[Federal Register Volume 79, Number 240 (Monday, December 15, 2014)]
[Rules and Regulations]
[Pages 74492-74541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-29197]



[[Page 74491]]

Vol. 79

Monday,

No. 240

December 15, 2014

Part IV





Department of Energy





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10 CFR Part 431





Energy Conservation Program: Energy Conservation Standards for 
Commercial Clothes Washers; Final Rule

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

[[Page 74492]]


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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.

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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-STD-0020. 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: 
<a href="/cdn-cgi/l/email-protection#b7f5c5d2d9d3d699f2d3c0d6c5d3c4f7d2d299d3d8d299d0d8c1"><span class="__cf_email__" data-cfemail="d89aaabdb6bcb9f69dbcafb9aabcab98bdbdf6bcb7bdf6bfb7ae">[email protected]</span></a>.

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: 
<a href="/cdn-cgi/l/email-protection#c785b5bea6a9e985a2b5b5aea9a0a2b587a2a2e9a3a8a2e9a0a8b1"><span class="__cf_email__" data-cfemail="4200303b232c6c002730302b2c2527300227276c262d276c252d34">[email protected]</span></a>.
    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: 
<a href="/cdn-cgi/l/email-protection#450f2a2d242b2b246b0d24372c2d2437242b052d346b212a206b222a33"><span class="__cf_email__" data-cfemail="501a3f38313e3e317e18312239383122313e1038217e343f357e373f26">[email protected]</span></a>.

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

[[Page 74493]]

    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))
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    \1\ All 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).
    \2\ Part 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.
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    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 (MEF<INF>J2</INF>) \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.
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    \3\ DOE uses the ``MEF<INF>J2</INF>'' 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 MEF<INF>J2</INF> is calculated 
according to the test procedures at 10 CFR 430, subpart B, appendix 
J2.

 Table I.1--Energy Conservation Standards for Commercial Clothes Washers
                  [Compliance Starting January 1, 2018]
------------------------------------------------------------------------
                                                  Minimum      Maximum
                Equipment class                    MEFJ2*    IWF[dagger]
------------------------------------------------------------------------
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.
[dagger] 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.
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    \4\ The 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).

   Table I.2--Impacts of Amended Standards on Customers of Commercial
                Clothes Washers: Multi-Family Application
------------------------------------------------------------------------
                                                                Simple
                                                Average LCC    payback
                Equipment class                   savings       period
                                                  (2013$)      (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
------------------------------------------------------------------------
                                                                Simple
                                                Average LCC    payback
                Equipment class                   savings       period
                                                  (2013$)      (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\
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    \5\ All monetary values in this section are expressed in 2013 
dollars and are discounted to 2014.
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    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.
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    \6\ A quad is equal to 10\15\ British thermal units (Btu).
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    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 (CO<INF>2</INF>), 32.0

[[Page 74494]]

thousand tons of methane (CH<INF>4</INF>), 1.9 thousand tons of sulfur 
dioxide (SO<INF>2</INF>), 0.04 thousand tons of nitrous oxide 
(N<INF>2</INF>O), 9.1 thousand tons of nitrogen oxides (NO<INF>X</INF>) 
and 0.01 tons of mercury (Hg).\8\ The cumulative reduction in 
CO<INF>2</INF> 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.
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    \7\ A metric ton is equivalent to 1.1 short tons. Results for 
NO<INF>X</INF> and Hg are presented in short tons.
    \8\ DOE calculated emissions reductions relative to the Annual 
Energy Outlook 2014 (AEO 2014) Reference case, which generally 
represents current legislation and environmental regulations for 
which implementing regulations were available as of October 31, 
2013.
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    The value of the CO<INF>2</INF> reductions is calculated using a 
range of values per metric ton of CO<INF>2</INF> (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 CO<INF>2</INF> 
emissions reduction is between $29.1 and $410 million. DOE also 
estimates the present monetary value of the NO<INF>X</INF> emissions 
reduction is $6.1 million and $12.7 million at 7-percent and 3-percent 
discount rates, respectively.\10\
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    \9\ Technical Update of the Social Cost of Carbon for Regulatory 
Impact Analysis Under Executive Order 12866. Interagency Working 
Group on Social Cost of Carbon, United States Government. May 2013; 
revised November 2013. http://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf.
    \10\ DOE is currently investigating valuation of avoided Hg and 
SO<INF>2</INF> emissions.
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    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 *
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                                                                                Present value     Discount rate
                                  Category                                      million 2013$       (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 $2,684/ton) **............................                 6                 7
                                                                                            13                 3
Total Benefits [dagger].....................................................               382                 7
                                                                                           678                 3
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                                    Costs
----------------------------------------------------------------------------------------------------------------
Incremental Installed Costs.................................................              0.24                 7
                                                                                          0.46                 3
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                             Total Net Benefits
----------------------------------------------------------------------------------------------------------------
Including Emissions Reduction Monetized Value [dagger]......................               382                 7
                                                                                           677                 3
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* This table presents the costs and benefits associated with front-loading and top-loading CCW units shipped in
  2018-2047. These results include benefits to customers which accrue after 2047 from the equipment purchased in
  2018-2047. The results account for the incremental variable and fixed costs incurred by manufacturers due to
  the standard, some of which may be incurred in preparation for the rule.
** The CO2 values represent global monetized values of the SCC, in 2013$, 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.
[dagger] Total Benefits for both the 3% and 7% cases are derived using the series corresponding to average SCC
  with 3-percent discount rate.

