variable                   Variable anti-
                                  BLDC* fan       exchanger     Thicker walls    insulation       speed         Adaptive    sweat  heater    Isobutane
                                   motors        improvement                   panels (VIPs)    compressor      defrost         control     refrigerant
--------------------------------------------------------------------------------------------------------------------------------------------------------
3............................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        .............  .............
5............................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        [radic]        .............
7............................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        [radic]        .............
9............................  [radic]         [radic]         [radic]         [radic]        [radic]        [radic]        .............  .............
10...........................  ..............  [radic]         [radic]         [radic]        [radic]        .............  .............  .............
11...........................  ..............  [radic]         [radic]         [radic]        [radic]        .............  .............  [radic]
18...........................  ..............  [radic]         [radic]         [radic]        [radic]        .............  .............  .............
3A-BI........................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        .............  .............
5-BI.........................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        [radic]        .............
7-BI.........................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        [radic]        .............
9-BI.........................  [radic]         [radic]         ..............  [radic]        [radic]        [radic]        .............  .............
--------------------------------------------------------------------------------------------------------------------------------------------------------
* Brushless-Direct-Current.

    Stakeholder comments and questions regarding the preliminary 
analysis max-tech 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.

[[Page 59484]]

    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 max-tech 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 max-tech 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 max-tech 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 single-speed compressor design options.
    DOE requests comment on the max-tech levels identified and on the 
combinations of design options considered applicable to achieve max-
tech 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.
---------------------------------------------------------------------------

    \15\ The NIA spreadsheet model is described in section IV.G of 
this notice.
---------------------------------------------------------------------------

    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 
long-term 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

[[Page 59485]]

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

[[Page 59486]]

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.
---------------------------------------------------------------------------

    \16\ BT stands for DOE's Building Technologies Program.
    \17\ The EIA allows the use of the name ``NEMS'' to describe 
only an AEO version of the model without any modification to code or 
data. Because the present analysis entails some minor code 
modifications and runs the model under various policy scenarios that 
deviate from AEO assumptions, the name ``NEMS-BT'' refers to the 
model as used here. For more information on NEMS, refer to The 
National Energy Modeling System: An Overview, DOE/EIA-0581 (98) 
(Feb.1998), available at: http://tonto.eia.doe.gov/FTPROOT/forecasting/058198.pdf.
---------------------------------------------------------------------------

A. Market and Technology Assessment

    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 [deg]F and below 39 [deg]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 [deg]F (and 
generally near 55 [deg]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 [deg]F. 
Because they are neither designed for food storage, nor maintain 
storage temperatures below 39 [deg]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).
---------------------------------------------------------------------------

    \18\ Title 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.
---------------------------------------------------------------------------

    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.

[[Page 59487]]

 
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-the-
                                door ice service.
3I-BI........................  Built-in refrigerator-freezers--automatic
                                defrost with top-mounted freezer with an
                                automatic icemaker without through-the-
                                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-the-
                                door 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 through-
                                the-door ice service.
5I...........................  Refrigerator-freezers--automatic defrost
                                with bottom-mounted freezer with an
                                automatic icemaker without through-the-
                                door 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 
bottom-mounted 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 
all-refrigerators. 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 built-in 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

[[Page 59488]]

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 
refrigerator-freezers--automatic defrost with top-mounted freezer and 
compact all-refrigerator--automatic defrost)--include refrigerators 
with freezer compartments (``basic refrigerators''), refrigerator-
freezers, and all-refrigerators. 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 all-refrigerators. 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 all-refrigerators 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 ``all-refrigerator'' is a sub-category of ``refrigerator.'' That 
final rule did not explicitly recognize the existence of all-
refrigerators 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 all-refrigerators 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 refrigerator-freezers 
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 refrigerator-
freezers, because the compartment temperature must be above 32 [deg]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 all-
refrigerators. 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

[[Page 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 (free-standing) 
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 built-ins 
(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 built-in 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 free-standing 
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 free-standing 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 performance-related 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.


[[Page 59490]]


(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 built-in 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
----------------------------------------------------------------------------------------------------------------
                                                                       One extra door and
     Glass window         One extra drawer         French doors       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\
---------------------------------------------------------------------------

    \19\ Cabinet 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.
---------------------------------------------------------------------------

    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: All-refrigerator--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 refrigerator-freezer--automatic 
defrost with top-mounted freezer without through-the-door 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

[[Page 59491]]

products are significantly lower than those for the conventional 
products, by roughly 10 percent for the refrigerator-freezers (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
----------------------------------------------------------------------------------------------------------------
                                     Built-in: 3A
          Product class             conventional: 3     5 (see Note 1)             7                   9
----------------------------------------------------------------------------------------------------------------
Design Options..................  <bullet> Larger     <bullet> Larger     <bullet> Larger     <bullet> Larger
                                   Heat Exchangers.    Heat Exchangers.    Heat Exchangers..   Heat Exchangers
                                  <bullet> BLDC Fan   <bullet> BLDC Fan   <bullet> BLDC Fan   <bullet> BLDC Fan
                                   Motors.             Motors.             Motors..            Motors
                                  <bullet> VIPs (see  <bullet> VIPs (see  <bullet> VIPs (see  <bullet> VIPs (see
                                   Note 2).            Note 2).            Note 2)..           Note 2)
                                  <bullet> Variable-  <bullet> Variable-  <bullet> Variable-  <bullet> Variable-
                                   Speed Compressors.  Speed Compressors.  Speed               Speed Compressors
                                  <bullet> Adaptive   <bullet> Adaptive    Compressors..      <bullet> Adaptive
                                   Defrost.            Defrost.           <bullet> Adaptive    Defrost
                                                      <bullet> Variable    Defrost..          <bullet> Forced
                                                       Anti-Sweat Heater  <bullet> Variable    Convection
                                                       Control (see Note   Anti-Sweat Heater   Condenser (see
                                                       4).                 Control for Ice     Note 5).
                                                                           Dispenser.         <bullet> 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 built-ins 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  Product  class  Product  class  Product  class
                                                         4               5               7               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.


[[Page 59492]]

    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, 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 
[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[hyphen]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 built-in 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

[[Page 59493]]

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 refrigerator-
freezers 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.
---------------------------------------------------------------------------

    \20\ DOE Docket No. EERE-2008-BT-STD-0012, Comment 49.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \21\ Throughout this notice the term ``reverse-engineered 
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.

                     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

[[Page 59494]]

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.
---------------------------------------------------------------------------

    \22\ Available at: http://www1.eere.energy.gov/buildings/appliance_standards/residential/pdfs/refrigerator_freezer_framework.pdf.

  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

[[Page 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
----------------------------------------------------------------------------------------------------------------
                                                            EPCA criteria for screening
                                 -------------------------------------------------------------------------------
                                                       Practicability to
   Excluded technology option        Technological       manufacture,     Adverse impacts on  Adverse impacts on
                                      feasibility        install, and       product utility    health and safety
                                                            service
----------------------------------------------------------------------------------------------------------------
Improved Insulation Resistivity.  [radic]
Gas-Filled Panels...............  ..................  [radic]             [radic]
Improved Gaskets, Double          ..................  [radic]             [radic]
 Gaskets, Improved Door Frame.
Linear Compressors..............  [radic]
Improved Evaporator Heat          [radic]             ..................  [radic]
 Exchange.
Improved Condenser Heat Exchange  [radic]             ..................  [radic]
Component Location..............  ..................  [radic]             [radic]             [radic]
Lorenz-Meutzner Cycle...........  [radic]             [radic]
Two-Stage System................  [radic]             [radic]
Control Valve System and Tandem   [radic]             [radic]
 System.
Ejector Refrigerator............  [radic]             [radic]
Stirling Cycle..................  [radic]             [radic]
Thermoelectric..................  [radic]             [radic]
Thermoacoustic..................  [radic]             [radic]
----------------------------------------------------------------------------------------------------------------

    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:
    <bullet> Technology already used in baseline products and incapable 
of generating additional energy efficiency or reducing energy 
consumption.
    <bullet> Technology does not reduce energy use.
    <bullet> 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 Anti-Sweat 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 high-efficiency 
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 high-efficiency 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 high-efficiency compressors nor variable-speed 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

[[Page 59496]]

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)
---------------------------------------------------------------------------

    \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.
    \24\ This UL safety standard sets numerous requirements for 
refrigeration products and details tests for evaluating compliance 
with many of the requirements.
    \25\ The 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.
---------------------------------------------------------------------------

    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 
phase-down 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 phase-down 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 non-GWP 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\
---------------------------------------------------------------------------

    \26\ Personal communication with Randall J. Haseman of 
Underwriters Laboratories, February 1, 2010 and June 28, 2010.
---------------------------------------------------------------------------

