26020 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

DEPARTMENT OF ENERGY 

10 CFR Part 431 

[Docket No. EERE–2006–STD–0125] 

RIN 1904–AB58 

Energy Conservation Program: Energy 

Conservation Standards for 

Refrigerated Bottled or Canned 

Beverage Vending Machines 

AGENCY: Office of Energy Efficiency and 

Renewable Energy, U.S. Department of 

Energy. 

ACTION: Notice of proposed rulemaking 

and notice of public meeting. 

SUMMARY: The Energy Policy and 

Conservation Act prescribes energy 

conservation standards for certain 

commercial and industrial equipment 

and requires the U.S. Department of 

Energy (DOE) to administer an energy 

conservation program for this 

equipment. In this notice, DOE is 

proposing new energy conservation 

standards for refrigerated bottled or 

canned beverage vending machines. 

DOE is also announcing a public 

meeting on its proposed standards. 

DATES: DOE will hold a public meeting 

on Wednesday, June 17, 2009 from 9 

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

must receive requests to speak at the 

public meeting no later than 4 p.m. 

Wednesday, June 3, 2009. DOE must 

receive a signed original and an 

electronic copy of statements to be given 

at the public meeting no later than 4 

p.m. Wednesday, June 10, 2009. 

DOE will accept comments, data, and 

information regarding the notice of 

proposed rulemaking (NOPR) before and 

after the public meeting, but no later 

than July 28, 2009. See section VII, 

‘‘Public Participation,’’ of this NOPR for 

details. Hada Flowers 

ADDRESSES: The public meeting will be 

held at the U.S. Department of Energy, 

Forrestal Building, Room 8E–089, 1000 

Independence Avenue, SW., 

Washington, DC 20585–0121. Please 

note that foreign nationals visiting DOE 

Headquarters are subject to advance 

security screening procedures, requiring 

a 30-day advance notice. If you are a 

foreign national and wish to participate 

in the public meeting, please inform 

DOE as soon as possible by contacting 

Ms. Brenda Edwards at (202) 586–2945 

so that the necessary procedures can be 

completed. 

Any comments submitted must 

identify the NOPR for beverage vending 

machines, and provide docket number 

EERE–2006–STD–0125 and/or RIN 

number 1904–AB58. Comments may be 

submitted using any of the following 

methods: 

• Federal eRulemaking Portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

• E-mail: beveragevending.

rulemaking@ee.doe.gov. Include docket 

number EERE–2006–STD–0125 and/or 

RIN 1904–AB58 in the subject line of 

the message. 

• Postal Mail: Ms. Brenda Edwards, 

U.S. Department of Energy, Building 

Technologies Program, Mailstop EE–2J, 

1000 Independence Avenue, SW., 

Washington, DC 20585–0121. 

Telephone: (202) 586–2945. Please 

submit one signed original paper copy. 

• Hand Delivery/Courier: Ms. Brenda 

Edwards, U.S. Department of Energy, 

Building Technologies Program, 950 

L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024. Please submit 

one signed original paper copy. 

For detailed instructions on 

submitting comments and additional 

information on the rulemaking process, 

see section VII, ‘‘Public Participation,’’ 

of this document. 

Docket: For access to the docket to 

read background documents or 

comments received, visit the U.S. 

Department of Energy, Resource Room 

of the Building Technologies Program, 

950 L’Enfant Plaza, SW., 6th Floor, 

Washington, DC 20024, (202) 586–2945, 

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

through Friday, except Federal holidays. 

Please call Ms. Brenda Edwards at the 

above telephone number for additional 

information regarding visiting the 

Resource Room. Please note: DOE’s 

Freedom of Information Reading Room 

(Room 1E–190 at the Forrestal Building) 

no longer houses rulemaking materials. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Charles Llenza, U.S. Department of 

Energy, Building Technologies Program, 

EE–2J, 1000 Independence Avenue, 

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

586–2192, Charles.Llenza@ee.doe.gov or 

Ms. Francine Pinto, Esq., U.S. 

