74492 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket Number EERE–2012–BT–STD– 

0020] 

RIN 1904–AC77 

Energy Conservation Program: Energy 

Conservation Standards for 

Commercial Clothes Washers 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, Department of 

Energy. 

ACTION: Final rule. 

SUMMARY: The Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended, prescribes energy 

conservation standards for various 

consumer products and certain 

commercial and industrial equipment, 

including commercial clothes washers 

(CCWs). EPCA also requires that any 

new or amended energy conservation 

standard must be designed to achieve 

the maximum improvement in energy 

efficiency that would be technologically 

feasible and economically justified, and 

would save a significant amount of 

energy. In this final rule, the U.S. 

Department of Energy (DOE) is adopting 

more stringent energy conservation 

standards for CCWs because DOE has 

determined that the amended energy 

conservation standards for CCWs would 

result in significant conservation of 

energy, and are technologically feasible 

and economically justified. 

DATES: The effective date of this rule is 

February 13, 2015. Compliance with the 

amended standards established for 

CCWs in this final rule is required on 

January 1, 2018. 

ADDRESSES: The docket, which includes 

Federal Register notices, public meeting 

attendee lists and transcripts, 

comments, and other supporting 

documents/materials, is available for 

review at regulations.gov. All 

documents in the docket are listed in 

the regulations.gov index. However, 

some documents listed in the index, 

such as those containing information 

that is exempt from public disclosure, 

may not be publicly available. 

The docket for this rulemaking can be 

found at: http://www.regulations.gov/

#!docketDetail;D=EERE-2012-BT-STD0020. The regulations.gov Web page will 

contain simple instructions on how to 

access all documents, including public 

comments, in the docket. 

For further information on how to 

review the docket, contact Ms. Brenda 

Edwards at (202) 586–2945 or by email: 

Brenda.Edwards@ee.doe.gov. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Bryan Berringer, U.S. Department of 

Energy, Office of Energy Efficiency and 

Renewable Energy, Building 

Technologies Program, EE–5B, 1000 

Independence Avenue SW., 

Washington, DC, 20585–0121. 

Telephone: (202) 586–0371. Email: 

Bryan.Berringer@ee.doe.gov. 

Ms. Johanna Hariharan, U.S. 

Department of Energy, Office of the 

General Counsel, GC–33, 1000 

Independence Avenue SW., 

Washington, DC 20585–0121. 

Telephone: (202) 287–6307. Email: 

Johanna.Hariharan@hq.doe.gov. 

SUPPLEMENTARY INFORMATION:

Table of Contents 

I. Summary of the Final Rule and Its Benefits 

A. Benefits and Costs to Consumers 

B. Impact on Manufacturers 

C. National Benefits 

D. Conclusion 

II. Introduction 

A. Authority 

B. Background 

1. Current Standards 

2. History of Standards Rulemaking for 

Commercial Clothes Washers 

III. General Discussion 

A. General Rulemaking Issues 

B. Equipment Classes and Scope of 

Coverage 

C. Test Procedures 

1. Appendix J2 

2. Energy Metric 

3. Water Metric 

D. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

E. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

F. Economic Justification 

1. Specific Criteria 

a. Economic Impact on Manufacturers and 

Consumers 

b. Savings in Operating Costs Compared to 

Increase in Price (LCC and PBP) 

c. Energy Savings 

d. Lessening of Utility of Equipment 

e. Impact of Any Lessening of Competition 

f. Need for National Energy Conservation 

g. Other Factors 

2. Rebuttable Presumption 

IV. Methodology and Discussion of Related 

Comments 

A. Market and Technology Assessment 

1. Market Assessment 

2. Technology Assessment 

B. Screening Analysis 

C. Engineering Analysis 

1. General Approach 

2. Technologies Unable to be Included in 

the Analysis 

3. Appendix J2 Efficiency Level 

Translations 

4. Baseline Efficiency Levels 

5. Front-Loading Higher Efficiency Levels 

6. Top-Loading Higher Efficiency Levels 

7. Impacts on Cleaning Performance and 

Cycle Time 

D. Markups Analysis 

E. Energy and Water Use Analysis 

F. Life-Cycle Cost and Payback Period 

Analysis 

1. Equipment Costs 

2. Installation Costs 

3. Unit Energy Consumption 

4. Energy and Water Prices 

5. Repair and Maintenance Costs 

6. Lifetime 

7. Discount Rate 

8. Compliance Date 

9. Base Case Efficiency Distribution 

10. Payback Period Inputs 

11. Rebuttable-Presumption Payback 

Period 

G. Shipments Analysis 

H. National Impact Analysis 

1. Efficiency Trends 

2. National Energy and Water Savings 

3. Net Present Value of Customer Benefit 

a. Total Annual Installed Cost 

b. Total Annual Operating Cost Savings 

I. Customer Subgroup Analysis 

J. Manufacturer Impact Analysis 

1. Overview 

2. Government Regulatory Impact Model 

a. Government Regulatory Impact Model 

Key Inputs 

b. Government Regulatory Impact Model 

Scenarios 

3. Discussion of Comments 

a. Cumulative Regulatory Burden 

b. Conversion Costs 

K. Emissions Analysis 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

1. Social Cost of Carbon 

b. Development of Social Cost of Carbon 

Values 

2. Valuation of Other Emissions 

Reductions 

M. Utility Impact Analysis 

N. Employment Impact Analysis 

V. Analytical Results 

A. Trial Standard Levels 

B. Economic Justification and Energy 

Savings 

1. Economic Impacts on Individual 

Customers 

a. Life-Cycle Cost and Payback Period 

b. Customer Subgroup Analysis 

c. Rebuttable Presumption Payback 

2. Economic Impacts on Manufacturers 

a. Industry Cash-Flow Analysis Results 

b. Impacts on Direct Employment 

c. Impacts on Manufacturing Capacity 

d. Impacts on Subgroups of Manufacturers 

e. Cumulative Regulatory Burden 

3. National Impact Analysis 

a. Significance of Energy Savings 

b. Net Present Value of Customer Costs and 

Benefits 

c. Indirect Impacts on Employment 

4. Impact on Utility 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Summary of National Economic Impacts 

8. Other Factors 

C. Conclusion 

1. Benefits and Burdens of Trial Standard 

Levels Considered for Commercial 

Clothes Washers 

2. Summary of Benefits and Costs 

(Annualized) of the Amended Standards 

VI. Procedural Issues and Regulatory Review 


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74493 

1All references to EPCA refer to the statute as 

amended through the American Energy 

Manufacturing Technical Corrections Act 

(AEMTCA), Pub. L. 112–210 (Dec. 18, 2012). 

2Part C of Title III was re-designated as Part A– 

1 upon incorporation into the U.S. Code (42 U.S.C. 

6311–6317, as codified) for editorial reasons. 

3 DOE uses the ‘‘MEFJ2’’ nomenclature to 

distinguish these new standards from the MEF 

metric used in the current energy conservation 

standards. MEF is calculated according to the test 

procedures at 10 Code of Federal Regulations (CFR) 

430, subpart B, appendix J1; whereas MEFJ2 is 

calculated according to the test procedures at 10 

CFR 430, subpart B, appendix J2. 

4The average LCC savings are measured relative 

to the base-case efficiency distribution, which 

depicts the market in the compliance year (see 

section IV.F.9). The simple PBP, which is designed 

to compare specific CCW efficiency levels, is 

measured relative to the baseline model (see section 

IV.C.4). 

5All monetary values in this section are 

expressed in 2013 dollars and are discounted to 

2014. 

6A quad is equal to 1015 British thermal units 

(Btu). 

7A metric ton is equivalent to 1.1 short tons. 

Results for NOX and Hg are presented in short tons. 

A. Review Under Executive Orders 12866 

and 13563 

B. Review Under the Regulatory Flexibility 

Act 

1. Significant Alternatives to the Rule 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act of 1969 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

M. Congressional Notification 

VII. Approval of the Office of the Secretary 

I. Summary of the Final Rule and Its 

Benefits 

Title III of the Energy Policy and 

Conservation Act of 1975 (42 

U.S.C.6291, et seq; ‘‘EPCA’’), Pub. L. 94– 

163, sets forth a variety of provisions 

designed to improve energy efficiency.1

Part C of title III 2 establishes the 

‘‘Energy Conservation Program for 

Certain Industrial Equipment.’’ These 

include commercial clothes washers 

(CCWs), which are the subject of this 

rule. (42 U.S.C. 6311(1)(H)) 

Pursuant to EPCA, any new or 

amended energy conservation standard 

must be designed to achieve the 

maximum improvement in energy 

efficiency that DOE determines is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and 6316(a)) Furthermore, 

the new or amended standard must 

result in significant conservation of 

energy. (42 U.S.C. 6295(o)(3)(B) and 

6316(a)). In accordance with these and 

other statutory provisions discussed in 

this notice, DOE is adopting amended 

energy conservation standards for 

CCWs. The amended standards, which 

are expressed for each equipment class 

in terms of a minimum modified energy 

factor (MEFJ2) 3 and a maximum 

integrated water factor (IWF), are shown 

in Table I.1. These amended standards 

apply to all equipment listed in Table 

I.1 that are manufactured in, or 

imported into, the United States on or 

after January 1, 2018. 

TABLE I.1—ENERGY CONSERVATION

STANDARDS FOR COMMERCIAL

CLOTHES WASHERS

[Compliance Starting January 1, 2018] 

Equipment class Minimum 

MEFJ2* 

Maximum 

IWF†

Top-Loading ...... 1.35 8.8 

Front-Loading ... 2.00 4.1 

* MEFJ2 (appendix J2 modified energy factor) is calculated as the clothes container capacity in cubic feet divided by the sum, expressed in kilowatt-hours (kWh), of: (1) The 

total weighted per-cycle hot water energy consumption; (2) the total weighted per-cycle machine electrical energy consumption; and (3) 

the per-cycle energy consumption for removing moisture from a test load. † IWF (integrated water factor) is calculated 

as the sum, expressed in gallons per cycle, of 

the total weighted per-cycle water consumption for all wash cycles divided by the clothes 

container capacity in cubic feet. 

A. Benefits and Costs to Consumers 

Table I.2 and Table I.3 present DOE’s 

evaluation of the economic impacts of 

the amended standards on customers of 

CCWs in multi-family and laundromat 

applications, respectively, as measured 

by the average life-cycle cost (LCC) 

savings and the simple payback period 

(PBP).4 In both applications, the average 

LCC savings are positive for both 

equipment classes. The PBPs near zero 

reflect the very small (or zero in the case 

of top-loading units) incremental cost 

necessary to achieve the amended 

standards. 

TABLE I.2—IMPACTS OF AMENDED

STANDARDS ON CUSTOMERS OF

COMMERCIAL CLOTHES WASHERS: 

MULTI-FAMILY APPLICATION

Equipment class 

Average 

LCC 

savings 

(2013$) 

Simple 

payback 

period 

(years) 

Front-loading ..... 271.9 0.02 

Top-Loading ...... 294.5 0.00 

TABLE I.3—IMPACTS OF AMENDED

STANDARDS ON CUSTOMERS OF

COMMERCIAL CLOTHES WASHERS: 

LAUNDROMAT APPLICATION

Equipment class 

Average 

LCC 

savings 

(2013$) 

Simple payback period 

(years) 

Front-loading ..... 212.3 0.02 

Top-Loading ...... 165.7 0.00 

B. Impact on Manufacturers 

The industry net present value (INPV) 

is the sum of the discounted cash flows 

to the industry from the base year 

through the end of the analysis period 

(2015 to 2047). Using a real discount 

rate of 8.6 percent, DOE estimates that 

the INPV for manufacturers of CCWs is 

$123.5 million in 2013$. Under the 

amended standards, DOE expects that 

the INPV may be reduced by up to 5.3 

percent, which is a loss of 

approximately $6.6 million. However, 

based on DOE’s interviews with the 

manufacturers of CCWs, DOE does not 

expect any plant closings or significant 

loss of employment. 

C. National Benefits 5

DOE’s analyses indicate that the 

amended energy conservation standards 

for CCWs would save a significant 

amount of energy. The lifetime energy 

savings for CCWs purchased in the 30- 

year period that begins in the year of 

compliance with amended standards 

(2018–2047) amount to 0.07 quadrillion 

Btu (quads).6 This amounts to energy 

savings of 7 percent, relative to the 

energy use of CCWs in the base case 

without amended standards. 

The cumulative net present value 

(NPV) of total customer costs and 

savings of the amended standards for 

CCWs ranges from $243 million to $532 

million at 7-percent and 3-percent 

discount rates, respectively. This NPV 

expresses the estimated total value of 

future operating-cost savings minus the 

estimated increased equipment costs for 

CCWs purchased in 2018–2047. 

In addition, the amended CCW 

standards would have significant 

environmental benefits. The energy 

savings from the amended standards 

would result in cumulative emission 

reductions of 4.1 million metric tons 

(Mt) 7 of carbon dioxide (CO2), 32.0 


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74494 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

8 DOE calculated emissions reductions relative to 

the Annual Energy Outlook 2014 (AEO 2014) 

Reference case, which generally represents current 

legislation and environmental regulations for which 

implementing regulations were available as of 

October 31, 2013. 

9Technical Update of the Social Cost of Carbon 

for Regulatory Impact Analysis Under Executive 

Order 12866. Interagency Working Group on Social 

Cost of Carbon, United States Government. May 

2013; revised November 2013. http://

www.whitehouse.gov/sites/default/files/omb/assets/

inforeg/technical-update-social-cost-of-carbon-forregulator-impact-analysis.pdf. 10 DOE is currently investigating valuation of 

avoided Hg and SO2 emissions. 11To convert the time-series of costs and benefits 

into annualized values, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total consumer costs and savings. For the 

benefits, DOE calculated a present value associated 

with each year’s shipments in the year in which the 

shipments occur (e.g., 2020 or 2030), and then 

discounted the present value from each year to 

2014. The calculation uses discount rates of 3 and 

7 percent for all costs and benefits except for the 

value of CO2 reductions, for which DOE used casespecific discount rates, as shown in Table I.3. Using 

the present value, DOE then calculated the fixed 

annual payment over a 30-year period, starting in 

the compliance year that yields the same present 

value. 

thousand tons of methane (CH4), 1.9 

thousand tons of sulfur dioxide (SO2), 

0.04 thousand tons of nitrous oxide 

(N2O), 9.1 thousand tons of nitrogen 

oxides (NOX) and 0.01 tons of mercury 

(Hg).8 The cumulative reduction in CO2

emissions through 2030 amounts to 1.18 

Mt, which is equivalent to the emissions 

associated with the annual electricity 

use of more than 162 thousand homes. 

The value of the CO2 reductions is 

calculated using a range of values per 

metric ton of CO2 (otherwise known as 

the Social Cost of Carbon, or SCC) 

developed by a Federal interagency 

process.9 The derivation of the SCC 

values is discussed in section IV.L.1. 

Using discount rates appropriate for 

each set of SCC values, DOE estimates 

the present monetary value of the CO2

emissions reduction is between $29.1 

and $410 million. DOE also estimates 

the present monetary value of the NOX

emissions reduction is $6.1 million and 

$12.7 million at 7-percent and 3-percent 

discount rates, respectively.10

Table I.4 summarizes the national 

economic costs and benefits expected to 

result from the amended standards for 

CCWs. 

TABLE I.4—SUMMARY OF NATIONAL ECONOMIC BENEFITS AND COSTS OF AMENDED ENERGY CONSERVATION STANDARDS

FOR CCWS * 

Category Present value 

million 2013$ 

Discount rate 

(percent) 

Benefits 

Operating Cost Savings ................................................................................................................................... 243 7 

533 3 

CO2 Reduction Monetized Value ($12.0/t case) ** .......................................................................................... 29 5 

CO2 Reduction Monetized Value ($40.5/t case) ** .......................................................................................... 133 3 

CO2 Reduction Monetized Value ($62.4/t case) ** .......................................................................................... 210 2.5 

CO2 Reduction Monetized Value ($119/t case) ** ........................................................................................... 410 3 

NOX Reduction Monetized Value (at $2,684/ton) ** ........................................................................................ 6 7 

13 3 

Total Benefits † ................................................................................................................................................. 382 7 

678 3 

Costs 

Incremental Installed Costs ............................................................................................................................. 0.24 7 

0.46 3 

Total Net Benefits 

Including Emissions Reduction Monetized Value † ......................................................................................... 382 7 

677 3 

* This table presents the costs and benefits associated with front-loading and top-loading CCW units shipped in 2018–2047. These results include benefits to customers which accrue after 2047 from the equipment purchased in 2018–2047. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. †Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC with 3-percent discount rate. 

The benefits and costs of the amended 

standards for CCWs sold from 2018– 

2047 can also be expressed in terms of 

annualized values. The annualized 

monetary values are the sum of (1) the 

annualized national economic value of 

the benefits from customer operation of 

CCWs that meet the amended standards 

(consisting primarily of operating cost 

savings from using less energy, minus 

increases in equipment purchase and 

installation costs, which is another way 

of representing customer NPV), and (2) 

the annualized monetary value of the 

benefits of emission reductions, 

including CO2 emission reductions.11

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions, whereas the 

value of CO2 reductions is based on a 

global value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different timeframes for 

analysis. The national operating cost 

savings is measured for the lifetime of 

CCWs shipped in 2018–2047. The SCC 

values, on the other hand, reflect the 

present value of some future climaterelated impacts resulting from the 

emission of one ton of carbon dioxide in 

each year. These impacts continue well 

beyond 2100. 


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74495 

Estimates of annualized benefits and 

costs of the amended standards are 

shown in Table I.5. The results under 

the primary estimate are as follows. 

Using a 7-percent discount rate for 

benefits and costs other than CO2

reduction, for which DOE used a 3- 

percent discount rate along with the 

average SCC series that uses a 3-percent 

discount rate ($40.5/t case), the cost of 

the standards amended in this rule is 

$0.02 million per year in increased 

equipment costs, while the benefits are 

$24 million per year in reduced 

equipment operating costs, $7 million 

per year in CO2 reductions, and $0.60 

million per year in reduced NOX

emissions. In this case, the net benefit 

amounts to $32 million per year. Using 

a 3-percent discount rate for all benefits 

and costs and the average SCC series, 

the cost of the CCW amended standards 

is $0.03 million per year in increased 

equipment costs, while the benefits are 

$30 million per year in reduced 

operating costs, $7 million per year in 

CO2 reductions, and $0.71 million per 

year in reduced NOX emissions. In this 

case, the net benefit amounts to $38 

million per year. 

TABLE I.5—ANNUALIZED BENEFITS AND COSTS OF AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL

CLOTHES WASHERS

Discount 

rate 

Primary estimate * 

Low net 

benefits 

estimate * 

High net 

benefits 

estimate * 

million 2013$/year 

Benefits: 

Operating Cost Savings ........................................................ 7% ............................................ 24 21 30 

3% ............................................ 30 26 38 

CO2 Reduction Monetized Value ($12.0/t case) * ................. 5% ............................................ 2 2 3 

CO2 Reduction Monetized Value ($40.5/t case) * ................. 3% ............................................ 7 7 9 

CO2 Reduction Monetized Value ($62.4/t case) * ................. 2.5% ......................................... 11 10 13 

CO2 Reduction Monetized Value ($119/t case) * .................. 3% ............................................ 23 21 28 

NOX Reduction Monetized Value (at $2,684/ton) ** .............. 7% ............................................ 0.60 0.55 0.71 

3% ............................................ 0.71 0.64 0.86 

Total Benefits † ............................................................... 7% plus CO2 range ................. 27 to 47 24 to 43 33 to 58 

7% ............................................ 32 29 39 

3% plus CO2 range ................. 33 to 53 29 to 47 41 to 66 

3% ............................................ 38 33 48 

Costs: 

Incremental Equipment Costs ............................................... 7% ............................................ 0.02 0.03 0.02 

3% ............................................ 0.03 0.03 0.02 

Net Benefits: 

Total † .............................................................................. 7% plus CO2 range ................. 27 to 47 24 to 43 33 to 58 

7% ............................................ 32 29 39 

3% plus CO2 range ................. 33 to 53 29 to 47 41 to 66 

3% ............................................ 38 33 48 

* This table presents the annualized costs and benefits associated with CCW equipment shipped in 2018–2047. These results include benefits 

to customers which accrue after 2047 from the equipment purchased in 2018–2047. The results account for the incremental variable and fixed 

costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and 

High Benefits Estimates utilize projections of energy prices from the AEO2014 Reference case, Low Estimate, and High Estimate, respectively. 

In addition, incremental equipment costs reflect a flat rate for projected equipment price trends in the Primary Estimate, a low decline rate in the 

Low Benefits Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in 

section IV. 

** The CO2 values represent global monetized values of the SCC, in 2013$, in 2015 under several scenarios of the updated SCC values. The 

first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series used by DOE incorporate an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. †Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount 

rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled 

discount rate, and those values are added to the full range of CO2 values. 

D. Conclusion 

DOE has concluded that the amended 

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 

equipment achieving these standard 

levels are already commercially 

available for the equipment classes 

covered by this final rule. Based on the 

analyses described above, DOE has 

concluded that the benefits of the 

amended standards to the Nation 

(energy savings, positive NPV of 

customer benefits, customer LCC 

savings, and emission reductions) 

would outweigh the burdens (loss of 

INPV for manufacturers and LCC 

increases for some customers). 

II. Introduction 

The following section briefly 

discusses the statutory authority 

underlying the final rule, as well as 

some of the relevant historical 

background related to the establishment 

of amended standards for CCWs. 

A. Authority 

As noted in section I, Title III of EPCA 

establishes the ‘‘Energy Conservation 

Program for Certain Industrial 

Equipment.’’ This equipment includes 

CCWs, the subject of this rulemaking. 

(42 U.S.C. 6311(1)(H)) 

EPCA established energy conservation 

standards for CCWs and directed DOE to 

conduct two rulemakings to determine 

whether the established standards 

should be amended. (42 U.S.C. 6313(e)) 

DOE published its first final rule 

amending CCW standards on January 8, 

2010 (‘‘January 2010 final rule’’), which 

apply to CCWs manufactured on or after 

January 8, 2013. The second final rule 

determining whether standards should 

be amended must be published by 


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74496 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

January 1, 2015. Any amended 

standards would apply to CCWs 

manufactured three years after the date 

on which the final amended standard is 

published. (42 U.S.C. 6313(e)(2)(B)) This 

current rulemaking satisfies the 

requirement to publish the second final 

rule by January 1, 2015. 

Pursuant to EPCA, DOE’s energy 

conservation program for covered 

equipment consists essentially of four 

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

establishment of Federal energy 

conservation standards; and (4) 

certification and enforcement 

procedures. Subject to certain criteria 

and conditions, DOE is required to 

develop test procedures to measure the 

energy efficiency, energy use, or 

estimated annual operating cost of each 

covered equipment. (42 U.S.C. 

6314(a)(2)) Manufacturers of covered 

equipment must use the prescribed DOE 

test procedure as the basis for certifying 

to DOE that their equipment comply 

with the applicable energy conservation 

standards adopted under EPCA and 

when making representations to the 

public regarding the energy use or 

efficiency of those equipment. 

(42 U.S.C. 6314(d)) Similarly, DOE must 

use these test procedures to determine 

whether the equipment comply with 

standards adopted pursuant to EPCA. 

DOE must follow specific statutory 

criteria for prescribing amended 

standards for covered equipment. As 

indicated above, any amended standard 

for covered equipment must be designed 

to achieve the maximum improvement 

in energy efficiency that is 

technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and 6316(a)) Furthermore, 

DOE may not adopt any standard that 

would not result in the significant 

conservation of energy. (42 U.S.C. 

6295(o)(3) and 6316(a)) Moreover, DOE 

may not prescribe a standard: (1) For 

certain equipment, including CCWs, if 

no test procedure has been established 

for the equipment, or (2) if DOE 

determines by rule that the amended 

standard is not technologically feasible 

or economically justified. (42 U.S.C. 

6295(o)(3)(A) (B) and 6316(a)) In 

deciding whether an amended standard 

is economically justified, DOE must 

determine whether the benefits of the 

standard exceed its burdens. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(a)) DOE must 

make this determination after receiving 

comments on the proposed standard, 

and by considering, to the greatest 

extent practicable, the following seven 

factors: 

1. The economic impact of the 

standard on manufacturers and 

consumers of the equipment subject to 

the standard; 

2. The savings in operating costs 

throughout the estimated average life of 

the covered equipment in the type (or 

class) compared to any increase in the 

price, initial charges, or maintenance 

expenses for the covered equipment that 

are likely to result from the imposition 

of the standard; 

3. The total projected amount of 

energy, or as applicable, water, savings 

likely to result directly from the 

imposition of the standard; 

4. Any lessening of the utility or the 

performance of the covered equipment 

likely to result from the imposition of 

the standard; 

5. The impact of any lessening of 

competition, as determined in writing 

by the Attorney General, that is likely to 

result from the imposition of the 

standard; 

6. The need for national energy and 

water conservation; and 

7. Other factors the Secretary of 

Energy (Secretary) considers relevant. 

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

6316(a)) 

EPCA, as codified, also contains what 

is known as an ‘‘anti-backsliding’’ 

provision, which prevents the Secretary 

from prescribing any amended standard 

that either increases the maximum 

allowable energy use or decreases the 

minimum required energy efficiency of 

covered equipment. (42 U.S.C. 

6295(o)(1) and 6316(a)) Also, the 

Secretary may not prescribe an amended 

or new standard if interested persons 

have established by a preponderance of 

the evidence that the standard is likely 

to result in the unavailability in the 

United States of any covered equipment 

type (or class) of performance 

characteristics (including reliability), 

features, sizes, capacities, and volumes 

that are substantially the same as those 

generally available in the United States. 

(42 U.S.C. 6295(o)(4) and 6316(a)) 

Further, EPCA, as codified, 

establishes a rebuttable presumption 

that a standard is economically justified 

if the Secretary finds that the additional 

cost to the consumer of purchasing 

products or equipment complying with 

an energy conservation standard level 

will be less than three times the value 

of the energy savings during the first 

year that the consumer will receive as 

a result of the standard, as calculated 

under the applicable test procedure. 

(42 U.S.C. 6295(o)(2)(B)(iii) and 6316(a)) 

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 or equipment for any group 

of covered products or equipment that 

have the same function or intended use 

if DOE determines that products or 

equipment within such group (A) 

consume a different kind of energy from 

that consumed by other covered 

products or equipment within such type 

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

performance-related feature which other 

products or equipment within such type 

(or class) do not have and such feature 

justifies a higher or lower standard. 

(42 U.S.C. 6295(q)(1) and 6316(a)) In 

determining whether a performancerelated feature justifies a different 

standard for a group of products or 

equipment, 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) and 

6316(a)) 

Federal energy conservation 

requirements generally supersede State 

laws or regulations concerning energy 

conservation testing, labeling, and 

standards. (42 U.S.C. 6297(a)–(c) 

6316(a)) DOE may, however, grant 

waivers of Federal preemption for 

particular State laws or regulations, in 

accordance with the procedures and 

other provisions set forth under 

42 U.S.C. 6297(d) and 6316(a)). 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011 (76 FR 3281, 

Jan. 21, 2011). EO 13563 is 

supplemental to and explicitly reaffirms 

the principles, structures, and 

definitions governing regulatory review 

established in Executive Order 12866. 

To the extent permitted by law, agencies 

are required by Executive Order 13563 

to: (1) Propose or adopt a regulation 

only upon a reasoned determination 

that its benefits justify its costs 

(recognizing that some benefits and 

costs are difficult to quantify); (2) tailor 

regulations to impose the least burden 

on society, consistent with obtaining 

regulatory objectives, taking into 

account, among other things, and to the 

extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 


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12A notation in this form provides a reference for 

information that is in the docket for DOE’s 

rulemaking to develop energy conservation 

standards for CCWs (Docket No. EERE–2012–BT– 

STD–0020), which is maintained at http://

www.regulations.gov/#!docketDetail;D=EERE-2012- 

BT-STD-0020. This notation indicates that AHAM’s 

statement preceding the reference can be found in 

document number 23 in the docket, and appears at 

page 6 of that document. 

13Whirlpool Corporation submitted a written 

comment stating that it worked closely with AHAM 

in the development of AHAM’s submitted 

comments, and that Whirlpool strongly supports 

Continued 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that 

Executive Order 13563 requires agencies 

to use the best available techniques to 

quantify anticipated present and future 

benefits and costs as accurately as 

possible. In its guidance, the Office of 

Information and Regulatory Affairs 

(OIRA) in the Office of Management and 

Budget (OMB) has emphasized that such 

techniques may include identifying 

changing future compliance costs that 

might result from technological 

innovation or anticipated behavioral 

changes. For the reasons stated in the 

preamble, DOE believes that the final 

rule is consistent with these principles, 

including the requirement that, to the 

extent permitted by law, benefits justify 

costs and that net benefits are 

maximized. Consistent with EO 13563, 

and the range of impacts analyzed in 

this rulemaking, the energy efficiency 

standard adopted herein by DOE 

achieves maximum net benefits. 

B. Background 

1. Current Standards 

In the January 2010 final rule, DOE 

prescribed the current energy 

conservation standards for CCWs 

manufactured on or after January 8, 

2013. The current standards are set forth 

in Table II.1. 

TABLE II.1—CURRENT FEDERAL ENERGY EFFICIENCY STANDARDS FOR COMMERCIAL CLOTHES WASHERS

Equipment class 

Minimum 

MEF* 

cu.ft/kWh/cycle 

Maximum WF†

gal/cu.ft./cycle 

Top-Loading ............................................................................................................................................................. 1.60 8.5 

Front-Loading ........................................................................................................................................................... 2.00 5.5 

* MEF (appendix J1 modified energy factor) is calculated as the clothes container capacity in cubic feet divided by the sum, expressed in kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot water energy consumption; (2) the total weighted per-cycle machine electrical energy 

consumption; and (3) the per-cycle energy consumption for removing moisture from a test load. †WF (water factor) is calculated as the weighted per-cycle water consumption for the cold wash/cold rinse cycle, expressed in gallons per 

cycle, divided by the clothes container capacity in cubic feet. 

2. History of Standards Rulemaking for 

Commercial Clothes Washers 

As described in Section II.A, EPCA 

established energy conservation 

standards for CCWs and directed DOE to 

conduct two rulemakings to determine 

whether the established standards 

should be amended. (42 U.S.C. 6313(e)) 

DOE published its first final rule 

amending CCW standards on January 8, 

2010 (‘‘January 2010 final rule’’). 75 FR 

1122. This current rulemaking satisfies 

the requirement to publish the second 

final rule determining whether the 

standards should be amended by 

January 1, 2015. 

On August 13, 2012, DOE published 

a notice of public meeting and 

availability of the framework document 

for this rulemaking. DOE also requested 

public comment on the document. 77 

FR 48108. The framework document 

described the procedural and analytical 

approaches that DOE anticipated using 

to evaluate energy conservation 

standards for CCWs and identified 

various issues to resolve during the 

rulemaking. 

On September 24, 2012, DOE held the 

framework document public meeting 

and discussed the issues detailed in the 

framework document. DOE also 

described the analyses that it 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 major issues 

at the public meeting, including the 

rulemaking schedule, test procedure 

revisions, equipment classes, 

technology options, efficiency levels, 

and approaches for each of the analyses 

performed by DOE as part of the 

rulemaking process. 

On March 4, 2014, DOE published a 

notice of proposed rulemaking 

(hereafter, the ‘‘March 2014 NOPR’’) and 

notice of public meeting. 79 FR 12301. 

The March 2014 NOPR presented the 

results of DOE’s initial analyses and 

proposed amended standards for CCWs. 

DOE also published an accompanying 

technical support document (TSD) that 

described the results of each analysis in 

greater detail. 

On April 21, 2014, DOE held the 

March 2014 NOPR public meeting and 

discussed the issues detailed in the 

NOPR. Interested parties commented on 

various aspects of the proposed rule and 

submitted supplemental written 

comments. Following the public 

meeting, DOE gathered additional 

information and performed additional 

analysis to supplement the analyses 

presented in the March 2014 NOPR, 

including the engineering, LCC, PBP, 

manufacturer impact, and national 

impact analyses. The results of these 

analyses are detailed in a TSD 

accompanying this final rule, available 

in the docket at the regulations.gov Web 

site. DOE considered the comments 

received since publication of the March 

2014 NOPR, including those received at 

the NOPR public meeting, in developing 

the amended standards for CCWs. 

III. General Discussion 

A. General Rulemaking Issues 

In the March 2014 NOPR (79 FR 

12301), DOE proposed a compliance 

date of January 1, 2015 for the amended 

standards resulting from this 

rulemaking. 79 FR 12301, 12351. As 

explained in the preamble to the March 

2014 NOPR, and as explained in this 

final rule, EPCA requires that any 

amended standards as a result of this 

rulemaking would apply to CCWs 

manufactured three years after the date 

on which the final amended standard is 

published. (42 U.S.C. 6313(e)(2)(B)) 

The Association of Home Appliance 

Manufacturers (AHAM) and Alliance 

Laundry Systems (ALS) commented that 

the March 2014 NOPR erroneously 

listed the compliance date for this 

rulemaking as ‘‘on or after January 1, 

2015,’’ and noted that the intended 

compliance data should be ‘‘on or after 

January 1, 2018.’’ (AHAM, No. 23 at p. 

6; Whirlpool, No. 28 at p. 1; ALS, No. 

26 at p. 3) 12 13


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the positions taken by AHAM. Unless otherwise 

noted, throughout this final rule, reference to 

AHAM’s written comments (document number 23 

in the docket) should be considered reflective of 

Whirlpool’s position as well. 

14This excludes one outlier top-loading model 

with a cycle time of 50 minutes. DOE considers the 

model with a cycle time of 50 minutes to be 

unrepresentative of equipment typically used in 

coin laundry or multi-family housing laundry 

facilities. 

The final rule corrects this error from 

the March 2014 NOPR and establishes a 

compliance date for amended standards 

as listed in the Summary section of this 

final rule. 

B. Equipment Classes and Scope of 

Coverage 

When evaluating and establishing 

energy conservation standards, DOE 

divides covered equipment into 

equipment classes by the type of energy 

used, or by capacity or other 

performance-related feature that justifies 

a different standard. DOE may not 

prescribe standards that are likely to 

result in the unavailability of a certain 

product class of performance 

characteristics, features, sizes, 

capacities, and volumes that are 

substantially the same as those generally 

available in the United States at the time 

of the Secretary’s finding. (42 U.S.C. 