    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

[[Page 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 foam-blowing 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

[[Page 59498]]

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-Q-tec 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 on-line 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)

[[Page 59499]]

ThermoCor agreed that large manufacturers would have the means to 
develop VIP production capability in-house 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 m\2\ of VIPs 
annually. Thermal Visions did not anticipate suppliers needing more 
than one year to respond to the ramp-up 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.
---------------------------------------------------------------------------

    \27\ Wilkes, K., et al. ``Aging of Polyurethane Foam Insulation 
in Simulated Refrigerator Panels--One-Year Results with Third-
Generation Blowing Agents.'' 29 Sep. 1999. http://www.ornl.gov/webworks/cpr/pres/107629.pdf. Accessed 14 June 2010.
---------------------------------------------------------------------------

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

[[Page 59500]]

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
----------------------------------------------------------------------------------------------------------------
                                     Standard-size
          Design option              refrigerator-       Standard-size          Compact        Compact freezers
                                       freezers            freezers          refrigerators
----------------------------------------------------------------------------------------------------------------
Increased Insulation Thickness..  ..................  [radic]             [radic]             [radic]
                                                      (see Note 1)......
Isobutane Refrigerant...........  ..................  ..................  [radic]
VIPs............................  [radic]             [radic]             [radic]             [radic]
Improved Compressor Efficiency..  [radic]             [radic]             [radic]             [radic]
Variable-Speed Compressor.......  [radic]             [radic]             [radic]             [radic]
Increased Evaporator Surface      [radic]             [radic]             [radic]             [radic]
 Area.
Increased Condenser Surface Area  [radic]             [radic]             [radic]             [radic]
Forced Convection Condenser.....  ..................  [radic]
Brushless DC Evaporator Fan.....  [radic]             [radic]
Brushless DC Condenser Fan......  [radic]             [radic]
Adaptive Defrost................  [radic]             [radic]
Variable Anti-Sweat Heater        [radic]
 Control.
----------------------------------------------------------------------------------------------------------------
Note 1: Increased Insulation Thickness was not considered for built-in, standard-size freezers.

C. Engineering Analysis

    The engineering analysis uses cost-efficiency 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 design-option approach, which provides the incremental costs of 
adding to a baseline model design options that will improve its 
efficiency; (2) the efficiency-level approach, which provides the 
relative costs of achieving increases in energy efficiency levels, 
without regard to the particular design options used to achieve such 
increases; and (3) the cost-assessment (or reverse engineering) 
approach, which provides ``bottom-up'' manufacturing cost assessments 
for achieving various levels of increased efficiency, based on detailed 
data as to costs for parts and material, labor, shipping/packaging, and 
investment for models that operate at particular efficiency levels.
    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 reverse-engineered 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.

[[Page 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          3. Refrigerator-freezer--
 refrigerator-freezers.                   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 NOPR-phase 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 cost-efficiency curve for each product class listed in 
Table IV.9, above, as the average of the two cost-efficiency curves 
developed for the two reverse-engineered 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
------------------------------------------------------------------------
                                                      Changes for the
         Parameter(s)              Preliminary         proposed rule
------------------------------------------------------------------------
VIP Surface Coverage..........  Full product       Full coverage of
                                 coverage, except   doors, 50% coverage
                                 for chest          of cabinet to assure
                                 freezer walls.     structural
                                                    integrity,
                                                    preference for
                                                    coverage of freezer
                                                    compartments, no
                                                    change to exception
                                                    for chest freezer
                                                    walls.
VIP Effectiveness.............  Full               50% of ERA energy
                                 effectiveness as   model effectiveness
                                 determined by      to better match
                                 the ERA energy     results reported by
                                 model.             manufacturers.
Cost Increase for Higher-       .................  Adjusted based on
 Efficiency Components.                             additional
                                                    information.
Conversion Costs for Increase   Based on           Increased due to
 of Door and Cabinet             Manufacturing      updating of
 Insulation Thickness.           Cost Model.        production equipment
                                                    costs in
                                                    manufacturing cost
                                                    model. Shift in
                                                    allocation of this
                                                    cost to increase the
                                                    portion allocated to
                                                    the door thickness
                                                    increase.

[[Page 59502]]

 
Heat Exchanger (Condenser and   Application of a   Application of this
 Evaporator) Size Increase.      20% increase in    design option based
                                 the UA value       on examination of
                                 (inverse of        product design
                                 thermal            details only for
                                 resistance) of     products for which
                                 the heat           size increase was
                                 exchangers.        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      Not included.....  Addition of 1.5W load
 Speed Controls.                                    outside the cabinet
                                                    for products not
                                                    already having
                                                    electronic control.
Variable Speed Compressor       Inconsistent       Fan operation at
 System Fan Control.             selection of fan   reduced speed to
                                 speed.             deliver reduced air
                                                    flow at 50% power
                                                    input consistent
                                                    with cubic fan law.
Variable Speed Compressor       .................  Degradation of
 Performance for Compact                            compressor capacity
 Products.                                          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      Considered for     Considered for
 Control.                        product class 5    product classes 5 *
                                 *.                 and 7 **.
Baseline Anti-Sweat Heater      .................  Baseline average
 Operation (Product Class 5*                        wattage reduced for
 only).                                             both directly
                                                    analyzed products.
Variable Defrost Compressor     38 hours.........  30 hours; Also,
 Run time between defrosts.                         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          3A-BI. All Refrigerators with
 refrigerator-freezers.                   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 well-summarized 
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

[[Page 59503]]

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 cost-efficiency 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 x (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.
---------------------------------------------------------------------------

    \28\ The 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.
---------------------------------------------------------------------------

    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

[[Page 59504]]

current product class 5 (refrigerator-freezers--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 (refrigerator-freezers--automatic defrost 
with side-mounted 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 reverse-engineered 
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 x 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 
shipment-weighted 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.

[[Page 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 shipment-weighted 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 max-tech 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 max-tech 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 size-
dependent, 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

[[Page 59506]]

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 directly-analyzed 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

[[Page 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 moderate-cost 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 refrigerator-freezers 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 reverse-engineered 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 refrigerator-freezers 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 
manufacturer-provided 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 Low-Volume Products
    DOE sought comment on its approach to developing energy standards 
for low-volume 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

[[Page 59508]]

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 high-volume product classes. AHAM 
suggested that DOE request data to estimate cost-efficiency curves for 
low-volume 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 higher-efficiency 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\
---------------------------------------------------------------------------

    \29\ The 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.
---------------------------------------------------------------------------

    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 higher-
efficiency 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.

[[Page 59509]]

    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 sub-sector 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.
---------------------------------------------------------------------------

    \30\ The 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.
---------------------------------------------------------------------------

    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 newly-derived 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 
afore-mentioned 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.
---------------------------------------------------------------------------

    \31\ For information on RECS, see http://www.eia.doe.gov/emeu/recs/.
---------------------------------------------------------------------------

    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[hyphen]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

[[Page 59510]]

on AHAM's concerns criticisms.\32\ In AHAM's view:
---------------------------------------------------------------------------

    \32\ Exhibit 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[hyphen]Freezers.
---------------------------------------------------------------------------

    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 
recently-concluded 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

[[Page 59511]]

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 <bullet> (1-R) = UAFRECS <bullet> TECRECS <bullet> (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 standard-size refrigerator-
freezers from the 2005 RECS data. The average scaled volumes 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) 
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.)
---------------------------------------------------------------------------

    \33\ California 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.
---------------------------------------------------------------------------

    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

[[Page 59512]]

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 field-metered 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               1.23  0.93 (0.82 to 1.04) *
                        defrost with top-mounted
                        freezer without through-the-
                        door ice service.
5....................  Refrigerator-freezers--                       1.08  0.92 (0.81 to 1.02) *
                        automatic defrost with bottom-
                        mounted freezer without
                        through-the-door ice service.
7....................  Refrigerator-freezers--                       1.44  0.94 (0.84 to 1.03) *
                        automatic defrost with side-
                        mounted freezer with through-
                        the-door ice service.
9....................  Upright freezers with automatic               1.37  0.85
                        defrost.
10...................  Chest freezers.................               1.48  0.89
11...................  Compact refrigerators and                     1.00  1.00
                        refrigerator-freezers with
                        manual defrost.
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 field-metered 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 base-case 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.