    The benefits and costs of 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 CO<INF>2</INF> emission reductions.\11\
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    \11\ To convert the time-series of costs and benefits into 
annualized values, DOE calculated a present value in 2014, the year 
used for discounting the NPV of total consumer costs and savings. 
For the benefits, DOE calculated a present value associated with 
each year's shipments in the year in which the shipments occur 
(e.g., 2020 or 2030), and then discounted the present value from 
each year to 2014. The calculation uses discount rates of 3 and 7 
percent for all costs and benefits except for the value of 
CO<INF>2</INF> reductions, for which DOE used case-specific discount 
rates, as shown in Table I.3. Using the present value, DOE then 
calculated the fixed annual payment over a 30-year period, starting 
in the compliance year that yields the same present value.
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    Although combining the values of operating savings and 
CO<INF>2</INF> 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 CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO<INF>2</INF> savings are performed with different methods 
that use 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 
climate-related impacts resulting from the emission of one ton of 
carbon dioxide in each year. These impacts continue well beyond 2100.

[[Page 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 CO<INF>2</INF> 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 CO<INF>2</INF> reductions, and $0.60 million per 
year in reduced NO<INF>X</INF> 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 CO<INF>2</INF> reductions, and $0.71 
million per year in reduced NO<INF>X</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                                                      Low net        High net
                                             Discount  rate           Primary        benefits        benefits
                                                                    estimate *      estimate *      estimate *
----------------------------------------------------------------------------------------------------------------
                                                                                million 2013$/year
----------------------------------------------------------------------------------------------------------------
Benefits:
Operating Cost Savings................  7%......................              24              21              30
                                        3%......................              30              26              38
CO2 Reduction Monetized Value ($12.0/t  5%......................               2               2               3
 case) *.
CO2 Reduction Monetized Value ($40.5/t  3%......................               7               7               9
 case) *.
CO2 Reduction Monetized Value ($62.4/t  2.5%....................              11              10              13
 case) *.
CO2 Reduction Monetized Value ($119/t   3%......................              23              21              28
 case) *.
NOX Reduction Monetized Value (at       7%......................            0.60            0.55            0.71
 $2,684/ton) **.
                                        3%......................            0.71            0.64            0.86
    Total Benefits [dagger]...........  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 [dagger]....................  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.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
  average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
  the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
  to the full range of CO2 values.

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

[[Page 74496]]

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 performance-related 
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

[[Page 74497]]

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
------------------------------------------------------------------------
                                           Minimum MEF*       Maximum
             Equipment class                cu.ft/kWh/    WF[dagger] gal/
                                               cycle       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.
[dagger] 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) <SUP>12 13</SUP>
---------------------------------------------------------------------------

    \12\ A 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.
    \13\ Whirlpool 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 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.

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

[[Page 74498]]

    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 
performance-related feature justifies a different standard, DOE must 
consider such factors as the utility to the consumer of the feature and 
other factors DOE determines are appropriate. (42 U.S.C. 6295(q) and 
6316(a)) DOE creates product and equipment classes based on function or 
use and currently divides CCWs into two equipment classes: Top-loading 
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 front-loading 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 front-loading CCWs 
results in fewer possible ``turns'' per day compared to top-loading 
CCWs. The longer average time is significant in a laundromat or multi-
family 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.
---------------------------------------------------------------------------

    \14\ This 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.
---------------------------------------------------------------------------

    In addition, DOE's analysis in the March 2014 NOPR indicated that 
the technologies, designs, and operating characteristics of the max-
tech top-loading 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 top-loading 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 
up-front costs that anyone, including the consumer, laundromat owner, 
or manufacturer, may bear. DOE determines consumer utility on a case-
by-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

[[Page 74499]]

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 top-loading 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 top-loading 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 front-loading 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 multi-family 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, 
side-mounted, 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 top-loading 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)).

[[Page 74500]]



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    Appendix
                                                ----------------------------------------------------- -------------
                                                                      Equivalent                        Equivalent
                                                       MEF*             MEFJ2*          WF[dagger]     IWF[Dagger]
----------------------------------------------------------------------------------------------------- -------------
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.
[dagger] 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.
[Dagger] 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    Appendix
                                                ----------------------------------------------------- -------------
                                                                                        Equivalent
                                                  Equivalent MEF*       MEFJ2*          WF[dagger]     IWF[Dagger]
----------------------------------------------------------------------------------------------------- -------------
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.
[dagger] 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.
[Dagger] 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, MEF<INF>J2</INF> and IWF.
2. Energy Metric
    In the March 2014 NOPR, DOE proposed amended energy efficiency 
standards based on MEF as measured using appendix J2 
(``MEF<INF>J2</INF>''). 77 FR 12301, 12303, 12310 (Mar. 4, 2014). As 
defined in section 4.5 of appendix J2, MEF<INF>J2</INF> 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.
    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)
---------------------------------------------------------------------------

    \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.''
---------------------------------------------------------------------------

    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

[[Page 74501]]

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 top-loading 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 
push-to-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 end-user 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 
MEF<INF>J2</INF>, 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, Sec.  
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

[[Page 74502]]

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

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

    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 industry-wide 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.