6294(o)(4) and 6316(a)) In making a 

determination whether a performancerelated feature justifies a different 

standard, DOE must consider such 

factors as the utility to the consumer of 

the feature and other factors DOE 

determines are appropriate. (42 U.S.C. 

6295(q) and 6316(a)) DOE creates 

product and equipment classes based on 

function or use and currently divides 

CCWs into two equipment classes: Toploading and front-loading. 

DOE tentatively concluded in the 

March 2014 NOPR that the axis of 

loading represents a distinct consumer 

utility-related feature that warrants 

retaining both top-loading and frontloading CCW equipment classes. 79 

FR12301, 12309 (Mar. 4, 2014). DOE 

reached the same conclusion in prior 

rulemakings for residential clothes 

washers. 56 FR 22249, 22263 (May 14, 

1991) and 77 FR 32307, 32319 (May 31, 

2012). 

DOE also preliminarily determined in 

the March 2014 NOPR that the longer 

average cycle time of front-loading 

machines warrants consideration of 

separate equipment classes. DOE 

presented data showing that top-loading 

cycle times for the maximum load size 

ranged from 29 to 31 minutes, with an 

average of 30 minutes.14 79 FR 12301, 

12309. Front-loading cycle times, on the 

other hand, ranged from 30 to 37 

minutes, with an average of 34 minutes. 

Id. DOE preliminarily determined that 

the longer average cycle time of frontloading CCWs results in fewer possible 

‘‘turns’’ per day compared to toploading CCWs. The longer average time 

is significant in a laundromat or multifamily laundry setting to end-users 

waiting on the machine to finish its 

cycle, as well as to laundromat owners 

and multi-family laundry route 

operators looking to maximize daily 

laundry throughput. 

In addition, DOE’s analysis in the 

March 2014 NOPR indicated that the 

technologies, designs, and operating 

characteristics of the max-tech toploading residential clothes washers were 

not transferrable to CCWs. Since the 

efficiency levels of top-loading CCWs on 

the market do not overlap with those of 

front-loading clothes washers, a single 

energy efficiency standard applicable to 

both top-loading and front-loading 

CCWs would likely result in the 

elimination of top-loading clothes 

washers from the market. 

For these reasons, DOE preliminarily 

concluded that separate equipment 

classes are justified for top-loading and 

front-loading CCWs based on the criteria 

established in EPCA. (42 U.S.C. 

6295(o)(4) and (q)(1), 6316(a)) The 

proposal in the March 2014 NOPR thus 

maintained separate standards for toploading and front-loading equipment 

classes. 77 FR 12309. DOE received 

comments in response to the March 

2014 NOPR both in support of and 

opposed to establishing two equipment 

classes for CCWs. These comments are 

described in more detail in the 

following paragraphs. 

The California Investor Owned 

Utilities (hereafter, ‘‘California IOUs’’) 

and, in a joint comment, the Natural 

Resources Defense Council (NRDC), 

Alliance to Save Energy, Northwest 

Power and Conservation Council, 

Appliance Standards Awareness Project 

(ASAP), and Northwest Energy 

Efficiency Alliance (hereafter, ‘‘Joint 

Commenters’’), support a single 

equipment class due to the similarity in 

cycle times between top-loaders and 

front-loaders. (California IOUs, Public 

Meeting Transcript, No. 30 at p. 14; 

Joint Commenters, No. 29 at pp. 1–4) In 

their comment, the California IOUs note 

that if a front-loader is able to get more 

water out of the clothing, the dryer time 

would be shorter and, thus, the overall 

cycle time associated with the end-user 

waiting at a laundromat would either be 

the same or less. (California IOUs, 

Public Meeting Transcript, No. 30 at pp. 

61–62). 

The California IOUs believe that a 

top-loading configuration does not offer 

distinct consumer utility. (California 

IOUs, No. 27 at pp. 1–2) The California 

IOUs believe increasing front-loading 

sales could imply that customers are 

becoming indifferent to distinctions 

between front-loading and top-loading 

CCWs, thus suggesting that the potential 

utility between the two is negligible in 

the market. (California IOUs, Public 

Meeting Transcript, No. 30 at pp. 91– 

92). 

The Joint Commenters note that in the 

January 2010 final rule, DOE 

acknowledged that method of access is 

a ‘‘feature’’ within the meaning of 42 

U.S.C. 6295(q), but that DOE rejected 

the contention that the top-loading 

configuration afforded any substantial 

consumer utility in a commercial 

setting. (Joint Commenters, No. 29 at pp. 

1–3) 

NRDC requests additional data, other 

than cycle time, upon which DOE based 

its conclusion about distinct consumer 

utility for separate equipment classes of 

CCWs. (NRDC, Public Meeting 

Transcript, pp. 34, 51–52) ASAP and 

NRDC also request that DOE provide an 

explanation of all the factors considered 

as justification for separating equipment 

classes based on location of access. 

(ASAP, Public Meeting Transcript, No. 

30 at pp. 60–61; NRDC, Public Meeting 

Transcript, No. 30 at p. 132) 

On the other hand, AHAM and ALS 

support DOE’s conclusion in the March 

2014 NOPR that separate equipment 

classes are justified for top-loading and 

front-loading CCWs. (AHAM, No. 23 at 

p. 2; ALS, No. 26 at p. 1) AHAM 

disagrees with the California IOUs that 

a 50/50 split in equipment class sales 

would indicate a negligible difference in 

the utility of each equipment class. 

(AHAM, Public Meeting Transcript, No. 

30 at pp. 94–96) AHAM believes that 

since both types of equipment classes 

are sold on the market in equal 

amounts, there is consumer utility in 

each equipment class. AHAM supports 

maintaining two product classes now, as 

well as in the future. (AHAM, Public 

Meeting Transcript, No. 30 at pp. 94–96; 

AHAM, No. 23 at p. 2) 

DOE views utility as an aspect of the 

product that is accessible to the 

layperson and is based on user 

operation, rather than performing a 

theoretical function. DOE does not 

separate equipment classes based on upfront costs that anyone, including the 

consumer, laundromat owner, or 

manufacturer, may bear. DOE 

determines consumer utility on a caseby-case basis and determines what value 

a product could have based on the 

consumer base and the associated 

technology. 

With that in mind, DOE disagrees 

with the California IOUs that a 50/50 


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split in top-loading versus front-loading 

sales would be an indication that the 

market is indifferent between the two, 

or that the potential utility between the 

two is negligible. DOE believes that a 

50/50 split would indicate that 50 

percent of the market expresses a 

preference for (i.e., derives utility from) 

the top-loading configuration. 

DOE acknowledges that the difference 

in cycle times between top-loading and 

front-loading CCWs has diminished due 

to improvements in front-loading 

technology. DOE also notes that at least 

one front-loading CCW model is 

available at the proposed standard level 

with a cycle time of approximately 30 

minutes, which matches the average 

cycle time of all top-loading CCWs 

tested by DOE. Therefore, DOE 

understands that, as technology 

progresses cycle time may become a less 

meaningful differentiator between CCW 

equipment classes. 

However, DOE disagrees with the 

Joint Commenters’ characterization of 

the January 2010 final rule—that DOE 

had rejected the contention that the toploading configuration afforded any 

substantial consumer utility in a 

commercial setting. In the January 2010 

final rule, DOE described its 

preliminary conclusions from the 

October 17, 2008 NOPR (hereafter, the 

‘‘October 2008 NOPR’’) and the 

November 9, 2009 SNOPR (hereafter, 

the ‘‘November 2009 SNOPR’’): That 

separate equipment classes for toploading and front-loading CCWs were 

warranted because the method of 

loading had been previously determined 

to be a ‘‘feature’’ under rulemakings for 

residential clothes washers, and a single 

standard would eliminate top-loading 

CCWs from the market. 75 FR 1122, 

1133. DOE did not reject this conclusion 

in the January 2010 final rule. DOE did 

note that access without stooping is not 

a specific consumer utility, because 

many manufacturers supply pedestals 

that would eliminate stooping in frontloading washers. Id. But method of 

loading encompasses more than 

stooping, and therefore, provides 

specific consumer utility that defines 

separate equipment classes. 

For example, front-loading 

commercial clothes washers are 

stackable and can be useful in a 

concentrated laundromat or multifamily housing setting. On the other 

hand, top-loading washing machines 

provide the utility of adding clothes 

during the wash cycle. Furthermore, 

DOE notes that the separation of clothes 

washer equipment classes by location of 

access is similar in nature to the 

equipment classes for residential 

refrigerator-freezers, which include 

separate equipment classes based on the 

access of location of the freezer 

compartment (e.g. top-mounted, sidemounted, and bottom-mounted). The 

location of the freezer compartment on 

such equipment provides no additional 

performance-related utility other than 

consumer preference. In other words, 

the location of access itself provides 

distinct consumer utility. 

Furthermore, DOE observes that toploading residential clothes washers are 

available with the same efficiency 

levels, control panel features, and price 

points as front-loading residential 

clothes washers. Given the equivalence 

in efficiency, features, and price, the 

purchase of such top-loaders indicates a 

preference among certain consumers for 

the top-loading configuration; i.e., the 

top-loading configuration itself provides 

unique consumer utility to those 

customers preferring one configuration 

over another, with all other product 

attributes being equal. 

In this final rule analysis, DOE 

reiterates and confirms its conclusions 

from the May 14, 1991 final rule for 

residential clothes washers (56 FR 

22250), the October 2008 NOPR, the 

September 2009 SNOPR, and the March 

2014 NOPR that the method of loading 

is a feature that provides distinct 

consumer utility. The final rule 

maintains separate equipment classes 

for top-loading and front-loading CCWs. 

C. Test Procedures 

1. Appendix J2 

The DOE test procedures for clothes 

washers are codified at title 10 of the 

Code of Federal Regulations (CFR) part 

430, subpart B, appendix J1 and 

appendix J2 (hereafter, ‘‘appendix J1’’ 

and ‘‘appendix J2’’). Under EPCA, test 

procedures for CCWs must be the same 

as test procedures as residential clothes 

washers. (42 U.S.C. 6314(a)(8)) On 

December 3, 2014, DOE published a 

final rule (hereafter, the ‘‘December 

2014 final rule’’) adopting appendix J2 

to be used to determine compliance 

with any future revised energy 

conservation standards for CCWs. The 

December 2014 final rule also clarified 

the dates for which appendix J1 and 

appendix J2 must be used to determine 

compliance with existing energy 

conservation standards and any future 

revised energy conservation standards 

for CCWs. 79 FR 71642. Manufacturers 

of CCWs must use appendix J1 to 

demonstrate compliance with the 

current standards established by the 

January 2010 final rule. (10 CFR 

431.156) Under this rulemaking, CCW 

manufacturers must use appendix J2, 

beginning January 1, 2018, to 

demonstrate compliance with the 

amended energy conservation 

standards. 

For the purpose of understanding how 

the amended standards compare with 

the current standards for CCWs, the 

following two tables provide the 

equivalent appendix J1 and appendix J2 

metrics for both. Table III.1 shows the 

equivalent appendix J1 and appendix J2 

values for the current energy 

conservation standards for CCWs as set 

forth at the current 10 CFR 431.156. 

Table III.2 shows the equivalent 

appendix J1 and appendix J2 values for 

the amended energy conservation 

standards established by the final rule. 

These translations between appendix J1 

and appendix J2 values are provided for 

comparison purposes only and will not 

be used to certify compliance with 

either the current or future energy 

conservation standards for CCWs. 

Manufacturers must use only appendix 

J1 values to certify compliance with the 

current energy conservation standards 

established the January 2010 final rule. 

Manufacturers must use only appendix 

J2 values to certify compliance with the 

amended standards beginning January 1, 

2018. 

As required by EPCA, the amended 

standards do not increase the maximum 

allowable energy and/or water use or 

decrease the minimum required energy 

efficiency of CCWs. (42 U.S.C. 6295(o) 

and 6316(a)). 


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15 In its comment, AHAM used the terms ‘‘Energy 

Factor’’ and ‘‘Integrated Energy Factor.’’ Based on 

the context of AHAM’s comment, DOE assumes that 

AHAM intended to reference ‘‘Modified Energy 

Factor’’ and ‘‘Integrated Modified Energy Factor.’’ 

TABLE III.1—CURRENT ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS, EQUIVALENT

APPENDIX J1 AND J2 VALUES

Minimum energy standards Maximum water 

standards 

Appendix J1 Appendix J2 

Appendix J1 

Equipment class 

MEF* 

Equivalent 

MEFJ2* WF†

Top-Loading ..................................................................................... 1.60 1.15 8.5 8.9 

Front-Loading ................................................................................... 2.00 1.65 5.5 5.2 

* MEF (appendix J1 modified energy factor) and MEFJ2 (appendix J2 modified energy factor) are calculated as the clothes container capacity in 

cubic feet divided by the sum, expressed in kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot water energy consumption; (2) the total 

weighted per-cycle machine electrical energy consumption; and (3) the per-cycle energy consumption for removing moisture from a test load. †WF (appendix J1 water factor) is calculated as the weighted per-cycle water consumption for the cold wash/cold rinse cycle, expressed in 

gallons per cycle, divided by the clothes container capacity in cubic feet. ‡ IWF (appendix J2 integrated water factor) is calculated as the weighted per-cycle water consumption for all wash cycles, expressed in gallons 

per cycle, divided by the clothes container capacity in cubic feet. 

TABLE III.2—AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS, EQUIVALENT

APPENDIX J1 AND J2 VALUES

Minimum energy standards Maximum water 

standards 

Appendix J1 Appendix J2 Appendix J1 

Equipment Class Equivalent 

MEF* MEFJ2* Equivalent 

WF†

Top-Loading ..................................................................................... 1.70 1.35 8.4 8.8 

Front-Loading ................................................................................... 2.40 2.00 4.0 4.1 

*MEF (appendix J1 modified energy factor) and MEFJ2 (appendix J2 modified energy factor) are calculated as the clothes container capacity in 

cubic feet divided by the sum, expressed in kilowatt-hours (kWh), of: (1) The total weighted per-cycle hot water energy consumption; (2) the total 

weighted per-cycle machine electrical energy consumption; and (3) the per-cycle energy consumption for removing moisture from a test load. †WF (appendix J1 water factor) is calculated as the weighted per-cycle water consumption for the cold wash/cold rinse cycle, expressed in 

gallons per cycle, divided by the clothes container capacity in cubic feet. ‡ IWF (appendix J2 integrated water factor) is calculated as the weighted per-cycle water consumption for all wash cycles, expressed in gallons 

per cycle, divided by the clothes container capacity in cubic feet. 

AHAM does not object to the 

translations developed to quantify the 

difference between results based on 

appendix J1 and appendix J2 in the 

context of this standards rulemaking. 

(AHAM, No. 23 at pp. 2–3) 

DOE received no comments objecting 

to the appendix J1 and appendix J2 

translations it developed for the purpose 

of understanding how the amended 

standards compare with the current 

standards for CCWs. Therefore, for the 

reasons discussed above, DOE maintains 

these informative translations in the 

final rule. DOE notes that the 

quantitative analyses performed for this 

rulemaking were conducted using the 

appendix J2 metrics, MEFJ2 and IWF. 

2. Energy Metric 

In the March 2014 NOPR, DOE 

proposed amended energy efficiency 

standards based on MEF as measured 

using appendix J2 (‘‘MEFJ2’’). 77 FR 

12301, 12303, 12310 (Mar. 4, 2014). As 

defined in section 4.5 of appendix J2, 

MEFJ2 is calculated as the clothes 

container capacity in cubic feet divided 

by the sum, expressed in kilowatt-hours 

(kWh), of: (1) The total weighted percycle hot water energy consumption; (2) 

the total weighted per-cycle machine 

electrical energy consumption; and (3) 

the per-cycle energy consumption for 

removing moisture from a test load. 

As explained in the March 2014 

NOPR, DOE evaluated the standby and 

off mode power characteristics of a 

representative sample of CCWs 

spanning a wide range of display types, 

payment systems, and communication 

features. DOE did not, however, propose 

amended standards for CCWs based on 

an integrated energy metric that would 

have included a measurement of 

standby and off mode power. 79 FR 

12301, 12310 (Mar. 4, 2014). 

AHAM supports DOE’s proposal for 

amended standards for CCWs based on 

MEF, rather than an integrated modified 

energy factor (IMEF).15 (AHAM, No. 23 

at p. 3) ALS supports DOE’s proposal to 

not amend CCW standards based on an 

integrated energy metric. ALS believes 

that standby power should not be 

included for CCWs, because the 

equipment needs an active visual 

display between active operating cycles 

to alert potential users that the 

equipment is ready and available to be 

used. (ALS, No. 26 at p. 2) 

The Joint Commenters suggest that 

DOE consider establishing standards for 

standby and off mode operation. In their 

submitted comments, the Joint 

Commenters referenced data that DOE 

provided in the TSD for the March 2014 

NOPR, and noted that standby energy 

consumption represents 7 to 44% of 

total annual machine energy 

consumption, depending on washer 

format and application. (Joint 

Commenters, No. 29 at p. 7) The Joint 

Commenters believe that, while 

machine energy comprises a fraction of 

the total energy consumed in the wash 

cycle, these data indicate that standby 

usage makes up a significant share of 

the electricity usage of CCWs. The Joint 

Commenters believe DOE acted without 

foundation in not using the IMEF metric 

and removing low-standby-power 

controls from the list of design options 

for consideration. (Joint Commenters, 

No. 29 at p. 7) 

DOE notes that the current energy 

standard established by the January 

2010 final rule is based on MEF, which 


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does not incorporate the measurement 

of standby and off-mode power. In order 

to amend the current standard in terms 

of IMEF, DOE would need to first 

translate the current standard of 1.60 

MEF into an equivalent baseline IMEF 

level, and then establish higher 

efficiency levels. 

As part of its market assessment and 

engineering analysis for this 

rulemaking, DOE performed an in-depth 

evaluation of the standby and off mode 

power characteristics of a representative 

sample of CCWs spanning a wide range 

of display types, payment systems, and 

communication features. The results 

from DOE’s testing are provided in 

chapter 5 of the final rule TSD. Based 

on its evaluation (which considered the 

structure of CCW equipment classes), 

DOE determined that promulgating an 

amended standard based on IMEF could 

enable backsliding. DOE observed that 

manufacturers offer a variety of display 

and payment functionalities that can be 

selected independently from the basic 

model. The standby power associated 

with these different display and 

payment functionalities varies from 0.88 

to 11.77 watts. The lowest standby 

power levels are associated with models 

having no vend price display and no 

coin or card payment options (often 

referred to as ‘‘push-to-start’’ models). 

These models are typically used in 

small multi-family housing facilities 

offering free laundry, or in other 

commercial applications not requiring 

fare payment. Such models are not 

suitable for coin-operated laundry or 

most other multi-family housing 

facilities. The highest standby power 

levels are associated with models 

having a digital vend price display, coin 

or debit card payment system, and 

advanced features such as dynamic or 

cycle-based pricing controls, built-in 

logging capabilities, and remote 

auditing features. These models are 

typically used in coin-operated 

laundries located in competitive 

markets. 

The following example demonstrates 

one potential backsliding scenario: DOE 

testing indicates that a baseline toploading CCW model rated at 1.60 MEF 

would have an equivalent IMEF rating 

ranging from 1.34 IMEF (for a CCW with 

the highest observed standby power 

usage) to 1.53 IMEF (for a CCW with the 

lowest observed standby power usage). 

If DOE were to establish the new 

equivalent baseline standard level at 

1.34 IMEF—which would accommodate 

all display and payment types—a pushto-start baseline CCW with lower 

standby power usage, rated at 1.53 MEF, 

would be able to increase its active 

mode energy consumption over current 

levels to ‘‘slide back’’ to the 1.34 MEF 

level. 

Alternatively, if DOE were to establish 

the new equivalent baseline standard 

level at 1.53 MEF—the level 

corresponding to the lowest standby 

power push-to-start models— 

manufacturers would be precluded from 

offering vend price displays, payment 

systems, or other advanced controls on 

new baseline CCWs. This would 

negatively impact consumer and enduser utility, since push-to-start models 

are not suitable for coin-operated 

laundries or most multi-family housing 

applications. 

Finally, because of the wide 

variations in standby power, CCWs with 

significantly different active mode (i.e., 

MEF) ratings could have similar IMEF 

ratings depending on their control panel 

functionalities, and vice versa. This 

would diminish the usefulness of the 

IMEF metric as a means for 

differentiating the active mode 

characteristics of different CCW models. 

For these reasons, DOE has 

determined that establishing amended 

standards for CCWs based on IMEF 

would not be technically feasible. 

Instead, the final rule establishes 

amended standards based on MEFJ2, 

which does not incorporate standby and 

off mode power. 

3. Water Metric 

In the March 2014 NOPR, DOE 

proposed amended water efficiency 

standards based on IWF as measured 

using appendix J2. 77 FR 12301, 12303, 

12310 (Mar. 4, 2014). As defined in 

section 4.2.13 of appendix J2, IWF is 

calculated as the weighted per-cycle 

water consumption for all wash cycles, 

expressed in gallons per cycle, divided 

by the clothes container capacity in 

cubic feet. DOE believes that the IWF 

metric provides a more representative 

measure of water consumption than the 

WF metric, which is based on the water 

consumption of only the cold wash/cold 

rinse temperature cycle. 

ALS supports DOE’s proposal to 

amend CCW water standards based on 

the IWF metric. (ALS, No. 26 at p. 2) 

DOE received no comments objecting 

to its proposal to use the IWF metric for 

amended water efficiency standards for 

CCWs. Therefore, for the reasons 

discussed above, the amended water 

efficiency standards established by the 

final rule are based on the IWF metric. 

D. Technological Feasibility 

1. General 

In each energy conservation standards 

rulemaking, DOE conducts a screening 

analysis based on information gathered 

on all current technology options and 

prototype designs that could improve 

the efficiency of the products or 

equipment that are the subject of the 

rulemaking. As the first step in such an 

analysis, DOE develops a list of 

technology options for consideration in 

consultation with manufacturers, design 

engineers, and other interested parties. 

DOE then determines which of those 

options for improving efficiency are 

technologically feasible. DOE considers 

technologies incorporated in 

commercially available equipment or in 

working prototypes to be 

technologically feasible. (10 CFR part 

430, subpt. C, app.A, § 4(a)(4)(i)) 

After DOE has determined that 

particular technology options are 

technologically feasible, it further 

evaluates each technology option in 

light of the following additional 

screening criteria: (1) Practicability to 

manufacture, install, and service; (2) 

adverse impacts on equipment utility or 

availability; and (3) adverse impacts on 

health or safety. (10 CFR part 430, 

subpart C, app. A, sec. 4(a)(4)(ii)–(iv)) 

Additionally, it is DOE policy not to 

include in its analysis any proprietary 

technology that is a unique pathway to 

achieving a certain efficiency level. 

Section IV.B of this notice discusses the 

results of the screening analysis for 

CCWs—in particular, the designs DOE 

considered, those it screened out, and 

those that form the basis for the trial 

standard level (TSLs) in this 

rulemaking. For further details on the 

screening analysis for this rulemaking, 

see chapter 4 of the final rule TSD. 

2. Maximum Technologically Feasible 

Levels 

When DOE proposes to adopt an 

amended standard for a class of covered 

equipment, it must determine the 

maximum improvement in energy 

efficiency or maximum reduction in 

energy use that is technologically 

feasible for such equipment. (42 U.S.C. 

6295(p)(1)) Accordingly, in the 

engineering analysis, DOE determined 

the maximum technologically feasible 

(‘‘max-tech’’) improvements in energy 

efficiency for CCWs, using the design 

parameters for the most efficient 

equipment available on the market or in 

working prototypes. The max-tech 

levels that DOE determined for this 

rulemaking are described in section IV.C 

of this final rule and in chapter 5 of the 

final rule TSD. 

E. Energy Savings 

1. Determination of Savings 

For each TSL, DOE projected energy 

savings from the CCWs purchased in the 


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16 In previous rulemakings, DOE presented energy 

savings results for only the 30-year period that 

begins in the year of compliance. In the calculation 

of economic impacts, however, DOE considered 

operating cost savings measured over the entire 

lifetime of products purchased in the 30-year 

period. DOE has modified its presentation of 

national energy savings consistent with the 

approach used for its national economic analysis. 

30-year period that begins in 2018. The 

savings are measured over the entire 

lifetime of the CCWs purchased in the 

30-year period.16 DOE quantified the 

energy savings attributable to each TSL 

as the difference in energy consumption 

between each standards case and the 

base case. The base case represents a 

projection of energy consumption in the 

absence of amended efficiency 

standards, and considers market forces 

and policies that affect demand for more 

efficient equipment. 

DOE used its national impact analysis 

(NIA) spreadsheet model to estimate 

energy savings from amended standards 

for the equipment that are the subject of 

this rulemaking. The NIA spreadsheet 

model (described in section IV.H of this 

notice) calculates energy savings in site 

energy, which is the energy directly 

consumed by CCWs at the locations 

where they are used. For electricity, 

DOE reports national energy savings in 

terms of the savings in the primary 

energy that is used to generate and 

transmit the site electricity. To calculate 

this quantity, DOE derives annual 

conversion factors from the model used 

to prepare the Energy Information 

Administration’s (EIA) Annual Energy 

Outlook (AEO). 

DOE also estimates full-fuel-cycle 

energy savings in its energy 

conservation standards rulemakings. 76 

FR 51282 (Aug. 18, 2011), as amended 

at 77 FR 49701 (August 17, 2012). The 

full-fuel-cycle (FFC) metric includes the 

energy consumed in extracting, 

processing, and transporting primary 

fuels (i.e., coal, natural gas, petroleum 

fuels), and thus presents a more 

complete picture of the impacts of 

energy efficiency standards. DOE’s 

approach is based on calculation of an 

FFC multiplier for each of the energy 

types used by covered equipment. For 

more information on FFC energy 

savings, see section IV.H.2. 

2. Significance of Savings 

As noted above, 42 U.S.C. 

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

adopting a standard for a covered 

equipment unless such standard would 

result in ‘‘significant’’ energy savings. 

Although the term ‘‘significant’’ is not 

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

Appeals, in Natural Resources Defense 

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

1373 (D.C. Cir. 1985), indicated that 

Congress intended ‘‘significant’’ energy 

savings in this context to be savings that 

were not ‘‘genuinely trivial.’’ The energy 

savings for all of the TSLs considered in 

this rulemaking (presented in section 

V.C) are nontrivial, and, therefore, DOE 

considers them ‘‘significant’’ within the 

meaning of section 325 of EPCA. 

F. Economic Justification 

1. Specific Criteria 

EPCA provides seven factors to be 

evaluated in determining whether a 

potential energy conservation standard 

is economically justified. (42 U.S.C. 

6295(o)(2)(B)(i) and 6316(a)) 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 energy conservation standard 

on manufacturers, DOE first uses an 

annual cash-flow approach to determine 

the quantitative impacts. This step 

includes both a short-term assessment— 

based on the cost and capital 

requirements during the period between 

when a regulation is issued and when 

entities must comply with the 

regulation—and a long-term assessment 

over a 30-year period. The industrywide impacts analyzed include: (1) 

INPV, which values the industry on the 

basis of expected future cash flows; (2) 

cash flows by year; (3) changes in 

revenue and income; and (4) other 

measures of impact, as appropriate. 

Second, DOE analyzes and reports the 

impacts on different types of 

manufacturers, including impacts on 

small manufacturers. Third, DOE 

considers the impact of standards on 

domestic manufacturer employment and 

manufacturing capacity, as well as the 

potential for standards to result in plant 

closures and loss of capital investment. 

Finally, DOE takes into account 

cumulative impacts of various DOE 

regulations and other regulatory 

requirements on manufacturers. 

For individual consumers, measures 

of economic impact include the changes 

in LCC and PBP associated with new or 

amended standards. These measures are 

discussed further in the following 

section. For consumers in the aggregate, 

DOE also calculates the national net 

present value of the economic impacts 

applicable to a particular rulemaking. 

DOE also evaluates the LCC impacts of 

potential standards on identifiable 

subgroups of consumers that may be 

affected disproportionately by a national 

standard. 

b. Savings in Operating Costs Compared 

To Increase in Price (LCC and PBP) 

EPCA requires DOE to consider the 

savings in operating costs throughout 

the estimated average life of the covered 

equipment in the class compared to any 

increase in the price of the covered 

equipment that are likely to result from 

the imposition of the standard. (42 

U.S.C. 6295(o)(2)(B)(i)(II) and 6316(a)) 

DOE conducts this comparison in its 

LCC and PBP analysis. The LCC is the 

sum of the purchase price of the 

equipment (including its installation) 

and the operating expense (including 

energy, maintenance, and repair 

expenditures) discounted over the 

lifetime of the equipment. To account 

for uncertainty and variability in 

specific inputs, such as equipment 

lifetime and discount rate, DOE uses a 

distribution of values, with probabilities 

attached to each value. For its analysis, 

DOE assumes that consumers will 

purchase the covered equipment in the 

first year of compliance with amended 

standards. 

The PBP is the estimated amount of 

time (in years) it takes consumers to 

recover the increased purchase cost 

(including installation) of more-efficient 

equipment through lower operating 

costs. DOE calculates the PBP by 

dividing the increase in purchase cost 

due to a more-stringent standard by the 

change in annual operating cost for the 

year that standards are assumed to take 

effect. 

The LCC savings and the PBP for the 

considered efficiency levels are 

calculated relative to a base case that 

reflects projected market trends in the 

absence of amended standards. DOE 

identifies the percentage of consumers 

estimated to experience an LCC 

increase, in addition to the average LCC 

savings associated with a particular 

standard level. In contrast, the PBP is 

measured relative to the baseline 

equipment. 

DOE’s LCC and PBP analyses are 

discussed in further detail in section 

IV.F. 

c. Energy Savings 

Although 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) 

and 6316(a)) As discussed in section 

IV.H.2, DOE uses the NIA spreadsheet to 

project national energy savings. 


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17The DOJ conclusion is available as document 

number 31 in the docket for this rulemaking, 

available at http://www.regulations.gov/

#!documentDetail;D=EERE-2012-BT–STD-0020- 

0031. 

18For more information on NEMS, refer to the 

DOE, EIA documentation. A useful summary is 

National Energy Modeling System: An Overview, 

DOE/EIA–0581(2009), (October 2009) (Available at: 

http://www.eia.gov/oiaf/aeo/overview/). 

d. Lessening of Utility of Equipment 

In establishing equipment classes, and 

in evaluating design options and the 

impact of potential standard levels, DOE 

evaluates standards that would not 

lessen the utility of the considered 

equipment. (42 U.S.C. 

6295(o)(2)(B)(i)(IV) and 6316(a)) Based 

on data available to DOE, the standards 

outlined in the final rule will not reduce 

the utility of the equipment under 

consideration in this rulemaking. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition that is likely to 

result from standards. (42 U.S.C. 

6295(o)(2)(B)(i)(V)) 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 in writing to the 

Secretary within 60 days of the 

publication of a proposed rule, together 

with an analysis of the nature and 

extent of the impact. (42 U.S.C. 

6295(o)(2)(B)(ii)) To assist the Attorney 

General in making such determination 

for these standards, DOE provided the 

Department of Justice (DOJ) with copies 

of the March 2014 NOPR and the 

accompanying TSD for review. In its 

assessment letter responding to DOE, 

DOJ concluded that the amended energy 

conservation standards for CCWs are 

unlikely to have a significant adverse 

impact on competition.17

f. Need for National Energy 

Conservation 

DOE also considers the need for 

national energy conservation in 

determining whether a new or amended 

standard is economically justified. (42 

U.S.C. 6295(o)(2)(B)(i)(VI) and 6316(a)) 

The energy savings from the amended 

standards are likely to provide 

improvements to the security and 

reliability of the nation’s energy system. 

Reductions in the demand for electricity 

also may result in reduced costs for 

maintaining the reliability of the 

nation’s electricity system. DOE 

conducts a utility impact analysis to 

estimate how standards may affect the 

nation’s needed power generation 

capacity. 

The amended standards also are likely 

to result in environmental benefits in 

the form of reduced emissions of air 

pollutants and greenhouse gases 

associated with energy production. DOE 

reports the emissions impacts from the 

standards, and from each TSL it 

considered, in section V.C.1 of this 

notice. DOE also reports estimates of the 

economic value of emissions reductions 

resulting from the considered TSLs, as 

discussed in section V.C.2. 

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) and 6316(a)) DOE 

did not consider any other factors for 

this final rule. 

2. Rebuttable Presumption 

As set forth in 42 U.S.C. 

6295(o)(2)(B)(iii) and 6316(a), EPCA 

creates a rebuttable presumption that an 

energy conservation standard is 

economically justified if the additional 

cost to the consumer of the equipment 

that meets the standard is less than 

three times the value of the first year’s 

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 effect that the 

energy conservation standards would 

have on the PBP for consumers. These 

analyses include, but are not limited to, 

the 3-year payback period contemplated 

under the rebuttable-presumption test. 

In addition, DOE routinely conducts an 

economic analysis that considers the 

full range of impacts to consumers, 

manufacturers, the nation, and the 

environment, as required under 42 

U.S.C. 6295(o)(2)(B)(i). The results of 

this analysis serve as the basis for DOE’s 

evaluation of the economic justification 

for a standard level (thereby supporting 

or rebutting the results of any 

preliminary determination of economic 

justification). The rebuttable 

presumption payback calculation is 

discussed in section V.B.1 of this final 

rule. 

IV. Methodology and Discussion of 

Related Comments 

This section addresses the analyses 

DOE has performed for this rulemaking 

with regard to CCWs. Separate 

subsections will address each 

component of DOE’s analyses. 

DOE used four analytical tools to 

estimate the impact of the amended 

standards. The first tool is a spreadsheet 

that calculates LCCs and PBPs of 

potential new energy conservation 

standards. The second tool includes a 

model that provides shipments 

forecasts, and a framework in a 

spreadsheet that calculates national 

energy savings and net present value 

resulting from potential amended 

energy conservation standards. DOE 

uses the third spreadsheet tool, the 

Government Regulatory Impact Model 

(GRIM), to assess manufacturer impacts. 