[[Page 59513]]



                 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   Incremental retail markup changed as described in
                                   manufacturer cost by     section IV.D.
                                   manufacturer and
                                   retailer markups and
                                   sales tax, as
                                   appropriate.
----------------------------------------------------------------------------------------------------------------
                                                 Operating Costs
----------------------------------------------------------------------------------------------------------------
Annual Energy Use...............  Based on energy use      Based on a multiple linear regression of field-
                                   given in 2005 RECS for   metered energy use data, adjusted using a UAF
                                   refrigerators or         function based on 2005 RECS household
                                   freezers, adjusted       characteristics.
                                   using a `usage
                                   adjustment factor'
                                   (UAF) that adjusts the
                                   energy use from its
                                   test energy
                                   consumption to reflect
                                   field conditions.
Energy Prices...................  Electricity: Based on    Electricity: Updated using Form 861 data for 2007.
                                   EIA's Form 861 data
                                   for 2006.
                                  Variability: Regional    Variability: No change.
                                   energy prices
                                   determined for 13
                                   regions.
Energy Price Trends.............  Forecasted using Annual  Forecasts updated using AEO2010.
                                   Energy Outlook 2009
                                   AEO2009.
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   No change.
                                   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..
Discount Rates..................  Approach involves        No change.
                                   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.
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 supply-chain markups described above (along with sales taxes). DOE 
used different markups for baseline products and higher-efficiency 
products, because DOE applies an incremental markup to the MSP increase 
associated with higher-efficiency 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.
---------------------------------------------------------------------------

    \34\ The spreadsheet tool that DOE used to conduct the LCC and 
PBP analyses allows users to select price forecasts from either 
AEO's High Economic Growth or Low Economic Growth Cases. Users can 
thereby estimate the sensitivity of the LCC and PBP results to 
different energy price forecasts.
    \35\ U.S. Energy Information Administration. Annual Energy 
Outlook 2010. Washington, DC. April 2010.

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

[[Page 59514]]

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 refrigerator-freezers 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.
---------------------------------------------------------------------------

    \36\ Commercial Refrigeration Equipment Final Rule Technical 
Support Document. Available at: http://www1.eere.energy.gov/buildings/appliance_standards/commercial/refrig_equip_final_rule_tsd.html.
---------------------------------------------------------------------------

    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 Refrigerator-Freezers
----------------------------------------------------------------------------------------------------------------
                                                          Product class 3    Product class 5    Product class 7
   Efficiency level (% less than baseline energy use)           ($)                ($)                ($)
----------------------------------------------------------------------------------------------------------------
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.
---------------------------------------------------------------------------

    \37\ U.S. Census Bureau, American Housing Survey. Available at: 
http://www.census.gov/hhes/www/housing/ahs/ahs.html.
---------------------------------------------------------------------------

    For compact refrigerators, DOE estimated an average lifetime of 5.6 
years in the preliminary analysis using data on shipments and the 
stock-in-place (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.

[[Page 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 base-case 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 bottom-mount 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 (refrigerator-
freezer--automatic defrost with top-mounted freezer without through-
the-door 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 refrigerator-freezers. 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 more-efficient 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

[[Page 59516]]

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    No change in approach; used 2008 data to estimate the
                                   shipments model.         ratio of bottom[hyphen]mount share to side-by-side
                                                            share.
Compliance Date of Standard.....  2014...................  No change.
Base-Case Forecasted              Used a ``roll-up +       No change in basic approach; modified efficiency
 Efficiencies.                     ENERGY STAR'' scenario   distributions based on new information.
                                   to establish the
                                   distribution of
                                   efficiencies.
Standards-Case Forecasted         Used a ``roll-up +       No change in basic approach; modified efficiency
 Efficiencies.                     ENERGY STAR'' scenario   distributions based on new information.
                                   to establish the
                                   distribution of
                                   efficiencies.
Annual Energy Consumption per     Annual weighted-average  No change.
 Unit.                             values as a function
                                   of SWEUF.*
Total Installed Cost per Unit...  Annual weighted-average  No change.
                                   values as a function
                                   of SWEUF.*
Energy Cost per Unit............  Annual weighted-average  No change.
                                   values as a function
                                   of the annual energy
                                   consumption per unit
                                   and energy prices.
Repair and Maintenance Cost per   Annual values as a       No change.
 Unit.                             function of efficiency
                                   level.
Escalation of Energy Prices.....  AEO2009 forecasts (to    Updated using AEO2010 forecasts.
                                   2035) and
                                   extrapolation through
                                   2043.
Energy Site-to-Source Conversion  Varies yearly and is     No change.
 Factor.                           generated by DOE/EIA's
                                   NEMS.
Discount Rate...................  Three and seven percent  No change.
                                   real.
Present Year....................  Future expenses are      No change.
                                   discounted to 2010,
                                   when the final rule
                                   will be published.
----------------------------------------------------------------------------------------------------------------
* 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 refrigerator-freezers, 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 refrigerator-freezer configurations to 
disaggregate the total shipments of refrigerator-freezers into the 
three considered refrigerator-freezer product categories (top-mount, 
bottom-mount and side-by-side configurations). The market share of 
side-by-side refrigerator-freezer models has grown significantly during 
the past two decades. Bottom-freezer

[[Page 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 side-by-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 side-by-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 bottom-mount 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 re-evaluate 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 product-class specific basis. This result 
is projected to occur for all product classes

[[Page 59518]]

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 Full-Fuel-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-of-use) 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-fuel-cycle 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\
---------------------------------------------------------------------------

    \38\ The 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.
---------------------------------------------------------------------------

    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 full-fuel-cycle measurement.
    DOE acknowledges that its site-to-source 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\
---------------------------------------------------------------------------

    \39\ For 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 Combined-Cycle Power Generation System, 
NREL/TP-570-27715, September 2000.
---------------------------------------------------------------------------

    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.

[[Page 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 ``pass-
through'' 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

[[Page 59520]]

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 cash-flow analysis for residential refrigerators, freezers, 
and refrigerator-freezers. 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.

[[Page 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 non-built-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 built-in 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 non-capitalized 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 large-scale 
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

[[Page 59522]]

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 step-increases 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.

[[Page 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 standards-compliant 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

[[Page 59524]]

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 industry-wide 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 
standard-size 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 low-cost 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

[[Page 59525]]

a concern on lower volume products, the additional production steps on 
high-speed 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 refrigerator-
freezers. 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, anti-sweat 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, top-mount 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 side-mount and bottom-mount refrigerator-freezers. 
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 bottom-mount refrigerator-freezers and will switch to buying the 
less expensive and less profitable top-mount refrigerator-freezers.
    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

[[Page 59526]]

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\
---------------------------------------------------------------------------

    \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 <a href="/cdn-cgi/l/email-protection#711518010206141331131d025f161e07"><span class="__cf_email__" data-cfemail="7f1b160f0c081a1d3f1d130c51181009">[email protected]</span></a>. Available at: http://www.bls.gov/news.release/prin1.nr0.htm.
    \41\ See Bureau of Economic Analysis, Regional Multipliers: A 
User Handbook for the Regional Input-Output Modeling System (RIMS 
II). Washington, DC. U.S. Department of Commerce, 1992.
---------------------------------------------------------------------------

    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 Input-Output'' (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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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.

[[Page 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 
CO<INF>2</INF>, NO<INF>X</INF>, 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 CO<INF>2</INF> 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 
(SO<INF>2</INF>) 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 
SO<INF>2</INF> emissions. Title IV of the Clean Air Act sets an annual 
emissions cap on SO<INF>2</INF> for all affected EGUs. SO<INF>2</INF> 
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 SO<INF>2</INF> emission allowances resulting from the lower 
electricity demand caused by the imposition of an efficiency standard 
could be used to permit offsetting increases in SO<INF>2</INF> 
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 SO<INF>2</INF> emissions from the 
standards. While there remains some uncertainty about the ultimate 
effects of efficiency standards on SO<INF>2</INF> 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 
SO<INF>2</INF>.
    NEMS-BT also has an algorithm for estimating NO<INF>X</INF> 
emissions from power generation. The impact of these emissions, 
however, will be affected by the CAIR. Much like SO<INF>2</INF>, 
NO<INF>X</INF> 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 NO<INF>X</INF> 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 NO<INF>X</INF> 
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 
NO<INF>X</INF> emissions allowances. However, DOE has preliminarily 
concluded the proposed standard would not have such an effect because 
the estimated reduction in NO<INF>X</INF> emissions or the 
corresponding allowance credits in States covered by the CAIR cap would 
be too small to affect allowance prices for NO<INF>X</INF> under the 
CAIR. The proposed standards would reduce NO<INF>X</INF> 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 SO<INF>2</INF> and NO<INF>X</INF>, 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 CO<INF>2</INF> emissions is only complete if the changes in 
CO<INF>2</INF> 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 full-fuel-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 CO<INF>2</INF> 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

[[Page 59528]]

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 
CO<INF>2</INF> 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.
---------------------------------------------------------------------------