Department of Energy, Office of General 

Counsel, GC–72, 1000 Independence 

Avenue, SW., Washington, DC 20585– 

0121, (202) 586–9507, 

Francine.Pinto@hq.doe.gov. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Proposed Rule 

II. Introduction 

A. Overview 

B. Authority 

C. Background 

1. History of Standards Rulemaking for 

Beverage Vending Machines 

2. Miscellaneous Rulemaking Issues 

III. General Discussion 

A. Test Procedures 

B. Technological Feasibility 

1. General 

2. Maximum Technologically Feasible 

Levels 

C. Energy Savings 

1. Determination of Savings 

2. Significance of Savings 

D. Economic Justification 

1. Specific Criteria 

2. Rebuttable Presumption 

IV. Methodology and Discussion of 

Comments 

A. Market and Technology Assessment 

1. Definition of Beverage Vending Machine 

2. Equipment Classes 

B. Engineering Analysis 

1. Approach 

2. Equipment Analyzed in the Engineering 

Analysis 

3. Analytical Models 

4. Engineering Analysis Results 

C. Markups to Determine Equipment Price 

D. Energy Use Characterization 

E. Life-Cycle Cost and Payback Period 

Analyses 

1. Manufacturer Selling Price 

2. Increase in Selling Price 

3. Markups 

4. Installation Costs 

5. Energy Consumption 

6. Electricity Prices 

7. Electricity Price Trends 

8. Repair Costs 

9. Maintenance Costs 

10. Lifetime 

11. Discount Rate 

12. Payback Period 

F. Shipments Analysis 

G. National Impact Analysis 

1. Base Case and Standards Case 

Forecasted Efficiencies 

2. Annual Energy Consumption, Total 

Installed Cost, Maintenance Cost, and 

Repair Costs 

3. Escalation of Electricity Prices 

4. Electricity Site-to-Source Conversion 

H. Life-Cycle Cost Subgroup Analysis 

I. Manufacturer Impact Analysis 

1. Overview 

2. Discussion of Comments 

3. Government Regulatory Impact Model 

Analysis 

4. Manufacturer Interviews 

5. Government Regulatory Impact Model 

Key Inputs and Scenarios 

J. Utility Impact Analysis 

K. Employment Impact Analysis 

L. Environmental Assessment 

M. Monetizing Carbon Dioxide and Other 

Emissions Impacts 

V. Analytical Results 

A. Trial Standard Levels 

B. Economic Impacts on Commercial 

Customers 

1. Economic Impacts on Commercial 

Customers 

2. Economic Impacts on Manufacturers 

3. National Impact Analysis 

4. Impact on Utility or Performance of 

Equipment 

5. Impact of Any Lessening of Competition 

6. Need of the Nation to Conserve Energy 

7. Other Factors 

C. Proposed Standard 

1. Class A Equipment 

2. Class B Equipment 

VI. Procedural Issues and Regulatory Review 

A. Review Under Executive Order 12866 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26021 

1This provision was redesignated by EISA, 

section 316(d)(1), as 42 U.S.C. 6295(v)(3). 

2Additionally, the standards would result in 

emissions reductions for nitrogen oxides (NOX) or 

generate a similar amount of NOX emissions 

allowance credits in areas where such emissions are 

subject to regulatory or voluntary emissions caps. 

3 DOE intends to use EIA’s AEO2009 to generate 

the results for the final rule. The AEO2009 Early 

Release contains reference case energy price 

forecasts, which shows higher commercial 

electricity prices at the national level compared 

with the AEO2008 on a real (inflation adjusted) 

basis. If these early release energy prices remain 

unchanged in the final release, then incorporation 

of the AEO2008 forecasts would likely result in 

reduced payback periods, greater life-cycle cost 

savings, and greater national net present value for 

the proposed standards. 