Additionally, DOE used a fourth 

analytical tool, the latest version of 

EIA’s National Energy Modeling System 

(NEMS) for the utility and emissions 

analyses, to estimate the impacts of 

energy conservation standards for CCW 

on air pollutant emissions and on 

utilities. NEMS is a public domain, 

multi-sector, partial equilibrium model 

of the U.S. energy sector.18 EIA uses 

NEMS to prepare its Annual Energy 

Outlook (AEO), a widely known energy 

forecast for the United States. 

A. Market and Technology Assessment 

1. Market Assessment 

In the March 2014 NOPR, DOE 

requested information on historical 

CCW shipments and market share 

efficiency data, disaggregated by 

equipment class, for 2012 and 2013, to 

supplement the data received in 

response to the framework document. 

NRDC also requested that DOE provide 

a breakdown of manufacturer market 

share within each equipment class. 

(NRDC, Public Meeting Transcript, No. 

30 at pp. 97–99) 

AHAM submitted revised data for 

2012 and 2013, including total 

shipments disaggregated by equipment 

class, shipment-weighted average 

efficiency by equipment class, and 

market share efficiency data by 

equipment class. (AHAM, No. 32, pp. 4– 

6) AHAM did not provide a breakdown 

of manufacturer market shares within 

each equipment class as part of its data 

submission. Individual manufacturers 

did not provide such information in 

their individual comment submissions. 

DOE is unaware of any publicly 

available source for this information, 

and is therefore unable to provide a 

breakdown of manufacturer market 

shares in this final rule analysis. 

2. Technology Assessment 

In the March 2014 NOPR, DOE 

presented a table of design options that 

it believes represents the most viable 

options for CCWs to achieve higher 

efficiencies. 

In response to comments received 

from the framework document, DOE 


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added temperature-differentiated 

pricing controls to the list of technology 

options for consideration. As explained 

in the March 2014 NOPR, DOE did not 

have any information regarding the 

degree to which this feature changes the 

temperature selection frequencies of 

end-users, and therefore was not able to 

consider this technology for further 

evaluation in its engineering analysis. 

DOE did not receive any additional 

comments from interested parties 

regarding design options for inclusion 

in the final rule technology assessment. 

Chapter 3 of the final rule TSD contains 

the final table of design options 

considered by DOE for this rulemaking 

analysis. 

B. Screening Analysis 

Following the development of the 

initial list of design options, DOE 

conducts a screening analysis of each 

design option based on the following 

factors: (1) Technological feasibility; (2) 

practicability to manufacture, install 

and service; (3) adverse impacts on 

equipment utility or equipment 

availability; and (4) adverse impacts on 

health or safety. (10 CFR part 430, 

subpart C, app. A, sec. 4(a)(3) and (4)) 

As a result of its initial screening 

analysis, DOE proposed eliminating 

ozonated laundering and plastic particle 

cleaning from further consideration for 

this rulemaking. 

ALS supports DOE’s decision to 

remove the following technologies from 

consideration: ozonated laundering and 

residential clothes washer design 

options that DOE determined would 

provide negligible, if any, energy 

savings. (ALS, No. 26 at p. 2) 

DOE received no comments objecting 

to its proposal to eliminate ozonated 

laundering and plastic particle cleaning 

from further consideration in this 

rulemaking. For the reasons discussed 

above, DOE eliminated these 

technologies accordingly in the final 

analysis conducted for the final rule. 

Chapter 4 of the final rule TSD provides 

further details of DOE’s screening 

analysis. 

C. Engineering Analysis 

1. General Approach 

The purpose of the engineering 

analysis is to characterize the 

relationship between the incremental 

manufacturing cost and efficiency 

improvements of CCWs. DOE used these 

cost-efficiency relationships as inputs to 

the PBP, LCC, and national energy 

savings (NES) analyses. As described in 

the March 2014 NOPR, DOE conducted 

the engineering analysis for this 

rulemaking using the efficiency-level 

approach supplemented with a designoption approach. Using the efficiencylevel approach, DOE examined the 

aggregated incremental increases in 

manufacturer selling price at each of the 

efficiency levels analyzed. DOE also 

conducted a reverse-engineering 

analysis, including testing and 

teardowns of models at each efficiency 

level, to identify the incremental cost 

and efficiency improvement associated 

with each design option or design 

option combination, supplementing the 

efficiency-level approach with a designoption approach as needed. Chapter 5 of 

the final rule TSD contains a detailed 

discussion of the engineering analysis 

methodology. 

2. Technologies Unable To Be Included 

in the Analysis 

As described earlier, DOE investigated 

adding temperature-differentiated 

pricing controls to the list of design 

options for consideration. Such controls 

could potentially incentivize energy 

savings by providing favorable vend 

pricing for lower-temperature wash/

rinse settings. DOE’s market analysis 

confirmed that this option was available 

on multiple top-loading and frontloading CCW models from multiple 

manufacturers. However, DOE’s test 

procedure at appendix J2 uses a fixed 

set of Temperature Use Factors (TUFs), 

which represent the assumed percentage 

of time an end-user would select each 

wash/rinse temperature (i.e., cold, 

warm, hot) available on the clothes 

washer. (10 CFR part 430, app. J2, table 

4.1.1) Because the TUFs in the test 

procedure are fixed, a clothes washer 

with temperature-differentiated pricing 

controls would be tested with the same 

weightings applied to each wash/rinse 

temperature selection as an identical 

clothes washer without temperaturedifferentiated pricing controls. 

Therefore, the energy savings of this 

technology cannot be measured 

according to the conditions and 

methods specified in the DOE clothes 

washer test procedure. Accordingly, 

DOE did not analyze this technology 

option in its NOPR analysis. 

ALS supports DOE’s decision to 

remove temperature-differentiated 

pricing controls from further 

consideration. (ALS, No. 26 at p. 2) DOE 

received no comments objecting to its 

proposal to eliminate temperaturedifferentiated pricing controls from 

further consideration in the engineering 

analysis. For the reasons discussed 

above, DOE eliminated this technology 

accordingly in the final analysis 

conducted for the final rule. 

3. Appendix J2 Efficiency Level 

Translations 

DOE proposed baseline and higher 

efficiency levels based on the MEFJ2 and 

IWF metrics as measured using 

appendix J2. Since current equipment 

ratings are based on appendix J1 

metrics, DOE performed testing on a 

representative sample of CCW models to 

determine, for each baseline and higher 

efficiency level considered in the 

analysis, the equivalent appendix J2 

efficiency levels corresponding to each 

appendix J1 efficiency level. Chapter 5 

of the final rule TSD describes the 

methodology DOE used to perform the 

translations between appendix J1 MEF/ 

WF values and appendix J2 MEFJ2/IWF 

values. 

4. Baseline Efficiency Levels 

As stated in the March 2014 NOPR, 

DOE used the current energy 

conservation standards, which became 

effective January 8, 2013, to characterize 

the baseline models for both the toploading and front-loading CCW 

equipment classes. 79 FR 12301, 12314 

(Mar. 4, 2014). ALS supports DOE’s 

proposed baseline efficiency levels for 

both top-loading and front-loading 

CCWs. (ALS, No. 26 at p. 2) 

5. Front-Loading Higher Efficiency 

Levels 

In the March 2014 NOPR, DOE 

proposed analyzing the higher 

efficiency levels shown in Table IV.1 for 

the front-loading equipment class. 79 FR 

12301, 12314 (Mar. 4, 2014). 

TABLE IV.1—FRONT-LOADING EFFICIENCY LEVELS

Level Efficiency level source 

Appendix J1 metrics Appendix J2 metrics 

MEF WF MEFJ2 IWF 

Baseline ......................... DOE Standard ..................................................... 2.00 5.5 1.65 5.2 

1 ..................................... Consortium for Energy Efficiency (CEE) Tier 2 .. 2.20 4.5 1.80 4.5 

2 ..................................... CEE Tier 3 ........................................................... 2.40 4.0 2.00 4.1 


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TABLE IV.1—FRONT-LOADING EFFICIENCY LEVELS—Continued 

Level Efficiency level source 

Appendix J1 metrics Appendix J2 metrics 

MEF WF MEFJ2 IWF 

3 ..................................... Maximum Available ............................................. 2.60 3.7 2.20 3.9 

DOE noted in the March 2014 NOPR 

that it developed its list of front-loading 

efficiency levels based on a review of 

CCW equipment currently on the 

market. Id. DOE confirmed through its 

market assessment that CCWs are 

available for purchase at each of the 

identified efficiency levels. Id. 

As described in the March 2014 

NOPR, the California IOUs had 

suggested that DOE include two 

additional front-loading efficiency 

levels corresponding to the top two 

efficiency levels considered during the 

most recent residential clothes washer 

rulemaking: 2.60 MEF/3.8 WF and 2.89 

MEF/3.7 WF, as measured using 

appendix J1. California IOUs, No. 8 at p. 

4; 79 FR 12301, 12314 (Mar. 4, 2014). 

DOE noted that the 2.60 MEF/3.8 WF 

efficiency level suggested by the 

California IOUs corresponds closely 

with the maximum level proposed by 

DOE of 2.60 MEF/3.7 WF. DOE further 

explained that it did not believe that the 

more stringent level of 2.89 MEF/3.7 WF 

would be appropriate for consideration 

in this CCW rulemaking because (1) no 

CCW models are currently available on 

the market at that efficiency level, and 

(2) some of the design options that 

would be required to achieve that 

efficiency level could negatively impact 

wash basket size and cycle time. 

Based on the results of its market and 

technology assessment and engineering 

analysis, DOE tentatively determined 

that the maximum available efficiency 

level presented in the March 2014 

NOPR represented the maximum 

efficiency level that is technologically 

feasible for front-loading CCWs. 79 FR 

12301, 12314 (Mar. 4, 2014). 

AHAM and Whirlpool support DOE’s 

decision not to evaluate the efficiency 

levels considered in the residential 

rulemaking in the commercial 

rulemaking context. (AHAM, No. 23 at 

p. 4; Whirlpool, No. 28 at p. 1) ALS 

supports DOE’s proposed efficiency 

levels for front-loading CCWs. (ALS, No. 

26 at p. 2) 

DOE received no additional 

comments objecting to the front-loading 

efficiency levels proposed for analysis 

in the March 2014 NOPR. Therefore, for 

the reasons discussed above, DOE 

maintained these efficiency levels for 

the final rule analysis. 

6. Top-Loading Higher Efficiency Levels 

In the March 2014 NOPR, DOE 

proposed analyzing the higher 

efficiency levels shown in Table IV.2 for 

the top-loading equipment class. 79 FR 

12301, 12315 (Mar. 4, 2014). 

TABLE IV.2—TOP-LOADING EFFICIENCY LEVELS

Level Efficiency level source 

Appendix J1 metrics Appendix J2 metrics 

MEF WF MEFJ2 IWF 

Baseline ................... DOE Standard ........................................................... 1.60 8.5 1.15 8.9 

1 ............................... Gap Fill ...................................................................... 1.70 8.4 1.35 8.8

2 ............................... Maximum Available ................................................... 1.85 6.9 1.55 6.9 

DOE developed its list of top-loading 

efficiency levels based on a review of 

CCW equipment currently on the 

market. DOE confirmed through its 

market assessment that CCWs are 

available for purchase at each of the 

identified efficiency levels. 

As described in the March 2014 

NOPR, the California IOUs had 

suggested that DOE analyze higher 

efficiency levels for top-loading CCWs 

corresponding to the higher efficiency 

levels that DOE had analyzed during the 

most recent residential clothes washer 

rulemaking. 79 FR 12301, 12315 (Mar. 4, 

2014). The California IOUs 

recommended levels ranging from 

1.72MEF/8.0WF to 2.47MEF/3.6WF at 

the residential clothes washer max-tech 

level, as measured using appendix J1. 

(California Utilities, No. 8 at p. 4) 

In the March 2014 NOPR, DOE 

explained that it did not believe that 

more stringent levels above the 

identified max-tech level would be 

appropriate for consideration in this 

CCW rulemaking, for many of the same 

reasons DOE gave in the front-loading 

efficiency levels section. 79 FR 12315– 

12316. First, no CCW models were 

available on the market above 1.85MEF/ 

6.9 WF, as measured using appendix J1. 

Second, some of the design options that 

would be required to achieve those 

higher efficiency levels, such as larger 

wash baskets and longer cycle times, 

could be perceived by the machine 

owners and/or end-users as negatively 

impacting equipment utility. 

Furthermore, the max-tech residential 

clothes washers use a circular wash 

plate instead of an agitator, requiring 

manufacturers to instruct users not to 

load garments directly over the center of 

the wash plate, so that the center of the 

wash plate remains visible when 

loaded. DOE believes these specialized 

loading instructions could not be 

effectively implemented in a 

commercial laundry environment such 

that the wash performance of the unit 

would be maintained. 

Based on the results of its market and 

technology assessment and engineering 

analysis, DOE tentatively determined 

that the maximum available efficiency 

level presented in the March 2014 

NOPR represented the maximum 

efficiency level that is technologically 

feasible for top-loading CCWs. 

AHAM and Whirlpool support DOE’s 

decision not to evaluate the efficiency 

levels considered in the residential 

rulemaking in the commercial 

rulemaking context. (AHAM, No. 23 at 

p. 4; Whirlpool, No. 28 at p. 1) ALS 

supports DOE’s proposed efficiency 

levels for top-loading CCWs. ALS also 

supports DOE’s determination that the 

technologies, designs and operating 

characteristics of the maximum 

efficiency top-loading residential 

clothes washers are not transferrable to 

CCWs. (ALS, No. 26 at pp. 2–3) 

The California IOUs recommend that 

DOE evaluate one additional efficiency 


emcdonald on DSK67QTVN1PROD with RULES3
74506 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

19See chapter 5 of the TSD accompanying the 

residential clothes washer direct final rule (May 31, 

2012, 77 FR 32319), docket number EERE–2008– 

BT–STD–0019. Available at: http://

www.regulations.gov/#!docketDetail;D=EERE-2008- 

BT-STD-0019. 

level for top-loaders, which would 

utilize the same design features from 

Efficiency Level 1 (EL1), in addition to 

improved motor efficiency. (California 

IOUs, No. 27 at p. 4) Similarly, the Joint 

Commenters stated that if DOE 

determines that adopting Efficiency 

Level 2 (EL2) for top-loaders is not 

justified, DOE should consider an 

intermediate level between EL1 and 

EL2, based on the current CCWs 

available on the market. (Joint 

Commenters, No. 29 at p. 5) 

DOE investigated the feasibility of 

analyzing one additional top-loading 

efficiency level between EL1 (1.70 MEF/ 

1.35 MEFJ2) and EL2 (1.85 MEF/1.55 

MEFJ2) by considering improved motor 

efficiency. As shown in chapter 7 of the 

final rule TSD, DOE determined that the 

typical top-loading CCW at EL1 uses 

0.21 kWh/cycle of machine electrical 

energy, whereas the typical top-loading 

CCW at EL2 uses 0.10 kWh/cycle of 

machine electrical energy. DOE 

performed testing and teardowns on a 

range of top-loading CCWs that are built 

using the same platform construction as 

the typical EL1 clothes washer. Across 

the range of models tested, machine 

electrical energy usage varied from 0.18 

to 0.22 kWh/cycle. DOE did not identify 

any commercially available motors with 

lower energy usage (i.e. higherefficiency) that are designed for use in 

this platform style. At EL1, reducing 

machine electrical energy usage from 

0.22 to 0.18 kWh/cycle would increase 

MEFJ2 from 1.35 to 1.37. DOE does not 

consider this magnitude of 

improvement to be significant enough to 

warrant an added efficiency between 

EL1 and EL2. DOE did not identify any 

other incremental improvements that 

could be made to the EL1 equipment 

platform, either independently or in 

combination with a more efficient motor 

design, to similarly boost its efficiency 

without requiring a major design 

overhaul. 

As discussed in greater detail in 

chapter 5 of the final rule TSD, DOE 

research suggests that improving 

efficiency beyond EL1 requires a 

significant overhaul to the design 

platform of a top-loading CCW. In other 

words, the overall system design on 

which the baseline unit is built can be 

incrementally improved (while 

maintaining adequate performance for 

the end-user) up until EL1, but at that 

level, the equipment platform is ‘‘maxed 

out,’’ and further improvements require 

a significant overhaul of the entire 

design. Because the overall designs are 

so significantly different, components 

from the higher-efficiency platform are 

not interchangeable with components 

from the lower-efficiency platform. DOE 

observed a similar shift in platforms 

with top-loading residential clothes 

washers between 1.72 MEF and 1.80 

MEF,19 which DOE notes is roughly the 

same efficiency level transition 

observed for top-loading CCWs. 

For these reasons, DOE has 

determined that further improving the 

EL1 equipment platform using low-cost 

design options and different motors 

would not be technologically feasible. 

Therefore, for the final rule analysis, 

DOE maintained the top-loading 

efficiency levels as proposed in the 

March 2014 NOPR. 

7. Impacts on Cleaning Performance and 

Cycle Time 

DOE conducted performance testing 

to quantitatively evaluate potential 

impacts on cleaning performance, 

rinsing performance, and solid particle 

removal as a result of higher standard 

levels. As described in greater detail in 

chapter 5 of the final rule TSD, DOE 

tested a representative sample of CCWs 

at each efficiency level using AHAM’s 

HLW–1–2010 test procedure. 

Specifically, DOE performed the soil/

stain removal, rinsing effectiveness, and 

sand removal tests provided in HLW–1– 

2010. 

For each clothes washer, DOE tested 

the maximum load size specified in 

appendix J2, rounded to the nearest 

pound, using the warm wash/cold rinse 

cycle. Manufacturers indicated that the 

maximum load size is particularly 

relevant to CCW owners and operators 

because end-users often overload the 

machines in order to limit their total 

laundry cost. DOE notes that the warm 

wash/cold rinse temperature selection 

has the highest usage factor in appendix 

J2. The test results indicate that units 

meeting the proposed new standard 

levels are capable of providing washing 

performance, rinsing performance, and 

solid particle removal results equivalent 

to current baseline equipment. 

As discussed in the March 2014 

NOPR, DOE consulted with a number of 

manufacturers who indicated that 

AHAM HLW–1–2010 would be the most 

appropriate test method to determine 

relative cleaning performance across 

different CCW models. DOE recognizes 

that AHAM HLW–1–2010 is typically 

used to measure the performance of 

residential clothes washers, but given 

the similarities in physical construction, 

DOE believes the test procedure is 

appropriate for CCWs. DOE also 

acknowledges that the CCW industry 

has not agreed upon acceptable ranges 

of performance characteristics; 

therefore, DOE’s test results should be 

used for relative comparison purposes 

only. 

AHAM stated that in addition to soil 

and stain removal, rinsing effectiveness, 

and sand removal, DOE should evaluate 

fabric care by performing the 

mechanical action test in HLW–1–2010. 

(AHAM, No. 23 at p. 4) AHAM 

explained that longevity of clothing is 

an important performance measure that 

could potentially be impacted by more 

stringent efficiency/water levels. Id. 

AHAM also responded to DOE’s 

discussion in the March 2014 NOPR 

TSD, in which DOE indicated that it 

believes that using less wash water in 

high-efficiency models increases the 

concentration of detergent during the 

wash portion of the cycle, thus 

enhancing stain removal and leading to 

higher efficiency top-loading CCWs 

achieving better total cleaning scores. 

(March 2014 NOPR TSD, chapter 5, pp. 

21–22) AHAM noted that it is not 

necessarily true that a higher 

concentration of detergent will result in 

better cleaning performance. AHAM 

explained that more detergent can 

actually result in worse performance, 

particularly if the consumer does not 

use the proper detergent. In addition, 

AHAM claimed that higher detergent 

concentrations are harder to remove, 

which can result in residual detergent 

and the gradual greying of the cloth over 

time. AHAM added that some of the 

detergent chemicals that can remain in 

clothes can build up and gradually 

break down fabric. (AHAM, No. 23 at p. 

4) Finally, AHAM requested that DOE 

further address the front-loading test 

results that indicated a general trend of 

higher efficiency levels resulting in 

reduced cleaning performance scores. 

(AHAM, No. 23 at pp. 4–5) 

ALS supports AHAM’s comments 

regarding consumer utility and 

performance. (ALS, No. 26 at p. 2) ALS 

stated that the standards proposed in 

the March 2014 NOPR would not result 

in further lessening of utility and 

performance beyond the CCW 

equipment offerings. (ALS, No. 26 at pp. 

2, 4) However, ALS also claims that 

more stringent CCW standards would 

result in a reduction of hot water 

consumption and total water 

consumption. ALS further commented 

that it takes four elements (thermal 

energy, mechanical energy, chemical 

energy and adequate time) to properly 

clean clothes to meet consumer 

expectations, and when thermal energy 

is depleted or nearly-depleted from the 

mix, the performance suffers. ALS 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74507 

20U.S. Census Bureau, Economic Census, 

Business Expenses Survey, Wholesale Trade, 

Machinery, Equipment and Supplies Merchant 

Wholesalers, 2007, available at http://

www.census.gov/econ/ (last accessed November 30, 

2014). 

added that thermal energy cannot be 

replaced by the remaining three 

elements. (ALS, No. 26 at pp. 2–3) 

NRDC requests that DOE make 

available the actual integers that were 

the result of the cycle time tests, since 

the cycle time results were displayed 

graphically in the March 2014 NOPR. 

NRDC also requests that DOE elaborate 

on why it viewed the cycle time of one 

of the top-loading units as an outlier. 

(NRDC, Public Meeting Transcript, No. 

30 at pp. 133–134) 

DOE recognizes that mechanical 

action is an important performance 

measure that could be impacted by 

higher efficiency standards. For 

example, if higher efficiency standards 

require lower hot water temperatures to 

be used (i.e. less thermal energy), the 

clothes washer may need to 

‘‘compensate’’ for this by increasing the 

amount of mechanical agitation 

performed on the clothing (i.e. more 

mechanical energy). Based on 

interviews with manufacturers, and 

comments from interested parties 

described above, DOE believes that the 

amended standards established by the 

final rule will not have a detrimental 

impact on mechanical action 

performance levels or limit selection 

beyond CCWs currently available on the 

market. 

As described in further detail in 

chapter 5 of the final rule TSD, DOE’s 

test results indicate that a front-loading 

CCW at the amended standard level 

(EL2, 2.00 MEFJ2) can provide the same 

cleaning performance as CCWs available 

at EL1 (1.80 MEFJ2). Within the sample 

of CCWs that DOE tested, the results at 

EL3 (2.20 MEFJ2) demonstrated lower 

(worse) cleaning performance than the 

best equipment available at EL1 and 

EL2. At this point in time, DOE test 

results are unable to demonstrate that 

CCWs reaching the amended standard 

level at EL3 could provide equivalent 

cleaning performance to CCWs available 

at EL1. However, DOE notes that the 

current max-tech cleaning performance 

levels could improve as front-loading 

CCW technology continues to evolve 

and improve. 

Due to the small number of 

manufacturers of CCWs, equipment 

offerings, and the number of units 

tested, DOE does not provide the 

numerical values associated with the 

performance tests presented in chapter 

5 of the final rule TSD. 

In the March 2014 NOPR, DOE stated 

the top-loading cycle times for the 

maximum load size ranged from 29 to 

31 minutes, with an average of 30 

minutes, which excluded one outlier 

top-loading model with a cycle time of 

50 minutes. 77 FR 12301, 12309. Based 

on conversations with CCW 

manufacturers, DOE believes that a 

cycle time range of 30 to 35 minutes is 

within the typical range of acceptable 

cycle times for coin-operated laundry 

owners and multi-family housing 

laundry operators. 

DOE confirms its prior conclusion 

that CCW units meeting the amended 

standard levels established by the final 

rule are capable of providing equivalent 

consumer-relevant performance as 

compared to current baseline 

equipment. 

D. Markups Analysis 

The markups analysis develops 

appropriate markups in the distribution 

chain to convert the estimates of 

manufacturer selling price derived in 

the engineering analysis to customer 

prices. (‘‘Customer’’ refers to purchasers 

of the equipment being regulated.) DOE 

calculates overall baseline and 

incremental markups based on the 

equipment markups at each step in the 

distribution chain. The incremental 

markup relates the change in the 

manufacturer sales price of higher 

efficiency models (the incremental cost 

increase) to the change in the customer 

price. 

For the three key CCW market 

segments—laundromats, private multifamily housing, and large institutions— 

data indicate that an overwhelming 

majority of CCWs are sold through 

either distributors or route operators. 

For this final rule, DOE used the same 

distribution channels as in the January 

2010 final rule (10 CFR 431.152): 

Manufacturer to distributor to owner/

lessee, and manufacturer to route 

operator to owner/lessee. For purposes 

of developing the markups for CCWs, 

DOE estimated that the markups and the 

resulting consumer products prices 

determined for the distribution channel 

involving distributors would be 

representative of the prices paid by 

customers acquiring their equipment 

from route operators. 

DOE based the distributor markups 

for CCWs on financial data for the sector 

Machinery, Equipment and Supplies 

Merchant Wholesalers from the 2007 

U.S. Census Business Expenses Survey 

(BES), which is the most recent 

available survey.20 This sector includes 

the subsector Laundry Machinery, 

Equipment, and Supplies, Commercial, 

Merchant Wholesalers, which 

specifically sells CCWs. DOE calculated 

overall baseline and incremental 

markups based on the equipment 

markups at the intermediate step in the 

distribution chain. The incremental 

markup relates the change in the 

manufacturer sales price of higher 

efficiency models (the incremental cost 

increase) to the change in the customer 

price. Chapter 6 of the final rule TSD 

provides further detail on the estimation 

of markups. 

E. Energy and Water Use Analysis 

The energy and water use analysis 

provides estimates of the annual energy 

and water consumption of CCW units at 

the considered efficiency levels. DOE 

uses these values in the LCC and PBP 

analyses and in the NIA. DOE 

developed energy and water 

consumption estimates for all 

equipment classes analyzed in the 

engineering analysis. The analysis seeks 

to capture the range of CCW use in the 

field. 

The DOE test procedure uses a single 

value for number of cycles, which is 

based on residential use. For the energy 

and water use analysis, DOE established 

an appropriate range of usage specific to 

CCWs in the field. Because the 

predominant applications of CCWs are 

in multi-family buildings and 

laundromats, DOE focused on these two 

building applications to determine 

appropriate values for number of CCW 

cycles per year. DOE acknowledges that 

the ‘‘other commercial applications’’ 

category in the statutory definition 

would include applications other than 

coin-operated laundry and multi-family 

housing laundry. However, DOE is not 

aware of any data indicating the 

prevalence of CCWs in other 

applications, such as on-premise 

laundries or in the hospitality industry. 

Furthermore, DOE is not aware of any 

data indicating how the usage patterns 

of such equipment would compare to 

the usage patterns of coin-operated and 

multi-housing laundries. Therefore, 

DOE has no information on which to 

base a separate analysis for ‘‘other 

commercial applications.’’ Further, 

discussions with manufacturers have 

supported DOE’s understanding that 

applications other than coin-operated 

laundries and multi-family housing 

laundries constitute a small minority of 

installations of covered CCWs. For these 

reasons, DOE’s analysis for this final 

rule focuses on the coin-operated 

laundry and multi-housing laundry 

applications, which represent the large 

majority of CCW usage. 

DOE included all available studies on 

CCW usage to establish representative 

usage. For the final rule analysis, DOE 

relied on several research studies to 


emcdonald on DSK67QTVN1PROD with RULES3
74508 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

21 DOE did not rely on the Commercial Building 

Energy Consumption Survey (CBECS) conducted by 

DOE’s Energy Information Administration (EIA) 

because energy and water consumption is not 

specified for buildings identified with laundry 

facilities in the CBECS dataset. 

22The Monte Carlo process statistically captures 

input variability and distribution without testing all 

possible input combinations. Therefore, while some 

atypical situations may not be captured in the 

analysis, DOE believes the analysis captures an 

adequate range of situations in which CCWs 

operate. 

arrive at a range of annual use cycles. 

DOE found that the average number of 

cycles for multi-family and laundromat 

applications were 1,074 and 1,483, 

respectively. DOE received this data 

from many entities, including the MultiHousing Laundry Association (MLA), 

Coin Laundry Association (CLA), 

Southern California Edison, and San 

Diego Gas and Electric. Chapter 7 of the 

final rule TSD describes the sources 

DOE received from these entities in 

detail.21

To determine the energy and water 

use per cycle, DOE used the new 

appendix J2 test procedure, as described 

in the paragraphs that follow. 77 FR 

13887 (Mar. 7, 2012). DOE determined 

the total weighted per-cycle water 

consumption for all wash cycles based 

on test data performed using the 

appendix J2 test procedure. The energy 

use analysis for the final rule consists of 

three related parts—the machine energy 

use, the dryer energy use and the water 

heating energy use. 

DOE determined the per-cycle 

machine energy use based on test data 

performed using the appendix J2 test 

procedure. The units selected for tests 

across efficiency levels varied in tub 

volume, so DOE adjusted the annual 

number of cycles to maintain consistent 

loading across all tub volumes. In their 

comments, the California IOUs asked 

why DOE assumed, in the case of maxtech front-loading washers, that only 50 

percent of consumers would fill the tub 

to capacity instead of assuming that 

customers would self-select an 

appropriately sized washer in a 

laundromat and fill the washer to 

capacity. (CA IOU, Public Meeting 

Transcript, No. 30, at pp. 84–87) DOE 

based this assumption on the theory that 

if the standard were to require max-tech 

front-loading washers, units with large 

tub volume would be more common (or 

be the only option), so consumers 

would not fill the tub to capacity in 

many cases. 

DOE determined the per-cycle clothes 

drying energy use by using the 

remaining moisture content (RMC) 

values for each efficiency level as 

measured using the appendix J2 test 

procedure. The energy required to 

remove moisture from clothes, i.e., the 

dryer energy, represents the estimated 

energy that would be required to dry the 

clothing in a clothes dryer after 

completion of the wash cycle. DOE 

includes this as one of the factors in the 

MEF equation as a way to give ‘‘credit’’ 

to clothes washers with more effective 

final spin sequences, which results in 

less drying time required in the clothes 

dryer. The estimated drying energy is a 

significant component of total clothes 

washer energy consumption. 

DOE’s current approach for 

quantifying reduction in dryer energy 

use from an increase in CCW efficiency 

is based on the drying energy equation 

in appendix J2, which reflects 

residential clothes washer and dryer 

usage patterns. DOE acknowledges that 

operating conditions for commercial 

dryers may differ from the conditions of 

residential dryers, but DOE did not find 

any data to support changing the dryer 

energy use calculation. See chapter 7 

and appendix 7–A of the final rule TSD 

for discussion. 

DOE determined the per-cycle waterheating energy use by first determining 

the total per-cycle energy use (the 

clothes container volume divided by the 

MEFJ2) and then subtracting from it the 

per-cycle clothes-drying and machine 

energy. 

F. Life-Cycle Cost and Payback Period 

Analysis 

In determining whether an energy 

efficiency standard is economically 

justified, DOE considers the economic 

impact of potential standards on 

customers. The effect of new or 

amended standards on customers 

usually includes a reduction in 

operating cost and an increase in 

purchase cost. 

The LCC is the total customer expense 

over the life of the equipment, 

consisting of equipment and installation 

costs plus operating costs over the 

lifetime of the equipment (expenses for 

energy use, maintenance, and repair). 

DOE discounts future operating costs to 

the time of purchase using customer 

discount rates. The PBP is the estimated 

amount of time (in years) it takes 

customers to recover the increased total 

installed cost (including equipment and 

installation costs) of a more efficient 

type of equipment through lower 

operating costs. DOE calculates the PBP 

by dividing the change in total installed 

cost due to a standard by the change in 

annual operating cost that results from 

the standard. 

DOE typically develops a customer 

sample for determining PBPs and LCC 

impacts. However, because EIA’s 

Commercial Building Energy 

Consumption Survey (CBECS) does not 

provide the necessary data to develop a 

customer sample for CCWs, DOE 

established the variability in energy and 

water use by defining the variability in 

the use by consumers (cycles per day) 

of the equipment. DOE characterized the 

variability in energy and water pricing 

by randomly assigning CCWs to regions 

with different energy and water prices. 

DOE expresses the LCC and PBP 

results as the number of units 

experiencing economic impacts of 

different magnitudes. DOE models both 

the uncertainty and the variability in the 

inputs to the LCC and PBP analysis 

using Monte Carlo simulation and 

probability distributions.22 As a result, 

the LCC and PBP results are displayed 

as distributions of impacts compared to 

the base case, which reflects the market 

in the absence of amended energy 

conservation standards, including the 

purchase of equipment that exceeds the 

current energy conservation standards. 

DOE conducted LCC and PBP analysis 

separately for two applications in each 

of the equipment classes: (1) 

Laundromats and (2) multi-family 

buildings. These applications have 

different usage characteristics. 

Inputs to the LCC and PBP analysis 

are categorized as: (1) Inputs for 

establishing the total installed cost and 

(2) inputs for calculating the operating 

costs. The following sections contain 

comments on the inputs and key 

assumptions of DOE’s LCC and PBP 

analysis and explain how DOE took 

these comments into consideration. 

1. Equipment Costs 

To calculate the equipment prices 

faced by CCW purchasers, DOE 

multiplied the manufacturing costs 

developed from the engineering analysis 

by the supply chain markups it 

developed (along with sales taxes). 

For the March 2014 NOPR (79 FR 

12301), to project future CCW prices, 

DOE examined the commercial laundry 

and dry-cleaning machinery Producer 

Price Index (PPI) between 1993 and 

2013. This index, adjusted for inflation, 

shows a rising trend. However, the 

inflation adjusted trend for household 

laundry equipment (which more closely 

matches CCW units because this 

rulemaking includes mostly residentialstyle CCW units and excludes the larger 

commercial laundry equipment) shows 

a long-term declining trend (see 

appendix 10–D of the final rule TSD). 

Given the uncertainty, DOE decided to 

take a conservative approach and used 

a constant price for the default case for 

CCW units. 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74509 

23RS Means, RS Means Mechanical Cost Data, 

36st Annual Edition. 2013. 

24 2012 EIA Form 861, Annual Electric Power 

Industry Report, available at http://www.eia.gov/

electricity/data/eia861/(last visited Nov. 20, 2014). 

25EIA, Natural Gas Monthly 2012 Report, 

available at http://www.eia.gov/naturalgas/

monthly/(last visited Nov. 20, 2014). 