    \43\ National Research Council. Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use. National Academies Press: 
Washington, DC. 2009.
---------------------------------------------------------------------------

    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 CO<INF>2</INF> 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 CO<INF>2</INF> 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,

[[Page 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 CO<INF>2</INF> and a ``global'' SCC value of $33 per 
ton of CO<INF>2</INF> 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 CO<INF>2</INF>. 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 CO<INF>2</INF> (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 
CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF>. 
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 CO<INF>2</INF> 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 cost-benefit 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 SO<INF>2</INF> and caps on NO<INF>X</INF> 
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 SO<INF>2</INF>, 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 SO<INF>2</INF> 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 
NO<INF>X</INF> emissions from the TSLs it considered. As noted above, 
new or amended energy conservation standards would reduce 
NO<INF>X</INF> emissions in those 22 States that are not affected by 
the CAIR, in addition to the reduction in site NO<INF>X</INF> emissions 
nationwide. DOE estimated the monetized value of NO<INF>X</INF> 
emissions reductions resulting from each of the TSLs considered for 
today's NOPR

[[Page 59530]]

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 $3,800 per ton of NO<INF>X</INF> from 
stationary sources, measured in 2001$ (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 NO<INF>X</INF>, one using a real discount rate 
of 3 percent and another using a real discount rate of 7 percent.
---------------------------------------------------------------------------

    \44\ Refer 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.
    \45\ OMB, Circular A-4: Regulatory Analysis (Sept. 17, 2003).
---------------------------------------------------------------------------

    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

[[Page 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
----------------------------------------------------------------------------------------------------------------
                                  Top-mount  refrigerator-         Bottom-mount               Side-by-side
                                          freezers            refrigerator-freezers      refrigerator-freezers
      Trial standard level      --------------------------------------------------------------------------------
                                 Product classes 1, 1A, 2,    Product classes 5, 5A,     Product classes 4, 4I,
                                      3, 3A, 3I and 6                 and 5I                     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
----------------------------------------------------------------------------------------------------------------
                                                   Upright freezers                          Chest freezers
                                --------------------------------------------------------------------------------
      Trial standard level                                                              Product classes  10 and
                                      Product  class 9           Product  class 8                 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
----------------------------------------------------------------------------------------------------------------
                                    Compact refrigerators and refrigerator-freezers         Compact freezers
                                --------------------------------------------------------------------------------
      Trial standard level        Product classes 11, 11A,   Product classes 13, 14,    Product classes 16, 17,
                                        12, and 13A                   and 15                       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)

[[Page 59532]]

 
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 max-tech efficiency levels.

                      Table V.4--Trial Standard Levels for Built-in Refrigeration Products
----------------------------------------------------------------------------------------------------------------
                                          Built-in  all-    Built-in bottom-     Built-in side-by-     Built-in
                                          refrigerators    mount refrigerator-  side refrigerator-     upright
                                       -------------------      freezers             freezers          freezers
         Trial standard level                             ------------------------------------------------------
                                        Product class  3A- Product classes  5-  Product classes 4-     Product
                                                BI            BI and 5I-BI      BI, 4I-BI and 7-BI    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       Net cost    No impact   Net benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 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
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59533]]


                                   Table V.6--Product Class 5, Bottom-Mount Refrigerator-Freezers: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       Net cost    No impact   Net benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       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
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 59534]]


                                        Table V.10--Product Class 11, Compact Refrigerators: LCC and PBP Results
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       Net cost    No impact   Net benefit     Median
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Life-cycle cost 2009$                        Life-cycle cost savings                 Payback
                                    Efficiency   -------------------------------------------------------------------------------------------    period
      Trial standard level        level (% less                 Discounted                 Average       % of households that experience       (years)
                                  than baseline    Installed    operating       LCC        savings   ---------------------------------------------------
                                   energy use)        cost         cost                     2009$       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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost 2009$                 Life-cycle cost savings            Payback
                                                                ------------------------------------------------------------------------------   period
                                Efficiency level (% less than                                                 % of Households that experience   (years)
    Trial standard level            baseline  energy use)        Installed  Discounted              Average  -------------------------------------------
                                                                    cost     operating     LCC      savings                            Net
                                                                               cost                  2009$     Net cost  No impact   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
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost 2009$                 Life-cycle cost savings            Payback
                                                                ------------------------------------------------------------------------------   period
                                Efficiency level (% less than                                                 % of Households that experience   (years)
   Trial  standard level            baseline  energy use)        Installed  Discounted              Average  -------------------------------------------
                                                                    cost     operating     LCC      savings                            Net
                                                                               cost                  2009$     Net cost  No impact   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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Life-cycle cost 2009$                 Life-cycle cost savings            Payback
                                                                ------------------------------------------------------------------------------   period
                                Efficiency level (% less than                                                 % of Households that experience   (years)
   Trial  standard  level           baseline  energy use)        Installed  Discounted              Average  -------------------------------------------
                                                                    cost     operating     LCC      savings                            Net
                                                                               cost                  2009$     Net cost  No impact   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
----------------------------------------------------------------------------------------------------------------
                                                   Top-mount             Bottom-mount           Side-by-side
                                             refrigerator-freezers  refrigerator-freezers  refrigerator-freezers
                                            --------------------------------------------------------------------
   Efficiency level (% less than baseline       Product class 3        Product class 5        Product class 7
                energy use)                 --------------------------------------------------------------------
                                                      Low-                   Low-                   Low-
                                             Senior  income   All   Senior  income   All   Senior  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
----------------------------------------------------------------------------------------------------------------
                                               Upright freezers                        Chest freezers
                                   -----------------------------------------------------------------------------
   Efficiency level (% less than               Product class 9                        Product class 10
       baseline energy use)        -----------------------------------------------------------------------------
                                       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  ...........  ...........  ...........
----------------------------------------------------------------------------------------------------------------


[[Page 59536]]


                Table V.18--Built-In Refrigeration Products: Comparison of Average LCC Savings for Consumer Subgroups and All Households
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Built-in all        Built-in bottom-mount   Built-in side-by-side     Built-in upright
                                                               refrigerators       refrigerator-freezers   refrigerator-freezers         freezers
                                                         -----------------------------------------------------------------------------------------------
   Efficiency level (% less than baseline  energy use)      Product class 3A-BI     Product class 5-BI      Product class 7-BI      Product class 9-BI
                                                         -----------------------------------------------------------------------------------------------
                                                                   Low-                    Low-                    Low-                    Low-
                                                          Senior  income    All   Senior  income    All   Senior  income    All   Senior  income    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 first-year 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-  Product class 7: Side-by-
-------------------------------------------------------------   mount  refrigerator-       side refrigerator-
                                                                       freezer              freezer with TTD*
                                                             ---------------------------------------------------
                                                               Efficiency                Efficiency
 Efficiency level (% less than baseline energy    PBP years     level (%                  level (%
                      use)                                     less than    PBP years    less than    PBP years
                                                                baseline                  baseline
                                                              energy use)               energy use)
----------------------------------------------------------------------------------------------------------------
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 (%
     Efficiency level (% less than            PBP years            less than baseline           PBP years
         baseline energy use)                                         energy use)
----------------------------------------------------------------------------------------------------------------
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 (%
    Efficiency level (% less than             PBP years            less than baseline           PBP years
         baseline energy use)                                         energy use)
----------------------------------------------------------------------------------------------------------------
1 (10)...............................                      1.8                   1 (10)                      2.0
2 (15)...............................                      2.1  .......................  .......................
3 (20)...............................                      2.7  .......................  .......................
----------------------------------------------------------------------------------------------------------------


[[Page 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:       Product class 7-BI:       Product class 9-BI:
---------------------------------------------------------------------------   built-in bottom-mount     built-in side-by-side   built-in upright freezer
                                                                              refrigerator-freezer      refrigerator-freezer   -------------------------
                                                                           --------------------------        with TTD *
                                                                                                     --------------------------  Efficiency
                                                                             Efficiency                Efficiency                 level (%
      Efficiency level (% less than baseline energy use)        PBP years     level (%                  level (%                 less than    PBP years
                                                                             less than    PBP years    less than    PBP years     baseline
                                                                              baseline                  baseline                energy use)
                                                                            energy use)               energy use)
--------------------------------------------------------------------------------------------------------------------------------------------------------
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 rebuttable-presumption 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 
higher-bound 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

[[Page 59538]]



                         Table V.23--Manufacturer Impact Analysis for Standard-Size Refrigerator-Freezers--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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 through-the-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 smaller-
sized 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 
refrigerator-freezers 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 upper-bound scenario, at TSL 1.