[[Page 74503]]

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

    \17\ The 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.
---------------------------------------------------------------------------

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

    \18\ For 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/).
---------------------------------------------------------------------------

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

[[Page 74504]]

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 design-option approach. Using the efficiency-level 
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 design-option 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 front-loading 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 temperature-differentiated 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 
temperature-differentiated 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 
MEF<INF>J2</INF> 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 
MEF<INF>J2</INF>/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 top-loading 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Appendix J1 metrics             Appendix J2 metrics
                     Level                               Efficiency level source         ---------------------------------------------------------------
                                                                                                MEF             WF             MEFJ2            IWF
--------------------------------------------------------------------------------------------------------------------------------------------------------
Baseline.......................................  DOE Standard...........................            2.00             5.5            1.65             5.2
1..............................................  Consortium for Energy Efficiency (CEE)             2.20             4.5            1.80             4.5
                                                  Tier 2.
2..............................................  CEE Tier 3.............................            2.40             4.0            2.00             4.1

[[Page 74505]]

 
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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                Appendix J1 metrics             Appendix J2 metrics
                    Level                               Efficiency level source          ---------------------------------------------------------------
                                                                                                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

[[Page 74506]]

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 MEF<INF>J2</INF>) 
and EL2 (1.85 MEF/1.55 MEF<INF>J2</INF>) 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. higher-efficiency) 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 
MEF<INF>J2</INF> 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.
---------------------------------------------------------------------------

    \19\ See 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.
---------------------------------------------------------------------------

    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

[[Page 74507]]

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 MEF<INF>J2</INF>) can provide the same 
cleaning performance as CCWs available at EL1 (1.80 MEF<INF>J2</INF>). 
Within the sample of CCWs that DOE tested, the results at EL3 (2.20 
MEF<INF>J2</INF>) 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 multi-
family 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.
---------------------------------------------------------------------------

    \20\ U.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).
---------------------------------------------------------------------------

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

[[Page 74508]]

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 Multi-Housing 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\
---------------------------------------------------------------------------

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

    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 max-tech 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 water-heating energy use by first 
determining the total per-cycle energy use (the clothes container 
volume divided by the MEF<INF>J2</INF>) 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.
---------------------------------------------------------------------------

    \22\ The 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.
---------------------------------------------------------------------------

    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 residential-style 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.

[[Page 74509]]

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

    \23\ RS Means, RS Means Mechanical Cost Data, 36st Annual 
Edition. 2013.
---------------------------------------------------------------------------

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

    \24\ 2012 EIA Form 861, Annual Electric Power Industry Report, 
available at http://www.eia.gov/electricity/data/eia861/(last 
visited Nov. 20, 2014).
---------------------------------------------------------------------------

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

    \25\ EIA, Natural Gas Monthly 2012 Report, available at http://www.eia.gov/naturalgas/monthly/(last visited Nov. 20, 2014).
---------------------------------------------------------------------------

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

    \26\ DOE-EIA, Annual Energy Outlook 2014 with Projections to 
2040 (available at: http://www.eia.gov/forecasts/aeo/).
---------------------------------------------------------------------------

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

    \27\ Raftelis 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.
---------------------------------------------------------------------------

    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 near-term 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.
---------------------------------------------------------------------------

    \28\ U.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
---------------------------------------------------------------------------

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

[[Page 74510]]

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 more-
efficient 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.
---------------------------------------------------------------------------

    \29\ U.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
---------------------------------------------------------------------------

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 
multi-family 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 weighted-
average 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.
---------------------------------------------------------------------------

    \30\ Ibbotson Associates, Cost of Capital 2009 Yearbook. 2009. 
Ibbotson Associates: Chicago, IL
---------------------------------------------------------------------------

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

    \31\ See U.S. Environmental Protection Agency, ENERGY STAR 
Certified Commercial Clothes Washer Models, available at https://data.energystar.gov/Active-Specifications/ENERGY-STAR-Certified-Commercial-Clothes-Washers/9g6r-cpdt (last accessed Nov. 20, 2014).