26 DOE–EIA, Annual Energy Outlook 2014 with 

Projections to 2040 (available at: http://

www.eia.gov/forecasts/aeo/). 

27Raftelis Financial Consultants, Inc. 2012 RFC/ 

AWWA Water and Wastewater Rate Survey, 

available at http://www.awwa.org/portals/0/files/

publications/documents/samples/

2012waterandwastewaterratesurvey.pdf. 

28U.S. Department of Labor—Bureau of Labor 

Statistics, Consumer Price Indexes, Item: Water and 

sewerage maintenance, Series Id: 

CUUR0000SEHG01, U.S. city average (not 

seasonally adjusted), 2013. Washington, DC. 

Available at http://www.bls.gov/cpi/home.htm#data 

29U.S. Department of Energy—Energy Efficiency 

and Renewable Energy, Technical Support 

Document: Energy Efficiency Standards for 

Consumer Products: Residential Central Air 

Conditioners and Heat Pumps Including: Regulatory 

Impact Analysis. Chapter 5, Life-Cycle Cost and 

Payback Analysis, May, 2002. Washington, DC. 

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

appliance_standards/residential/ac_central_1000_

r.html 

In response to DOE’s approach in the 

March 2014 NOPR, AHAM commented 

that DOE should not rely on experience 

curves for the same reasons that it 

expressed in comments for the 

microwave oven rulemaking. (AHAM, 

No. 23 at p. 5) DOE did not use 

experience curves for the March 2014 

NOPR. For the final rule, it retained the 

approach used for the March 2014 

NOPR. For the NIA, DOE also analyzed 

the sensitivity of results to alternative 

price forecasts. (See section IV.H) 

In the previous CCW rulemaking (10 

CFR 431.152), DOE based the LCC 

analysis on the assumption that any 

increase in the cost of a more efficient 

unit that is leased gets passed on to the 

building owners through the contracting 

arrangements between route operators 

and building owners. The assumption 

that any increase in the cost of a more 

efficient unit that is leased gets passed 

on is consistent with what one would 

expect in a competitive business 

environment. To the extent that costs 

are not passed on, the LCC savings for 

building owners from higher-efficiency 

CCWs would be larger than indicated in 

the final rule. 

2. Installation Costs 

Installation costs include labor, 

overhead, and any miscellaneous 

materials and parts. For the final rule, 

DOE used data from the 2013 RS Means 

Mechanical Cost Data 23 on labor 

requirements to estimate installation 

costs for CCWs. DOE estimated that 

installation costs do not increase with 

equipment efficiency. ALS suggests 

including the cost of concrete risers in 

place of metal risers for front-loading 

units as a more recent trend in 

laundromats. (ALS, No. 26, at p. 7) 

However, since DOE does not have 

estimates on the cost of these concrete 

risers, the installation costs do not 

include it. Furthermore, since the cost 

of the risers would be common to the 

baseline unit as well as more efficient 

units, its exclusion does not have any 

impact on the cost-effectiveness 

calculation. 

3. Unit Energy Consumption 

The calculation of annual per-unit 

energy consumption at each considered 

efficiency level is described in section 

IV.E. 

4. Energy and Water Prices 

DOE used commercial sector energy 

and water prices for both multi-family 

and laundromat applications. DOE 

assumes that common area laundry 

facilities are mainly found in large 

multi-family buildings that receive 

commercial energy and water rates. 

a. Energy Prices 

DOE derived average electricity and 

natural gas prices for 27 geographic 

areas. DOE estimated commercial 

electricity prices for each of the 27 areas 

based on 2012 data from EIA Form 861, 

Annual Electric Power Industry 

Report.24 DOE first estimated an average 

commercial price for each utility, and 

then calculated an average price for 

each area by weighting each utility with 

customers in an area by the number of 

commercial customers served in that 

area. 

DOE estimated average commercial 

natural gas prices in each of the 27 

geographic areas based on 2012 data 

from the EIA publication Natural Gas 

Monthly.25 DOE calculated an average 

natural gas price for each area by first 

calculating the average prices for each 

State, and then calculating a regional 

price by weighting each State in a region 

by its population. 

To estimate the trends in electricity 

and natural gas prices, DOE used price 

forecasts in AEO 2014.26 To arrive at 

prices in future years, DOE multiplied 

the average prices described above by 

the forecast of annual average changes 

in national-average commercial 

electricity and natural gas prices. 

Because the AEO forecasts prices only 

to 2040, DOE used the average rate of 

change between 2025 and 2040 to 

estimate the price trends beyond 2040. 

The spreadsheet tools used to conduct 

the LCC and PBP analysis allow users to 

select either the AEO’s high-growth case 

or low-growth case price forecasts to 

estimate the sensitivity of the LCC and 

PBP to different energy price forecasts. 

b. Water and Wastewater Prices 

DOE obtained commercial water and 

wastewater price data from the Water 

and Wastewater Rate Survey conducted 

by Raftelis Financial Consultants (RFC) 

and the American Water Works 

Association (AWWA).27 The survey 

covers approximately 290 water utilities 

and 214 wastewater utilities from 44 

States and the District of Columbia, with 

water and wastewater utilities analyzed 

separately. The samples that DOE 

obtained of the water and wastewater 

utilities are not large enough to 

calculate regional prices for the group of 

states. Hence, DOE calculated average 

values at the Census region level 

(Northeast, South, Midwest, and West) 

by weighting each State in a region by 

its population. 

To estimate the future trend for water 

and wastewater prices, DOE used data 

on the historic trend in the national 

water price index (U.S. city average) 

provided by the Labor Department’s 

Bureau of Labor Statistics (BLS),28

adjusted for inflation. In keeping with 

prior practice, DOE extrapolated a 

future trend based on the linear growth 

from 1970 to 2012. However, DOE did 

not use a linear fit after 2012 because 

doing so would have resulted in a price 

decline in the near-term. This does not 

seem plausible because historically, 

water prices have not declined in the 

country. Therefore, rather than use the 

extrapolated trend to forecast the nearterm trend after 2012, DOE pinned the 

annual price to the value in 2012 until 

2020. Beyond 2020, DOE used the 

extrapolated trend to forecast prices. 

5. Repair and Maintenance Costs 

Repair costs are associated with 

repairing or replacing components that 

have failed in the appliance; 

maintenance costs are associated with 

maintaining the operation of the 

equipment. For the March 2014 NOPR 

(79 FR 12301), DOE included increased 

repair costs for higher efficiency CCWs 

based on an algorithm developed by 

DOE for central air conditioners and 

heat pumps. This algorithm calculates 

annualized repair and maintenance 

costs by dividing half of the equipment 

retail price over the equipment lifetime. 

(See Chapter 8 of the final rule TSD for 

details).29 DOE requested industry input 

to estimate changes in repair and 

maintenance costs associated with an 

increase in efficiency of CCW units. 

ALS stated that their experience under 

the 3-year warranty period shows that 


emcdonald on DSK67QTVN1PROD with RULES3
74510 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

30 Ibbotson Associates, Cost of Capital 2009 

Yearbook. 2009. Ibbotson Associates: Chicago, IL 

31See U.S. Environmental Protection Agency, 

ENERGY STAR Certified Commercial Clothes 

Washer Models, available at https://

data.energystar.gov/Active-Specifications/ENERGYSTAR-Certified-Commercial-Clothes-Washers/9g6rcpdt (last accessed Nov. 20, 2014). 

front-loading washers cost 27 percent 

more to repair than top-loading units. 

(ALS, No. 26, at p.4) Since the potential 

increase in repair cost is in comparison 

to top-loading units rather than to moreefficient units in each equipment class, 

and DOE did not receive new input 

from other manufacturers specific to 

repair and maintenance costs, it 

continued with the approach used in 

the March 2014 NOPR for this final rule. 

This approach shows rising 

maintenance and repair costs as 

efficiency increases. 

6. Lifetime 

Equipment lifetime is the age at 

which the equipment is retired from 

service. In the March 2014 NOPR (79 FR 

12301), DOE used a variety of sources to 

establish low, average, and high 

estimates for equipment lifetime in 

years. DOE characterized CCW lifetime 

with a Weibull probability distribution. 

ALS generally agrees with DOE on 

equipment lifetime characterization, 

although ALS believes that newer CCW 

models may have shorter lifetimes. 

(ALS, No. 26 at p. 4) Since DOE could 

not find any data to validate or quantify 

the potential decrease in average 

lifetimes of newer CCW models, it did 

not change the lifetime assumption for 

the newly shipped units. For this final 

rule, DOE updated its data sources (as 

described in chapter 8 of the final rule 

TSD), and calculated the same average 

CCW lifetimes (11.3 years for multifamily building applications and 7.1 

years for laundromat applications) that 

DOE used in the March 2014 NOPR. 

DOE used the same lifetime for each 

equipment class. 

7. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

estimate their present value. The cost of 

capital is commonly used to estimate 

the present value of cash flows to be 

derived from a typical company project 

or investment. Most companies use both 

debt and equity capital to fund 

investments, so the cost of capital is the 

weighted-average cost to the firm of 

equity and debt financing. DOE uses the 

capital asset pricing model (CAPM) to 

calculate the equity capital component, 

and financial data sources to calculate 

the cost of debt financing. 

In the March 2014 NOPR (79 FR 

12301), DOE estimated the weightedaverage cost of capital of publicly traded 

firms in the key sectors that purchase 

CCWs (i.e., personal services, 

educational services, hotels, and 

R.E.I.T—building and apartment 

complex owners).30 For the final rule, 

DOE updated its data sources for 

calculating this cost. More details 

regarding DOE’s estimates of customer 

discount rates are provided in chapter 8 

of the final rule TSD. 

8. Compliance Date 

DOE calculated the LCC and PBP for 

all customers as if each were to 

purchase new equipment in the year 

that compliance with amended 

standards is required. EPCA, as 

amended, directs DOE to publish a final 

rule amending the standard for the 

equipment by January 1, 2015. Any 

amended standards would apply to 

CCWs manufactured three years after 

the date on which the final amended 

standard is published. (42 U.S.C. 

6313(e)(2)(B)) Therefore, for purposes of 

its analysis, DOE used 2018 as the first 

year of compliance with amended 

standards. 

9. Base Case Efficiency Distribution 

To accurately calculate the percentage 

of customers that would be affected by 

a particular standard level, DOE 

estimates the distribution of equipment 

efficiencies that customers are expected 

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

case without amended energy efficiency 

standards). DOE refers to this 

distribution of equipment energy 

efficiencies as a base-case efficiency 

distribution. This approach reflects the 

fact that some customers may already 

purchase equipment with efficiencies 

greater than the baseline equipment 

levels. 

For the final rule, DOE utilized the 

shipment-weighted efficiency 

distributions between 2010 and 2013 

(submitted by AHAM) to establish the 

base-case efficiency distributions. 

Because these data are not 

comprehensive enough to capture any 

definite trend in efficiency, DOE used 

the 2013 distribution to represent the 

market in the compliance year (2018). 

DOE found that the distribution based 

on ENERGY STAR qualified equipment 

matched closely with the data submitted 

by AHAM.31 Table IV.3 presents the 

market shares of the efficiency levels in 

the base case for CCWs. See chapter 8 

of the final rule TSD for further details 

on the development of CCW base-case 

market shares. 

TABLE IV.3—COMMERCIAL CLOTHES WASHERS: BASE CASE EFFICIENCY DISTRIBUTION

Top-loading Front-loading 

Standard 

level MEFJ2 IWF 

Market 

share 

(percent) 

Standard 

level MEFJ2 IWF 

Market 

share 

(percent) 

Baseline ................................................... 1.15 8.9 62 .11 Baseline 1.65 5.2 0 

1 ............................................................... 1.35 8.8 26 .7 1 1.80 4.5 31 

2 ............................................................... 1.55 6.9 11 .3 2 2.00 4.1 69 

3 2.20 3.9 0 


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32 Data from the American Housing Survey as 

well as RECS indicate that there has been growth 

of in-unit washer saturation in the multi-family 

housing stock over the last 10–15 years. See chapter 

9 of the final rule TSD for further discussion. 

10. Payback Period Inputs 

The PBP is the amount of time it takes 

the consumer to recover the additional 

installed cost of more efficient 

equipment, compared to baseline 

equipment, through energy cost savings. 

PBPs are expressed in years. PBPs that 

exceed the life of the equipment 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 annual first year operating 

expenditures for each efficiency level. 

The PBP calculation uses the same 

inputs as the LCC analysis, except that 

discount rates are not needed. 

11. Rebuttable-Presumption Payback 

Period 

EPCA establishes a rebuttable 

presumption that a standard is 

economically justified if the Secretary 

finds that the additional cost to the 

customer of purchasing equipment 

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. For each considered 

efficiency level, DOE determines the 

value of the first year’s energy savings 

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 

standards would be required. 

G. Shipments Analysis 

DOE uses projections of equipment 

shipments to calculate the national 

impacts of standards on energy use, 

NPV, and future manufacturer cash 

flows. DOE develops shipment 

projections based on historical data and 

an analysis of key market drivers for 

each equipment. Historical shipments 

data are used to build up an equipment 

stock and also to calibrate the shipments 

model. 

Table IV.4 summarizes the approach 

and data DOE used to derive the inputs 

to the shipments analysis for the final 

rule. DOE projected CCW shipments (for 

both equipment classes) for the new 

construction and replacement markets, 

and also accounted for non-replacement 

of retired units. 

TABLE IV.4—APPROACH AND DATA USED TO DERIVE THE INPUTS TO THE SHIPMENTS ANALYSIS

Inputs Approach 

Number of Equipment Classes ...... Two equipment classes: Top-loading washers and front-loading washers. Shipments forecasts established 

for all CCWs and then disaggregated into the two equipment classes based on the market share of topand front-loading washers. 

New Construction Shipments ......... Determined by multiplying multi-housing forecasts by forecasted saturation of CCWs for new multi-housing. 

Multi-housing forecasts with AEO 2014. Verified frozen saturations with data from the U.S. Census Bureau’s American Housing Survey (AHS) for 1997–2011. 

Replacements ................................. Determined by tracking total equipment stock by vintage and establishing the failure of the stock using retirement functions from the LCC and PBP analysis. Retirement functions revised to be based on Weibull 

lifetime distributions. 

Retired Units not Replaced (i.e., 

non-replacements).

Used to calibrate shipments model to historical shipments data. Froze the percentage of non-replacements 

at 31.6 percent for the period 2012–2047 to account for the increased saturation rate of in-unit washers 

in the multi-family stock between 2000 and 2011 timeframe shown by the AHS. 

Historical Shipments ....................... Data sources include AHAM data submittal, Appliance Magazine, and U.S. Bureau of Economic Analysis’ 

quantity index data for commercial laundry. Relative market shares of the two equipment applications, 

common-area laundry facilities in multi-family housing and laundromats, estimated to be 85 and 15 percent, respectively. 

For the new construction market, DOE 

assumed shipments are driven solely by 

multi-family construction starts. 

Implicit in this assumption is the fact 

that a certain percentage of multi-family 

residents will need to wash their 

laundry in either a common-area 

laundry facility (within the multi-family 

building) or a laundromat. 

For existing buildings replacing 

broken equipment, the shipments model 

uses a stock accounting framework. 

Given the equipment entering the stock 

in each year and a retirement function 

based on the lifetime distribution 

developed in the LCC analysis, the 

model predicts how many units reach 

the end of their lifetime in each year. 

DOE typically refers to new shipments 

intended to replace retired units as 

‘‘replacement’’ shipments. Such 

shipments are usually the largest part of 

total shipments. 

Historical data show a rise in 

shipments in the second half of the 

1990s followed by a significant drop 

between 1999 and 2002, and a slower 

decline since then. DOE believes that a 

large part of the decline was due to 

growth of in-unit washers in multifamily housing (possibly due to 

conversions of rental property to 

condominiums), leading to nonreplacement of failed CCWs in commonarea laundry facilities.32 To account for 

the decline and to reconcile the 

historical shipments with the 

accounting model, DOE assumed that 

every retired unit is not replaced. 

Starting in 1999 and extending to 2011, 

DOE estimated the share of retired units 

that were not replaced (as discussed in 

chapter 9 of the final rule TSD). 

DOE allocated shipments to each of 

the two equipment classes based on the 

current market share of each class. 

Based on data submitted by AHAM, 

DOE estimated that top-loading washers 

comprise 64 percent of the market while 

front-loading washers comprise 36 

percent. DOE implemented change in 

the market share for the projection 

period based on the historical trend that 

shows a gradual market shift towards 

front-loading units, with the market 

stabilizing at 52 percent and 48 percent 

for top-loading and front-loading units, 

respectively, by 2047. ALS suggested 

that DOE re-evaluate the front-loading 

market share increase during the 

analysis period based on new shipments 

data for 2012 and 2013 from AHAM. 

(ALS, No. 26, at p .5) After receiving 

new shipments data for 2012 and 2013, 

DOE re-evaluated the historical trends 


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74512 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

33See chapter 9 in Direct Final Rule Technical 

Support Document, available at http://

www.regulations.gov/#!documentDetail;D=EERE2008-BT–STD-0019-0047. 

34 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. 

and adjusted the market share estimates 

accordingly. 

DOE implemented a cross-price 

elasticity to capture the impact of a 

change in price of one equipment class 

on the demand of the other equipment 

class. Due to insufficient data on CCW 

units, DOE was not able to estimate 

cross-price impacts on the market share 

of top-loading and front-loading CCWs 

and instead relied on its analysis 

performed for the 2012 residential 

clothes washer rulemaking.33 The price 

impact observed from residential 

clothes washer data indicate that a 10 

percent increase in the price of frontloading washers would lead to a 10.7 

percent decrease in top-loading 

washers’ market share, holding other 

variables constant and measured as 

changes from the reference case using 

average values for each variable. This 

translates to the front-loading crossprice impact (percent change in toploading market share over percent 

change in front-loading price) of 1.07. 

For further details on this estimation, 

please refer to chapter 9 and appendix 

9A of the final rule TSD. 

H. National Impact Analysis 

The NIA assesses the NES and the 

national NPV of total customer costs 

and savings that would be expected to 

result from amended standards at 

specific efficiency levels. 

DOE used an MS Excel spreadsheet 

model to calculate the energy savings 

and the national customer costs and 

savings from each TSL.34 The NIA 

calculations are based on the annual 

energy consumption and total installed 

cost data from the energy use analysis 

and the LCC analysis. DOE projected the 

lifetime energy savings, energy cost 

savings, equipment costs, and NPV of 

customer benefits for each equipment 

class over the lifetime of equipment sold 

from 2018 through 2047. 

DOE evaluated the impacts of 

potential amended standards for frontloading and top-loading CCW by 

comparing base-case projections with 

standards-case projections. The basecase projections characterize energy use 

and customer costs for each equipment 

class in the absence of amended energy 

conservation standards. 

Table IV.5 summarizes the key inputs 

for the NIA. The sections following 

provide further details, as does chapter 

10 of the final rule TSD. 

TABLE IV.5—INPUTS FOR THE NATIONAL IMPACT ANALYSIS

Input Description 

Shipments ..................... Annual shipments from shipments model. 

Compliance date ........... January 1, 2018. 

Base case efficiency ..... Based on the current market distribution of efficiencies, with the option of a frozen, 1%, and 2% growth in efficiency. 

Standards case efficiency.Based on a ‘‘Roll up’’ scenario to establish a 2018 shipment weighted efficiency. 

Annual energy and 

water consumption 

per unit.

Calculated for each efficiency level and equipment class based on inputs from the energy and water use analysis. 

Total installed cost per 

unit.

Calculated equipment prices by efficiency level using manufacturer selling prices and weighted-average overall markup values. Installation costs vary in direct proportion to the weight of the equipment. 

Electricity and water expense per unit.Annual energy use for each equipment class is multiplied by the corresponding average energy and water and wastewater price. 

Escalation of electricity 

and water prices.

AEO 2014 forecasts (to 2040) and extrapolation beyond 2040 for electricity and gas prices. BLS’s historical Consumer 

Price Index for water for projecting the prices beyond 2020. 

Electricity site-to-primary energy conversion.A time series conversion factor; includes electric generation, transmission, and distribution losses. 

Discount rates ............... 3% and 7% real. 

Present year ................. 2014. 

1. Efficiency Trends 

A key component of DOE’s estimates 

of NES and NPV is the equipment 

energy and water efficiencies forecasted 

over time. For the base case, DOE 

considered the lack of change in the 

historical trends and assumed that 

efficiency would remain constant at the 

2018 levels derived in the LCC and PBP 

analysis. DOE provides 1 percent and 2 

percent efficiency growth rates as 

options for sensitivities. 

To estimate the impact that standards 

would have in the year compliance 

becomes required, DOE used a ‘‘roll-up’’ 

scenario, which assumes that equipment 

efficiencies in the base case that do not 

meet the standard level under 

consideration would ‘‘roll up’’ to meet 

the new standard level. Equipment 

shipments at efficiencies above the 

standard level under consideration are 

not affected. In each standards case, the 

efficiency distributions remain constant 

at the 2018 levels for the remainder of 

the shipments forecast period. 

2. National Energy and Water Savings 

For each year in the forecast period, 

DOE calculates the national energy and 

water savings for each standard level by 

multiplying the shipments of frontloading and top-loading by the per-unit 

annual energy and water savings. 

Cumulative energy and water savings 

are the sum of the annual energy and 

water savings over the lifetime of all 

equipment shipped during 2018–2047. 

The annual energy consumption per 

unit depends directly on equipment 

efficiency. DOE used the shipmentweighted energy and water efficiencies 

associated with the base case and each 

standards case, in combination with the 

annual energy and water use data, to 

estimate the shipment-weighted average 

annual per-unit energy and water 

consumption under the base case and 

standards cases. The national energy 

consumption is the equipment of the 

annual energy consumption per unit 

and the number of units of each vintage, 

which depends on shipments. DOE 

calculates the total annual site energy 

savings for a given standards case by 

subtracting total energy use in the 

standards case from total energy use in 


emcdonald on DSK67QTVN1PROD with RULES3
Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74513 

35Office of Management and Budget, Circular A– 

4, section E (2003), available at http://

www.whitehouse.gov/omb/circulars_a004_a-4. 

the base case. Note that total shipments 

are the same in the standards cases as 

in the base case. 

DOE converted the site electricity 

consumption and savings to primary 

energy (power sector energy 

consumption) using annual conversion 

factors derived from the AEO 2014 

version of the NEMS. Cumulative 

primary energy and water savings are 

the sum of the national energy and 

water savings for each year in which 

equipment shipped during 2018–2047 

continue to operate. 

In response to the recommendations 

of a committee on ‘‘Point-of-Use and 

Full-Fuel-Cycle Measurement 

Approaches to Energy Efficiency 

Standards’’ appointed by the National 

Academy of Science, DOE announced 

its intention to use FFC measures of 

energy use and greenhouse gas and 

other emissions in the national impact 

analyses and emissions analyses 

included in future energy conservation 

standards rulemakings. 76 FR 51281 

(August 18, 2011). After evaluating the 

approaches discussed in the August 18, 

2011 notice, DOE published a statement 

of amended policy in the Federal 

Register in which DOE explained its 

determination that NEMS is the most 

appropriate tool for its FFC analysis and 

its intention to use NEMS for that 

purpose. 77 FR 49701 (August 17, 2012). 

The FFC factors incorporate losses in 

production and delivery in the case of 

natural gas (including fugitive 

emissions), and energy used to produce 

and deliver the fuels used by power 

plants. The approach used for the Final 

rule, and the FFC multipliers that were 

applied, are described in appendix 10– 

A of the final rule TSD. 

3. Net Present Value of Customer 

Benefit 

The inputs for determining the NPV 

of the total costs and benefits 

experienced by customers of the 

considered equipment are: (1) Total 

annual installed cost; (2) total annual 

savings in operating costs; and (3) a 

discount factor. DOE calculates the 

lifetime net savings for equipment 

shipped each year as the difference 

between the base case and each 

standards case in total savings in 

lifetime operating costs and total 

increases in installed costs. DOE 

calculates lifetime operating cost 

savings over the life of each frontloading and top-loading CCW unit 

shipped during the forecast period. 

a. Total Annual Installed Cost 

The total installed cost includes both 

the equipment price and the installation 

cost. For each equipment class, DOE 

calculated equipment prices by 

efficiency level using manufacturer 

selling prices and weighted-average 

overall markup values (weights based 

on shares of the distribution channels 

used). Because DOE calculated the total 

installed cost as a function of equipment 

efficiency, it was able to determine 

annual total installed costs based on the 

annual shipment-weighted efficiency 

levels determined in the shipments 

model. 

As noted in section IV.F.1, DOE 

assumed no change in front-loading and 

top-loading CCW equipment prices over 

the analysis period. However, DOE 

conducted sensitivity analyses using 

alternative price trends: One in which 

prices decline after 2013, and one in 

which prices rise. These price trends, 

and the NPV results from the associated 

sensitivity cases, are described in 

appendix 10–B of the final rule TSD. 

b. Total Annual Operating Cost Savings 

The per-unit energy and water savings 

were derived as described in section 

IV.H.2. To calculate future electricity 

and natural gas prices, DOE applied the 

projected trend in national-average 

commercial electricity and natural gas 

price from the AEO 2014 Reference 

case, which extends to 2040. To 

extrapolate prices beyond 2040, DOE 

applied the trend between 2030 and 

2040 from the AEO 2014 forecast, which 

yielded a growth rate of 0.5% per 

annum. To calculate future water prices, 

DOE applied the historical price trend 

based on the consumer price index of 

water, published by the BLS. 

In addition, DOE analyzed scenarios 

that used the energy price projections in 

the AEO 2014 Low Economic Growth 

and High Economic Growth cases. 

These cases have higher and lower 

energy price trends compared to the 

Reference case. These price trends and 

the NPV results from the associated 

cases are described in appendix 10–C of 

the final rule TSD. 

DOE estimated that annual 

maintenance costs (including minor 

repairs) do not vary with efficiency 

within each equipment class, so they do 

not figure into the annual operating cost 

savings for a given standards case. In 

addition, DOE developed annualized 

repair costs by dividing half of the 

equipment retail price over the 

equipment lifetime as described in 

Section IV.F.5. 

In calculating the NPV, DOE 

multiplies the net dollar savings in 

future years by a discount factor to 

determine their present value. DOE 

estimates the NPV using both a 3- 

percent and a 7-percent real discount 

rate, in accordance with guidance 

provided by the OMB to Federal 

agencies on the development of 

regulatory analysis.35 The discount rates 

that determine the NPV are different 

than the discount rates used in the LCC 

analysis, which are designed to reflect a 

consumer’s perspective. For instance, 

the 7-percent real value estimate the 

average before-tax rate of return to 

private capital in the U.S. economy, 

while the 3-percent real value 

represents the ‘‘social rate of time 

preference,’’ which is the rate at which 

society discounts future consumption 

flows to its present value. 

I. Customer Subgroup Analysis 

In analyzing the potential impacts of 

new or amended standards, DOE 

evaluates impacts on identifiable groups 

(i.e., subgroups) of customers that may 

be disproportionately affected by a 

national standard. For the final rule, 

DOE evaluated impacts on a small 

business subgroup using the LCC 

spreadsheet model. The customer 

subgroup analysis is discussed in detail 

in chapter 11 of the final rule TSD. 

J. Manufacturer Impact Analysis 

1. Overview 

DOE performed a Manufacturer 

Impact Analysis (MIA) to estimate the 

impacts of amended energy 

conservation standards on CCW 

manufacturers. The MIA has both 

quantitative and qualitative aspects and 

includes analyses of forecasted industry 

cash flows, the INPV, investments in 

research and development (R&D), and 

manufacturing capital, and domestic 

manufacturing employment. 

Additionally, the MIA seeks to 

determine how amended energy 

conservation standards might affect 

manufacturing capacity and 

competition, as well as how standards 

contribute to overall regulatory burden. 

Finally, the MIA serves to identify any 

disproportionate impacts on 

manufacturer subgroups. 

The quantitative part of the MIA relies 

primarily on the GRIM, an industry cash 

flow model with inputs specific to this 

rulemaking. The key GRIM inputs 

include data on the industry cost 

structure, unit production costs, 

equipment shipments, manufacturer 

markups, and investments in R&D and 

manufacturing capital required to 

produce compliant equipment. The key 

GRIM outputs are the INPV, which is 

the sum of industry annual cash flows 

over the analysis period, discounted 

using the industry weighted average 


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36U.S. Small Business Administration, Small 

Business Size Standards, http://www.sba.gov/

content/table-small-business-size-standards (last 

visited Nov. 21, 2014). 

cost of capital, and the impact to 

domestic manufacturing employment. 

The model estimates the impacts of 

amended energy conservation standards 

on a given industry by comparing 

changes in INPV and domestic 

manufacturing employment between a 

base case and the various TSLs in the 

standards case. To capture the 

uncertainty relating to manufacturer 

pricing strategy following amended 

standards, the GRIM estimates a range of 

possible impacts under different 

markup scenarios. 

The qualitative part of the MIA 

addresses manufacturer characteristics 

and market trends. Specifically, the MIA 

considers such factors as manufacturing 

capacity, competition within the 

industry, the cumulative impact of other 

regulations, and impacts on 

manufacturer subgroups. The complete 

MIA is outlined in chapter 12 of the 

final rule TSD. 

DOE conducted the MIA for this 

rulemaking in three phases. In Phase 

One, DOE prepared a profile of the CCW 

manufacturing industry. DOE used 

public sources of information to derive 

preliminary financial inputs for the 

GRIM (e.g., revenues; materials, labor, 

overhead, and depreciation expenses; 

selling, general, and administrative 

expenses (SG&A); and R&D expenses). 

Sources of data used in this initial 

characterization of the CCW 

manufacturing industry included 

company filings of form 10–K from the 

Securities and Exchange Commission 

(SEC), corporate annual reports, the U.S. 

Census Bureau’s Economic Census, and 

reports from Dun & Bradstreet. 

In Phase Two, DOE prepared an 

industry cash flow analysis to quantify 

the impacts of new and amended energy 

conservation standards. The GRIM uses 

several factors to determine a series of 

annual cash flows, starting with the year 

in which the standards final rule is 

published, and extending over a 30-year 

period following the effective date of the 

standard. These factors include annual 

expected revenues, costs of sales, SG&A 

and R&D expenses, taxes, and capital 

expenditures. In general, energy 

conservation standards can affect 

manufacturer cash flow in three distinct 

ways by: (1) Creating a need for 

increased investment; (2) raising 

production costs per unit; and (3) 

altering revenue due to higher per-unit 

prices and changes in sales volumes. 

In Phase Three of the MIA, DOE 

interviewed representative 

manufacturers. During these interviews, 

DOE discussed engineering, 

manufacturing, procurement, and 

financial topics to validate assumptions 

used in the GRIM and to identify key 

issues or concerns. The March 2014 

NOPR described some of the key issues 

that manufacturers raised during the 

interviews. As part of Phase Three, DOE 

also evaluated subgroups of 

manufacturers that might be 

disproportionately impacted by 

amended standards or that might not be 

accurately represented by the average 

cost assumptions used to develop the 

industry cash flow analysis. In addition 

to small business manufacturers, such 

manufacturer subgroups might include 

low volume manufacturers (LVMs), 

niche players, and/or manufacturers 

exhibiting a cost structure that largely 

differs from the industry average. DOE 

identified two subgroups for which 

average cost assumptions may not hold: 

Small businesses and LVMs. 

Based on the size standards published 

by the Small Business Administration 

(SBA) 36 to be categorized as a small 

business manufacturer of CCWs under 

North American Industry Classification 

System (NAICS) 333318, ‘‘Other 

commercial and service industry 

machinery manufacturing,’’ a 

commercial laundry equipment 

manufacturer and its affiliates may 

employ a maximum of 1000 employees. 

The 1000-employee threshold includes 

all employees in a business’s parent 

company and any other subsidiaries. 

Using this classification in conjunction 

with a search of industry databases and 

the SBA member directory, DOE did not 

identify any manufacturers of CCWs 

that qualify as small businesses. 

Unlike small business manufacturers, 

there is no employment limit associated 

with LVMs. Instead, LVMs are 

characterized by their low overall 

production volumes relative to their 

competitors, often associated with 

specialization within a singular 

industry. In the industry 

characterization from Phase One, DOE 

identified two manufacturers that 

represent over 90 percent of CCW 

shipments. DOE categorized one of 

these manufacturers as a LVM due to 

the concentration of its business in both 

laundry and CCWs, relative to its 

competitors. In 2012, the LVM derived 

98 percent of its revenues from the sale 

of laundry equipment and service parts, 

while its main competitor derived 30 

percent. Within the commercial and 

residential clothes washer segment, 

DOE estimates that the LVM derived 88 

percent of its washer equipment 

revenues from the sale of CCWs covered 

by this rulemaking, while its major 

competitor is more focused on 

residential rather than commercial 

washer production. Because the CCW 

industry itself is characterized by low 

total shipments, with less than 200,000 

units sold annually in the U.S., the 

concentration of this manufacturer’s 

business in this industry qualifies them 

as an LVM. Since the LVM operates at 

a much smaller scale and does not 

manufacture equipment across a broad 

range of industries, this rulemaking 

could have disproportionate impacts on 

the LVM compared to its large, 

diversified competitors. Accordingly, 

DOE performed an in-depth analysis of 

the issues relating to the CCW LVM. The 

manufacturer subgroup analysis is 

discussed in greater detail in chapter 12 

of the final rule TSD and in section 

V.B.2.d of this notice. 

2. Government Regulatory Impact Model 

DOE uses the GRIM to quantify the 

changes in industry cash flows resulting 

from amended energy conservation 

standards. The GRIM uses manufacturer 

costs, markups, shipments, and industry 

financial information to arrive at a series 

of base-case annual cash flows absent 

new or amended standards, beginning 

with the present year, 2014, and 

continuing through 2047. The GRIM 

then models changes in costs, 

investments, shipments, and 

manufacturer margins that may result 

from new or amended energy 

conservation standards and compares 

these results against those in the basecase forecast of annual cash flows. The 

primary quantitative output of the GRIM 

is the INPV, which DOE calculates by 

summing the stream of annual 

discounted cash flows over the full 

analysis period. For manufacturers of 

CCWs, DOE used a real discount rate of 

8.6 percent, the weighted average cost of 

capital derived from industry financials 

and modified based on feedback 

received during confidential interviews 

with manufacturers. 