[[Page 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 
refrigerator-freezers 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 side-by-side units, at TSL 2 most production 
lines of standard-size refrigerator-freezers 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 refrigerator-freezers 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 top-mount 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

[[Page 59540]]

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 
lower-labor-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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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)

[[Page 59541]]

 
                                             (%)..........................  ...........       -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

[[Page 59542]]

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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial Standard Level
                                                         Units               Base Case  ----------------------------------------------------------------
                                                                                              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

[[Page 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 refrigerator-
freezers 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 
shipment-weighted 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 shipment-weighted 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 shipment-weighted 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

[[Page 59544]]

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 base-case 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 Built-In Refrigeration Products

                           Table V.29--Manufacturer Impact Analysis for Built-In Refrigeration Products--Flat Markup Scenario
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                               Trial standard level
                                                         Units               Base case  ----------------------------------------------------------------
                                                                                              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 
(built-in all-refrigerators--automatic defrost), product class 5-BI 
(built-in refrigerator-

[[Page 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 base-case 
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

[[Page 59546]]

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-labor-cost 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 standard-
size 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                8,517            8,300            8,258            8,309            8,236            8,088
 2014 (without changes in production locations)...
Potential Changes in Domestic Production Workers    ...............    (217)-(8,517)    (259)-(8,517)    (208)-(8,517)    (281)-(8,517)    (429)-(8,517)
 in 2014 *........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
* 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 top-mounted, 
side-by-side, and bottom-mounted 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

[[Page 59547]]

widespread adoption of VIPs or (2) significant capital conversion costs 
that would force them to consider non-domestic 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 standard-size 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            1,904            1,850            1,781            1,734            1,634            1,508
 changes in production locations)...........................
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 refrigerator-freezers, 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 refrigerator-freezers 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            31           30           29           29           28           46
 (without changes in production locations)..........

[[Page 59548]]

 
Potential Changes in Domestic Production Workers in   ...........     (1)-(31)     (2)-(31)     (2)-(31)     (3)-(31)      15-(31)
 2014*..............................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*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 built-in 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 built-in 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               1,320           1,320           1,319           1,327           1,331           1,357
 Production Workers in 2014
 (without changes in
 production locations)......
Potential Changes in          ..............       0-(1,320)     (1)-(1,320)       7-(1,320)      11-(1,320)      37-(1,320)
 Domestic Production Workers
 in 2014*...................
--------------------------------------------------------------------------------------------------------------------------------------------------------
*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

[[Page 59549]]

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.
---------------------------------------------------------------------------

    \46\ The schedule for all DOE rulemakings can be found at http://www1.eere.energy.gov/buildings/appliance_standards/schedule_setting.html.
---------------------------------------------------------------------------

    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.

[[Page 59550]]



                              Table V.35--Standard-Size Refrigerator-Freezers: Cumulative National Energy Savings in Quads
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Top-mount  refrigerator-     Bottom-mount  refrigerator-   Side-by-side  refrigerator-
                                                                          freezers                      freezers                      freezers
                     Trial standard level                      -----------------------------------------------------------------------------------------
                                                                Product classes 1, 1A, 2, 3,   Product classes 5, 5A, and
                                                                        3A, 3I and 6                       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
------------------------------------------------------------------------
                                            Upright       Chest freezers
                                            freezers    ----------------
         Trial standard level          -----------------
                                        Product classes  Product classes
                                            8 and 9         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
------------------------------------------------------------------------
                                            Compact          Compact
                                         refrigerators       freezers
                                       ---------------------------------
         Trial standard level           Product classes
                                          11, 11A, 12,   Product classes
                                          13, 13A, 14,      16, 17, 18
                                             and 15
------------------------------------------------------------------------
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Built-in all          Built-in bottom-mount      Built-in side-by-side         Built-in upright
                                                    refrigerators          refrigerator-freezers      refrigerator-freezers             freezers
            Trial standard level             -----------------------------------------------------------------------------------------------------------
                                                                          Product classes 5-BI and  Product classes 4-BI,  4I-
                                                 Product class 3A-BI               5I-BI                   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 before-tax rate of return on private capital in the U.S. 
economy, and reflects the returns on real estate and small business 
capital as well as corporate capital. 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

[[Page 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 Refrigerator-Freezers, 3-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                     Top-mount refrigerator-        Bottom-mount              Side-by-side
                                            freezers            refrigerator-freezers     refrigerator-freezers
       Trial standard level        -----------------------------------------------------------------------------
                                     Product class 1, 1A, 2,   Product classes 5, 5A,    Product classes 4, 4I,
                                         3, 3A, 3I and 6               and 5I                     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 Refrigerator-Freezers, 7-Percent
                                                  Discount Rate
----------------------------------------------------------------------------------------------------------------
                                    Top-mount  refrigerator-        Bottom-mount              Side-by-side
                                            freezers            refrigerator-freezers     refrigerator-freezers
       Trial standard level        -----------------------------------------------------------------------------
                                     Product classes 1, 1A,    Product classes 5, 5A,    Product classes 4, 4I,
                                       2, 3, 3A, 3I and 6              and 5I                     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
------------------------------------------------------------------------
                                           Upright       Chest freezers
                                           freezers    -----------------
         Trial standard level         -----------------
                                       Product classes   Product classes
                                           8 and 9         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
------------------------------------------------------------------------
                                      Upright freezers   Chest freezers
                                     -----------------------------------
        Trial standard level           Product classes   Product classes
                                           8 and 9         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)
------------------------------------------------------------------------


[[Page 59552]]


    Table V.43--Cumulative Net Present Value of Consumer Benefits for
         Compact Refrigeration Products, 3-Percent Discount Rate
------------------------------------------------------------------------
                                           Compact           Compact
                                        refrigerators       freezers
                                     -----------------------------------
        Trial standard level           Product classes
                                      11, 11A, 12, 13,   Product classes
                                       13A, 14, and 15     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
------------------------------------------------------------------------
                                           Compact           Compact
                                        refrigerators       freezers
                                     -----------------------------------
        Trial standard level           Product classes
                                      11, 11A, 12, 13,   Product classes
                                       13A, 14, and 15     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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Built-in all            Built-in bottom-mount       Built-in side-by-side    Built-in upright  freezers
                                                 refrigerators           refrigerator-freezers       refrigerator-freezers   ---------------------------
          Trial standard level           ------------------------------------------------------------------------------------
                                                                       Product classes 5-BI and    Product classes 4-BI, 4I-      Product class 9-BI
                                              Product class 3A-BI                5I-BI                    BI and 7-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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          Built-in all refrigerators     Built-in bottom-mount       Built-in side-by-side     Built-in upright freezers
                                                    (3A-BI)              refrigerator-freezers       refrigerator-freezers              (9-BI)
          Trial standard level           ---------------------------------------------------------------------------------------------------------------
                                                                       Product classes 5-BI and    Product classes 4-BI, 4I-
                                              Product class 3A-BI                5I-BI                    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)
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 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-                2.28            2.63            3.10            4.23            5.07
 Freezers.......................
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

[[Page 59554]]

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 CO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions reductions 
projected to result from the TSLs considered in this rulemaking. DOE 
reports annual CO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions 
reductions for each TSL in chapter 15 of the NOPR TSD.
    As discussed in section IV.M, DOE did not report SO<INF>2</INF> 
emissions reductions from power plants because there is uncertainty 
about the effect of energy conservation standards on the overall level 
of SO<INF>2</INF> emissions in the United States due to SO<INF>2</INF> 
emissions caps. DOE also did not include NO<INF>X</INF> emissions 
reduction from power plants in States subject to CAIR because an energy 
conservation standard would not affect the overall level of 
NO<INF>X</INF> 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 CO<INF>2</INF> 
and NO<INF>X</INF> 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 CO<INF>2</INF> 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 
CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                                       Million 2009$
                                         -----------------------------------------------------------------------
                   TSL                                                                             3% discount
                                             5% discount       3% discount      2.5% discount      rate, 95th
                                           rate, average *   rate, average *   rate, average *    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.


[[Page 59555]]


  Table V.51--Standard-Size Freezers: Estimates of Global Present Value of CO2 Emissions Reduction in 2014-2043
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2009$
                                                 ---------------------------------------------------------------
                       TSL                          5% discount     3% discount    2.5% discount    3% discount
                                                   rate, average   rate, average   rate, average    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
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2009$
                                                 ---------------------------------------------------------------
                       TSL                          5% discount     3% discount    2.5% discount    3% discount
                                                   rate, average   rate, average   rate, average    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
----------------------------------------------------------------------------------------------------------------
                                                                           Million 2009$
                                                 ---------------------------------------------------------------
                       TSL                          5% discount     3% discount    2.5% discount    3% discount
                                                   rate, average   rate, average   rate, average    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
----------------------------------------------------------------------------------------------------------------
                                                                  Million 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate,  average **  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.