                                        Table IV.3--Commercial Clothes Washers: Base Case Efficiency Distribution
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Top-loading                                                                 Front-loading
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Market                                              Market
                        Standard level                            MEFJ2         IWF         share       Standard      MEFJ2         IWF         share
                                                                                          (percent)      level                                (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
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 74511]]

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 top- and 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-        Used to calibrate shipments model to historical shipments data.
 replacements).                                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 multi-family housing 
(possibly due to conversions of rental property to condominiums), 
leading to non-replacement of failed CCWs in common-area 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).
---------------------------------------------------------------------------

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

    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

[[Page 74512]]

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 front-loading 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 cross-price impact (percent change in top-loading 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.
---------------------------------------------------------------------------

    \33\ See chapter 9 in Direct Final Rule Technical Support 
Document, available at http://www.regulations.gov/#!documentDetail;D=EERE-2008-BT-STD-0019-0047.
---------------------------------------------------------------------------

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

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

    DOE evaluated the impacts of potential amended standards for front-
loading and top-loading CCW by comparing base-case projections with 
standards-case projections. The base-case projections characterize 
energy use and customer costs for each equipment class in the absence 
of 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            A time series conversion factor; includes electric generation,
 conversion.                                   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 front-loading 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 shipment-weighted 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

[[Page 74513]]

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 front-loading 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.
---------------------------------------------------------------------------

    \35\ Office of Management and Budget, Circular A-4, section E 
(2003), available at http://www.whitehouse.gov/omb/circulars_a004_a-4.
---------------------------------------------------------------------------

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

[[Page 74514]]

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

    \36\ U.S. Small Business Administration, Small Business Size 
Standards, http://www.sba.gov/content/table-small-business-size-standards (last visited Nov. 21, 2014).
---------------------------------------------------------------------------

    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 base-case 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.

[[Page 74515]]

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 one-time 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 
un-depreciated 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.
---------------------------------------------------------------------------

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

    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

[[Page 74516]]

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 cost-competitive 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 CCW-specific 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 high-level 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 top-loading 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 top-loaders, manufacturers will be required to make all the 
major changes (as above-specified) 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 top-loader 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.

[[Page 74517]]

K. Emissions Analysis

    In the emissions analysis, DOE estimated the reduction in power 
sector emissions of carbon dioxide (CO<INF>2</INF>), nitrogen oxides 
(NO<INF>X</INF>), sulfur dioxide (SO<INF>2</INF>), 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 (CH<INF>4</INF>) and 
nitrous oxide (N<INF>2</INF>O), both of which are recognized as 
greenhouse gases.
---------------------------------------------------------------------------

    \38\ DOE's FFC was amended in 2012 for reasons unrelated to the 
inclusion of CH<INF>4</INF> and N<INF>2</INF>O. 77 FR 49701 (Aug. 
17, 2012).
---------------------------------------------------------------------------

    DOE primarily conducted the emissions analysis using emissions 
factors for CO<INF>2</INF> and most of the other gases derived from 
data in AEO 2014.\39\ Combustion emissions of CH<INF>4</INF> and 
N<INF>2</INF>O were estimated using emissions intensity factors 
published by the U.S. Environmental Protection Agency (EPA), GHG 
Emissions Factors Hub.\40\ Site emissions of CO<INF>2</INF> and 
NO<INF>X</INF> (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.
---------------------------------------------------------------------------

    \39\ DOE-EIA, Annual Energy Outlook 2014 with Projections to 
2040 (Available at: http://www.eia.gov/forecasts/aeo/).
    \40\ EPA, GHG Emissions Factors Hub, available at http://www.epa.gov/climateleadership/inventory/ghg-emissions.html (last 
visited Nov. 21, 2014).
    \41\ EPA, 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.
---------------------------------------------------------------------------

    For CH<INF>4</INF> and N<INF>2</INF>O, DOE calculated emissions 
reduction in tons and also in terms of units of carbon dioxide 
equivalent (CO<INF>2</INF>eq). Gases are converted to CO<INF>2</INF>eq 
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 CH<INF>4</INF> and 265 for N<INF>2</INF>O.
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

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

    \43\ Annual Energy Outlook 2014. Available at http://www.eia.gov/forecasts/aeo/index.cfm.
---------------------------------------------------------------------------

    SO<INF>2</INF> emissions from affected electric generating units 
(EGUs) are subject to nationwide and regional emissions cap-and-trade 
programs. Title IV of the Clean Air Act sets an annual emissions cap on 
SO<INF>2</INF> for affected EGUs in the 48 contiguous states and the 
District of Columbia (DC). (42 U.S.C. 7651 et seq.) SO<INF>2</INF> 
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\
---------------------------------------------------------------------------

    \44\ See North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008); 
North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008).
    \45\ See EME Homer City Generation, LP v. EPA, 696 F.3d 7, 38 
(D.C. Cir. 2012), cert. granted, 81 U.S.L.W. 3567, 81 U.S.L.W. 3696, 
81 U.S.L.W. 3702 (2013) (No. 12-1182).
    \46\ On April 29, 2014, the U.S. Supreme Court reversed the 
judgment of the DC Circuit and remanded the case for further 
proceedings consistent with the Supreme Court's opinion. The Supreme 
Court held in part that EPA's methodology for quantifying emissions 
that must be eliminated in certain states due to their impacts in 
other downwind states was based on a permissible, workable, and 
equitable interpretation of the Clean Air Act provision that 
provides statutory authority for CSAPR. See EPA v. EME Homer City 
Generation, No 12-1182, slip op. at 32 (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 SO<INF>2</INF> emissions.
---------------------------------------------------------------------------