The GRIM calculates cash flows using 

standard accounting principles and 

compares changes in INPV between the 

base case and the various TSLs. The 

difference in INPV between the base 

case and a standards case represents the 

financial impact of the amended 

standard on manufacturers at that 

particular TSL. As discussed previously, 

DOE collected the necessary 

information to develop key GRIM inputs 

from a number of sources, including 

publicly available data and interviews 

with manufacturers (described in the 

next section). The GRIM results are 

shown in section V.B.2.a. Additional 

details about the GRIM can be found in 

chapter 12 of the final rule TSD. 


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37 ‘‘Gross margin’’ is defined as revenues minus 

cost of goods sold. On a unit basis, gross margin is 

selling price minus manufacturer production cost. 

In the GRIM, markups determine the gross margin 

because various markups are applied to the 

manufacturer production costs to reach 

manufacturer selling price. 

a. Government Regulatory Impact Model 

Key Inputs 

Manufacturer Production Costs 

Manufacturing higher efficiency 

equipment is typically more expensive 

than manufacturing baseline equipment 

due to the use of more complex and 

typically more costly components. The 

changes in the manufacturer production 

costs (MPCs) of the analyzed equipment 

can affect the revenues, gross margins, 

and cash flow of the industry, making 

equipment cost data key GRIM inputs 

for DOE’s analysis. For each efficiency 

level of each equipment class, DOE used 

the MPCs developed in the engineering 

analysis, as described in chapter 5 of the 

final rule TSD. Additionally, DOE used 

information from its teardown analysis, 

described in section IV.C to disaggregate 

the MPCs into material and labor costs. 

These cost breakdowns and equipment 

markups were validated with 

manufacturers during manufacturer 

interviews. 

Base-Case Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on total unit shipment 

forecasts and the distribution of 

shipments by efficiency level. Changes 

in sales volumes and efficiency mix 

over time can significantly affect 

manufacturer finances. For this analysis, 

the GRIM uses the NIA’s annual 

shipment forecasts derived from the 

shipments analysis from 2014, the base 

year, to 2047, the end of the analysis 

period. See chapter 9 of the final rule 

TSD for additional details. 

Standards-Case Shipments Forecast 

For each standards-case, the GRIM 

assumes that shipments of CCWs below 

the projected minimum standard levels 

would roll up to the standard efficiency 

levels in response to an increase in 

energy conservation standards. The 

GRIM also assumes that demand for 

high-efficiency equipment is a function 

of price, and is independent of the 

standard level. Additionally, the 

standards case shipments forecast 

includes a partial shift of shipments 

from one equipment class to another 

depending on the standard level, 

reflecting positive cross-price elasticity 

of demand, as one equipment class 

becomes relatively more expensive than 

the other to produce and for consumers 

to purchase. A decrease in shipments 

offsets the relative increase in costs to 

produce at a given TSL for a given 

equipment class. See chapter 9 of the 

final rule TSD for additional details. 

Equipment and Capital Conversion 

Costs 

Amended energy conservation 

standards may cause manufacturers to 

incur one-time conversion costs to bring 

their production facilities and 

equipment designs into compliance 

with the new standards. For the purpose 

of the MIA, DOE classified these onetime conversion costs into two major 

groups: (1) Equipment conversion and 

(2) capital conversion costs. Product 

conversion costs are investments in 

research, development, testing, and 

marketing, focused on making 

equipment designs comply with the 

new energy conservation standard. 

Capital conversion expenditures are 

investments in property, plant, and 

equipment to adapt or change existing 

production facilities so that new 

equipment designs can be fabricated 

and assembled. 

Stranded Assets 

If new or amended energy 

conservation standards require 

investment in new manufacturing 

capital, there also exists the possibility 

that they will render existing 

manufacturing capital obsolete. If this 

obsolete manufacturing capital is not 

fully depreciated at the time new or 

amended standards go into effect, this 

would result in the stranding of these 

assets, and would necessitate the 

expensing of the residual undepreciated value. 

DOE used multiple sources of data to 

evaluate the level of equipment and 

capital conversion costs and stranded 

assets manufacturers would likely face 

to comply with amended energy 

conservation standards. DOE used 

manufacturer interviews to gather data 

on the level of investment anticipated at 

each proposed efficiency level and 

validated these assumptions using 

estimates of capital requirements 

derived from the equipment teardown 

analysis and engineering model 

described in section IV.C. These 

estimates were then aggregated and 

scaled to derive total industry estimates 

of equipment and capital conversion 

costs and to protect confidential 

information. 

In general, DOE assumes that all 

conversion-related investments occur 

between the year the final rule is 

published and the year by which 

manufacturers must comply with the 

new or amended standards. The 

investment figures used in the GRIM 

can be found in section V.B.2 of this 

notice. For additional information on 

the estimated equipment conversion 

and capital conversion costs, see 

chapter 12 of the final rule TSD. 

Government Regulatory Impact Model 

Scenarios 

Markup Scenarios 

As discussed in section IV.D, 

manufacturing selling prices (MSPs) 

include direct manufacturing 

production costs (i.e., labor, material, 

overhead, and depreciation 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 manufacturer 

markups to the MPCs estimated in the 

engineering analysis. Modifying these 

markups in the standards-case yields 

different sets of impacts on 

manufacturers. For the MIA, DOE 

modeled two standards-case markup 

scenarios to represent the uncertainty 

regarding the potential impacts on 

prices and profitability for 

manufacturers following the 

implementation of amended energy 

conservation standards: (1) A 

preservation of gross margin 

percentage 37 scenario; and (2) a 

preservation of per-unit operating 

profits scenario. These scenarios lead to 

different markups values that, when 

applied to the MPCs, result in varying 

revenue and cash flow impacts. 

Under the preservation of gross 

margin percentage scenario, DOE 

applied a single, uniform ‘‘gross margin 

percentage’’ markup across all efficiency 

levels. As production costs increase 

with efficiency, this scenario implies 

that the absolute dollar markup will 

increase as well. Based on publicly 

available financial information for 

manufacturers of CCWs and comments 

from manufacturer interviews, DOE 

assumed the industry average markup 

on production costs to be 1.285. Because 

this markup scenario assumes that 

manufacturers would be able to 

maintain their gross margin percentage 

as production costs increase in response 

to an amended energy conservation 

standard, it represents a lower bound of 

industry impacts (higher industry 

profitability) under an amended energy 

conservation standard. 

In the per-unit operating profits 

scenario, manufacturer markups are 

calibrated so that per-unit operating 

profits in the year after the compliance 

date of the amended energy 

conservation standard is the same as in 


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74516 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

the base-case. Under this scenario, as 

the cost of production goes up, 

manufacturers are generally required to 

reduce the markups on their minimally 

compliant equipment to maintain a costcompetitive offering. DOE implicitly 

assumes that the industry can only 

maintain operating profits after 

compliance with the amended standard 

is required. Therefore, the gross margin 

(as a percentage) shrinks in the 

standards cases. This markup scenario 

represents an upper bound of industry 

impacts (lower profitability) under an 

amended energy conservation standard. 

3. Discussion of Comments 

During the March 2014 NOPR public 

meeting, interested parties commented 

on the assumptions and results of the 

March 2014 NOPR analysis TSD. Oral 

and written comments addressed 

conversion costs and cumulative 

regulatory burdens. 

a. Cumulative Regulatory Burden 

With regards to cumulative regulatory 

burdens, ALS commented that 

regulatory burden is increasing at an 

alarming rate. ALS’s cumulative 

regulatory burdens include the U.S. 

Consumer Product Safety Improvement 

Act, Canada Consumer Product Safety 

Act, UL 2157/CAN CSA 22.2 No. 169, 

UL 2158/CAN CSA 22.2 No. 112, and 

ANSI Z21.5.1/CAN CSA 7.1. ALS is also 

burdened by California legislation 

imposing reporting and certification of 

substance usage, California Energy 

Commission commercial clothes dryer 

rulemaking, Canada Electro-Magnetic 

Compliance standards for appliances, 

European Union directives for 

Restriction of Hazardous Substances, 

Waste Electronic and Electronic 

Equipment, Registration, Evaluation and 

Authorization of Chemicals, and Energy 

Using Products. (ALS, No. 26 at p. 6) 

DOE has conducted an analysis of 

cumulative regulatory burden impacts 

on CCW manufacturers, where DOE 

considers other DOE conservation 

standards affecting CCW manufacturers 

as well as other significant CCWspecific regulations that will take effect 

3 years before or after the 2018 

compliance date of the amended energy 

conservation standards for CCWs. While 

this analysis focuses on the impacts on 

manufacturers born of other Federal 

requirements, DOE’s analysis also 

includes other non-Federal regulations 

that impact CCWs. A full list can be 

found in chapter 12 of the final rule 

TSD. 

Most manufacturers interviewed also 

sell equipment to other countries with 

energy conservation and standby 

standards. Manufacturers may incur a 

substantial cost to the extent that there 

are overlapping testing and certification 

requirements in other markets besides 

the United States. Because DOE has 

authority to set standards on equipment 

sold in the United States, DOE accounts 

only for domestic compliance costs in 

its analysis of cumulative regulatory 

burdens impacting CCW manufacturers. 

For more details, see chapter 12 of the 

final rule TSD. 

b. Conversion Costs 

AHAM commented that it supports 

DOE’s analysis regarding the conversion 

costs associated with a major platform 

change. (AHAM, No. 23, p. 3) The 

California IOUs ask that DOE provide 

greater transparency relating to the 

causes for the significant increase in 

conversion costs associated with the 

shift from EL 1 to EL 2 for top-loading 

CCWs. (CA IOUs, No. 27 at p. 3) 

Additionally, the California IOUs 

recommend that DOE conduct a 

sensitivity analysis of the conversion 

costs by removing the most expensive 

design options and recalculating what 

the efficiency level would be, as well as 

what the impact on the manufacturer 

would be. (CA IOUs, Public Meeting 

Transcript, No. 30 at p. 48–49, 51) 

As discussed in section V.2 of this 

final rule, manufacturers provided highlevel feedback during interviews 

regarding the design options that would 

be required at the max tech efficiency 

levels for both equipment classes. For 

top-loading units, the design options 

proposed at EL 2 include increased tub 

capacity, hung suspension, low-profile 

(non-traditional) agitator design, and 

improved motor and transmission 

efficiency. All of these upgrades require 

major platform overhauls and 

significant changes to manufacturing 

capital. In addition, in section V.2, DOE 

discusses how the existing efficiency 

distribution for currently available toploading units contributes to the increase 

in industry conversion costs from EL 1 

to EL 2 for top-loaders. 

Regarding a sensitivity analysis, DOE 

notes that, in order to reach EL 2 for toploaders, manufacturers will be required 

to make all the major changes (as abovespecified) at once. As is a characteristic 

of a distinct ‘‘platform,’’ the equipment 

platform design at EL 2 for top-loaders 

is so different from that associated with 

baseline and EL 1 equipment that 

components from the EL 2 platform 

design are not interchangeable with 

components from the baseline and EL 1 

platforms. Manufacturers will not be 

able to make just one or a portion of the 

major changes because they are 

designed to function together as a 

working system (see section VI.C. of this 

notice). 

The California IOUs also request 

clarification as to why the equipment 

and capital conversion costs vary 

significantly between the residential 

and commercial clothes washer 

rulemakings. (CA IOU, No. 27 at p. 4). 

In reference to the differences in 

product conversion costs for top-loading 

units at EL 2 between the residential 

and commercial clothes washer 

rulemakings, DOE points to the 

differences in base case efficiency 

distributions between the two toploader markets at the time of the 

respective standards. In 2012, the 

residential clothes washer top-loading 

market was dominated by two major 

appliance manufacturers, both of which 

produced products with a range of 

efficiencies, including EL 2. Thus, these 

manufacturers had already incurred 

some product conversion costs in order 

to get a portion of their products to EL 

2. Conversely, in the top-loading 

segment of the CCW market, although 

one of the two major players produces 

equipment only at the max tech level, 

the other manufacturer (the LVM) 

produces only baseline equipment. 

Thus, product conversion costs are 

relatively larger for this manufacturer 

and for the CCW industry as a whole 

(since product conversion costs are not 

a function of shipments volumes). 

Regarding capital conversion costs, 

the costs associated with EL 2 for CCWs 

are much lower than that for residential 

clothes washers because, unlike product 

conversion costs, capital conversion 

costs are somewhat related to the size of 

the market. Given that the residential 

clothes washer market is substantially 

larger than the CCW market, it is logical 

that the capital conversion costs 

associated with shifting all lower 

efficiency equipment to EL 2 are higher. 

NRDC stated that DOE should 

evaluate whether the investments that 

manufacturers will already be making to 

meet the 2018 standards for residential 

top-loaders would effectively reduce the 

conversion costs to meet EL 2 for 

commercial top-loaders. (NRDC, No. 29 

at p. 5) 

Given that the LVM does not 

currently produce residential clothes 

washers at EL 2, DOE cannot assume 

that the LVM will remain in the 

residential clothes washer market 

starting in 2018. Thus, DOE must 

evaluate conversion costs estimates for 

the CCW industry independently from 

the 2018 standards for residential 

clothes washers. 


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38 DOE’s FFC was amended in 2012 for reasons 

unrelated to the inclusion of CH4 and N2O. 77 FR 

49701 (Aug. 17, 2012). 

39 DOE–EIA, Annual Energy Outlook 2014 with 

Projections to 2040 (Available at: http://

www.eia.gov/forecasts/aeo/). 

40EPA, GHG Emissions Factors Hub, available at 

http://www.epa.gov/climateleadership/inventory/

ghg-emissions.html (last visited Nov. 21, 2014). 

41EPA, Compilation of Air Pollutant Emission 

Factors, AP–42, Fifth Edition, Volume I: Stationary 

Point and Area Sources (1998), available at http:// 

www.epa.gov/ttn/chief/ap42/index.html. 

42 Intergovernmental Panel on Climate Change, 

Climate Change 2013: The Physical Science Basis. 

Contribution of Working Group I to the Fifth 

Assessment Report of the Intergovernmental Panel 

on Climate Change, Chapter 8 (T.F. Stocker et al. 

eds.) (2013). 

43Annual Energy Outlook 2014. Available at 

http://www.eia.gov/forecasts/aeo/index.cfm 

44See North Carolina v. EPA, 550 F.3d 1176 (D.C. 

Cir. 2008); North Carolina v. EPA, 531 F.3d 896 

(D.C. Cir. 2008). 

45See EME Homer City Generation, LP v. EPA, 

696 F.3d 7, 38 (D.C. Cir. 2012), cert. granted, 81 

U.S.L.W. 3567, 81 U.S.L.W. 3696, 81 U.S.L.W. 3702 

(2013) (No. 12–1182). 

46On April 29, 2014, the U.S. Supreme Court 

reversed the judgment of the DC Circuit and 

remanded the case for further proceedings 

consistent with the Supreme Court’s opinion. The 

Supreme Court held in part that EPA’s methodology 

for quantifying emissions that must be eliminated 

in certain states due to their impacts in other 

downwind states was based on a permissible, 

workable, and equitable interpretation of the Clean 

Air Act provision that provides statutory authority 

for CSAPR. See EPA v. EME Homer City Generation, 

No 12–1182, slip op. at 32 (April 29, 2014). Because 

DOE is using emissions factors based on AEO 2014 

for this final rule, the rule assumes that CAIR, not 

CSAPR, is the regulation in force. The difference 

between CAIR and CSAPR is not relevant for the 

purpose of DOE’s analysis of SO2 emissions. 

47CSAPR also applies to NOX, and it would 

supersede the regulation of NOX under CAIR. As 

stated previously, the current analysis assumes that 

CAIR, not CSAPR, is the regulation in force. The 

difference between CAIR and CSAPR with regard to 

DOE’s analysis of NOX is slight. 

K. Emissions Analysis 

In the emissions analysis, DOE 

estimated the reduction in power sector 

emissions of carbon dioxide (CO2), 

nitrogen oxides (NOX), sulfur dioxide 

(SO2), and mercury (Hg) from potential 

energy conservation standards for 

CCWs. In addition, DOE estimated 

emissions impacts in production 

activities (extracting, processing, and 

transporting fuels) that provide the 

energy inputs to power plants. These are 

referred to as ‘‘upstream’’ emissions. 

Together, these emissions account for 

the FFC. In accordance with DOE’s FFC 

Statement of Policy (76 FR 51282 (Aug. 

18, 2011)),38 the FFC analysis includes 

impacts on emissions of methane (CH4) 

and nitrous oxide (N2O), both of which 

are recognized as greenhouse gases. 

DOE primarily conducted the 

emissions analysis using emissions 

factors for CO2 and most of the other 

gases derived from data in AEO 2014.39

Combustion emissions of CH4 and N2O 

were estimated using emissions 

intensity factors published by the U.S. 

Environmental Protection Agency 

(EPA), GHG Emissions Factors Hub.40

Site emissions of CO2 and NOX (from 

gas water heaters) were estimated using 

emissions intensity factors from an EPA 

publication.41 DOE developed separate 

emissions factors for power sector 

emissions and upstream emissions. The 

method that DOE used to derive 

emissions factors is described in chapter 

13 of the final rule TSD. 

For CH4 and N2O, DOE calculated 

emissions reduction in tons and also in 

terms of units of carbon dioxide 

equivalent (CO2eq). Gases are converted 

to CO2eq by multiplying the physical 

units by the gas global warming 

potential (GWP) over a 100-year time 

horizon. Based on the Fifth Assessment 

Report of the Intergovernmental Panel 

on Climate Change (IPCC),42 DOE used 

GWP values of 28 for CH4 and 265 for 

N2O. 

EIA prepares the Annual Energy 

Outlook using NEMS.43 Each annual 

version of NEMS incorporates the 

projected impacts of existing air quality 

regulations on emissions. AEO 2014 

generally represents current legislation 

and environmental regulations, 

including recent government actions, for 

which implementing regulations were 

available as of October 31, 2013. 

SO2 emissions from affected electric 

generating units (EGUs) are subject to 

nationwide and regional emissions capand-trade programs. Title IV of the 

Clean Air Act sets an annual emissions 

cap on SO2 for affected EGUs in the 48 

contiguous states and the District of 

Columbia (DC). (42 U.S.C. 7651 et seq.) 

SO2 emissions from 28 eastern states 

and DC were also limited under the 

Clean Air Interstate Rule (CAIR) (70 FR 

25162 (May 12, 2005)), which created an 

allowance-based trading program that 

operates along with the Title IV 

program. CAIR was remanded to the 

EPA by the U.S. Court of Appeals for the 

District of Columbia Circuit, but it 

remained in effect.44 In 2011, EPA 

issued a replacement for CAIR, the 

Cross-State Air Pollution Rule (CSAPR). 

76 FR 48208 (Aug. 8, 2011). On August 

21, 2012, the DC Circuit issued a 

decision to vacate CSAPR.45 The court 

ordered EPA to continue administering 

CAIR. The emissions factors used for the 

final rule, which are based on AEO 

2014, assume that CAIR remains a 

binding regulation through 2040.46

The attainment of emissions caps is 

typically flexible among EGUs and is 

enforced through the use of emissions 

allowances and tradable permits. 

Beginning in 2016, however, SO2

emissions will decline significantly as a 

result of the Mercury and Air Toxics 

Standards (MATS) for power plants. 77 

FR 9304 (Feb. 16, 2012). In the final 

MATS rule, EPA established a standard 

for hydrogen chloride as a surrogate for 

acid gas hazardous air pollutants (HAP), 

and also established a standard for SO2

(a non-HAP acid gas) as an alternative 

equivalent surrogate standard for acid 

gas HAP. The same controls are used to 

reduce HAP and non-HAP acid gas; 

thus, SO2 emissions will be reduced as 

a result of the control technologies 

installed on coal-fired power plants to 

comply with the MATS requirements 

for acid gas. AEO 2014 assumes that, in 

order to continue operating, coal plants 

must have either flue gas 

desulfurization or dry sorbent injection 

systems installed by 2016. Both 

technologies, which are used to reduce 

acid gas emissions, also reduce SO2

emissions. Under the MATS, emissions 

will be far below the cap established by 

CAIR, so it is unlikely that excess SO2

emissions allowances resulting from the 

lower electricity demand would be 

needed or used to permit offsetting 

increases in SO2 emissions by any 

regulated EGU. Therefore, DOE believes 

that energy efficiency standards will 

reduce SO2 emissions in 2016 and 

beyond. 

CAIR established a cap on NOX

emissions in 28 eastern states and the 

District of Columbia.47 Energy 

conservation standards are expected to 

have little effect on NOX emissions in 

those states covered by CAIR because 

excess NOX emissions allowances 

resulting from the lower electricity 

demand could be used to permit 

offsetting increases in NOX emissions. 

However, standards would be expected 

to reduce NOX emissions in the states 

not affected by the caps, so DOE 

estimated NOX emissions reductions 

from the standards considered in the 

final rule for these states. 

The MATS limit mercury emissions 

from power plants, but they do not 

include emissions caps. DOE estimated 

mercury emissions reduction using 

emissions factors based on AEO 2014, 

which incorporates the MATS. 

L. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

As part of the development of this 

rule, DOE considered the estimated 

monetary benefits from the reduced 

emissions of CO2 and NOX that are 

expected to result from each of the TSLs 

considered. In order to make this 

calculation similar to the calculation of 


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48National Research Council, Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use (2009). 

49 Interagency Working Group on Social Cost of 

Carbon, Social Cost of Carbon for Regulatory 

Impact Analysis Under Executive Order 12866 

(2010), available at http://www.whitehouse.gov/

the NPV of consumer benefit, DOE 

considered the reduced emissions 

expected to result over the lifetime of 

equipment shipped in the forecast 

period for each TSL. This section 

summarizes the basis for the monetary 

values used for each of these emissions 

and presents the values considered in 

this rulemaking. 

For the final rule, DOE is relying on 

a set of values for the SCC that was 

developed by an interagency process. A 

summary of the basis for these values is 

provided below, and a more detailed 

description of the methodologies used is 

provided as an appendix to chapter 14 

of the final rule TSD. 

1. Social Cost of Carbon 

The SCC is an estimate of the 

monetized damages associated with an 

incremental increase in carbon 

emissions in a given year. It is intended 

to include (but is not limited to) changes 

in net agricultural productivity, human 

health, property damages from 

increased flood risk, and the value of 

ecosystem services. Estimates of the 

SCC are provided in dollars per metric 

ton of carbon dioxide. A domestic SCC 

value is meant to reflect the value of 

damages in the United States resulting 

from a unit change in carbon dioxide 

emissions, while a global SCC value is 

meant to reflect the value of damages 

worldwide. 

Under section 1(b)(6) of Executive 

Order 12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

agencies must, to the extent permitted 

by law, ‘‘assess both the costs and the 

benefits of the intended regulation and, 

recognizing that some costs and benefits 

are difficult to quantify, propose or 

adopt a regulation only upon a reasoned 

determination that the benefits of the 

intended regulation justify its costs.’’ 

The purpose of the SCC estimates 

presented here is to allow agencies to 

incorporate the monetized social 

benefits of reducing CO2 emissions into 

cost-benefit analyses of regulatory 

actions. DOE acknowledges that there 

are many uncertainties involved in the 

estimates and understands 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 the SCC estimates, technical 

experts from numerous agencies met on 

a regular basis to consider public 

comments, explore the technical 

literature in relevant fields, and discuss 

key model inputs and assumptions. The 

main objective of this process was to 

develop a range of SCC values using a 

defensible set of input assumptions 

grounded in the existing scientific and 

economic literatures. In this way, key 

uncertainties and model differences 

transparently and consistently inform 

the range of SCC estimates used in the 

rulemaking process. 

a. Monetizing Carbon Dioxide Emissions 

When attempting to assess the 

incremental economic impacts of carbon 

dioxide emissions, the analyst faces a 

number of challenges. A report from the 

National Research Council 48 points out 

that any assessment will suffer from 

uncertainty, speculation, and lack of 

information about: (1) Future emissions 

of greenhouse gases; (2) the effects of 

past and future emissions on the climate 

system; (3) the impact of changes in 

climate on the physical and biological 

environment; and (4) the translation of 

these environmental impacts into 

economic damages. As a result, any 

effort to quantify and monetize the 

harms associated with climate change 

will raise serious questions of science, 

economics, and ethics and should be 

viewed as provisional. 

Despite the limits of both 

quantification and monetization, SCC 

estimates can be useful in estimating the 

social benefits of reducing carbon 

dioxide emissions. The agency can 

estimate the benefits from reduced (or 

costs from increased) emissions in any 

future year by multiplying the change in 

emissions in that year by the SCC values 

appropriate for that year. The NPV of 

the benefits can then be calculated by 

multiplying each of these future benefits 

by an appropriate discount factor and 

summing across all affected years. 

It is important to emphasize that the 

interagency process is committed to 

updating these estimates as the science 

and economic understanding of climate 

change and its impacts on society 

improves over time. In the meantime, 

the interagency group will continue to 

explore the issues raised by this analysis 

and consider public comments as part of 

the ongoing interagency process. 

b. Development of Social Cost of Carbon 

Values 

In 2009, an interagency process was 

initiated to offer a preliminary 

assessment of how best to quantify the 

benefits from reducing carbon dioxide 

emissions. To ensure consistency in 

how benefits are evaluated across 

Federal agencies, the Administration 

sought to develop a transparent and 

defensible method, specifically 

designed for the rulemaking process, to 

quantify avoided climate change 

damages from reduced CO2 emissions. 

The interagency group did not 

undertake any original analysis. Instead, 

it combined SCC estimates from the 

existing literature to use as interim 

values until a more comprehensive 

analysis could be conducted. The 

outcome of the preliminary assessment 

by the interagency group was a set of 

five interim values: global SCC 

estimates for 2007 (in 2006 dollars) of 

$55, $33, $19, $10, and $5 per metric 

ton of CO2. These interim values 

represented the first sustained 

interagency effort within the U.S. 

government to develop an SCC for use 

in regulatory analysis. The results of 

this preliminary effort were presented in 

several proposed and final rules. 

c. Current Approach and Key 

Assumptions 

After the release of the interim values, 

the interagency group reconvened on a 

regular basis to generate improved SCC 

estimates. Specifically, the group 

considered public comments and 

further explored the technical literature 

in relevant fields. The interagency group 

relied on three integrated assessment 

models commonly used to estimate the 

SCC: the FUND, DICE, and PAGE 

models. These models are frequently 

cited in the peer-reviewed literature and 

were used in the last IPCC assessment. 

Each model was given equal weight in 

the SCC values that were developed. 

Each model takes a slightly different 

approach to model how changes in 

emissions result in changes in economic 

damages. A key objective of the 

interagency process was to enable a 

consistent exploration of the three 

models while respecting the different 

approaches to quantifying damages 

taken by the key modelers in the field. 

An extensive review of the literature 

was conducted to select three sets of 

input parameters for these models: 

Climate sensitivity, socio-economic and 

emissions trajectories, and discount 

rates. A probability distribution for 

climate sensitivity was specified as an 

input into all three models. In addition, 

the interagency group used a range of 

scenarios for the socio-economic 

parameters and a range of values for the 

discount rate. All other model features 

were left unchanged, relying on the 

model developers’ best estimates and 

judgments. 

In 2010, the interagency group 

selected four sets of SCC values for use 

in regulatory analyses.49 Three sets of 


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sites/default/files/omb/inforeg/for-agencies/SocialCost-of-Carbon-for-RIA.pdf (‘‘The 2010 Report’’). 

50 It is recognized that this calculation for 

domestic values is approximate, provisional, and 

highly speculative. There is no a priori reason why 

domestic benefits should be a constant fraction of 

net global damages over time. 

51 Interagency Working Group on Social Cost of 

Carbon, United States Government, Technical 

Update of the Social Cost of Carbon for Regulatory 

Impact Analysis Under Executive Order 12866, 

(2013), available at http://www.whitehouse.gov/

sites/default/files/omb/assets/inforeg/technicalupdate-social-cost-of-carbon-for-regulator-impactanalysis.pdf (‘‘The 2013 Report’’). 

values are based on the average SCC 

from three integrated assessment 

models, at discount rates of 2.5 percent, 

3 percent, and 5 percent. The fourth set, 

which represents the 95th-percentile 

SCC estimate across all three models at 

a 3-percent discount rate, is included to 

represent higher-than-expected impacts 

from climate change further out in the 

tails of the SCC distribution. The values 

grow in real terms over time. 

Additionally, the interagency group 

determined that a range of values from 

7 percent to 23 percent should be used 

to adjust the global SCC to calculate 

domestic effects,50 although preference 

is given to consideration of the global 

benefits of reducing CO2 emissions. 

Table IV.6 presents the values in the 

2010 interagency group report, which is 

reproduced in appendix 14–A of the 

final rule TSD. 

TABLE IV.6—ANNUAL SCC VALUES FROM 2010 INTERAGENCY REPORT, 2010–2050 

[in 2007 dollars per metric ton CO2] 

Year 

Discount Rate % 

5 3 2.5 3 

Average Average 95th percentile Average 

2010 ................................................................................................................. 4.7 21.4 35.1 64.9 

2015 ................................................................................................................. 5.7 23.8 38.4 72.8 

2020 ................................................................................................................. 6.8 26.3 41.7 80.7 

2025 ................................................................................................................. 8.2 29.6 45.9 90.4 

2030 ................................................................................................................. 9.7 32.8 50.0 100.0 

2035 ................................................................................................................. 11.2 36.0 54.2 109.7 

2040 ................................................................................................................. 12.7 39.2 58.4 119.3 

2045 ................................................................................................................. 14.2 42.1 61.7 127.8 

2050 ................................................................................................................. 15.7 44.9 65.0 136.2 

The SCC values used for the final rule 

were generated using the most recent 

versions of the three integrated 

assessment models that have been 

published in the peer-reviewed 

literature.51 Table IV.7 shows the 

updated sets of SCC estimates from the 

2013 Report update in five-year 

increments from 2010 to 2050. 

Appendix 14–B of the final rule TSD 

provides the full set of values. The 

central value that emerges is the average 

SCC across models at 3-percent discount 

rate. However, for purposes of capturing 

the uncertainties involved in regulatory 

impact analysis, the interagency group 

emphasizes the importance of including 

all four sets of SCC values. 

TABLE IV.7—ANNUAL SCC VALUES FROM 2013 INTERAGENCY UPDATE, 2010–2050 

[in 2007 dollars per metric ton CO2] 

Year 

Discount Rate % 

5 3 2.5 

3 

Average 

2010 ................................................................................................................. 11 32 51 89 

2015 ................................................................................................................. 11 37 57 109 

2020 ................................................................................................................. 12 43 64 128 

2025 ................................................................................................................. 14 47 69 143 

2030 ................................................................................................................. 16 52 75 159 

2035 ................................................................................................................. 19 56 80 175 

2040 ................................................................................................................. 21 61 86 191 

2045 ................................................................................................................. 24 66 92 206 

2050 ................................................................................................................. 26 71 97 220 

AHAM suggests that DOE rely on the 

2010 estimates for SCC until it has 

resolved all comments on the derivation 

of the SCC estimates from the 2013 

Report. (AHAM, No. 23, at pp. 5–6) The 

2013 Report provides an update of the 

SCC estimates based solely on the latest 

peer-reviewed version of the models, 

replacing model versions that were 

developed up to ten years ago in a 

rapidly evolving field. It does not revisit 

other assumptions with regard to the 

discount rate, reference case socioeconomic and emission scenarios, or 

equilibrium climate sensitivity. 

Improvements in the way damages are 

modeled are confined to those that have 

been incorporated into the latest 

versions of the models by the 

developers themselves in the peerreviewed literature. Given the above, 

using the 2010 estimates would be 

inconsistent with DOE’s objective of 

using the best available information in 

its analyses. 

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 


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52National Research Council, Hidden Costs of 

Energy: Unpriced Consequences of Energy 

Production and Use (2009). 

53 ‘‘The Associations’’ include the U.S. Chamber 

of Commerce, American Chemistry Council, 

American Forest & Paper Association, American 

Fuel & Petrochemical Manufacturers, American 

Petroleum Institute, Council of Industrial Boiler 

Owners, National Association of Manufacturers, 

and the National Mining Association. 

54 Interagency Working Group on Social Cost of 

Carbon, Social Cost of Carbon for Regulatory 

Impact Analysis Under Executive Order 12866 

(2010), available athttp://www.whitehouse.gov/

sites/default/files/omb/inforeg/for-agencies/SocialCost-of-Carbon-for-RIA.pdf (‘‘The 2010 Report’’). 

55U.S. Office of Management and Budget, Office 

of Information and Regulatory Affairs, 2006 Report 

to Congress on the Costs and Benefits of Federal 

Regulations and Unfunded Mandates on State, 

Local, and Tribal Entities (2006) (Available at: 

http://www.whitehouse.gov/sites/default/files/omb/

assets/omb/inforeg/2006_cb/2006_cb_final_

report.pdf). 

scientific and economic understanding. 

The interagency group also recognizes 

that the existing models are imperfect 

and incomplete. The National Research 

Council report describes 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.52 There are a 

number of analytical challenges that are 

being addressed by the research 

community, including research 

programs housed in many of the Federal 

agencies participating in the interagency 

process to estimate the SCC. The 

interagency group intends to 

periodically review and reconsider 

those estimates to reflect increasing 

knowledge of the science and 

economics of climate impacts, as well as 

improvements in modeling. 

In summary, in considering the 

potential global benefits resulting from 

reduced CO2 emissions, DOE used the 

values from the 2013 Report, adjusted to 

2013$ using the Gross Domestic Product 

price deflator. For each of the four SCC 

cases specified, the values used for 

emissions in 2015 were $12.0, $40.5, 

$62.4, and $119 per metric ton avoided 

(values expressed in 2013 dollars). DOE 

derived values after 2050 using the 

relevant growth rates for the 2040–2050 

period in the interagency update. 

DOE multiplied the CO2 emissions 

reduction estimated for each year by the 

SCC value for that year in each of the 

four cases. To calculate a present value 

of the stream of monetary values, DOE 

discounted the values in each of the 

four cases using the specific discount 

rate that had been used to obtain the 

SCC values in each case. 