B. Review Under the Regulatory Flexibility 

Act/Initial Regulatory Flexibility 

Analysis 

1. Reasons for the Proposed Rule 

2. Objectives of and Legal Basis for the 

Proposed Rule 

3. Description and Estimated Number of 

Small Entities Regulated 

4. Description and Estimate of Compliance 

Requirements 

5. Duplication, Overlap, and Conflict with 

Other Rules and Regulations 

6. Significant Alternatives to the Rule 

C. Review Under the Paperwork Reduction 

Act 

D. Review Under the National 

Environmental Policy Act 

E. Review Under Executive Order 13132 

F. Review Under Executive Order 12988 

G. Review Under the Unfunded Mandates 

Reform Act of 1995 

H. Review Under the Treasury and General 

Government Appropriations Act, 1999 

I. Review Under Executive Order 12630 

J. Review Under the Treasury and General 

Government Appropriations Act, 2001 

K. Review Under Executive Order 13211 

L. Review Under the Information Quality 

Bulletin for Peer Review 

VII. Public Participation 

A. Attendance at Public Meeting 

B. Procedure for Submitting Requests to 

Speak 

C. Conduct of Public Meeting 

D. Submission of Comments 

VIII. Approval of the Office of the Secretary 

I. Summary of the Proposed Rule 

The Energy Policy and Conservation 

Act (EPCA), as amended, specifies that 

any new or amended energy 

conservation standard the U.S. 

Department of Energy (DOE) prescribes 

for the equipment covered by this notice 

shall be designed to ‘‘achieve the 

maximum improvement in energy 

efficiency * * * which the Secretary 

determines is technologically feasible 

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

6295(o)(2)(A), and (v)) Further, the new 

or amended standard must ‘‘result in 

significant conservation of energy.’’ (42 

U.S.C. 6295(o)(3)(B) and (v)) In 

accordance with these and other 

statutory criteria discussed in this 

notice, DOE proposes to adopt new 

energy conservation standards for 

refrigerated bottled or canned beverage 

vending machines, hereafter referred to 

as ‘‘beverage vending machines.’’ The 

proposed standards, shown in Table I– 

1, would apply to all beverage vending 

machines manufactured 3 years after 

publication of the final rule establishing 

the energy conservation standards and 

offered for sale in the United States. (42 

U.S.C. 6295(v)(4))1

TABLE I–1—PROPOSED STANDARD

LEVELS

Equipment 

class* 

Proposed standard level** 

Maximum Daily Energy 

Consumption (MDEC) 

kWh/day 

A 0.055 × V + 2.56†

B 0.073 × V + 3.16††

* See section IV.A.2 of this notice for a discussion of equipment classes. 

** ‘‘V’’ is the refrigerated volume (ft3) of the 

refrigerated bottled or canned beverage vending machine, as measured by the American 

National Standards Institute (ANSI)/Association of Home Appliance Manufacturers 

(AHAM) HRF–1–2004, ‘‘Energy, Performance 

and Capacity of Household Refrigerators, Refrigerator-Freezers and Freezers.’’ † Trial Standard Level (TSL) 6. 

†† TSL 3. 

DOE’s analyses indicate that the 

proposed energy conservation 

standards, trial standard level (TSL) 6 

for Class A equipment and TSL 3 for 

Class B equipment would save a 

significant amount of energy—an 

estimated 0.098 quadrillion British 

thermal units (Btu), or quads, of 

cumulative energy over 30 years (2012 

to 2042). See section V.A for a detailed 

description of TSLs. The economic 

impacts on commercial customers (i.e., 

the average life-cycle cost (LCC) savings) 

are positive for both equipment classes. 

The cumulative national net present 

value (NPV) of the proposed standards 

from 2012 to 2042 ranges from $0.105 

billion (at a 7-percent discount rate) to 

$0.273 billion (at a 3-percent discount 

rate) in 2008$. This is the estimated 

total value of future operating cost 

savings minus the estimated increased 

equipment costs, discounted to 2008$. 

The benefits and costs of the standards 

can also be expressed in terms of 

annualized 2008$ values over the 

forecast period 2012 through 2042. 