    The attainment of emissions caps is typically flexible among EGUs 
and is enforced through the use of emissions allowances and tradable 
permits. Beginning in 2016, however, SO<INF>2</INF> 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 SO<INF>2</INF> (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, 
SO<INF>2</INF> 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 SO<INF>2</INF> emissions. Under the MATS, emissions will be far 
below the cap established by CAIR, so it is unlikely that excess 
SO<INF>2</INF> emissions allowances resulting from the lower 
electricity demand would be needed or used to permit offsetting 
increases in SO<INF>2</INF> emissions by any regulated EGU. Therefore, 
DOE believes that energy efficiency standards will reduce 
SO<INF>2</INF> emissions in 2016 and beyond.
    CAIR established a cap on NO<INF>X</INF> emissions in 28 eastern 
states and the District of Columbia.\47\ Energy conservation standards 
are expected to have little effect on NO<INF>X</INF> emissions in those 
states covered by CAIR because excess NO<INF>X</INF> emissions 
allowances resulting from the lower electricity demand could be used to 
permit offsetting increases in NO<INF>X</INF> emissions. However, 
standards would be expected to reduce NO<INF>X</INF> emissions in the 
states not affected by the caps, so DOE estimated NO<INF>X</INF> 
emissions reductions from the standards considered in the final rule 
for these states.
---------------------------------------------------------------------------

    \47\ CSAPR also applies to NO<INF>X</INF>, and it would 
supersede the regulation of NO<INF>X</INF> 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 NO<INF>X</INF> is slight.
---------------------------------------------------------------------------

    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 
CO<INF>2</INF> and NO<INF>X</INF> that are expected to result from each 
of the TSLs considered. In order to make this calculation similar to 
the calculation of

[[Page 74518]]

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

    \48\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use (2009).
---------------------------------------------------------------------------

    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 CO<INF>2</INF> emissions. The interagency group 
did not undertake any original analysis. Instead, it combined SCC 
estimates from the existing literature to use as interim values until a 
more comprehensive analysis could be conducted. The outcome of the 
preliminary assessment by the interagency group was a set of five 
interim values: global SCC estimates for 2007 (in 2006 dollars) of $55, 
$33, $19, $10, and $5 per metric ton of CO<INF>2</INF>. 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

[[Page 74519]]

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

    \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/sites/default/files/omb/inforeg/for-agencies/Social-Cost-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.

                      Table IV.6--Annual SCC Values from 2010 Interagency Report, 2010-2050
                                      [in 2007 dollars per metric ton CO2]
----------------------------------------------------------------------------------------------------------------
                                                                          Discount Rate %
                                                 ---------------------------------------------------------------
                                                         5               3              2.5              3
                      Year                       ---------------------------------------------------------------
                                                                                       95th
                                                      Average         Average       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.
---------------------------------------------------------------------------

    \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/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf (``The 2013 Report'').

                                          Table IV.7--Annual SCC Values from 2013 Interagency Update, 2010-2050
                                                          [in 2007 dollars per metric ton CO2]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Discount Rate %
                                                                 ----------------------------------------------------------------------------------------------
                                                                                                                                        3
                              Year                                                                               ----------------------------------------------
                                                                         5               3              2.5                                            95th
                                                                                                                      Average     Average  Average  Percentile
-------------------------------------------------------------------------------------------------------------------------------- ------------------------------
2010............................................................              11              32              51              89
2015............................................................              11              37              57             109
2020............................................................              12              43              64             128
2025............................................................              14              47              69             143
2030............................................................              16              52              75             159
2035............................................................              19              56              80             175
2040............................................................              21              61              86             191
2045............................................................              24              66              92             206
2050............................................................              26              71              97             220
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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 socio-
economic 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 peer-reviewed 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

[[Page 74520]]

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

    \52\ National Research Council, Hidden Costs of Energy: Unpriced 
Consequences of Energy Production and Use (2009).
---------------------------------------------------------------------------

    In summary, in considering the potential global benefits resulting 
from reduced CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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.
---------------------------------------------------------------------------

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

    (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.
---------------------------------------------------------------------------

    \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/Social-Cost-of-Carbon-for-RIA.pdf 
(``The 2010 Report'').
---------------------------------------------------------------------------

    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 CO<INF>2</INF> 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 NO<INF>X</INF> emissions 
nationwide and increase power sector NO<INF>X</INF> emissions in those 
22 States not affected by the CAIR. DOE estimated the monetized value 
of net NO<INF>X</INF> 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 NO<INF>X</INF> from stationary sources range from $476 to 
$4,893 per ton in 2013$.\55\ DOE calculated monetary benefits using a 
medium value for NO<INF>X</INF> emissions of $2,684 per short ton and 
real discount rates of 3 percent and 7 percent.
---------------------------------------------------------------------------

    \55\ U.S. Office of Management and Budget, Office of Information 
and Regulatory Affairs, 2006 Report to Congress on the Costs and 
Benefits of Federal Regulations and Unfunded Mandates on State, 
Local, and Tribal Entities (2006) (Available at: http://www.whitehouse.gov/sites/default/files/omb/assets/omb/inforeg/2006_cb/2006_cb_final_report.pdf).
---------------------------------------------------------------------------

    DOE is evaluating appropriate monetization of avoided 
SO<INF>2</INF> 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

[[Page 74521]]

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

    \56\ See Bureau of Economic Analysis, Regional Multipliers: A 
Handbook for the Regional Input-Output Modeling System (RIMS II) 
(1992).
---------------------------------------------------------------------------

    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 Input-Output'' (I-O) model, which was designed to estimate the 
national employment and income effects of energy-saving technologies. 
The ImSET software includes a computer-based I-O model having 
structural coefficients that characterize economic flows among 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 short-term 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 max-tech 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.