The Associations 53 believe the SCC 

should not be used in any rulemaking 

and/or policymaking until it undergoes 

a more rigorous notice, review and 

comment process. (The Associations, 

No. 25 at p. 3) ALS strongly opposes the 

application of SCC and the inclusion of 

the social benefit of CO2 emission 

reductions in DOE’s analysis for 

justification of standards for covered 

equipment. (ALS, No. 26 at p.6) The 

Cato Institute stated that the SCC is not 

supported by scientific literature, not in 

accordance with OMB guidelines, 

fraught with uncertainty, illogical and 

thus unsuitable and inappropriate for 

Federal rulemaking. The Cato Institute 

also argued that use of the SCC in cost/ 

benefit analyses in the rulemaking 

should be suspended. 

(Cato Institute, No. 24 at pp. 1–24) 

DOE acknowledges the limitations of 

the SCC estimates, which are discussed 

in detail in the 2010 Report. 

Specifically, the 2010 Report discusses 

and explains the reasons for 

uncertainties in the assumptions 

regarding climate sensitivity, as well as 

other model inputs such as economic 

growth and emissions trajectories.54 The 

three integrated assessment models used 

to estimate the SCC are frequently cited 

in the peer-reviewed literature and were 

used in the last assessment of the IPCC. 

In addition, new versions of the models 

that were used in 2013 to estimate 

revised SCC values were published in 

the peer-reviewed literature (see 

appendix 14B of the final rule TSD for 

discussion). Although uncertainties 

remain, the revised estimates in the 

2013 Report are based on the best 

available scientific information on the 

impacts of climate change. The current 

SCC estimates have been developed 

over many years, using the best science 

available, and with input from the 

public. In November 2013, OMB 

announced a new opportunity for public 

comment on the interagency technical 

support document underlying the 

revised SCC estimates. 78 FR 70586. 

OMB is reviewing comments and 

considering whether further revisions to 

the SCC estimates are warranted. DOE 

stands ready to work with OMB and the 

other members of the interagency 

working group on further review and 

revision of the SCC estimates as 

appropriate. 

In addition, it is important to note 

that the monetized benefits of carbon 

emission reductions are one factor that 

DOE considers in its evaluation of the 

economic justification of proposed 

standards. As shown in Table I.4, the 

benefits of the amended standards in 

terms of consumer operating cost 

savings exceed the incremental costs of 

the standards-compliant equipment. 

The benefits of CO2 emission reductions 

were considered by DOE, but were not 

determinative in DOE’s decision to 

adopt these standards. 

2. Valuation of Other Emissions 

Reductions 

As noted above, DOE has taken into 

account how amended energy 

conservation standards would reduce 

site NOX emissions nationwide and 

increase power sector NOX emissions in 

those 22 States not affected by the CAIR. 

DOE estimated the monetized value of 

net NOX emissions reductions resulting 

from each of the TSLs considered for the 

final rule based on estimates found in 

the relevant scientific literature. 

Estimates of monetary value for 

reducing NOX from stationary sources 

range from $476 to $4,893 per ton in 

2013$.55 DOE calculated monetary 

benefits using a medium value for NOX

emissions of $2,684 per short ton and 

real discount rates of 3 percent and 7 

percent. 

DOE is evaluating appropriate 

monetization of avoided SO2 and Hg 

emissions in energy conservation 

standards rulemakings. It has not 

included monetization in the current 

analysis. 

M. Utility Impact Analysis 

The utility impact analysis estimates 

several effects on the power generation 

industry that would result from the 

adoption of new or amended energy 

conservation standards. In the utility 

impact analysis, DOE analyzes the 

changes in installed electricity capacity 

and generation that would result for 

each TSL. The utility impact analysis is 

based on published output from NEMS. 

Each year, NEMS is updated to produce 

the AEO reference case as well as a 

number of side cases that estimate the 

economy-wide impacts of changes to 

energy supply and demand. DOE uses 

those published side cases that 

incorporate efficiency-related policies to 

estimate the marginal impacts of 

reduced energy demand on the utility 

sector. The output of this analysis is a 

set of time-dependent coefficients that 

capture the change in electricity 

generation, primary fuel consumption, 

installed capacity and power sector 

emissions due to a unit reduction in 

demand for a given end use. These 

coefficients are multiplied by the stream 

of energy savings calculated in the NIA 

to provide estimates of selected utility 

impacts of new or amended energy 

conservation standards. Chapter 15 of 


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56See Bureau of Economic Analysis, Regional 

Multipliers: A Handbook for the Regional InputOutput Modeling System (RIMS II) (1992). 

the final rule TSD describes the utility 

impact analysis in further detail. 

N. Employment Impact Analysis 

Employment impacts from new or 

amended energy conservation standards 

include direct and indirect impacts. 

Direct employment impacts are any 

changes in the number of employees of 

manufacturers of the equipment subject 

to standards; the MIA addresses those 

impacts. 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 equipment. Indirect 

employment impacts from standards 

consist of the 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 consumer 

spending on the purchase of new 

equipment; and (4) the effects of those 

three factors throughout the economy. 

One method for assessing the possible 

effects on the demand for labor of such 

shifts in economic activity is to compare 

sector employment statistics developed 

by the Labor Department’s Bureau of 

Labor Statistics (BLS). 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.56 There are many reasons for 

these differences, including wage 

differences and the fact that the utility 

sector is more capital-intensive and less 

labor-intensive than other sectors. 

Energy conservation standards have the 

effect of reducing consumer utility bills. 

Because reduced consumer 

expenditures for energy likely lead to 

increased expenditures in other sectors 

of the economy, the general effect of 

efficiency standards is to shift economic 

activity from a less labor-intensive 

sector (i.e., the utility sector) to more 

labor-intensive sectors (e.g., the retail 

and service sectors). Thus, based on the 

BLS data alone, DOE believes net 

national employment may increase 

because of shifts in economic activity 

resulting from amended standards. 

For the standard levels considered in 

the final rule, DOE estimated indirect 

national employment impacts using an 

input/output model of the U.S. economy 

called Impact of Sector Energy 

Technologies, Version 3.1.1 (ImSET). 

ImSET is a special-purpose version of 

the ‘‘U.S. Benchmark National InputOutput’’ (I–O) model, which was 

designed to estimate the national 

employment and income effects of 

energy-saving technologies. The ImSET 

software includes a computer-based I–O 

model having structural coefficients that 

characterize economic flows among 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 most relevant to 

industrial, commercial, and residential 

building energy use. DOE notes that 

ImSET is not a general equilibrium 

forecasting model, and understands the 

uncertainties involved in projecting 

employment impacts, especially 

changes in the later years of the 

analysis. Because ImSET does not 

incorporate price changes, the 

employment effects predicted by ImSET 

may over-estimate actual job impacts 

over the long run. For the final rule, 

DOE used ImSET only to estimate shortterm employment impacts. 

For more details on the employment 

impact analysis, see chapter 16 of the 

final rule TSD. 

V. Analytical Results 

The following section addresses the 

results from DOE’s analyses with 

respect to potential energy conservation 

standards for the CCWs examined as 

part of this rulemaking. It addresses the 

trial standard levels examined by DOE, 

the projected impacts of each of these 

levels if adopted as energy conservation 

standards for CCWs, and the standard 

levels that DOE is adopting in this final 

rule. Additional details regarding the 

analyses conducted by DOE are 

contained in the publicly-available TSD 

supporting this final rule. 

A. Trial Standard Levels 

DOE analyzed the benefits and 

burdens of a number of TSLs for CCWs, 

the equipment that are the subject of the 

final rule. DOE attempted to limit the 

number of TSLs considered for the final 

rule by excluding efficiency levels that 

do not exhibit significantly different 

economic and/or engineering 

characteristics from the efficiency levels 

already selected as a TSL. Although 

DOE presents the results for only those 

efficiency levels in TSL combinations in 

the final rule, DOE presents the results 

for all efficiency levels that it analyzed 

in the final rule TSD. 

California IOUs and NRDC requested 

DOE to consider including an additional 

TSL to represent efficiency level 2 for 

front-loading units and the max-tech 

level for top-loading units. (CA IOUs, 

Public Meeting Transcript, No. 30, at p. 

78 and 100–101; NRDC, No. 29, at p. 4) 

DOE has included the additional TSL in 

the analysis for the final rule. 

Table V.1 presents the TSLs analyzed 

and the corresponding efficiency level 

for each CCW equipment class. TSL 4 is 

comprised of the max-tech efficiency 

levels. TSL 3 is comprised of efficiency 

level two for front-loading and the maxtech level for top-loading units. TSL 2 

is comprised of efficiency level two for 

front-loading CCWs and efficiency level 

one for top-loading CCWs. TSL 1 is 

comprised of efficiency level one for 

each equipment class. 

TABLE V.1—SUMMARY OF TSLS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL CLOTHES WASHERS

Equipment Class TSL 1 TSL 2 TSL 3 TSL 4 

Efficiency level* 

Front Loading CCW Units ............................................................................................... 1 2 2 3 

Top Loading CCW Units .................................................................................................. 1 1 2 2 

* For the MEFJ2 and IWF that correspond to efficiency levels 1 through 4, see Table IV.3. 


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B. Economic Justification and Energy 

Savings 

As discussed in section II.A, EPCA 

provides seven factors to be evaluated in 

determining whether a more stringent 

standard for front-loading and toploading CCWs is economically justified. 

(42 U.S.C. 6313(a)(6)(B)(ii)) The 

following sections discuss how DOE 

addresses each of those factors in this 

rulemaking. 

1. Economic Impacts on Individual 

Customers 

DOE analyzed the economic impacts 

on front-loading and top-loading CCWs 

customers by looking at the effects 

potential standards would have on the 

LCC and PBP. DOE also examined the 

impacts of potential standards on 

customer subgroups. These analyses are 

discussed below. 

a. Life-Cycle Cost and Payback Period 

To evaluate the economic impact of 

potential amended energy conservation 

standards on customers of CCWs, DOE 

conducted LCC and PBP analyses for 

each TSL. In general, higher-efficiency 

equipment would affect customers in 

two ways: (1) Purchase price would 

increase, and (2) annual operating costs 

would decrease. Inputs used for 

calculating the LCC and PBP include 

total installed costs (i.e., equipment 

price plus installation costs), and 

operating costs (i.e., annual energy 

savings, energy prices, energy price 

trends, repair costs, and maintenance 

costs). The LCC calculation also uses 

equipment lifetime and a discount rate. 

Chapter 8 of the final rule TSD provides 

detailed information on the LCC and 

PBP analyses. 

Tables V.2 through V.9 show the LCC 

and PBP results for both front-loading 

and top-loading CCW units. In the first 

of each pair of tables, the simple 

payback is measured relative to the 

baseline equipment. In the second 

tables, the LCC savings are measured 

relative to the base-case efficiency 

distribution in the compliance year (see 

section IV.F.9 of this notice). 

TABLE V.2—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR FRONT-LOADING, MULTI-FAMILY

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency 

level 

Average costs 

2013$ Simple 

payback 

years 

Average 

lifetime 

Installed years 

cost 

First year’s 

operating 

cost 

Lifetime 

operating 

cost 

LCC 

.................. Baseline ............................. 1,817 409 2,915 4,732 — 11.3 

1 ............... 1 ......................................... 1,817 384 2,695 4,512 0.0 11.3 

2 ............... 2 ......................................... 1,818 364 2,519 4,337 0.0 11.3 

3 ............... 2 ......................................... 1,818 364 2,519 4,337 0.0 11.3 

4 ............... 3 ......................................... 1,848 381 2,659 4,507 1.1 11.3 

Note: The results for each TSL are calculated assuming that all customers use equipment with that efficiency level. The PBP is measured relative to the baseline equipment. 

TABLE V.3—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR FRONT-LOADING, MULTI-FAMILY

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency 

level 

Life-cycle cost savings 

% of customers that 

experience 

Average savings * 

Net cost 2013$ 

1 ................................................................................................................................................... 1 0 221.37 

2 ................................................................................................................................................... 2 0 271.91 

3 ................................................................................................................................................... 2 0 271.91 

4 ................................................................................................................................................... 3 55 (2.67) 

* The calculation includes households with zero LCC savings (no impact). 

TABLE V.4—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR FRONT-LOADING, LAUNDROMAT

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL 

Efficiency level Simple payback 

years 

Average lifetime 

years Average costs 

2013$ Installed cost First year’s operating cost 

Lifetime operating cost LCC 

.................. Baseline ............................. 1,817 524 2,452 4,267 — 7.1 

1 ............... 1 ......................................... 1,817 493 2,266 4,082 0.0 7.1 

2 ............... 2 ......................................... 1,818 471 2,133 3,951 0.0 7.1 

3 ............... 2 ......................................... 1,818 471 2,133 3,951 0.0 7.1 

4 ............... 3 ......................................... 1,848 491 2,243 4,092 1.0 7.1 

Note: The results for each TSL are calculated assuming that all customers use equipment with that efficiency level. The PBP is measured relative to the baseline equipment. 


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TABLE V.5—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR FRONT-LOADING, LAUNDROMAT

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency level 

Life-cycle cost savings 

% of Cutomers that experience Average savings * 

Net cost 2013$ 

1 ...... 1 0 184.29 

2 ...... 2 0 212.31 

3 ...... 2 0 212.31 

4 ...... 3 65 (10.22) 

* The calculation includes households with zero LCC savings (no impact). 

TABLE V.6—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR TOP-LOADING, MULTI-FAMILY APPLICATION

COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency level 

Average costs 

2013$ Simple 

payback 

years 

Average 

lifetime 

years Installed cost 

First year’s 

operating 

cost 

Lifetime 

operating 

cost 

LCC 

......... Baseline ...................................... 1,229 556 4,453 5,682 ........................ 11.3 

1 ...... 1 .................................................. 1,229 522 4,159 5,388 0.0 11.3 

2 ...... 1 .................................................. 1,229 522 4,159 5,388 0.0 11.3 

3 ...... 2 .................................................. 1,293 459 3,580 4,873 0.7 11.3 

4 ...... 2 .................................................. 1,293 459 3,580 4,873 0.7 11.3 

Note: The results for each TSL are calculated assuming that all customers use equipment with that efficiency level. The PBP is measured relative to the baseline equipment. 

TABLE V.7—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR TOP-LOADING, MULTI-FAMILY

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency level 

Life-cycle cost savings 

% of customers that 

experience Average savings * 

Net cost 2013$ 

1 ...... 1 0 294.48 

2 ...... 1 0 294.48 

3 ...... 2 0 807.36 

4 ...... 2 0 807.36 

* The calculation includes households with zero LCC savings (no impact). 

TABLE V.8—SUMMARY LIFE-CYCLE COST AND PAYBACK PERIOD RESULTS FOR TOP-LOADING, LAUNDROMAT APPLICATION

COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency level 

Average costs 

2013$ Simple 

payback 

years 

Average 

lifetime 

years Installed cost 

First year’s 

operating 

cost 

Lifetime 

operating 

cost 

LCC 

......... Baseline ...................................... 1,229 678 3,638 4,867 ........................ 7.1 

1 ...... 1 .................................................. 1,229 651 3,472 4,701 0.0 7.1 

2 ...... 1 .................................................. 1,229 651 3,472 4,701 0.0 7.1 

3 ...... 2 .................................................. 1,293 568 2,950 4,243 0.6 7.1 

4 ...... 2 .................................................. 1,293 568 2,950 4,243 0.6 7.1 

Note: The results for each TSL are calculated assuming that all customers use equipment with that efficiency level. The PBP is measured relative to the baseline equipment. 


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TABLE V.9—LCC SAVINGS RELATIVE TO THE BASE CASE EFFICIENCY DISTRIBUTION FOR TOP-LOADING, LAUNDROMAT

APPLICATION COMMERCIAL CLOTHES WASHER UNITS

TSL Efficiency level 

Life-cycle cost savings 

% of customers that 

experience Average savings * 

Net cost 2013$ 

1 ...... 1 0 165.67 

2 ...... 1 0 165.67 

3 ...... 2 0 622.36 

4 ...... 2 0 622.36 

* The calculation includes households with zero LCC savings (no impact). 

b. Customer Subgroup Analysis 

In the customer subgroup analysis, 

DOE estimated the impacts of the 

considered TSLs on small business 

customers. The LCC savings and PBPs 

for small business customers are similar 

to the impacts for all customers. Chapter 

11 of the final rule TSD presents 

detailed results of the customer 

subgroup analysis. 

c. Rebuttable Presumption Payback 

As discussed in section III.E.2, EPCA 

establishes a rebuttable presumption 

that an energy conservation standard is 

economically justified if the increased 

purchase cost for equipment that meets 

the standard is less than three times the 

value of the first-year energy savings 

resulting from the standard. DOE 

calculated a rebuttable-presumption 

PBP for each TSL based on average 

usage profiles. As a result, DOE 

calculated a single rebuttable 

presumption payback value, and not a 

distribution of PBPs, for each TSL. 

Table V.10 and Table V.11 show the 

rebuttable-presumption PBPs for the 

considered TSLs. 

In addition to the rebuttable 

presumption analysis, however, DOE 

routinely conducts an economic 

analysis that considers the full range of 

impacts to the customer, manufacturer, 

nation, and environment, as required by 

EPCA. The results of that analysis serve 

as the basis for DOE to evaluate the 

economic justification for a potential 

standard level (thereby supporting or 

rebutting the results of any three-year 

PBP analysis). Section V.B.2 addresses 

how DOE considered the range of 

impacts to select these amended 

standards. 

TABLE V.10—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR FRONT-LOADING AND TOP-LOADING

COMMERCIAL CLOTHES WASHER UNITS: MULTI-FAMILY APPLICATION

Trial standard level 1 2 3 4 

Efficiency Level ................................................................................................ FL:EL1 FL:EL2 FL:EL2 FL:EL3 

TL:EL1 TL:EL1 TL:EL2 TL:EL2 

Front Loading CCW Units ................................................................................ 0.0 0.1 0.1 11.2 

Top Loading CCW Units .................................................................................. 0.0 0.0 2.6 2.6 

TABLE V.11—REBUTTABLE-PRESUMPTION PAYBACK PERIODS (YEARS) FOR FRONT-LOADING AND TOP-LOADING

COMMERCIAL CLOTHES WASHER UNITS: LAUNDROMAT APPLICATION

Trial standard level 1 2 3 4 

Efficiency Level ................................................................................................ FL:EL1 FL:EL2 FL:EL2 FL:EL3 

TL:EL1 TL:EL1 TL:EL2 TL:EL2 

Front Loading CCW Units ................................................................................ 0.0 0.1 0.1 11.1 

Top Loading CCW Units .................................................................................. 0.0 0.0 3.1 3.1 

2. Economic Impacts on Manufacturers 

DOE performed an MIA to estimate 

the impact of amended energy 

conservation standards on CCW 

manufacturers. The following section 

describes the expected impacts on 

manufacturers at each TSL. Chapter 12 

of the final rule TSD explains the 

analysis in further detail. 

a. Industry Cash-Flow Analysis Results 

The following tables depict the 

financial impacts (represented by 

changes in INPV) of amended energy 

conservation standards on 

manufacturers of CCWs as well as the 

conversion costs that DOE estimates 

manufacturers would incur for each 

equipment class at each TSL. To 

evaluate the range of cash flow impacts 

on the CCW manufacturing industry, 

DOE used two different markup 

assumptions to model scenarios that 

correspond to the range of anticipated 

market responses to amended energy 

conservation standards. 

To assess the lower (less severe) end 

of the range of potential impacts, DOE 

modeled a preservation of gross margin 

percentage markup scenario, in which a 

uniform gross margin percentage 

markup is applied across all efficiency 

levels. In this scenario, DOE assumed 

that a manufacturer’s absolute dollar 

markup would increase as production 

costs increase in the amended energy 

conservation standards case. 

Manufacturers have indicated that it is 

optimistic to assume that they would be 

able to maintain a constant gross margin 

percentage markup if their production 

costs increase in response to an 

amended energy conservation standard, 

particularly at higher TSLs. 

To assess the higher (more severe) end 

of the range of potential impacts, DOE 

modeled the preservation of per-unit 


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operating profit markup scenario, which 

assumes that manufacturers would not 

be able to preserve the same overall 

gross margin, but instead cut their 

markup for marginally compliant 

equipment to maintain a costcompetitive equipment offering and 

keep the same overall level of operating 

profit as in the base-case. Table V.12 

and Table V.13 show the range of 

potential INPV impacts for 

manufacturers of CCWs. Table V.12 

reflects the lower bound of impacts 

(higher profitability) and Table V.13 

represents the upper bound of impacts 

(lower profitability). 

Each scenario results in a unique set 

of cash flows and corresponding 

industry values at each TSL. In the 

following discussion, the INPV results 

refer to the sum of discounted cash 

flows through 2047, the difference in 

INPV between the base case and each 

standards case, and the total industry 

conversion costs required for each 

standards case. 

TABLE V.12—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP

SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 

INPV .......................................................... 2013$ Millions .................. 123.5 117.1 116.9 56.0 23.9 

Change in INPV ........................................ 2013$ Millions .................. .................... (6.4) (6.6) (67.5) (99.6) 

% ...................................... .................... (5.2%) (5.3%) (54.6%) (80.7%) 

Product Conversion Costs ........................ 2013$ Millions .................. .................... 9.9 10.2 50.9 62.4 

Capital Conversion Costs ......................... 2013$ Millions .................. .................... .................... .................... 38.7 63.1 

Total Conversion Costs ............................ 2013$ Millions .................. .................... 9.9 10.2 89.5 125.6 

Free Cash Flow 1 ...................................... 2013$ Millions .................. 8.9 6.2 6.1 (22.8) (37.2) 

Free Cash Flow ........................................ % Change ......................... .................... (30.7%) (31.7%) (355.6%) (516.2%) 

Note: Scenario reflected above corresponds with Reference Case shipments and Constant Learning Curve; Values in parentheses are negative values. 1Free Cash Flow figures are for the year before standards go into effect (i.e. 2017). 

TABLE V.13—MANUFACTURER IMPACT ANALYSIS UNDER THE PRESERVATION OF PER-UNIT OPERATING PROFIT MARKUP

SCENARIO

Units Base case 

Trial standard level 

1 2 3 4 

INPV .......................................................... 2013$ Millions .................. 123.5 117.1 116.9 53.0 19.7 

Change in INPV ........................................ 2013$ Millions .................. .................... (6.4) (6.6) (70.5) (103.8) 

% ...................................... .................... (5.2%) (5.3%) (57.1%) (84.1%) 

Product Conversion Costs ......................... 2013$ Millions .................. .................... 9.9 10.2 50.9 62.4 

Capital Conversion Costs .......................... 2013$ Millions .................. .................... .................... .................... 38.7 63.1 

Total Conversion Costs ............................. 2013$ Millions .................. .................... 9.9 10.2 89.5 125.6 

Free Cash Flow 1 ....................................... 2013$ Millions .................. 8.9 6.2 6.1 (22.8) (37.2) 

Free Cash Flow ......................................... % Change ........................ .................... (30.7%) (31.7%) (355.6%) (516.2%) 

Note: Scenario reflected above corresponds with Reference Case shipments and Constant Learning Curve; Values in parentheses are negative values. 1Free Cash Flow figures are for the year before standards go into effect (i.e. 2017). 

To provide perspective on short-run 

cash flow impacts, DOE also included a 

comparison of free cash flow between 

the base case and the standards case at 

each TSL in the year before amended 

standards take effect. At TSL 1, DOE 

estimated the impact for manufacturers 

of CCWs to be a decrease in INPV of 

$6.4 million, or 5.2 percent, under 

either markup scenario. At TSL 1, 

industry free cash flow is estimated to 

decrease by approximately 30.7 percent 

to $6.2 million, compared to the basecase value of $8.9 million in the year 

before the compliance date (2017). 

TSL 1 represents an improvement in 

MEFJ2 (as determined using appendix 

J2) from the baseline level of 1.65 to 

1.80 (ft3/kWh/cycle) for front-loading 

equipment and an improvement in 

MEFJ2 from the baseline level of 1.15 to 

1.35 (ft3/kWh/cycle) for top-loading 

equipment. The results for the two 

markup scenarios are identical at TSL 1 

because the baseline MPCs and the 

MPCs at TSL 1 are the same for both 

equipment classes. For front-loading 

CCWs, the 1.8 MEFJ2 (as determined 

using appendix J2) equipment (on 

which the EL 1 standard is based) are 

the lowest efficiency front-loading 

equipment available on the market. As 

such, TSL 1 would have no impact on 

the front-loading market. Similarly, the 

design options associated with EL 1 for 

top-loading equipment relate to control 

changes and different cycle options, 

rather than material changes to the 

equipment itself. While there are 

product conversion costs associated 

with the research and development 

needed to make these changes, there are 

no changes in the per unit production 

costs. Given these conditions, the 

impacts on INPV at TSL 1 can be 

attributed solely to the $9.9 million in 

product conversion costs for top-loading 

equipment. 

At TSL 2, DOE estimates a decrease in 

INPV of $6.6 million, or 5.3 percent, 

under either markup scenario. At TSL 2, 

industry free-cash flow is estimated to 

decrease by approximately 31.7 percent 

to $6.1 million, compared to the basecase value of $8.9 million in the year 

before the compliance date (2017). 

TSL 2 represents an improvement in 

MEFJ2 from the baseline level of 1.65 to 

2.00 (ft3/kWh/cycle) for front-loading 

equipment and an improvement in 

MEFJ2 from the baseline level of 1.15 to 

1.35 (ft3/kWh/cycle) for top-loading 

equipment. Much like TSL 1, the results 

for the two markup scenarios at TSL 2 

are identical because the baseline MPCs 

and the MPCs at TSL 2 are very close 


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57The U.S. Census Bureau’s 2012 Economic 

Census data (form EC1231l1) for NAICS code 

333318 can be found at: http://

factfinder2.census.gov/faces/nav/jsf/pages/

searchresults.xhtml?refresh=t. Enter ‘‘333318’’ in 

the Industry Codes search option (left). 

58The U.S. Census Bureau provides the following 

definition: ‘‘The ‘production workers’ number 

includes workers (up through the line-supervisor 

level) engaged in fabricating, processing, 

assembling, inspecting, receiving, storing, handling, 

packing, warehousing, shipping (but not 

delivering), maintenance, repair, janitorial and 

guard services, product development, auxiliary 

production for plant’s own use (e.g., power plant), 

recordkeeping, and other services closely associated 

with these production operations at the 

establishment covered by the report. Employees 

above the working-supervisor level are excluded 

from this item.’’ https://ask.census.gov/

faq.php?id=5000&faqId=6953. 

for both front-loading and top-loading 

equipment. For front-loading 

equipment, the 2.0 MEFJ2 EL (as 

determined using appendix J2) requires 

only minor changes to baseline 

equipment needed to enable slightly 

faster spin speeds. The standard level 

for top-loading equipment at TSL 2 is 

the same at TSL 1, and again relates to 

control changes and different cycle 

options, rather than material changes to 

the equipment. Because there are no 

substantive changes to MPCs for either 

equipment class, nearly all of the 

impacts on INPV at TSL 2 can be 

attributed to the $10.2 million in 

product conversion costs. 

At TSL 3, DOE estimates decreases in 

INPV for CCW manufacturers to range 

$67.5 million (or 54.6 percent) to $70.5 

million (or 57.1 percent). At TSL 3, 

industry free cash flow is estimated to 

decrease by over 356 percent to -$22.8 

million, compared to the base-case 

value of $8.9 million in the year before 

the compliance date (2017). 

TSL 3 represents an improvement in 

MEFJ2 from the baseline level of 1.65 to 

2.00 (ft3/kWh/cycle) for front-loading 

CCWs and an improvement in MEFJ2

from the baseline level of 1.15 to 1.55 

(ft3/kWh/cycle) for top-loading CCWs. 

Unlike TSL 1 and TSL 2, the efficiency 

level specified at TSL 3 would require 

substantial redesigns of top-loading 

CCWs. The design options proposed at 

efficiency level 2 for top-loading units 

include increased tub capacity, hung 

suspension, low-profile (nontraditional) agitator design, and 

improved motor and transmission 

efficiency—all of which require major 

platform overhauls and significant 

changes to manufacturing capital. These 

design options do not contribute to 

substantially different MPCs, but the 

conversion costs associated with 

equipment development and testing, as 

well as the investments in 

manufacturing capital, including 

retooling of tubs and agitators, 

significantly impact the INPV. 

Additionally, the significant increase in 

industry aggregate equipment and 

capital conversion costs due to the shift 

to max tech efficiency level for toploaders is explained by that fact that a 

larger proportion of top-loading units 

would require upgrades. As estimated in 

the shipments analysis, approximately 

90% of top-loading units currently on 

the market are below EL 2 (by contrast, 

approximately 70% of current toploading units are below EL 1). 

At TSL 4, DOE estimates decreases in 

INPV for CCW manufacturers to range 

from $99.6 million (or 80.7 percent) to 

$103.8 million (or 84.1 percent). At TSL 

4, industry free-cash flow is estimated to 

decrease by over 516 percent to -$37.2 

million, compared to the base-case 

value of $8.9 million in the year before 

the compliance date (2017). 

TSL 4 represents an improvement in 

MEFJ2 from the baseline level of 1.65 to 

2.20 (ft3/kWh/cycle) for front-loading 

CCWs and an improvement in MEFJ2

from the baseline level of 1.15 to 1.55 

(ft3/kWh/cycle) for top-loading CCWs. 

The efficiency level specified at TSL 4 

would require substantial CCW 

redesigns in both equipment classes. For 

front-loading units, the design options 

associated with EL 3 include increased 

capacity and switching to direct drive 

motors. For top-loading units, the 

design options proposed at EL 2 include 

increased tub capacity, hung 

suspension, low-profile (nontraditional) agitator design, and 

improved motor and transmission 

efficiency. All of these upgrades require 

major platform overhauls and 

significant changes to manufacturing 

capital. These design options do not 

contribute to substantially different 

MPCs, but the conversion costs 

associated with equipment development 

and testing, as well as the investments 

in manufacturing capital including 

retooling of tubs and agitators, 

significantly impact the INPV. 

b. Impacts on Direct Employment 

DOE used the GRIM to estimate the 

domestic labor expenditures and 

number of domestic production workers 

in the base-case and at each TSL from 

2014 to 2047. DOE used statistical data 

from the most recent U.S Census 

Bureau’s Economic Census,57 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 for the 

manufacture of equipment are a 

function of the labor intensity of the 

equipment, the sales volume, and an 

assumption that wages in real terms 

remain constant. 

DOE notes that the MIA’s analysis 

detailing impacts on employment 

focuses specifically on the production 

workers manufacturing the covered 

equipment in question, rather than a 

manufacturer’s broader operations. 

Thus, the estimated number of impacted 

employees in the MIA is separate from 

the total number of employees used to 

determine whether a manufacturer is a 

small business for purposes of analysis 

under the Regulatory Flexibility Act. 

The estimates of production workers 

in this section cover only those up to 

and including the line-supervisor level, 

who are directly involved in fabricating 

and assembling equipment within the 

original equipment manufacturer (OEM) 

facility. In addition, workers that 

perform services closely associated with 

production operations are included. 

Employees above the workingsupervisor level are excluded from the 

count of production workers. Thus, the 

labor associated with non-production 

functions (e.g., factory supervision, 

advertisement, sales) is explicitly not 

covered.58 In addition, DOE’s estimates 

account for production workers that 

manufacture only the specific 

equipment covered by this rulemaking. 

For example, a worker on a clothes 

dryer production line would not be 

included in the estimate of the number 

of CCW production workers. Finally, 

this analysis also does not factor in the 

dependence of some manufacturers on 

production volume to make their 

operations viable. For example, should 

a major line of business cease or move, 

a production facility may no longer have 

the manufacturing scale to obtain 

volume discounts on its purchases, nor 

be able to justify maintaining major 

capital equipment. Thus, the impact on 

a production facility due to a line 

closure may affect more employees than 

just the production workers, but as 

stated previously, this analysis focuses 

only on the production workers 

impacted directly. The aforementioned 

scenarios, however, are considered 

relative to employment impacts specific 

to the LVM at the end of this section. 

In the GRIM, DOE used the labor 

content of the equipment and the 

manufacturing production costs from 

the engineering analysis to estimate the 

annual labor expenditures in the CCW 

manufacturing industry. DOE used 

information gained through interviews 

with manufacturers to estimate the 

portion of the total labor expenditures 

that is attributable to domestic labor. 

The employment impacts shown in 

Table V.14 represent the potential 


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production employment that could 

result following amended energy 

conservation standards. These impacts 

are independent of the employment 

impacts from the broader U.S. economy, 

which are documented in chapter 16 of 

the final rule TSD. 

DOE estimates that, in the absence of 

amended energy conservation 

standards, there would be 301 domestic 

production workers involved in 

manufacturing CCWs in 2018. Table 

V.14 shows the range of the impacts of 

potential amended energy conservation 

standards on U.S. production workers in 

the CCW manufacturing industry. The 

upper end of the results in this table 

estimates the total potential increase in 

the number of production workers after 

amended energy conservation standards 

come into effect. To calculate the total 

potential increase, DOE assumed that 

manufacturers continue to produce the 

same scope of covered equipment in 

domestic production facilities and 

domestic production is not shifted to 

lower-labor-cost countries. Because 

there is a 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.14 includes the estimated total 

number of U.S. production workers in 

the industry who could lose their jobs 

if all existing production was moved 

outside of the United States. 

TABLE V.14—CHANGE IN TOTAL NUMBER OF DOMESTIC PRODUCTION EMPLOYEES IN 2018 IN THE CCW INDUSTRY

Base case TSL 1 TSL 2 TSL 3 TSL 4 

Total Number of Domestic Production Workers in 2018 ..... 301 301 301 327 328 

Potential Changes in Domestic Production Workers in 

2018 * ................................................................................ ........................ 0–(301) 0–(301) 28–(301) 30–(301) 

* Values in parentheses are negative values. 

Because production employment 

expenditures are assumed to be a fixed 

percentage of Cost of Goods Sold 

(COGS) and the MPCs typically increase 

with more efficient equipment, labor 

tracks the increased prices in the GRIM. 

As efficiency of CCWs increases, so does 

the complexity of the machines, 

generally requiring more labor to 

produce. As previously discussed, for 

TSL 1, there is no change in MPCs from 

the base case, and for TSL 2, there is a 

small increase in MPCs for front-loaders 

that would be offset by a shift in 

shipments from front-loaders to toploaders. As a result, DOE expects that 

there would be no employment impacts 

among domestic CCW manufacturers for 

TSL 1 and TSL 2. For TSL 3 and TSL 

4, the GRIM predicts an increase in 

domestic employment, based on the 

increase in complexity and relative 

price of the equipment. 