[[Page 59556]]


 Table V.55--Standard-Size Freezers: Estimates of Domestic Present Value of CO2 Emissions Reduction in 2014-2043
                                           Under Trial Standard Levels
----------------------------------------------------------------------------------------------------------------
                                                                  Million 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate,  average **  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
----------------------------------------------------------------------------------------------------------------
                                                                  Million 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                      average **          average **       rate,  average **  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
----------------------------------------------------------------------------------------------------------------
                                                                  Million 2009$ *
                                 -------------------------------------------------------------------------------
               TSL                 5% discount rate,   3% discount rate,     2.5% discount     3% discount rate,
                                       average**           average**       rate,  average**    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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 NO<INF>X</INF> emissions reductions 
anticipated to result from amended standards for refrigeration 
products. The dollar-per-ton 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.

[[Page 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 CO<INF>2</INF> and 
NO<INF>X</INF> 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 CO<INF>2</INF> values used in the columns of each table correspond 
to the four scenarios for the valuation of CO<INF>2</INF> 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
------------------------------------------------------------------------
                                       Present value      Discount rate
              Category                 billion 2009$      (in percent)
------------------------------------------------------------------------
Benefits:
    Operating Cost Savings.........             13.62                  7
                                                34.75                  3
    CO2 Reduction Monetized Value                0.713                 5
     (at $4.7/Metric Ton)*.........
    CO2 Reduction Monetized Value                3.65                  3
     (at $21.4/Metric Ton)*........
    CO2 Reduction Monetized Value                6.19                2.5
     (at $35.1/Metric Ton)*........
    CO2 Reduction Monetized Value               11.14                  3
     (at $64.9/Metric Ton)*........
    NOX Reduction Monetized Value                0.087                 7
     (at $2,519/Ton)*..............
                                                 0.206                 3
                                    ------------------------------------
        Total Monetary Benefits**..             17.36                  7
                                                38.61                  3
                                    ------------------------------------
Costs:
    Total Incremental Installed                 13.21                  7
     Costs.........................
                                                24.35                  3
Net Benefits/Costs:
    Including CO2 and NOX**........              4.15                  7
                                                14.26                  3
------------------------------------------------------------------------
* These values represent global values (in 2007$) 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 $21.4/ton in 2010 (in 2007$).


[[Page 59558]]


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
----------------------------------------------------------------------------------------------------------------
                                                     Consumer NPV at 7% discount rate added with:
                                     ---------------------------------------------------------------------------
                                      SCC value of $4.7/    SCC value of       SCC value of       SCC value of
                 TSL                   metric ton CO2*    $21.4/metric ton   $35.1/metric ton   $64.9/metric ton
                                      and low value for   CO2* and medium    CO2* and Medium     CO2* and High
                                        NOX** billion     value for NOX**    Value for NOX**    Value for NOX**
                                            2009$          billion 2009$      billion 2009$      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
----------------------------------------------------------------------------------------------------------------
                                                     Consumer NPV at 3% discount rate added with:
                                     ---------------------------------------------------------------------------
                                      SCC value of $4.7/    SCC value of       SCC value of       SCC value of
                 TSL                   metric ton CO2*    $21.4/metric ton   $35.1/metric ton   $64.9/metric ton
                                      and low value for   CO2* and medium    CO2* and Medium     CO2* and High
                                        NOX** billion     value for NOX**    Value for NOX**    Value for NOX**
                                            2009$          billion 2009$      billion 2009$      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 CO<INF>2</INF> reductions is based on a global 
value. Second, the assessments of operating cost savings and 
CO<INF>2</INF> 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 max-tech 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

[[Page 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 low-income 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 refrigerator-freezers. 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 Refrigerator-
     Freezers:
        Industry NPV (2009$         (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)
         million).
        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$    27 to 278.....................  31 to 320.....................  37 to 376.....................  50 to 513....................  60 to 614
     million).
    NOX--7% discount rate (2009$    11 to 117.....................  13 to 135.....................  15 to 159.....................  21 to 217....................  25 to 260
     million).
Mean LCC Savings** (2009$):
    Top-Mount Refrigerator-         29............................  29............................  22............................  (37).........................  (133)
     Freezers.
    Bottom-Mount Refrigerator-      19............................  19............................  19............................  (79).........................  (180)
     Freezers.
    Side-by-Side Refrigerator-      53............................  37............................  37............................  (55).........................  (134)
     Freezers.
Median PBP (years):
    Top-Mount Refrigerator-         9.2...........................  9.2...........................  10.9..........................  15.4.........................  20.5
     Freezers
    Bottom-Mount Refrigerator-      4.9...........................  4.9...........................  4.9...........................  24.8.........................  29.0
     Freezers.

[[Page 59560]]

 
    Side-by-Side Refrigerator-      4.8...........................  10.9..........................  10.9..........................  18.6.........................  22.6
     Freezers.
Distribution of Consumer LCC
 Impacts:
    Top-Mount Refrigerator-
     Freezers:
        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 Refrigerator-
     Freezers:
        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 Refrigerator-
     Freezers:
        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       2.28..........................  2.63..........................  3.10..........................  4.23.........................  5.07
 (GW).[dagger]
Employment Impacts:
    Total Potential Changes in      (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)
     Domestic Production Workers
     in 2014 (thousands).
    Indirect Domestic Jobs          10.99.........................  12.05.........................  13.49.........................  12.95........................  10.34
     (thousands).[dagger]
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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.
[dagger] 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 
CO<INF>2</INF>, 272 kt of NO<INF>X</INF>, and 1.73 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 top-mount refrigerator-freezers, a cost of $180 for bottom-mount 
refrigerator-freezers, and a cost of $134 for side-by-side 
refrigerator-freezers. The median payback period is 21 years for top-
mount refrigerator-freezers, 29 years for bottom-mount refrigerator-
freezers, and 23 years for side-by-side refrigerator-freezers. The 
fraction of consumers experiencing an LCC benefit is 15 percent for 
top-mount refrigerator-freezers, 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 
refrigerator-freezers.
    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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 228 kt of NO<INF>X</INF>, and 1.45 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 top-
mount refrigerator-freezers, 25 years for bottom-mount refrigerator-
freezers, and 19 years for side-by-side refrigerator-freezers. The 
fraction of consumers experiencing an LCC benefit is 26 percent for 
top-mount refrigerator-freezers, 12 percent for bottom-mount

[[Page 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 
refrigerator-freezers.
    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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 168 kt of NO<INF>X</INF>, and 1.07 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 top-mount 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 top-mount 
refrigerator-freezers, 5 years for bottom-mount refrigerator-freezers, 
and 11 years for side-by-side refrigerator-freezers. The fraction of 
consumers experiencing an LCC benefit is 45 percent for top-mount 
refrigerator-freezers, 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 refrigerator-freezers.
    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 refrigerator-freezer 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 CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class               ----------------------------------------------------------------------
                                                   based on AV (ft\3\)                  based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerators and refrigerator-         7.99AV + 225.0....................  0.282av + 225.0
 freezers with manual defrost.
1A. All-refrigerators--manual defrost....  6.79AV + 193.6....................  0.240av + 193.6
2. Refrigerator-freezers--partial          7.99AV + 225.0....................  0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic        8.04AV + 232.7....................  0.284av + 232.7
 defrost with top-mounted freezer without
 an automatic icemaker.
3I. Refrigerator-freezers--automatic       8.04AV + 316.7....................  0.284av + 316.7
 defrost with top-mounted freezer with an
 automatic icemaker without through-the-
 door ice service.
3A. All-refrigerators--automatic defrost.  7.07AV + 201.6....................  0.250av + 201.6
4. Refrigerator-freezers--automatic        8.48AV + 296.5....................  0.299av + 296.5
 defrost with side-mounted freezer
 without an automatic icemaker.
4I. Refrigerator-freezers--automatic       8.48AV + 380.5....................  0.299av + 380.5
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
5. Refrigerator-freezers--automatic        8.80AV + 315.4....................  0.311av + 315.4
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5I. Refrigerator-freezers--automatic       8.80AV + 399.4....................  0.311av + 399.4
 defrost with bottom-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
5A. Refrigerator-freezer--automatic        9.15AV + 471.3....................  0.323av + 471.3
 defrost with bottom-mounted freezer with
 through-the-door ice service.
6. Refrigerator-freezers--automatic        8.36AV + 384.1....................  0.295av + 384.1
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic        8.50AV + 431.1....................  0.300av + 431.1
 defrost with side-mounted freezer with
 through-the-door ice service.
----------------------------------------------------------------------------------------------------------------
AV = adjusted volume in cubic feet; av = adjusted volume in liters.