[[Page 74522]]

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 top-loading 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2013$
                                                         ---------------------------------------------------------------- Simple payback      Average
                TSL                   Efficiency level                     First year's      Lifetime                          years      lifetime years
                                                          Installed cost  operating cost  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
----------------------------------------------------------------------------------------------------------------
                                                                                      Life-cycle cost savings
                                                                                 -------------------------------
                                                                                  % of customers      Average
                               TSL                                  Efficiency         that          savings *
                                                                       level        experience   ---------------
                                                                                 ----------------
                                                                                     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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Efficiency level
                                   -------------------------------------------------------------------------------------- Simple payback      Average
                TSL                                                        First year's      Lifetime                          years      lifetime years
                                     Average costs 2013$  Installed cost  operating cost  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.


[[Page 74523]]


Table V.5--LCC Savings Relative to the Base Case Efficiency Distribution
   for Front-loading, Laundromat Application Commercial Clothes Washer
                                  Units
------------------------------------------------------------------------
                                              Life-cycle cost savings
                                         -------------------------------
                                           % of Cutomers      Average
           TSL              Efficiency         that          savings *
                               level        experience   ---------------
                                         ----------------
                                             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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2013$
                                                         ----------------------------------------------------------------
          TSL                    Efficiency level                          First year's      Lifetime                         Simple          Average
                                                          Installed cost     operating       operating          LCC        payback years  lifetime years
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         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
------------------------------------------------------------------------
                                              Life-cycle cost savings
                                         -------------------------------
                                          % of customers      Average
           TSL              Efficiency         that          savings *
                               level        experience   ---------------
                                         ----------------
                                             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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Average costs 2013$
                                                         ----------------------------------------------------------------
          TSL                    Efficiency level                          First year's      Lifetime                         Simple          Average
                                                          Installed cost     operating       operating          LCC        payback years  lifetime years
                                                                               cost            cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
                         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.


[[Page 74524]]


Table V.9--LCC Savings Relative to the Base Case Efficiency Distribution
 for Top-Loading, Laundromat Application Commercial Clothes Washer Units
------------------------------------------------------------------------
                                              Life-cycle cost savings
                                         -------------------------------
                                          % of customers      Average
           TSL              Efficiency         that          savings *
                               level        experience   ---------------
                                         ----------------
                                             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

[[Page 74525]]

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 cost-competitive 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
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                     Units        Base case  ---------------------------------------------------
                                                                   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.
\1\ Free 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
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                     Units        Base case  ---------------------------------------------------
                                                                   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.
\1\ Free 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 
base-case value of $8.9 million in the year before the compliance date 
(2017).
    TSL 1 represents an improvement in MEF<INF>J2</INF> (as determined 
using appendix J2) from the baseline level of 1.65 to 1.80 (ft\3\/kWh/
cycle) for front-loading equipment and an improvement in 
MEF<INF>J2</INF> from the baseline level of 1.15 to 1.35 (ft\3\/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 MEF<INF>J2</INF> (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 base-case value of $8.9 million in the year 
before the compliance date (2017).
    TSL 2 represents an improvement in MEF<INF>J2</INF> from the 
baseline level of 1.65 to 2.00 (ft\3\/kWh/cycle) for front-loading 
equipment and an improvement in MEF<INF>J2</INF> from the baseline 
level of 1.15 to 1.35 (ft\3\/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

[[Page 74526]]

for both front-loading and top-loading equipment. For front-loading 
equipment, the 2.0 MEF<INF>J2</INF> 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 MEF<INF>J2</INF> from the 
baseline level of 1.65 to 2.00 (ft\3\/kWh/cycle) for front-loading CCWs 
and an improvement in MEF<INF>J2</INF> from the baseline level of 1.15 
to 1.55 (ft\3\/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 (non-traditional) 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 top-loaders 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 top-loading 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 MEF<INF>J2</INF> from the 
baseline level of 1.65 to 2.20 (ft\3\/kWh/cycle) for front-loading CCWs 
and an improvement in MEF<INF>J2</INF> from the baseline level of 1.15 
to 1.55 (ft\3\/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 (non-
traditional) 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.
---------------------------------------------------------------------------

    \57\ The 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).
---------------------------------------------------------------------------

    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 working-supervisor 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.
---------------------------------------------------------------------------

    \58\ The 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.
---------------------------------------------------------------------------

    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

[[Page 74527]]

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 top-loaders. 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 standards-
compliant 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 more-
efficient 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 
front-loading washers at the proposed max-tech level (MEF<INF>J2</INF> 
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 three-
quarters of its CCW shipments. To shift all top-loading CCWs to front-
loading

[[Page 74528]]