From interviews with manufacturers, 

DOE estimates that approximately 83 

percent of CCWs are currently produced 

domestically. In the CCW industry, 100 

percent of top-loaders are manufactured 

domestically, while a much larger share 

of front-loaders are produced 

internationally. As illustrated in Table 

V.14, the actual impacts on domestic 

employment after standards would be 

different than estimated if any U.S. 

manufacturer decided to shift remaining 

U.S. production to lower-cost countries. 

The proposed standard could result in 

losing all 301 production workers if all 

U.S. manufacturers source standardscompliant washers or shift U.S. 

production internationally. However, 

feedback from manufacturers during 

NOPR interviews supports the notion 

that top-loading CCWs will continue to 

be produced domestically following 

amended energy conservation 

standards, unless the max-tech level is 

chosen. 

c. Impacts on Manufacturing Capacity 

According to the majority of CCW 

manufacturers, new energy conservation 

standards could potentially impact 

manufacturers’ production capacity, 

depending on the efficiency level 

required. For TSL 1 and TSL 2, the most 

significant conversion costs are the 

research and development, testing, and 

certification of equipment with moreefficient components, which does not 

affect production line capacity. 

Available information indicates that 

manufacturers will be able to maintain 

manufacturing capacity levels and 

continue to meet market demand under 

new energy conservation standards as 

long as manufacturers continue to offer 

top-loading and front-loading washers. 

However, a very high efficiency 

standard for top-loading clothes washers 

could cause certain manufacturers to 

abandon further domestic production of 

top-loading clothes washers after the 

effective date, and choose instead to 

relocate manufacturing internationally 

or to source from a foreign 

manufacturer, which could lead to a 

permanently lower production capacity 

within the CCW industry. 

d. Impacts on Subgroups of 

Manufacturers 

Using average cost assumptions to 

develop an industry cash flow estimate 

is not adequate for assessing differential 

impacts among subgroups of 

manufacturers. Small manufacturers, 

niche players, or manufacturers 

exhibiting a cost structure that differs 

significantly from the industry average 

could be affected differently. DOE used 

the results of the industry 

characterization to group manufacturers 

exhibiting similar characteristics. 

As outlined earlier, one LVM of CCWs 

would be disproportionately affected by 

any energy efficiency regulation in the 

CCW industry. This business is focused 

on one specific market segment and is 

at least ten times smaller than its 

diversified competitors. Due to this 

combination of market concentration 

and size, this LVM is at risk of material 

harm to its business, depending on the 

TSL chosen. 

The LVM indicated that it could not 

manufacture top-loading or frontloading washers at the proposed maxtech level (MEFJ2 of 1.55 and 2.20, 

respectively, as determined using 

appendix J2) with its existing 

manufacturing capital and platform 

constraints. If DOE were to set the 

standard at the max-tech level, the LVM 

believes that a ‘‘green field’’ design for 

front-loaders would likely be required. 

For top-loaders, the LVM asserts that it 

does not have the technology to reach 

the max-tech level, and it would be 

forced to develop an entirely new 

business model, possibly ceasing CCW 

production altogether, sourcing 

internationally, shifting production 

internationally, or some combination 

thereof, which could negatively impact 

employment in the CCW industry. If the 

LVM no longer offers top-loading 

washers, it would likely cease CCW 

production altogether, resulting in 

significant impacts to the industry. 

Currently, the LVM’s top-loading 

washers account for more than half of 

the company’s CCW revenues and threequarters of its CCW shipments. To shift 

all top-loading CCWs to front-loading 


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74528 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

washers at current production volumes 

would require substantial investments 

that the LVM may not be able to justify. 

In addition, relative to its residential 

and commercial washer production, the 

LVM derives an estimated 88 percent of 

its clothes washer revenue from CCWs, 

so its sales in the residential clothes 

washer market would be too low to 

justify continuing any top-loading 

clothes washer manufacturing. Further 

detail and separate analysis of impacts 

on the LVM are found in chapter 12 of 

the final rule TSD. 

e. Cumulative Regulatory Burden 

One aspect of assessing manufacturer 

burden is the cumulative impact of 

multiple DOE standards and the 

regulatory actions of other Federal 

agencies and states that affect the 

manufacturers of covered equipment. 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several existing or impending 

regulations may have serious 

consequences for some manufacturers, 

groups of manufacturers, or an entire 

industry. 

Companies that produce a wider 

range of regulated equipment may be 

faced with more capital and equipment 

development expenditures than their 

competitors. This can prompt those 

companies to exit the market or reduce 

their equipment offerings, potentially 

reducing competition. LVMs can be 

especially affected, since they have 

lower sales volumes over which to 

amortize the costs of compliance with 

new regulations. 

In addition to DOE’s energy 

conservation regulations for CCWs, 

several other existing regulations apply 

to CCWs and other equipment produced 

by the same manufacturers. The most 

significant of these additional 

regulations include several additional 

existing or proposed Federal and State 

energy conservation and environmental 

standards, consumer equipment safety 

standards, the Green Chemistry law in 

California, and standards impacting 

CCW suppliers such as the Conflict 

Minerals directive contained within the 

Dodd-Frank Act of 2010. For more 

details, see chapter 12 of the final rule 

TSD. 

3. National Impact Analysis 

Projections of shipments are an 

important part of the NIA. Table V.15 

presents the estimated cumulative 

shipments in 2018–2047 in the basecase and under each TSL. Because DOE 

found CCW units to be relatively price 

inelastic, DOE estimated that the 

potential standards would not affect 

total shipments. However, DOE applied 

a cross-price elasticity to estimate how 

the market would shift between frontloading and top-loading units in 

response to a change in price of the unit. 

At higher TSLs, there is a shift toward 

front-loading units. 

TABLE V.15—PROJECTED CUMULATIVE SHIPMENTS OF FRONT- AND TOP-LOADING COMMERCIAL CLOTHES WASHER UNITS

IN 2018–2047 

[Million units] 

Base case TSL1 TSL2 TSL3 TSL 4 Max tech 

FL:EL1 .................

TL:EL1 .................

FL:EL2 .................

TL:EL1 .................

FL:EL2 .................

TL:EL2 .................

FL:EL3 

TL:EL2 

Front Loading .................................................... 2.55 2.55 ..................... 2.55 ..................... 2.68 ..................... 2.61 

Top Loading ...................................................... 3.74 3.74 ..................... 3.74 ..................... 3.61 ..................... 3.68 

Total ........................................................... 6.29 6.29 ..................... 6.29 ..................... 6.29 ..................... 6.29 

a. Significance of Energy Savings 

For each TSL, DOE projected energy 

savings for front-loading and toploading CCW units purchased in the 30- 

year period that begins in the year of 

anticipated compliance with amended 

standards (2018–2047). The savings are 

measured over the entire lifetime of 

equipment purchased in the 30-year 

period. DOE quantified the energy 

savings attributable to each TSL as the 

difference in energy consumption 

between each standards case and the 

base case. Table V.16 presents the 

estimated primary energy savings for 

each considered TSL, and Table V.17 

presents the estimated FFC energy 

savings for each TSL. The approach for 

estimating national energy savings is 

further described in section IV.H. The 

negative savings for front-loading units 

in TSLs 3 and 4 are a consequence of 

the projected increase in shipments 

relative to the base case. 

TABLE V.16—CUMULATIVE PRIMARY ENERGY SAVINGS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL CLOTHES

WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2047 

Equipment class 

Trial standard level 

1 2 3 4 

Quads 

Front Loading CCW Units ................................................................................ 0.000 0.007 ¥0.005 ¥0.007 

Top Loading CCW Units .................................................................................. 0.060 0.060 0.136 0.127 

Total All Classes ....................................................................................... 0.060 0.067 0.131 0.120


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74529 

59U.S. Office of Management and Budget, 

Circular A–4: Regulatory Analysis (2003), available 

at http://www.whitehouse.gov/omb/circulars_a004_

a-4/. 

60Section 325(m) of EPCA requires DOE to review 

its standards at least once every 6 years, and 

requires, for certain products, a 3-year period after 

any new standard is promulgated before 

compliance is required, except that in no case may 

any new standards be required within 6 years of the 

compliance date of the previous standards. While 

adding a 6-year review to the 3-year compliance 

period adds up to 9 years, DOE notes that it may 

undertake reviews at any time within the 6 year 

period and that the 3-year compliance date may 

yield to the 6-year backstop. A 9-year analysis 

period may not be appropriate given the variability 

that occurs in the timing of standards reviews and 

the fact that for some consumer products, the 

compliance period is 5 years rather than 3 years. 

61OMB Circular A–4, section E, supra note 52. 

TABLE V.17—CUMULATIVE FULL-FUEL-CYCLE ENERGY SAVINGS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2047 

Equipment class 

Trial standard level 

1 2 3 4 

Quads 

Front Loading CCW Units ................................................................................ 0.000 0.007 ¥0.005 ¥0.008 

Top Loading CCW Units .................................................................................. 0.065 0.065 0.145 0.136 

Total All Classes ....................................................................................... 0.065 0.072 0.140 0.128

OMB Circular A–4 59 requires 

agencies to present analytical results, 

including separate schedules of the 

monetized benefits and costs that show 

the type and timing of benefits and 

costs. Circular A–4 also directs agencies 

to consider the variability of key 

elements underlying the estimates of 

benefits and costs. For this rulemaking, 

DOE undertook a sensitivity analysis 

using nine instead of 30 years of 

equipment shipments. This choice 

reflects the timeline in EPCA for the 

review of certain energy conservation 

standards and potential revision of and 

compliance with such revised 

standards.60 The review timeframe 

established in EPCA is generally not 

synchronized with the equipment 

lifetime, equipment manufacturing 

cycles, or other factors specific to CCWs. 

Thus, this information is presented for 

informational purposes only and is not 

indicative of any change in DOE’s 

analytical methodology. The NES 

results based on a nine-year analytical 

period are presented in Table V.18. The 

impacts are counted over the lifetime of 

CCWs purchased in 2018–2026. 

TABLE V.18—CUMULATIVE PRIMARY ENERGY SAVINGS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL CLOTHES

WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2026 

Equipment class 

Trial standard level 

1 2 3 4 

Quads 

Front Loading CCW Units ............................................................................. 0 .0 0.002 ¥0.001 ¥0.001 

Top Loading CCW Units ................................................................................ 0 .019 0.019 0.042 0.039 

Total All Classes ..................................................................................... 0 .019 0.021 0.041 0.038 

b. Net Present Value of Customer Costs 

and Benefits 

DOE estimated the cumulative NPV of 

the total costs and savings for customers 

that would result from the TSLs 

considered for CCWs. In accordance 

with OMB’s guidelines on regulatory 

analysis,61 DOE calculated the 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. This discount 

rate approximates the opportunity cost 

of capital in the private sector. The 3- 

percent rate reflects the potential effects 

of standards on private consumption 

(e.g., through higher prices for 

equipment and reduced purchases 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 United 

States Treasury notes), which has 

averaged about 3 percent for the past 30 

years. 

Table V.19 shows the customer NPV 

results for each TSL considered for 

CCWs. In each case, the impacts cover 

the lifetime of equipment purchased in 

2018–2047. 

TABLE V.19—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2047 

Equipment class Discount rate 

% 

Trial standard level 

1 2 3 4 

billion 2013$ 

Front Loading CCW Units .................................................... 3 0.0 0.1 ¥0.1 ¥0.3 


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74530 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

TABLE V.19—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2047—Continued 

Equipment class Discount rate 

% 

Trial standard level 

1 2 3 4 

Top Loading CCW Units ...................................................... 0.4 0.4 2.0 1.9 

Total All Classes .................................................................. 0.4 0.5 1.9 1.6 

Front Loading CCW Units .................................................... 7 0.0 0.0 ¥0.1 ¥0.1 

Top Loading CCW Units ...................................................... 0.2 0.2 0.9 0.8 

Total All Classes ........................................................... 0.2 0.2 0.9 0.7 

The NPV results based on the nineyear analytical period discussed in 

section V.B.3.a are presented in Table 

V.20. The impacts are counted over the 

lifetime of equipment purchased in 

2018–2026. As mentioned previously, 

this information is presented for 

informational purposes only and is not 

indicative of any change in DOE’s 

analytical methodology or decision 

criteria. 

TABLE V.20—NET PRESENT VALUE OF CUSTOMER BENEFITS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS FOR UNITS SOLD IN 2018–2026†

Equipment class Discount rate 

% 

Trial standard level 

1 2 3 

4 

billion 

2013$ 

Front Loading CCW Units .................................................................... 3 0.0 0.0 0.0 (0.1) 

Top Loading CCW Units ...................................................................... ........................ 0.2 0.2 0.7 0.7 

Total All Classes ........................................................................... ........................ 0.2 0.2 0.7 0.6 

Front Loading CCW Units .................................................................... 7 0.0 0.0 0.0 0.0 

Top Loading CCW Units ...................................................................... ........................ 0.1 0.1 0.4 0.4 

Total All Classes ........................................................................... ........................ 0.1 0.1 0.4 0.4 

†Values in parentheses are negative values. 

c. Indirect Impacts on Employment 

DOE expects energy conservation 

standards for front-loading and toploading CCWs to reduce energy costs for 

equipment owners, and the resulting net 

savings to be redirected to other forms 

of economic activity. Those shifts in 

spending and economic activity could 

affect the demand for labor. As 

described in section IV.N, DOE used an 

input/output model of the U.S. economy 

to estimate indirect employment 

impacts of the TSLs that DOE 

considered in this rulemaking. DOE 

understands that there are uncertainties 

involved in projecting employment 

impacts, especially changes in the later 

years of the analysis. Therefore, DOE 

generated results for near-term time 

frames, where these uncertainties are 

reduced. 

The results suggest that the standards 

are likely to have negligible impact on 

the net demand for labor in the 

economy. The net change in jobs is so 

small that it would be imperceptible in 

national labor statistics and might be 

offset by other, unanticipated effects on 

employment. Chapter 16 of the final 

rule TSD presents detailed results. 

4. Impact on Utility 

As discussed in section IV.C, DOE has 

determined that the amended standards 

will not lessen the utility of frontloading and top-loading CCWs. 

5. 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 

amended standard and to transmit such 

determination in writing to the 

Secretary within 60 days of the 

publication of amended rule, together 

with an analysis of the nature and 

extent of the impact. (42 U.S.C. 

6295(o)(2)(B)(i)(V) and (ii)) 

To assist the Attorney General in 

making such determination for these 

standards, DOE provided the DOJ with 

copies of the March 2014 NOPR and the 

TSD for review. In its assessment letter 

responding to DOE, DOJ concluded that 

the amended energy conservation 

standards for CCWs are unlikely to have 

a significant adverse impact on 

competition. 

6. Need of the Nation to Conserve 

Energy 

Enhanced energy efficiency, where 

economically justified, improves the 

nation’s energy security, strengthens the 

economy, and reduces the 

environmental impacts or costs of 

energy use and production. Reduced 

electricity demand due to energy 

conservation standards is also likely to 

reduce the cost of maintaining the 

reliability of the electricity system, 

particularly during peak-load periods. 

As a measure of this reduced demand, 

chapter 15 in the final rule TSD presents 

the estimated reduction in generating 

capacity for the TSLs that DOE 

considered in this rulemaking. 

Energy savings from standards for 

CCWs could also produce 

environmental benefits in the form of 

reduced emissions of air pollutants and 

greenhouse gases. Table V.21 provides 

DOE’s estimate of cumulative emissions 

reductions projected to result from the 

TSLs considered in this rulemaking. 

DOE reports annual emissions 

reductions for each TSL in chapter 13 of 

the final rule TSD. 


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TABLE V.21—CUMULATIVE EMISSIONS REDUCTION ESTIMATED FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS

Trial standard level 

1 2 3 4 

Power Sector and Site Emissions* 

CO2 (million metric tons) .................................................................................. 3.4 3.8 7.5 6.9 

SO2 (thousand tons) ........................................................................................ 1.8 1.9 4.2 4.2 

NOX (thousand tons) ....................................................................................... 3.5 4.0 7.4 6.5 

Hg (tons) .......................................................................................................... 0.0 0.0 0.0 0.0 

N2O (thousand tons) ........................................................................................ 0.0 0.0 0.1 0.1 

CH4 (thousand tons) ........................................................................................ 0.2 0.2 0.5 0.5 

Upstream Emissions 

CO2 (million metric tons) .................................................................................. 0.3 0.3 0.6 0.5 

SO2 (thousand tons) ........................................................................................ 0.0 0.0 0.1 0.1 

NOX (thousand tons) ....................................................................................... 4.5 5.1 9.2 8.0 

Hg (tons) .......................................................................................................... 0.0 0.0 0.0 0.0 

N2O (thousand tons) ........................................................................................ 0.0 0.0 0.0 0.0 

CH4 (thousand tons) ........................................................................................ 27.7 31.8 56.6 48.8 

Total Emissions 

CO2 (million metric tons) .................................................................................. 3.7 4.1 8.1 7.4 

SO2 (thousand tons) ........................................................................................ 1.8 1.9 4.3 4.3 

NOX (thousand tons) ....................................................................................... 8.0 9.1 16.6 14.5 

Hg (tons) .......................................................................................................... 0.0 0.0 0.0 0.0 

N2O (thousand tons) ........................................................................................ 0.0 0.0 0.1 0.1 

N2O (thousand tons CO2eq)** ......................................................................... 8.8 9.3 20.5 20.1 

CH4 (thousand tons) ........................................................................................ 28.0 32.0 57.2 49.3 

CH4 (thousand tons CO2eq)** ......................................................................... 783.1 897.3 1600.6 1380.3 

* Includes site emissions from gas water heaters. 

** CO2eq is the quantity of CO2 that would have the same GWP. 

As part of the analysis for this rule, 

DOE estimated monetary benefits likely 

to result from the reduced emissions of 

CO2 and NOX that DOE estimated for 

each of the TSLs considered. As 

discussed in section IV.L, DOE used the 

most recent values for the SCC 

developed by an interagency process. 

The four sets of SCC values resulting 

from that process (expressed in 2013$) 

are represented by $12.0/metric ton (the 

average value from a distribution that 

uses a 5-percent discount rate), $40.5/

metric ton (the average value from a 

distribution that uses a 3-percent 

discount rate), $62.4/metric ton (the 

average value from a distribution that 

uses a 2.5-percent discount rate), and 

$119/metric ton (the 95th-percentile 

value from a distribution that uses a 3- 

percent discount rate). These values 

correspond to the value of emission 

reductions in 2015; the values for later 

years are higher due to increasing 

damages as the projected magnitude of 

climate change increases. 

Table V.22 presents the global value 

of CO2 emissions reductions at each 

TSL. For each of the four cases, DOE 

calculated a present value of the stream 

of annual values using the same 

discount rate as was used in the studies 

upon which the dollar-per-ton values 

are based. DOE calculated domestic 

values as a range from 7 percent to 23 

percent of the global values, and these 

results are presented in chapter 14 of 

the final rule TSD. 

TABLE V.22—ESTIMATES OF PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER FRONT-LOADING AND TOP-LOADING

COMMERCIAL CLOTHES WASHERS TRIAL STANDARD LEVELS

TSL 

SCC Case* 

5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 

3% discount rate, 95th 

percentile* 

Million 2013$ 

Power Sector and Site Emissions 

1 .................. 24.3 110.7 175.4 342.0 

2 .................. 26.7 121.9 193.3 376.8 

3 .................. 52.9 240.9 381.9 744.4 

4 .................. 48.8 222.1 352.1 686.2 

Upstream Emissions 

1 .................. 2.1 9.5 15.0 29.3 

2 .................. 2.3 10.8 17.1 33.3 


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74532 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

TABLE V.22—ESTIMATES OF PRESENT VALUE OF CO2 EMISSIONS REDUCTION UNDER FRONT-LOADING AND TOP-LOADING

COMMERCIAL CLOTHES WASHERS TRIAL STANDARD LEVELS—Continued 

TSL 

SCC Case* 

5% discount rate, average* 3% discount rate, average* 2.5% discount rate, average* 

3% discount rate, 95th 

percentile* 

Million 2013$ 

3 .................. 4.2 19.5 31.0 60.4 

4 .................. 3.7 17.1 27.1 52.8 

Total Emissions 

1 .................. 26.4 120.2 190.5 371.3 

2 .................. 29.1 132.7 210.4 410.1 

3 .................. 57.1 260.4 413.0 804.8 

4 .................. 52.5 239.2 379.2 739.0 

* For each of the four cases, the corresponding global SCC value for emissions in 2015 is $12.0, $40.5, $62.4, and $119 per metric ton 

(2013$). 

DOE is well aware that scientific and 

economic knowledge about the 

contribution of CO2 and other 

greenhouse gas (GHG) emissions to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed on 

reducing CO2 emissions in this 

rulemaking is subject to change. DOE, 

together with other Federal agencies, 

will continue to review various 

methodologies for estimating the 

monetary value of reductions in CO2

and other GHG emissions. This ongoing 

review will consider the comments on 

this subject that are part of the public 

record for this and other rulemakings, as 

well as other methodological 

assumptions and issues. However, 

consistent with DOE’s legal obligations, 

and taking into account the uncertainty 

involved with this particular issue, DOE 

has included in this final rule the most 

recent values and analyses resulting 

from the interagency process. 

DOE also estimated the cumulative 

monetary value of the economic benefits 

associated with NOX emissions 

reductions anticipated to result from 

amended standards for CCWs. The 

dollar-per-ton values that DOE used are 

discussed in section IV.L. Table V.23 

presents the cumulative present values 

for each TSL calculated using sevenpercent and three-percent discount 

rates. 

TABLE V.23—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER FRONT-LOADING AND

TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS

TSL 3% discount rate 

7% discount rate 

Million 2013$ 

Power Sector and Site Emissions 

1 ....... 5.0 2.5 

2 ....... 5.6 2.7 

3 ....... 10.5 5.1 

4 ....... 9.4 4.6 

Upstream Emissions 

1 ....... 6.2 3.0 

2 ....... 7.1 3.3 

3 ....... 12.7 6.0 

4 ....... 11.1 5.3 

Total Emissions 

1 ....... 11.2 5.4 

2 ....... 12.7 6.1 

3 ....... 23.2 11.2 

TABLE V.23—ESTIMATES OF PRESENT

VALUE OF NOX EMISSIONS REDUCTION UNDER FRONT-LOADING AND

TOP-LOADING COMMERCIAL

CLOTHES WASHERS TRIAL STANDARD LEVELS—Continued 

TSL 3% discount rate 

7% discount rate 

Million 2013$ 

4 ....... 20.4 9.9 

7. Summary of National Economic 

Impacts 

The NPV of the monetized benefits 

associated with emissions reductions 

can be viewed as a complement to the 

NPV of the customer savings calculated 

for each TSL considered in this 

rulemaking. Table V.24 presents the 

NPV values that result from adding the 

estimates of the potential economic 

benefits resulting from reduced CO2 and 

NOX emissions in each of four valuation 

scenarios to the NPV of customer 

savings calculated for each TSL 

considered in this rulemaking, at both a 

seven-percent and three-percent 

discount rate. The CO2 values used in 

the columns of each table correspond to 

the four sets of SCC values discussed 

above. 

TABLE V.24—NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS

FROM CO2 AND NOX EMISSIONS REDUCTIONS

TSL 

Customer NPV at 3% Discount Rate added with: 

SCC Case $12.0/t and NOX

medium value* 

SCC Case $40.5/t and NOX

medium value* 

SCC Case $62.4/t and NOX

medium value* 

SCC Case $119/t and NOX

medium value* 

Billion 2013$ 

1 .................. 0.5 0.6 0.6 0.8 

2 .................. 0.6 0.7 0.8 1.0 

3 .................. 2.0 2.2 2.4 2.8 


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74533 

TABLE V.24—NET PRESENT VALUE OF CUSTOMER SAVINGS COMBINED WITH PRESENT VALUE OF MONETIZED BENEFITS

FROM CO2 AND NOX EMISSIONS REDUCTIONS—Continued 

TSL 

Customer NPV at 3% Discount Rate added with: 

SCC Case $12.0/t and NOX

medium value* 

SCC Case $40.5/t and NOX

medium value* 

SCC Case $62.4/t and NOX

medium value* 

SCC Case $119/t and NOX

medium value* 

4 .................. 1.6 1.8 2.0 2.3 

Customer NPV at 7% Discount Rate added with: 

1 .................. 0.2 0.3 0.4 0.6 

2 .................. 0.3 0.4 0.5 0.7 

3 .................. 0.9 1.1 1.3 1.7 

4 .................. 0.8 1.0 1.1 1.5 

* These label values represent the global SCC in 2015, in 2013$. For NOX emissions, each case uses the medium value, which corresponds 

to $2,684 per ton. 

Although adding the value of 

customer savings to the values of 

emission reductions provides a valuable 

perspective, two issues should be 

considered. First, the national operating 

cost savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions, while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and the SCC are 

performed with different methods that 

use different time frames for analysis. 

The national operating cost savings is 

measured for the lifetime of equipment 

shipped in 2018–2047. The SCC values, 

on the other hand, reflect the present 

value of future climate-related impacts 

resulting from the emission of one 

metric ton of CO2 in each year. These 

impacts continue well beyond 2100. 

8. Other Factors 

The Secretary of Energy, in 

determining whether a standard is 

economically justified, may consider 

any other factors that the Secretary 

deems to be relevant. (42 U.S.C. 

6313(a)(6)(B)(ii)(VII)) No other factors 

were considered in this analysis. 

C. Conclusion 

EPCA requires that the new or 

amended energy conservation standard 

that DOE adopts for any type (or class) 

of covered equipment shall be designed 

to achieve the maximum improvement 

in energy efficiency that the Secretary of 

Energy determines is technologically 

feasible and economically justified. (42 

U.S.C. 6295(o)(2)(A) and 6316(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, considering 

the seven statutory factors discussed 

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

and 6316(a)) The new or amended 

standard must also ‘‘result in significant 

conservation of energy.’’ (42 U.S.C. 

6295(o)(3)(B) and 6316(a)) 

For this final rule, DOE considered 

the impacts of standards at each TSL, 

beginning with the maximum 

technologically feasible level, to 

determine whether that level was 

economically justified. Where the maxtech level was not justified, DOE then 

considered the next most efficient level 

and undertook the same evaluation until 

it reached the highest efficiency level 

that is technologically feasible, 

economically justified and saves a 

significant amount of energy. 

To aid the reader in understanding 

the benefits and/or burdens of each TSL, 

tables in this section summarize the 

quantitative analytical results for each 

TSL, based on the assumptions and 

methodology discussed herein. The 

efficiency levels contained in each TSL 

are described in section V.A. 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 

customers who may be 

disproportionately affected by a national 

standard (see section V.B.1.b), and 

impacts on employment. DOE discusses 

the impacts on employment in frontloading and top-loading CCW 

equipment manufacturing in section 

V.B.2, and discusses the indirect 

employment impacts in section V.B.3.c. 

1. Benefits and Burdens of Trial 

Standard Levels Considered for 

Commercial Clothes Washers 

Table V.25 and Table V.26 summarize 

the quantitative impacts estimated for 

each TSL for CCWs. 

TABLE V.25—SUMMARY OF ANALYTICAL RESULTS FOR COMMERCIAL CLOTHES WASHERS: NATIONAL IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 

National FFC Energy Savings quads 

..................................................................................................................... 0.065 0.072 0.140 0.128 

NPV of Customer Benefits 2013$ billion 

3% discount rate .............................................................................................. 0.4 0.5 1.9 1.6 

7% discount rate .............................................................................................. 0.2 0.2 0.9 0.7 

Cumulative Emissions Reduction (Total FFC Emissions) 

CO2 million metric tons .................................................................................... 3.73 4.13 8.09 7.41 

NOX thousand tons .......................................................................................... 8.01 9.10 16.60 14.54 

Hg tons ............................................................................................................ 0.01 0.01 0.01 0.01

N2O thousand tons .......................................................................................... 0.03 0.04 0.10 0.10 


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74534 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

TABLE V.25—SUMMARY OF ANALYTICAL RESULTS FOR COMMERCIAL CLOTHES WASHERS: NATIONAL IMPACTS— 

Continued 

Category TSL 1 TSL 2 TSL 3 TSL 4 

N2O thousand tons CO2eq* ............................................................................. 8.79 9.32 20.55 20.08 

CH4 thousand tons .......................................................................................... 27.97 32.05 57.17 49.29 

CH4 thousand tons CO2eq* ............................................................................. 783.1 897.3 1600.6 1380.3 

SO2 thousand tons .......................................................................................... 1.80 1.88 4.29 4.26 

Value of Emissions Reduction (Total FFC Emissions) 

CO2 2013$ million** ......................................................................................... 26—371 29—410 57—805 53—739 

NOX—3% discount rate 2013$ million ............................................................ 11.2 12.7 23.2 20.4 

NOX—7% discount rate 2013$ million ............................................................ 5.4 6.1 11.2 9.9 

* CO2eq is the quantity of CO2 that would have the same GWP. 

** Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. 

TABLE V.26—SUMMARY OF ANALYTICAL RESULTS FOR FRONT-LOADING AND TOP-LOADING COMMERCIAL CLOTHES

WASHERS: MANUFACTURER AND CUSTOMER IMPACTS

Category TSL 1 TSL 2 TSL 3 TSL 4 

Manufacturer Impacts 

Change in INPV ...............................................................................................

(2013$ million) † ............................................................................................... (6.4) (6.6) (67.5) (99.6) 

Change in INPV ...............................................................................................

(%) † ................................................................................................................. (5.2%) (5.3%) (54.6%) (80.7%) 

Customer Mean LCC Savings 2013$ 

Front-Loading, Multi-family † ............................................................................ 221.4 271.9 271.9 (2.7)

Front-Loading, Laundromat † ........................................................................... 184.3 212.3 212.3 (10.2) 

Top-Loading, Multi-family ................................................................................ 294.5 294.5 807.4 807.4 

Top-Loading, Laundromat ............................................................................... 165.7 165.7 622.4 622.4 

Weighted Average* .......................................................................................... 251.4 270.3 573.0 466.3 

Customer Simple PBP years 

Front-Loading, Multi-family .............................................................................. 0.0 0.0 0.0 1.1 

Front-Loading, Laundromat ............................................................................. 0.0 0.0 0.0 1.0 

Top-Loading, Multi-family ................................................................................ 0.0 0.0 0.7 0.7 

Top-Loading, Laundromat ............................................................................... 0.0 0.0 0.6 0.6 

Weighted Average* .......................................................................................... 0.0 0.0 0.4 0.8 

Customers with Net Cost % 

Front-Loading, Multi-Family ............................................................................. 0 0 0 55 

Front-Loading, Laundromat ............................................................................. 0 0 0 65 

Top-Loading, Multi-Family ............................................................................... 0 0 0 0 

Top-Loading, Laundromat ............................................................................... 0 0 0 0 

Weighted Average* .......................................................................................... 0 0 0 23 

* Weighted by shares of each equipment class in total projected shipments in 2018. 

† Values in parentheses are negative values. 

First, DOE considered TSL 4, the max 

tech level, which would save an 

estimated total of 0.128 quads of energy, 

an amount DOE considers significant. 

TSL 4 has an estimated NPV of 

customer benefit of $0.71 billion using 

a 7 percent discount rate, and $1.58 

billion using a 3 percent discount rate. 

The cumulative emissions reductions 

at TSL 4 are 7.41 million metric tons of 

CO2, 14.54 thousand tons of NOX, 4.26 

thousand tons of SO2, 49.29 thousand 

tons of CH4, 0.08 thousand tons of N2O, 

and 0.01 tons of Hg (see Table V.25). 

The estimated monetary value of the 

CO2 emissions reductions at TSL 4 

ranges from $53 million to $739 million. 

For front-loading CCWs at TSL 4, the 

mean LCC savings decreases by $3 and 

$10 for multi-family and laundromat 

applications, respectively. The simple 

payback period is 1.1 years and 1.0 

years for multifamily and laundromat 

applications, respectively. On the other 

hand, top-loading CCWs have a mean 

LCC savings of $807 and $622 for multifamily and laundromat applications, 

respectively, and the simple PBP is 0.7 

years and 0.6 years for multi-family and 

laundromat applications, respectively. 

The share of customers that would 

experience a net LCC cost (i.e., LCC 

increase) is 55 percent and 65 percent 

for multifamily and laundromat 

applications of front-loading CCW units, 

respectively. For top-loading CCW 

units, no customers would experience a 

net LCC cost. 

At TSL 4, the projected change in 

INPV ranges from a decrease of $99.6 

million to a decrease of $103.8 million, 

equivalent to 80.7 percent and 84.1 

percent, respectively. CCWs that meet 

the efficiency standards specified by 

this TSL are forecast to represent only 


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8 percent of shipments in the year 

leading up to amended standards. As 

such, manufacturers would have to 

redesign nearly all equipment by the 

2018 compliance date to meet demand. 

Redesigning all units to meet the current 

max tech efficiency levels would require 

considerable capital and equipment 

conversion expenditures. At TSL 4, the 

capital conversion costs total $63.1 

million, 13.7 times the industry annual 

capital expenditure in the year leading 

up to the standards compliance year of 

2018. DOE estimates that complete 

platform redesigns would cost the 

industry $62.4 million in product 

conversion costs. These conversion 

costs largely relate to the research 

programs required to develop new 

equipment that meet the efficiency 

standards set forth by TSL 4. These 

costs are equivalent to 14.9 times the 

industry annual budget for research and 

development. Total capital and product 

conversion costs associated with the 

changes in equipment and 

manufacturing facilities required at TSL 

4 would require significant use of 

manufacturers’ financial reserves 

(manufacturer capital pools), impacting 

other areas of business that compete for 

these resources, and significantly 

reducing INPV. In addition, 

manufacturers could face a substantial 

impact on profitability at TSL 4. 

Because manufacturers are more likely 

to reduce their margins to maintain a 

price-competitive equipment at higher 

TSLs, DOE expects that TSL 4 would 

yield impacts closer to the high end of 

the range of INPV impacts (i.e. most 

severe). If the high end of the range of 

impacts is reached, as DOE expects, TSL 

4 could result in a net loss of 84.1 

percent in INPV to CCW manufacturers. 