[[Page 59562]]

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$         (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)
         million).
        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$    8.4 to 86.....................  12 to 123.....................  14 to 143.....................  16 to 166....................  17 to 178
     million).
    NOX--7% discount rate (2009$    3.5 to 36.....................  5.0 to 52.....................  5.9 to 61.....................  6.8 to 69....................  7.3 to 75
     million).
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       0.74..........................  0.74..........................  1.25..........................  1.42.........................  1.53
 (GW)[dagger].
Employment Impacts:
    Total Potential Changes in      (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)
     Domestic Production Workers
     in 2014 (thousands).
    Indirect Domestic Jobs          4.34..........................  5.79..........................  5.79..........................  6.77.........................  5.80
     (thousands)[dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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.
[dagger] 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 
CO<INF>2</INF>, 79 kt of NO<INF>X</INF>, and 0.50 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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.

[[Page 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 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 efficiency-improving 
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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 74 kt of NO<INF>X</INF>, and 0.47 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 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 efficiency-
improving 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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 65 kt of NO<INF>X</INF>, and 0.41 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 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 
efficiency-improving 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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 55kt of NO<INF>X</INF>, and 0.34 t of Hg. The estimated 
monetary value of the cumulative CO<INF>2</INF> 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

[[Page 59564]]

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 CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class               ----------------------------------------------------------------------
                                                  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         8.62AV + 228.3                      0.305av + 228.3
 defrost without an automatic icemaker.
10. Chest freezers and all other freezers  7.29AV + 107.8                      0.257av + 107.8
 except compact freezers.
10A. Chest freezers with automatic         10.24AV + 148.1                     0.362av + 148.1
 defrost.
----------------------------------------------------------------------------------------------------------------
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$    3.3 to 33.....................  3.9 to 40.....................  4.7 to 48.....................  5.9 to 60....................  6.6 to 68
     million).
    NOX--7% discount rate (2009$    1.3 to 13.....................  1.5 to 16.....................  1.8 to 19.....................  2.3 to 24....................  2.7 to 28
     million).
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:

[[Page 59565]]

 
 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
 [dagger].
Employment Impacts:
    Total Potential Changes in      (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)
     Domestic Production Workers
     in 2014 (thousands).
    Indirect Domestic Jobs          1.24..........................  1.26..........................  1.44..........................  1.21.........................  0.14
     (thousands) [dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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.
[dagger] 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 
CO<INF>2</INF>, 31 kt of NO<INF>X</INF>, and 0.21 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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, low-margin products, there is a 
limited ability to pass on to consumers the required conversion costs 
and added product costs associated with efficiency-improving 
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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 28 kt of NO<INF>X</INF>, and 0.19 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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, low-margin products, there is a limited ability 
to pass on to consumers the required conversion costs and added product 
costs associated with efficiency-improving 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 CO<INF>2</INF> 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

[[Page 59566]]

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 
CO<INF>2</INF>, 23 kt of NO<INF>X</INF>, and 0.15 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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, low-margin products, there is a limited ability to 
pass on to consumers the required conversion costs and added product 
costs associated with efficiency-improving 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 CO<INF>2</INF> 
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 
CO<INF>2</INF>, 19 kt of NO<INF>X</INF>, and 0.12 t of Hg. The 
estimated monetary value of the cumulative CO<INF>2</INF> 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 efficiency-improving 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 CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class               ----------------------------------------------------------------------
                                                   based on AV (ft\3\)                  based on av (L)
----------------------------------------------------------------------------------------------------------------
11. Compact refrigerators and              9.03AV + 252.3                      0.319av + 252.3
 refrigerator-freezers with manual
 defrost.
11A. Compact refrigerators and             7.84AV + 219.1                      0.277av + 219.1
 refrigerator-freezers with manual
 defrost.
12. Compact refrigerator-freezers--        5.91AV + 335.8                      0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--        11.80AV + 339.2                     0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13A. Compact all-refrigerator--automatic   9.17AV + 259.3                      0.324av + 259.3
 defrost.
14. Compact refrigerator-freezers--        6.82AV + 456.9                      0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
15. Compact refrigerator-freezers--        12.88AV + 368.7                     0.455av + 368.7
 automatic defrost with bottom-mounted
 freezer.
16. Compact upright freezers with manual   8.65AV + 225.7                      0.306av + 225.7
 defrost.
17. Compact upright freezers with          10.17AV + 351.9                     0.359av + 351.9
 automatic defrost.

[[Page 59567]]

 
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$         (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)
         million).
        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$    0 to 2........................  0 to 3........................  1 to 7.......................  1 to 8.......................  1 to 10
     million).
    NOX--7% discount rate (2009$    0 to 1........................  0 to 1........................  0 to 3.......................  0 to 3.......................  0 to 4
     million).
Mean LCC Savings** (2009$):
    Built-in All-Refrigerators:     47............................  63............................  (34).........................  (195)........................  (318)
    Built-in Bottom-Mount           7.............................  0.............................  0............................  (164)........................  (244)
     Refrigerator-Freezers:
    Built-in Side-by-Side           7.............................  7.............................  (116)........................  (116)........................  (219)
     Refrigerator-Freezers:
    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           4.4...........................  12.9..........................  12.9.........................  62.8.........................  61.8
     Refrigerator-Freezers.
    Built-in Side-by-Side           8.7...........................  8.7...........................  36.7.........................  36.7.........................  60.0
     Refrigerator-Freezers.
    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

[[Page 59568]]

 
        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
 [dagger].
Employment Impacts:
    Total Potential Changes in      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)
     Domestic Production Workers
     in 2014 (thousands).
    Indirect Domestic Jobs          0.10..........................  0.13..........................  0.08.........................  0.01.........................  (0.13)
     (thousands) [dagger].
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
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.
[dagger] 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 
CO<INF>2</INF>, 4 kt of NO<INF>X</INF>, and 0.03 t of Hg. The estimated 
monetary value of the cumulative CO<INF>2</INF> 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 built-in all-refrigerators, a cost of $244 for built-in bottom-
mount refrigerator-freezers, a cost of $219 for built-in side-by-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 refrigerator-
freezers, 60 years for built-in side-by-side refrigerator-freezers, and 
27 years for built-in upright freezers. The fraction of consumers 
experiencing an LCC benefit is 3 percent for built-in all-
refrigerators, 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 refrigerator-freezers, 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 CO<INF>2</INF> 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 
CO<INF>2</INF>, 4 kt of NO<INF>X</INF>, and 0.02 t of Hg. The estimated 
monetary value of the cumulative CO<INF>2</INF> 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 all-refrigerators, 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 built-in 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 all-refrigerators, 
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 CO<INF>2</INF> 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

[[Page 59569]]

billion, using a discount rate of 3 percent.
    The cumulative emissions reductions at TSL 3 are 4 Mt of 
CO<INF>2</INF>, 3 kt of NO<INF>X</INF>, and 0.02 t of Hg. The estimated 
monetary value of the cumulative CO<INF>2</INF> 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 all-refrigerators, 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 
refrigerator-freezers, 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 CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class               ----------------------------------------------------------------------
                                                   Based on AV (ft\3\)                  Based on av (L)
----------------------------------------------------------------------------------------------------------------
3-BI. Built-in refrigerator-freezer--      8.57AV + 248.2                      0.303av + 248.2
 automatic defrost with top-mounted
 freezer without an automatic icemaker.
3I-BI. Built-in refrigerator-freezers--    8.57AV + 332.2                      0.303av + 332.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A-BI. Built-in all-refrigerators--        7.55AV + 215.1                      0.266av + 215.1
 automatic defrost.
4-BI. Built-in refrigerator-freezers--     9.04AV + 316.2                      0.319av + 316.2
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I-BI. Built-in refrigerator-freezers--    9.04AV + 400.2                      0.319av + 400.2
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5-BI. Built-in refrigerator-freezers--     9.35AV + 335.1                      0.330av + 335.1
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I-BI. Built-in refrigerator-freezers--    9.35AV + 419.1                      0.330av + 419.1
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A-BI. Built-in refrigerator-freezer--     9.72AV + 495.5                      0.343av + 495.5
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
7-BI. Built-in refrigerator-freezers--     9.07AV + 454.3                      0.320av + 454.3
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
9-BI. Built-in upright freezers with       9.24AV + 244.6                      0.326av + 244.6
 automatic defrost without an automatic
 icemaker.
----------------------------------------------------------------------------------------------------------------
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 
CO<INF>2</INF> emission reductions.\47\ The value of the

[[Page 59570]]

CO<INF>2</INF> reductions, otherwise known as the Social Cost of Carbon 
(SCC), is calculated using a range of values per metric ton of 
CO<INF>2</INF> 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.
---------------------------------------------------------------------------