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 
base-case 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 front-loading 
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..........  FL:EL2..........  FL:EL2.........  FL:EL3
                                            TL:EL1..........  TL:EL1..........  TL:EL2.........  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 
top-loading 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
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                 Equipment class                 ---------------------------------------------------------------
                                                         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
----------------------------------------------------------------------------------------------------------------


[[Page 74529]]


   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
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                 Equipment class                 ---------------------------------------------------------------
                                                         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.
---------------------------------------------------------------------------

    \59\ U.S. Office of Management and Budget, Circular A-4: 
Regulatory Analysis (2003), available at http://www.whitehouse.gov/omb/circulars_a004_a-4/.
    \60\ Section 325(m) of EPCA requires DOE to review its standards 
at least once every 6 years, and requires, for certain products, a 
3-year period after any new standard is promulgated before 
compliance is required, except that in no case may any new standards 
be required within 6 years of the compliance date of the previous 
standards. While adding a 6-year review to the 3-year compliance 
period adds up to 9 years, DOE notes that it may undertake reviews 
at any time within the 6 year period and that the 3-year compliance 
date may yield to the 6-year backstop. A 9-year analysis period may 
not be appropriate given the variability that occurs in the timing 
of standards reviews and the fact that for some consumer products, 
the compliance period is 5 years rather than 3 years.

Table V.18--Cumulative Primary Energy Savings for Front-Loading and Top-Loading Commercial Clothes Washers Trial
                                   Standard Levels for Units Sold in 2018-2026
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
                 Equipment class                 ---------------------------------------------------------------
                                                         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.
---------------------------------------------------------------------------

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

    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
----------------------------------------------------------------------------------------------------------------
                                                                       Trial standard level
         Equipment class           Discount rate ---------------------------------------------------------------
                                         %               1               2               3               4
----------------------------------------------------------------------------------------------------------------
                                  ..............                           billion 2013$
----------------------------------------------------------------------------------------------------------------
Front Loading CCW Units.........               3             0.0             0.1            -0.1            -0.3

[[Page 74530]]

 
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 nine-year 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[dagger]
----------------------------------------------------------------------------------------------------------------
                                                                             Trial standard level
                                                             ---------------------------------------------------
                                               Discount rate                                              4
               Equipment class                       %                                              ------------
                                                                   1            2            3         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
----------------------------------------------------------------------------------------------------------------
[dagger] Values in parentheses are negative values.

c. Indirect Impacts on Employment
    DOE expects energy conservation standards for front-loading and 
top-loading 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 front-loading 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.

[[Page 74531]]



    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 CO<INF>2</INF> 
and NO<INF>X</INF> 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 CO<INF>2</INF> emissions 
reductions at each TSL. For each of the four cases, DOE calculated a 
present value of the stream of annual values using the same discount 
rate as was used in the studies upon which the dollar-per-ton values 
are based. DOE calculated domestic values as a range from 7 percent to 
23 percent of the global values, and these results are presented in 
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
----------------------------------------------------------------------------------------------------------------
                                                                 SCC Case*
                         ---------------------------------------------------------------------------------------
                                                                                              3% discount rate,
           TSL              5% discount rate,     3% discount rate,    2.5% discount rate,    95th percentile*
                                average*              average*              average*       ---------------------
                                                                                                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

[[Page 74532]]

 
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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> and other GHG emissions. This 
ongoing review will consider the comments on this subject that are part 
of the public record for this and other rulemakings, as well as other 
methodological assumptions and issues. However, consistent with DOE's 
legal obligations, and taking into account the uncertainty involved 
with this particular issue, DOE has included in this 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 NO<INF>X</INF> 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 
seven-percent 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
------------------------------------------------------------------------
                                                            7% discount
                                            3% discount        rate
                   TSL                         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
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 CO<INF>2</INF> 
and NO<INF>X</INF> 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 CO<INF>2</INF> 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
----------------------------------------------------------------------------------------------------------------
                                                           Customer NPV at 3% Discount Rate added with:
                                                 ---------------------------------------------------------------
                       TSL                        SCC Case $12.0/ SCC Case $40.5/ SCC Case $62.4/ SCC Case $119/
                                                     t and NOX       t and NOX       t and NOX       t and NOX
                                                   medium value*   medium value*   medium value*   medium value*
----------------------------------------------------------------------------------------------------------------
                                                  Billion 2013$
----------------------------------------------------------------------------------------------------------------
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

[[Page 74533]]

 
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 CO<INF>2</INF> 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 CO<INF>2</INF> 
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 max-
tech level was not justified, DOE then considered the next most 
efficient level and undertook the same evaluation until it reached the 
highest efficiency level that is 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 front-loading 
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

[[Page 74534]]

 
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..................................           (6.4)           (6.6)          (67.5)          (99.6)
(2013$ million) [dagger]........................
Change in INPV..................................          (5.2%)          (5.3%)         (54.6%)         (80.7%)
(%) [dagger]....................................
----------------------------------------------------------------------------------------------------------------
Customer Mean LCC Savings 2013$
----------------------------------------------------------------------------------------------------------------
Front-Loading, Multi-family [dagger]............           221.4           271.9           271.9           (2.7)
Front-Loading, Laundromat [dagger]..............           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.
[dagger] 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 CO<INF>2</INF>, 14.54 thousand tons of NO<INF>X</INF>, 
4.26 thousand tons of SO<INF>2</INF>, 49.29 thousand tons of 
CH<INF>4</INF>, 0.08 thousand tons of N<INF>2</INF>O, and 0.01 tons of 
Hg (see Table V.25). The estimated monetary value of the CO<INF>2</INF> 
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 multi-family 
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