As a result, at TSL 4, DOE expects that 

some companies would be forced to exit 

the CCW market or shift production 

abroad, both which would negatively 

impact domestic manufacturing 

capacity and employment. 

More specifically, DOE expects that 

the level of investments that the LVM 

would be required to make at TSL 4 

would be unmanageable and may result 

in the LVM exiting the top-loading 

market or the CCW market altogether. 

This would negatively impact 

competition in the industry by reducing 

the number of market actors. Relative to 

the LVM’s major competitor, 

disproportionate impacts are high at the 

max tech level for top-loading CCW 

units. This is due to the fact that the 

LVM’s major competitor already 

produces at the max tech level for toploading units. Thus, for the major 

competitor, there is no conversion cost 

burden associated with a standard for 

top-loading units. Conversely, for 

reasons mentioned in the preceding 

paragraph, the LVM will have high 

conversion costs at the max tech level 

for top-loading units. 

Therefore, for TSL 4, DOE concludes 

that the benefits of energy savings, 

positive NPV of total customer benefits, 

customer average LCC savings for two of 

the four applications, emission 

reductions and the estimated monetary 

value of the emissions reductions would 

be outweighed by the negative customer 

impacts for front-loading CCWs in 

multi-family and laundromat 

applications, the large reduction in 

industry value at TSL 4, as well as the 

potential for loss of domestic 

manufacturing. Consequently, DOE 

concludes that TSL 4 is not 

economically justified. 

Next, DOE considered TSL 3, which 

would save an estimated total of 0.14 

quads of energy, an amount DOE 

considers significant. TSL 3 has an 

estimated NPV of customer benefit of 

$0.87 billion using a 7 percent discount 

rate, and $1.93 billion using a 3 percent 

discount rate. 

The cumulative emissions reductions 

at TSL 3 are 8.09 million metric tons of 

CO2, 16.60 thousand tons of NOX, 4.29 

thousand tons of SO2, 57.17 thousand 

tons of CH4, 0.08 thousand tons of N2O, 

and 0.01 tons of Hg. The estimated 

monetary value of the CO2 emissions 

reductions at TSL 3 ranges from $57 

million to $805 million. 

At TSL 3, the average LCC savings is 

$272 and $212 for front-loading CCW 

units for multi-family and laundromat 

applications, respectively. For toploading CCW units, the average LCC 

savings are $807 and $622 for multifamily and laundromat applications, 

respectively. The simple PBP is close to 

zero years for both applications of frontloading CCW units, 0.7 and 0.6 years for 

multi-family and laundromat 

applications of top-loading CCW units. 

DOE estimates that no customer would 

experience a net LCC cost for both frontloading and top-loading CCW units. 

At TSL 3, the projected change in 

INPV ranges from a decrease of $67.5 

million to a decrease of $70.5 million, 

equivalent to 54.6 percent and 57.1 

percent, respectively. CCWs that meet 

the efficiency standards specified by 

this TSL are forecast to represent only 

29 percent of shipments (11% for toploading CCW units only) in 2017 (the 

year leading up to amended standards). 

As such, manufacturers would have to 

redesign a large portion of CCWs by the 

2018 compliance date to meet demand. 

Redesigning all top-loading units to 

meet the current max tech efficiency 

level would require considerable capital 

and equipment conversion 

expenditures. At TSL 3, the capital 

conversion costs total $38.7 million, 8.4 

times the industry annual capital 

expenditure in the year leading up to 

amended standards. DOE estimates that 

complete platform redesign for toploading units and upgrades to frontloading units would cost the industry 

$50.9 million in product conversion 

costs. These conversion costs largely 

relate to the research programs required 

to develop new equipment that meet the 

efficiency standards set forth by TSL 3. 

These costs are equivalent to 12.1 times 

the industry annual budget for research 

and development. In addition, total 

capital and product conversion costs 

associated with the changes in 

equipment and manufacturing facilities 

required at TSL 3 would require 

significant use of manufacturers’ 

financial reserves, impacting other areas 

of business that compete for these 

resources, and significantly reducing 

INPV. In addition, manufacturers could 

face a substantial impact on profitability 

at TSL 3. Because manufacturers are 

more likely to reduce their margins to 

maintain a price-competitive CCW at 

higher TSLs, DOE expects that TSL 3 

would yield impacts closer to the high 

end of the range of INPV impacts. If the 

high end of the range of impacts is 

reached, as DOE expects, TSL 3 could 

result in a net loss of 84.1 percent in 

INPV to CCW manufacturers. As a 

result, at TSL 3, DOE expects that some 

companies would be forced to exit the 

CCW market or shift production 

internationally, both which would 

negatively impact domestic 

manufacturing capacity and 

employment. 

In terms of the LVM, DOE expects the 

level of investments that the LVM 

would be required to make at TSL 3 

would be unmanageable and may result 

in the LVM exiting the top-loading 

market. In terms of disproportionate 

impacts relative to the LVM’s major 

competitor, disproportionate impacts 

are high at the max tech level for toploading CCW units. This is due to the 

fact that the LVM’s major competitor 

already produces at the max tech level 

for top-loading units. Thus, for the 

major competitor, there is no conversion 

cost burden associated with a standard 

for top-loading units. Conversely, for 

reasons mentioned in the preceding 

paragraph, the LVM will have high 

conversion costs at TSL 3 for toploading units. 

In view of the foregoing, DOE 

concludes that, at TSL 3 for frontloading and top-loading CCW 

equipment, the benefits of energy 


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62 DOE used a two-step calculation process to 

convert the time-series of costs and benefits into 

annualized values. First, DOE calculated a present 

value in 2014, the year used for discounting the 

NPV of total customer costs and savings, for the 

time-series of costs and benefits using discount 

rates of three and seven percent for all costs and 

benefits except for the value of CO2 reductions. For 

the latter, DOE used a range of discount rates. From 

the present value, DOE then calculated the fixed 

annual payment over a 30-year period (2018 

through 2047) that yields the same present value. 

The fixed annual payment is the annualized value. 

Although DOE calculated annualized values, this 

does not imply that the time-series of cost and 

benefits from which the annualized values were 

determined is a steady stream of payments. 

savings, positive NPV of customer 

benefit, positive impacts on customers, 

emission reductions, and the estimated 

monetary value of the emissions 

reductions would not outweigh the large 

reduction in industry value at TSL 3, as 

well as the potential for loss of domestic 

manufacturing. Consequently, DOE 

concludes that TSL 3 is not 

economically justified. 

Next, DOE considered TSL 2, which 

would save an estimated total of 0.072 

quads of energy, an amount DOE 

considers significant. TSL 2 has an 

estimated NPV of customer benefit of 

$0.24 billion using a 7 percent discount 

rate, and $0.53 billion using a 3 percent 

discount rate. 

The cumulative emissions reductions 

at TSL 2 are 4.13 million metric tons of 

CO2, 9.10 thousand tons of NOX, 1.88 

thousand tons of SO2, 32.05 thousand 

tons of CH4, 0.04 thousand tons of N2O, 

and 0.01 tons of Hg. The estimated 

monetary value of the CO2 emissions 

reductions at TSL 2 ranges from $29 

million to $410 million. 

At TSL 2, the average LCC savings is 

$272 and $212 for front-loading CCW 

units for multi-family and laundromat 

applications, respectively. For toploading CCW units, the average LCC 

savings are $294 and $166 for multifamily and laundromat applications. 

The simple PBP is close to zero years for 

both applications of front-loading as 

well as top-loading CCW units. DOE 

estimates that no customer would 

experience a net LCC cost for both frontloading and top-loading CCW units. 

At TSL 2, the projected change in 

INPV is a decrease of $6.6 million, or a 

decrease of 5.3 percent. Although CCWs 

that meet the efficiency standards 

specified by this TSL are forecast to 

represent only 39 percent of shipments 

in the year leading up to amended 

standards, DOE’s testing and reverseengineering analyses indicate that 

manufacturers can achieve TSL 2 at 

little or no additional capital cost 

compared to models at the current 

baseline levels. Through its analyses, 

DOE observed that manufacturers 

generally employ control strategies to 

achieve the TSL 2 efficiency levels (e.g., 

changes in water levels, water 

temperatures, and cycle settings 

available to the end-user). Accordingly, 

this level corresponds more to 

incremental equipment conversions 

rather than platform redesigns. Thus, 

DOE estimates that compliance with 

TSL 2 would not require any upfront 

capital investments. TSL 2 will require 

an estimated $10.2 million in product 

conversion costs primarily relating to 

the research and development programs 

needed to improve upon existing 

platforms to meet the specified 

efficiency levels. This represents 2.4 

times the industry budget for research 

and development in 2017 (the year 

leading up to amended standards), as 

indicated in the GRIM and described in 

greater detail in chapter 12 of the final 

rule TSD. The substantial reduction in 

conversion costs corresponding to 

compliance with TSL 2 (relative to TSL 

3 and TSL 4) greatly mitigates the 

operational risk and impact on INPV. 

After considering the analysis and 

weighing the benefits and the burdens, 

DOE concludes that at TSL 2 for frontloading and top-loading CCW 

equipment, the benefits of energy 

savings, positive NPV of customer 

benefit, positive impacts on customers 

(as indicated by positive average LCC 

savings, favorable PBPs, and the large 

percentage of customers who would 

experience LCC benefits), emission 

reductions, and the estimated monetary 

value of the emissions reductions would 

outweigh the potential reductions in 

INPV for manufacturers. DOE concludes 

that TSL 2 would save a significant 

amount of energy and is technologically 

feasible and economically justified. 

Based on the above considerations, 

DOE adopts the energy conservation 

standards for front-loading and toploading CCWs at TSL 2. 

Table V.27 presents the amended 

energy conservation standards for CCW 

equipment. 

TABLE V.27—AMENDED ENERGY CONSERVATION STANDARDS FOR COMMERCIAL CLOTHES WASHERS

Equipment class Minimum 

MEFJ2* 

Maximum 

IWF †

Top-Loading ............................................................................................................................................................. 1.35 8.8 

Front-Loading ........................................................................................................................................................... 2.00 4.1 

* MEFJ2 (appendix J2 modified energy factor) is calculated as the clothes container capacity in cubic feet divided by the sum, expressed in kilowatt-hours (kWh), of: (1) the total weighted per-cycle hot water energy consumption; (2) the total weighted per-cycle machine electrical energy 

consumption; and (3) the per-cycle energy consumption for removing moisture from a test load. † IWF (integrated water factor) is calculated as the sum, expressed in gallons per cycle, of the total weighted per-cycle water consumption for 

all wash cycles divided by the clothes container capacity in cubic feet. 

2. Summary of Benefits and Costs 

(Annualized) of the Amended Standards 

For equipment sold between 2018 and 

2047, the benefits and costs of the 

amended standards can also be 

expressed in terms of annualized values. 

The annualized monetary values are the 

sum of (1) the annualized national 

economic value of the benefits from 

customer operation of equipment that 

meet the amended standards (consisting 

primarily of operating cost savings from 

using less energy, minus increases in 

equipment purchase and installation 

costs, which is another way of 

representing customer NPV), and (2) the 

annualized monetary value of the 

benefits of emission reductions, 

including CO2 emission reductions.62

Although combining the values of 

operating savings and CO2 emission 

reductions provides a useful 

perspective, two issues should be 

considered. First, the national operating 

savings are domestic U.S. customer 

monetary savings that occur as a result 

of market transactions while the value 

of CO2 reductions is based on a global 

value. Second, the assessments of 

operating cost savings and CO2 savings 

are performed with different methods 

that use different time frames for 

analysis. The national operating cost 

savings is measured for the lifetime of 

front-loading and top-loading CCWs 

shipped between 2018 and 2047. The 

SCC values, on the other hand, reflect 

the present value of some future 

climate-related impacts resulting from 

the emission of one ton of carbon 


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63 DOE used a 3-percent discount rate for CO2 

reduction, along with the average SCC series that 

uses a 3-percent discount rate ($40.5/t in 2015). 

dioxide in each year. These impacts 

continue well beyond 2100. 

Estimates of annualized benefits and 

costs of the amended standards for 

front-loading and top-loading CCWs are 

shown in Table V.28. Using a 7-percent 

discount rate for benefits and costs 63

the cost of the standards amended in the 

rule is $0.02 million per year in 

increased equipment costs; while the 

estimated benefits are $24 million per 

year in reduced equipment operating 

costs, $7 million in CO2 reductions, and 

$0.60 million in reduced NOX

emissions. In this case, the net benefit 

would amount to $32 million per year. 

Using a 3-percent discount rate for all 

benefits and costs and the average SCC 

series, the estimated cost of the 

standards amended in the rule is $0.03 

million per year in increased equipment 

costs; while the estimated benefits are 

$30 million per year in reduced 

operating costs, $7 million in CO2

reductions, and $0.71 million in 

reduced NOX emissions. In this case, the 

net benefit would amount to 

approximately $38 million per year. 

TABLE V.28—ANNUALIZED BENEFITS AND COSTS OF AMENDED STANDARDS FOR FRONT-LOADING AND TOP-LOADING

COMMERCIAL CLOTHES WASHERS (TSL 2) 

Discount rate (%) Primary estimate * Low net benefits Estimate * 

High net 

benefits 

estimate * 

million 2013$/year 

Benefits: 

Operating Cost Savings .... 7 ............................................... 24 ............................................. 21 ............................................. 30. 

3 ............................................... 30 ............................................. 26 ............................................. 38. 

CO2 Reduction Monetized 

Value ($12.0/t case) *.

5 ............................................... 2 ............................................... 2 ............................................... 3. 

CO2 Reduction Monetized 

Value ($40.5/t case) *.

3 ............................................... 7 ............................................... 7 ............................................... 9. 

CO2 Reduction Monetized 

Value ($62.4/t case) *.

2.5 ............................................ 11 ............................................. 10 ............................................. 13. 

CO2 Reduction Monetized 

Value ($119/t case) *.

3 ............................................... 23 ............................................. 21 ............................................. 28. 

NOX Reduction Monetized 

Value (at $2,684/ton) **.

7 ............................................... 0.60 .......................................... 0.55 .......................................... 0.71. 

3 ............................................... 0.71 .......................................... 0.64 .......................................... 0.86. 

Total Benefits † ........... 7 plus CO2 range ..................... 27 to 47 ................................... 24 to 43 ................................... 33 to 58. 

7 ............................................... 32 ............................................. 29 ............................................. 39. 

3 plus CO2 range ..................... 33 to 53 ................................... 29 to 47 ................................... 41 to 66. 

3 ............................................... 38 ............................................. 33 ............................................. 48. 

Costs: 

Incremental Equipment 

Costs.

7 ............................................... 0.02 .......................................... 0.03 .......................................... 0.02. 

3 ............................................... 0.03 .......................................... 0.03 .......................................... 0.02, 

Net Benefits: 

Total † ................................. 7 plus CO2 range ..................... 27 to 47 ................................... 24 to 43 ................................... 33 to 58. 

7 ............................................... 32 ............................................. 29 ............................................. 39. 

3 plus CO2 range ..................... 33 to 53 ................................... 29 to 47 ................................... 41 to 66. 

3 ............................................... 38 ............................................. 33 ............................................. 48. 

* This table presents the annualized costs and benefits associated with front-loading and top-loading CCW units shipped in 2018–2047. These 

results include benefits to customers which accrue after 2047 from the equipment purchased in 2018–2047. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The 

Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices from the AEO2014 Reference case, Low Economic 

Growth case, and High Economic Growth case, respectively. In addition, incremental equipment costs reflect no change for projected equipment 

price trends in the Primary Estimate, an increasing trend for projected equipment prices in the Low Benefits Estimate, and a decreasing trend for 

projected equipment prices in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F. 

** The interagency group selected four sets of SCC values for use in regulatory analyses. Three sets of values are based on the average SCC 

from the three integrated assessment models, at discount rates of 2.5, 3, and 5 percent. The fourth set, which represents the 95th percentile 

SCC estimate across all three models at a 3-percent discount rate, is included to represent higher-than-expected impacts from temperature 

change further out in the tails of the SCC distribution. The values in parentheses represent the SCC in 2015. The SCC time series incorporate 

an escalation factor. The value for NOX is the average of the low and high values used in DOE’s analysis. †Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to average SCC with 3-percent discount 

rate. In the rows labeled ‘‘7% plus CO2 range’’ and ‘‘3% plus CO2 range,’’ the operating cost and NOX benefits are calculated using the labeled 

discount rate, and those values are added to the full range of CO2 values. 


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64The size standards are listed by NAICS code 

and industry description and are available at 

http://www.sba.gov/sites/default/files/files/Size_

Standards_Table.pdf. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Orders 

12866 and 13563 

Section 1(b)(1) of Executive Order 

12866, ‘‘Regulatory Planning and 

Review,’’ 58 FR 51735 (Oct. 4, 1993), 

requires each agency to identify the 

problem that it intends to address, 

including, where applicable, the failures 

of private markets or public institutions 

that warrant new agency action, as well 

as to assess the significance of that 

problem. The problems that these 

standards address are as follows: 

(1) Insufficient information and the 

high costs of gathering and analyzing 

relevant information leads some 

consumers to miss opportunities to 

make cost-effective investments in 

energy efficiency. 

(2) In some cases the benefits of more 

efficient equipment are not realized due 

to misaligned incentives between 

purchasers and users. An example of 

such a case is when the equipment 

purchase decision is made by a building 

contractor or building owner who does 

not pay the energy costs. 

(3) There are external benefits 

resulting from improved energy 

efficiency of CCWs that are not captured 

by the users of such equipment. These 

benefits include externalities related to 

public health, environmental protection 

and national security that are not 

reflected in energy prices, such as 

reduced emissions of air pollutants and 

greenhouse gases that impact human 

health and global warming. 

In addition, DOE has determined that 

this regulatory action is not a 

‘‘significant regulatory action’’ under 

section 3(f)(1) of Executive Order 12866. 

Therefore, DOE did not present for 

review to the OIRA in the OMB the draft 

rule and other documents prepared for 

this rulemaking, including a regulatory 

impact analysis (RIA). 

DOE has also reviewed this regulation 

pursuant to Executive Order 13563, 

issued on January 18, 2011. 76 FR 3281 

(Jan. 21, 2011). EO 13563 is 

supplemental to and explicitly reaffirms 

the principles, structures, and 

definitions governing regulatory review 

established in EO 12866. To the extent 

permitted by law, agencies are required 

by EO 13563 to: (1) Propose or adopt a 

regulation only upon a reasoned 

determination that its benefits justify its 

costs (recognizing that some benefits 

and costs are difficult to quantify); (2) 

tailor regulations to impose the least 

burden on society, consistent with 

obtaining regulatory objectives, taking 

into account, among other things, and to 

the extent practicable, the costs of 

cumulative regulations; (3) select, in 

choosing among alternative regulatory 

approaches, those approaches that 

maximize net benefits (including 

potential economic, environmental, 

public health and safety, and other 

advantages; distributive impacts; and 

equity); (4) to the extent feasible, specify 

performance objectives, rather than 

specifying the behavior or manner of 

compliance that regulated entities must 

adopt; and (5) identify and assess 

available alternatives to direct 

regulation, including providing 

economic incentives to encourage the 

desired behavior, such as user fees or 

marketable permits, or providing 

information upon which choices can be 

made by the public. 

DOE emphasizes as well that EO 

13563 requires agencies to use the best 

available techniques to quantify 

anticipated present and future benefits 

and costs as accurately as possible. In its 

guidance, OIRA has emphasized that 

such techniques may include 

identifying changing future compliance 

costs that might result from 

technological innovation or anticipated 

behavioral changes. For the reasons 

stated in the preamble, DOE believes 

that this final rule is consistent with 

these principles, including the 

requirement that, to the extent 

permitted by law, benefits justify costs 

and that net benefits are maximized. 

B. Review Under the Regulatory 

Flexibility Act 

The Regulatory Flexibility Act (5 

U.S.C. 601 et seq.) requires preparation 

of a final regulatory flexibility analysis 

(FRFA) for any rule that by law must be 

proposed for public comment, unless 

the agency certifies that the rule, if 

promulgated, will not have a significant 

economic impact on a substantial 

number of small entities. As required by 

Executive Order 13272, ‘‘Proper 

Consideration of Small Entities in 

Agency Rulemaking,’’ 67 FR 53461 

(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://energy.gov/

gc/office-general-counsel). 

DOE reviewed this final rule pursuant 

to the FRFA and the policies and 

procedures discussed above. DOE 

certifies that the standards established 

in this final rule will not have a 

significant impact on a substantial 

number of small entities. The factual 

basis for this certification is set forth 

below. 

For manufacturers of CCWs, the SBA 

has set a size threshold, which defines 

those entities classified as ‘‘small 

businesses’’ for the purposes of the 

statute. DOE used the SBA’s small 

business size standards to determine 

whether any small entities would be 

subject to the requirements of the rule. 

65 FR 30836, 30848 (May 15, 2000), as 

amended at 65 FR 53533, 53544 (Sept. 

5, 2000) and codified at 13 CFR part 

121.64 CCW manufacturing is classified 

under NAICS 333318, ‘‘Other 

commercial and service industry 

machinery 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. 

To estimate the number of small 

businesses which could be impacted by 

the amended energy conservation 

standards, DOE conducted a market 

survey using available public 

information to identify potential small 

manufacturers. DOE’s research included 

the AHAM membership directory, 

equipment databases (CEE, California 

Energy Commission (CEC), and 

ENERGY STAR databases) and 

individual company Web sites to find 

potential small business manufacturers. 

DOE also asked interested parties and 

industry representatives if they were 

aware of any other small business 

manufacturers during manufacturer 

interviews and at DOE public meetings. 

DOE reviewed all publicly available 

data and contacted various companies, 

as necessary, to determine whether they 

met the SBA’s definition of a small 

business manufacturer of covered 

CCWs. DOE screened out companies 

that did not offer equipment covered by 

this rulemaking, did not meet the 

definition of a ‘‘small business,’’ or are 

foreign owned and operated. 

All top-loading CCWs and 

approximately 40 percent of frontloading CCWs are currently 

manufactured in the United States, 

accounting for 83 percent of overall 

domestic CCW shipments. Three U.S.- 

based companies are responsible for this 

83 percent domestic production and 

over 95 percent of CCW industry market 

share. Although one of these 

manufacturers has been identified and 

analyzed separately as an LVM, none of 

these manufacturers meet the definition 

of a small business manufacturer, as 

they all have more than 1,000 

employees. The small portion of the 


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74539 

remaining CCW market (approximately 

5,800 shipments) is supplied by a 

combination of three international 

companies, all of which have small 

market shares. These companies are all 

foreign owned and operated, and exceed 

the SBA’s employment threshold for 

consideration as a small business under 

the appropriate NAICS code. Therefore, 

DOE did not identify any small business 

manufacturers of CCWs. 

Based on the discussion above, DOE 

certifies that the standards for CCWs set 

forth in this final rule will not have a 

significant economic impact on a 

substantial number of small entities. 

Accordingly, DOE has not prepared a 

FRFA for this rulemaking. DOE will 

transmit the certification and supporting 

statement of factual basis to the Chief 

Counsel for Advocacy of the SBA for 

review under 5 U.S.C. 605(b). 

1. Significant Alternatives to the Rule 

The discussion above analyzes 

impacts on small businesses that would 

result from DOE’s final rule. In addition 

to the other TSLs being considered, the 

final rule TSD includes a regulatory 

impact analysis (RIA). For CCWs, the 

RIA discusses the following policy 

alternatives: (1) No change in standard; 

(2) consumer rebates; (3) consumer tax 

credits; (4) manufacturer tax credits; (5) 

voluntary energy efficiency targets; (6) 

voluntary early replacement programs; 

and (7) bulk government purchases. 

While these alternatives may mitigate to 

some varying extent the economic 

impacts on small entities compared to 

the standards, DOE determined that the 

energy savings of these alternatives are 

significantly smaller than those that 

would be expected to result from 

adoption of the amended standard 

levels. Accordingly, DOE is declining to 

adopt any of these alternatives and is 

enacting the standards set forth in this 

rulemaking. See chapter 17 of the final 

rule TSD for further detail on the policy 

alternatives DOE considered. 

C. Review Under the Paperwork 

Reduction Act 

Manufacturers of CCWs must certify 

to DOE that their equipment complies 

with any applicable energy conservation 

standards. In certifying compliance, 

manufacturers must test their 

equipment according to the DOE test 

procedures for CCWs, including any 

amendments adopted for those test 

procedures. DOE has established 

regulations for the certification and 

recordkeeping requirements for all 

covered consumer products and 

commercial equipment, including 

CCWs. 76 FR 12422 (March 7, 2011). 

The collection-of-information 

requirement for the certification and 

recordkeeping is subject to review and 

approval by OMB under the Paperwork 

Reduction Act (PRA). This requirement 

has been approved by OMB under OMB 

control number 1910–1400. Public 

reporting burden for the certification is 

estimated to average 20 hours per 

response, including the time for 

reviewing instructions, searching 

existing data sources, gathering and 

maintaining the data needed, and 

completing and reviewing the collection 

of information. 

AHAM commented that 20 hours is 

an underestimation of the certification 

burden, particularly for large companies 

with a large number of models to certify. 

AHAM stated that for CCWs, the 

certification reporting burden varies 

significantly by companies. According 

to AHAM, for some companies, 20 

hours may be a fairly accurate average 

estimate. But for others, the burden 

could be significantly more than that. 

Thus, AHAM requested that DOE revise 

its public reporting burden estimate for 

CCWs. (AHAM, No. 34 at p. 6). 

As required by the PRA, all 

collections of information from the 

public by a Federal agency must receive 

prior approval from OMB. An ongoing 

collection must be approved by OMB at 

least once every three years. DOE plans 

to investigate the public reporting 

burden raised by AHAM separately as 

part of the three-year review process. 

Notwithstanding any other provision 

of the law, no person is required to 

respond to, nor shall any person be 

subject to a penalty for failure to comply 

with, a collection of information subject 

to the requirements of the PRA, unless 

that collection of information displays a 

currently valid OMB Control Number. 

D. Review Under the National 

Environmental Policy Act of 1969 

Pursuant to the National 

Environmental Policy Act (NEPA) of 

1969, DOE has determined that the rule 

fits within the category of actions 

included in Categorical Exclusion (CX) 

B5.1 and otherwise meets the 

requirements for application of a CX. 

See 10 CFR part 1021, App. B, B5.1(b); 

1021.410(b) and Appendix B, B(1)–(5). 

The rule fits within the category of 

actions because it is a rulemaking that 

establishes energy conservation 

standards for consumer products or 

industrial equipment, and for which 

none of the exceptions identified in CX 

B5.1(b) apply. Therefore, DOE has made 

a CX determination for this rulemaking, 

and DOE does not need to prepare an 

Environmental Assessment or 

Environmental Impact Statement for 

this rule. DOE’s CX determination for 

this rule is available at http://

cxnepa.energy.gov/. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (Aug. 10, 1999), imposes 

certain requirements on Federal 

agencies formulating and implementing 

policies or regulations that preempt 

State law or that have Federalism 

implications. The Executive Order 

requires agencies to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and to carefully assess the 

necessity for such actions. The 

Executive Order also requires agencies 

to have an accountable process to 

ensure meaningful and timely input by 

State and local officials in the 

development of regulatory policies that 

have Federalism implications. On 

March 14, 2000, DOE published a 

statement of policy describing the 

intergovernmental consultation process 

it will follow in the development of 

such regulations. 65 FR 13735. EPCA 

governs and prescribes Federal 

preemption of State regulations as to 

energy conservation for the equipment 

that is the subject of this final rule. 

States can petition DOE for exemption 

from such preemption to the extent, and 

based on criteria, set forth in EPCA. (42 

U.S.C. 6297 and 6316(a)) 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; (3) 

provide a clear legal standard for 

affected conduct rather than a general 

standard and (4) promote simplification 

and burden reduction. 61 FR 4729 (Feb. 

7, 1996). Section 3(b) of Executive Order 

12988 specifically requires that 

Executive agencies make every 

reasonable effort to ensure that the 

regulation: (1) Clearly specifies the 

preemptive effect, if any; (2) clearly 

specifies any effect on existing Federal 

law or regulation; (3) provides a clear 

legal standard for affected conduct 

while promoting simplification and 

burden reduction; (4) specifies the 

retroactive effect, if any; (5) adequately 

defines key terms; and (6) addresses 

other important issues affecting clarity 

and general draftsmanship under any 

guidelines issued by the Attorney 


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74540 Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 

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 final 

rule meets the relevant standards of 

Executive Order 12988. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA) requires 

each Federal agency to assess the effects 

of Federal regulatory actions on State, 

local, and Tribal governments and the 

private sector. Pub. L. 104–4, sec. 201 

(codified at 2 U.S.C. 1531) For an 

amended 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 ‘‘significant 

intergovernmental mandate,’’ and 

requires an agency plan for giving notice 

and opportunity for timely input to 

potentially affected small governments 

before establishing any requirements 

that might significantly or uniquely 

affect small governments. On March 18, 

1997, DOE published a statement of 

policy on its process for 

intergovernmental consultation under 

UMRA. 62 FR 12820. DOE’s policy 

statement is also available at http://

energy.gov/gc/office-general-counsel. 

DOE examined this final rule 

according to UMRA and its statement of 

policy. This final rule does not contain 

a Federal intergovernmental mandate, 

and DOE expects it will not require 

expenditures of $100 million or more by 

the private sector. Such expenditures 

may include: (1) Investment in research 

and development and in capital 

expenditures by CCW manufacturers in 

the years between the final rule and the 

compliance date for the new standards, 

and (2) incremental additional 

expenditures by consumers to purchase 

higher-efficiency CCWs, starting at the 

compliance date for the applicable 

standard. Therefore, the analytical 

requirements of UMRA do not apply. 

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 

Pursuant to Executive Order 12630, 

‘‘Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights’’ 53 FR 8859 (March 18, 1988), 

DOE has determined that this final rule 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

Section 515 of the Treasury and 

General Government Appropriations 

Act, 2001 (44 U.S.C. 3516, note) 

provides for Federal agencies to review 

most disseminations of information to 

the public under guidelines established 

by each agency pursuant to general 

guidelines issued by OMB. OMB’s 

guidelines were published at 67 FR 

8452 (Feb. 22, 2002), and DOE’s 

guidelines were published at 67 FR 

62446 (Oct. 7, 2002). DOE has reviewed 

this final rule 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 

significant energy action. A ‘‘significant 

energy action’’ is defined as any action 

by an agency that promulgates or is 

expected to lead to promulgation of a 

final rule, and that: (1) Is a significant 

regulatory action under Executive Order 

12866, or any successor order; and (2) 

is likely to have a significant adverse 

effect on the supply, distribution, or use 

of energy, or (3) is designated by the 

Administrator of OIRA as a significant 

energy action. For any 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 concluded that this 

regulatory action, which sets forth 

energy conservation standards for 

CCWs, is not a significant energy action 

because the amended 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 final 

rule. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

and Technology Policy (OSTP), issued 

its Final Information Quality Bulletin 

for Peer Review (the Bulletin). 70 FR 

2664 (Jan. 14, 2005). The Bulletin 

establishes that certain scientific 

information shall be peer reviewed by 

qualified specialists before it is 

disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemaking analyses are 

‘‘influential scientific information,’’ 

which the Bulletin defines as scientific 

information the agency reasonably can 

determine will have, or does have, a 

clear and substantial impact on 

important public policies or private 

sector decisions. 70 FR 2667. 

In response to OMB’s Bulletin, DOE 

conducted formal in-progress peer 

reviews of the energy conservation 

standards development process and 

analyses and has prepared a Peer 

Review Report pertaining to the energy 

conservation standards rulemaking 

analyses. Generation of this report 

involved a rigorous, formal, and 

documented evaluation using objective 

criteria and qualified and independent 

reviewers to make a judgment as to the 

technical/scientific/business merit, the 

actual or anticipated results, and the 

productivity and management 

effectiveness of programs and/or 

projects. The ‘‘Energy Conservation 

Standards Rulemaking Peer Review 

Report’’ dated February 2007 has been 

disseminated and is available at the 

following Web site: 

www1.eere.energy.gov/buildings/

appliance_standards/peer_review.html. 


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Federal Register / Vol. 79, No. 240 / Monday, December 15, 2014 / Rules and Regulations 74541 

M. Congressional Notification 

As required by 5 U.S.C. 801, DOE will 

report to Congress on the promulgation 

of this rule prior to its effective date. 

The report will state that it has been 

determined that the rule is a ‘‘major 

rule’’ as defined by 5 U.S.C. 804(2). 

VII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this final rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation, 

Reporting and recordkeeping 

requirements. 

Issued in Washington, DC, on December 5, 

2014. 

David T. Danielson, 

Assistant Secretary, Energy Efficiency and 

Renewable Energy. 

For the reasons set forth in the 

preamble, DOE amends part 431 of 

chapter II, subchapter D, of title 10 of 

the Code of Federal Regulations, as set 

forth below: 

PART 431—ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

■ 1. The authority citation for Part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291¥6317. 

■ 2. Section 431.156 is amended by 

revising paragraph (b) and adding 

paragraph (c) to read as follows: 

§ 431.156 Energy and water conservation 

standards and their effective dates. 

* * * * * 

(b) Each commercial clothes washer 

manufactured on or after January 8, 

2013, and before January 1, 2018, shall 

have a modified energy factor no less 

than and a water factor no greater than: 

Equipment class 

Modified energy factor 

(MEF), 

cu. ft./kWh/cycle 

Water factor (WF), 

gal./cu. ft./cycle 

Top-Loading ............................................................................................................................. 1.60 8.5 

Front-Loading ........................................................................................................................... 2.00 5.5 

(c) Each commercial clothes washer 

manufactured on or after January 1, 

2018 shall have a modified energy factor 

no less than and an integrated water 

factor no greater than: 

Equipment class 

Modified energy factor 

(MEFJ2), 

cu. ft./kWh/cycle 

Integrated water factor 

(IWF), 

gal./cu. ft./cycle 

Top-Loading ............................................................................................................................. 1.35 8.8 

Front-Loading ........................................................................................................................... 2.00 4.1 

[FR Doc. 2014–29197 Filed 12–12–14; 8:45 am] 

BILLING CODE 6450–01–P 


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