    \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. 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.
---------------------------------------------------------------------------

    Although combining the values of operating savings and 
CO<INF>2</INF> 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 CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO<INF>2</INF> 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 climate-related 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 CO<INF>2</INF> reductions, and $7 
million in reduced NO<INF>X</INF> 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 CO<INF>2</INF> 
reductions, and $33 million in reduced NO<INF>X</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                                 Primary
                                         Discount rate         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 $2,519/t **...  7%...................                 7                 7                 7
                                     3%...................                33                33                33
        Total [dagger].............  7% plus CO2 range....         2204-3082         1944-2822         2469-3348
                                     7%...................              2435              2175              2700
                                     3%...................              3278              2869              3684
                                     3% plus CO2 range....         3047-3925         2638-3516         3453-4331
Costs:
    Incremental Product Costs......  7%...................              1841              1733              1950
                                     3%...................              1849              1729              1969
Net Benefits/Costs:
    Total [dagger].................  7% plus CO2 range....          363-1241          211-1089          519-1397
                                     7%...................               594               442               750
                                     3%...................              1429              1140              1714
                                     3% plus CO2 range....         1198-2076          909-1787         1483-2362
----------------------------------------------------------------------------------------------------------------
* The Primary, Low, and High Estimates utilize forecasts of energy prices and housing starts from the AEO2010
  Reference case, Low Economic Growth case, and Low Economic Growth case, respectively.
** The CO2 values represent global values (in 2007$) 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.
[dagger] 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

[[Page 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

[[Page 59572]]

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 refrigerator-freezer 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 refrigerator-freezers, 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 standard-size 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

[[Page 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

[[Page 59574]]

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 <a href="/cdn-cgi/l/email-protection#b6f4c4d3d8d2d798f3d2c1d7c4d2c5f6d3d398d2d9d398d1d9c0"><span class="__cf_email__" data-cfemail="4c0e3e2922282d6209283b2d3e283f0c292962282329622b233a">[email protected]</span></a>. 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: <a href="/cdn-cgi/l/email-protection#91d3e3f4fff5f0bfd4f5e6f0e3f5e2d1f4f4bff5fef4bff6fee7"><span class="__cf_email__" data-cfemail="ecae9e8982888dc2a9889b8d9e889fac8989c2888389c28b839a">[email protected]</span></a>.
    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

[[Page 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 max-tech levels identified, and on 
the combinations of design options considered applicable to achieve 
max-tech 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 variable-speed 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 shipment-weighted 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.


[[Page 59576]]


    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 Sec.  430.2, add the definition for ``Built-in refrigerator/
refrigerator-freezer/freezer,'' in alphabetical order, and revise the 
definition for ``Compact refrigerator/refrigerator-freezer/freezer'' to 
read as follows:


Sec.  430.2  Definitions.

* * * * *
    Built-in refrigerator/refrigerator-freezer/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/refrigerator-freezer/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 Sec.  430.32 revise paragraph (a) to read as follows:


Sec.  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.

----------------------------------------------------------------------------------------------------------------
                                                         Equations for maximum energy use (kWh/yr)
              Product class               ----------------------------------------------------------------------
                                                   based on AV (ft\3\)                  based on av (L)
----------------------------------------------------------------------------------------------------------------
1. Refrigerators and refrigerator-         7.99AV + 225.0                      0.282av + 225.0
 freezers with manual defrost.
1A. All-refrigerators--manual defrost....  6.79AV + 193.6                      0.240av + 193.6
2. Refrigerator-freezers--partial          7.99AV + 225.0                      0.282av + 225.0
 automatic defrost.
3. Refrigerator-freezers--automatic        8.04AV + 232.7                      0.284av + 232.7
 defrost with top-mounted freezer without
 an automatic icemaker.
3-BI. Built-in refrigerator-freezer--      8.57AV + 248.2                      0.303av + 248.2
 automatic defrost with top-mounted
 freezer without an automatic icemaker.
3I. Refrigerator-freezers--automatic       8.04AV + 316.7                      0.284av + 316.7
 defrost with top-mounted freezer with an
 automatic icemaker without through-the-
 door ice service.
3I-BI. Built-in refrigerator-freezers--    8.57AV + 332.2                      0.303av + 332.2
 automatic defrost with top-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
3A. All-refrigerators--automatic defrost.  7.07AV + 201.6                      0.250av + 201.6
3A-BI. Built-in All-refrigerators--        7.55AV + 215.1                      0.266av + 215.1
 automatic defrost.
4. Refrigerator-freezers--automatic        8.48AV + 296.5                      0.299av + 296.5
 defrost with side-mounted freezer
 without an automatic icemaker.
4-BI. Built-In Refrigerator-freezers--     9.04AV + 316.2                      0.319av + 316.2
 automatic defrost with side-mounted
 freezer without an automatic icemaker.
4I. Refrigerator-freezers--automatic       8.48AV + 380.5                      0.299av + 380.5
 defrost with side-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
4I-BI. Built-In Refrigerator-freezers--    9.04AV + 400.2                      0.319av + 400.2
 automatic defrost with side-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5. Refrigerator-freezers--automatic        8.80AV + 315.4                      0.311av + 315.4
 defrost with bottom-mounted freezer
 without an automatic icemaker.
5-BI. Built-In Refrigerator-freezers--     9.35AV + 335.1                      0.330av + 335.1
 automatic defrost with bottom-mounted
 freezer without an automatic icemaker.
5I. Refrigerator-freezers--automatic       8.80AV + 399.4                      0.311av + 399.4
 defrost with bottom-mounted freezer with
 an automatic icemaker without through-
 the-door ice service.
5I-BI. Built-In Refrigerator-freezers--    9.35AV + 419.1                      0.330av + 419.1
 automatic defrost with bottom-mounted
 freezer with an automatic icemaker
 without through-the-door ice service.
5A. Refrigerator-freezer--automatic        9.15AV + 471.3                      0.323av + 471.3
 defrost with bottom-mounted freezer with
 through-the-door ice service.
5A-BI. Built-in refrigerator-freezer--     9.72AV + 495.5                      0.343av + 495.5
 automatic defrost with bottom-mounted
 freezer with through-the-door ice
 service.
6. Refrigerator-freezers--automatic        8.36AV + 384.1                      0.295av + 384.1
 defrost with top-mounted freezer with
 through-the-door ice service.
7. Refrigerator-freezers--automatic        8.50AV + 431.1                      0.300av + 431.1
 defrost with side-mounted freezer with
 through-the-door ice service.
7-BI. Built-In Refrigerator-freezers--     9.07AV + 454.3                      0.320av + 454.3
 automatic defrost with side-mounted
 freezer with through-the-door ice
 service.
8. Upright freezers with manual defrost..  5.57AV + 193.7                      0.197av + 193.7
9. Upright freezers with automatic         8.62AV + 228.3                      0.305av + 228.3
 defrost without an automatic icemaker.
9-BI. Built-In Upright freezers with       9.24AV + 244.6                      0.326av + 244.6
 automatic defrost without an automatic
 icemaker.
10. Chest freezers and all other freezers  7.29AV + 107.8                      0.257av + 107.8
 except compact freezers.
10A. Chest freezers with automatic         10.24AV + 148.1                     0.362av + 148.1
 defrost.
11. Compact refrigerators and              9.03AV + 252.3                      0.319av + 252.3
 refrigerator-freezers with manual
 defrost.
11A. Compact refrigerators and             7.84AV + 219.1                      0.277av + 219.1
 refrigerator-freezers with manual
 defrost.
12. Compact refrigerator-freezers--        5.91AV + 335.8                      0.209av + 335.8
 partial automatic defrost.
13. Compact refrigerator-freezers--        11.80AV + 339.2                     0.417av + 339.2
 automatic defrost with top-mounted
 freezer.
13A. Compact all-refrigerator--automatic   9.17AV + 259.3                      0.324av + 259.3
 defrost.
14. Compact refrigerator-freezers--        6.82AV + 456.9                      0.241av + 456.9
 automatic defrost with side-mounted
 freezer.
15. Compact refrigerator-freezers--        12.88AV + 368.7                     0.455av + 368.7
 automatic defrost with bottom-mounted
 freezer.

[[Page 59577]]

 
16. Compact upright freezers with manual   8.65AV + 225.7                      0.306av + 225.7
 defrost.
17. Compact upright freezers with          10.17AV + 351.9                     0.359av + 351.9
 automatic defrost.
18. Compact chest freezers...............  9.25AV + 136.8                      0.327av + 136.8
----------------------------------------------------------------------------------------------------------------
AV = Total adjusted volume, expressed in ft\3\, 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


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