[[Page 74535]]

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 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 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 CO<INF>2</INF>, 16.60 thousand tons of NO<INF>X</INF>, 
4.29 thousand tons of SO<INF>2</INF>, 57.17 thousand tons of 
CH<INF>4</INF>, 0.08 thousand tons of N<INF>2</INF>O, and 0.01 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> 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 top-loading CCW units, the average LCC savings are 
$807 and $622 for multi-family and laundromat applications, 
respectively. The simple PBP is close to zero years for both 
applications of front-loading 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 
front-loading 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 top-loading 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 top-loading units and upgrades to front-loading 
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 top-loading 
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 top-loading units.
    In view of the foregoing, DOE concludes that, at TSL 3 for front-
loading and top-loading CCW equipment, the benefits of energy

[[Page 74536]]

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 CO<INF>2</INF>, 9.10 thousand tons of NO<INF>X</INF>, 
1.88 thousand tons of SO<INF>2</INF>, 32.05 thousand tons of 
CH<INF>4</INF>, 0.04 thousand tons of N<INF>2</INF>O, and 0.01 tons of 
Hg. The estimated monetary value of the CO<INF>2</INF> 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 top-loading CCW units, the average LCC savings are 
$294 and $166 for multi-family 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 front-loading 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 reverse-engineering 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 front-loading 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 top-loading 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
------------------------------------------------------------------------
                                                            Maximum IWF
             Equipment class              Minimum MEFJ2*     [dagger]
------------------------------------------------------------------------
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.
[dagger] 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 
CO<INF>2</INF> emission reductions.\62\
---------------------------------------------------------------------------

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

    Although combining the values of operating savings and 
CO<INF>2</INF> 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 CO<INF>2</INF> reductions is 
based on a global value. Second, the assessments of operating cost 
savings and CO<INF>2</INF> savings are performed with different methods 
that use 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

[[Page 74537]]

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 CO<INF>2</INF> 
reductions, and $0.60 million in reduced NO<INF>X</INF> 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 CO<INF>2</INF> reductions, and $0.71 million in reduced 
NO<INF>X</INF> emissions. In this case, the net benefit would amount to 
approximately $38 million per year.
---------------------------------------------------------------------------

    \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).

   Table V.28--Annualized Benefits and Costs of Amended Standards for Front-Loading and Top-Loading Commercial
                                             Clothes Washers (TSL 2)
----------------------------------------------------------------------------------------------------------------
                                                                                                     High net
                                   Discount rate (%)    Primary estimate *    Low net benefits       benefits
                                                                                 Estimate *         estimate *
----------------------------------------------------------------------------------------------------------------
                                                                           million 2013$/year
----------------------------------------------------------------------------------------------------------------
Benefits:
    Operating Cost Savings......  7..................  24.................  21.................  30.
                                  3..................  30.................  26.................  38.
    CO2 Reduction Monetized       5..................  2..................  2..................  3.
     Value ($12.0/t case) *.
    CO2 Reduction Monetized       3..................  7..................  7..................  9.
     Value ($40.5/t case) *.
    CO2 Reduction Monetized       2.5................  11.................  10.................  13.
     Value ($62.4/t case) *.
    CO2 Reduction Monetized       3..................  23.................  21.................  28.
     Value ($119/t case) *.
    NOX Reduction Monetized       7..................  0.60...............  0.55...............  0.71.
     Value (at $2,684/ton) **.
                                  3..................  0.71...............  0.64...............  0.86.
                                 -------------------------------------------------------------------------------
        Total Benefits [dagger].  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 [dagger]..............  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.
[dagger] Total Benefits for both the 3-percent and 7-percent cases are derived using the series corresponding to
  average SCC with 3-percent discount rate. In the rows labeled ``7% plus CO2 range'' and ``3% plus CO2 range,''
  the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added
  to the full range of CO2 values.


[[Page 74538]]

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

    \64\ The size standards are listed by NAICS code and industry 
description and are available at http://www.sba.gov/sites/default/files/files/Size_Standards_Table.pdf.
---------------------------------------------------------------------------

    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 front-loading 
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

[[Page 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

[[Page 74540]]

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.

[[Page 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

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

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

0
2. Section 431.156 is amended by revising paragraph (b) and adding 
paragraph (c) to read as follows:


Sec.  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:

 
----------------------------------------------------------------------------------------------------------------
                                                                 Modified energy factor
                        Equipment class                           (MEF), cu. ft./kWh/    Water factor (WF), gal./
                                                                         cycle                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:

 
----------------------------------------------------------------------------------------------------------------
                                                                 Modified energy factor  Integrated water factor
                        Equipment class                          (MEFJ2),  cu. ft./kWh/   (IWF),  gal./cu. ft./
                                                                         cycle                    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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