Using a 7-percent discount rate for the 

annualized cost analysis, the cost of the 

standards is estimated to be $11.1 

million per year in increased equipment 

and installation costs, while the 

annualized benefits are expected to be 

$20.5 million per year in reduced 

equipment operating costs. Using a 3- 

percent discount rate, the annualized 

cost of the standards is expected to be 

$9.4 million per year, while the 

annualized benefits of the standards are 

expected to be $21.4 million per year. 

(See section V.B.3 for additional 

details.) If DOE adopts the proposed 

standards, it expects manufacturers will 

lose 22.9 to 25.3 percent of the industry 

net present value (INPV), which is 

approximately $13.2 to $14.6 million. 

DOE estimates that the proposed 

standards will have environmental 

benefits leading to reductions in 

greenhouse gas emissions (i.e., 

cumulative (undiscounted) emission 

reductions) of 5.14 million tons (Mt) of 

carbon dioxide (CO2) from 2012 to 

2042.2 Most of the energy saved is 

electricity. In addition, DOE expects the 

energy savings from the proposed 

standards to eliminate the need for 

approximately 46 megawatts (MW) of 

electric generating capacity by 2042. 

These results reflect DOE’s use of energy 

price projections from the U.S. Energy 

Information Administration (EIA)’s 

Annual Energy Outlook 2009 

(AEO2009).3 DOE also estimated that 

the net present value benefits of the 

proposed standards from reducing CO2

emissions would range from $0 to $49.6 

million using a 7-percent discount rate 

and $0 to $96.4 million using a 3- 

percent discount rate, although the 

method for developing these estimates 

is now under review. The net present 

value benefits of the proposed standards 

from reducing oxides of nitrogen (NOX) 

emissions would range from $109,000 to 

$1.13 million using a 7-percent discount 

rate and from $187,000 to $1.93 million 

using a 3-percent discount rate. Finally, 

the net present value benefits of the 

proposed standards from reducing Hg 

emissions would range from $0 to $1.0 

million using a 7-percent discount rate 

and $0 to $1.73 million using a 3- 

percent discount rate. 

DOE proposes that the standards in 

today’s NOPR for Class A and Class B 

beverage vending machines represent 

the maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. DOE 

proposes that the benefits to the Nation 

of the proposed standards (energy 

savings, commercial customer average 

LCC savings, national NPV increase, and 

emission reductions) outweigh the costs 

(loss of manufacturer INPV). 

Furthermore, DOE proposes that the 

proposed standards are technologically 

feasible because the technologies 

required to achieve these levels already 

exist. 

DOE requests comment and further 

data or information on whether the 

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26022 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

4Because of their placement into 10 CFR 431, 

beverage vending machines will be referred to as 

‘‘equipment’’ throughout this notice. 

energy savings and related benefits of 

TSL 6 outweigh the costs, including 

potential manufacturer impacts. DOE 

seeks comment on the magnitude of the 

estimated decline in INPV at TSL 6, and 

what impact this level could have on 

industry parties, including small 

businesses. DOE is particularly 

interested in receiving comments, 

views, and further data or information 

from interested parties concerning: (1) 

Why the private market has not been 

able to capture the energy benefits 

proposed in TSL 6; (2) whether and to 

what extent parties estimate they will be 

able to transfer costs of implementing 

TSL 6 on to consumers; (3) whether and 

to what extent parties estimate 

distributional chain intermediaries 

(such as wholesalers or bottlers) will be 

able to absorb TSL 6 implementation 

costs and in turn transfer these costs to 

on-site consumers, who ultimately 

benefit from the energy gains associated 

with the proposed standard. 

II. Introduction 

A. Overview 

DOE proposes to set energy 

conservation standards for beverage 

vending machines at the levels shown 

in Table I–1. The proposed standards 

would apply to equipment 

manufactured 3 years after publication 

of the final rule establishing the energy 

conservation standards and offered for 

sale in the United States. DOE has 

tentatively found that the standards 

would save a significant amount of 

energy (see section III.C.2) and result in 

a cleaner environment. In the 30-year 

period after the new standards become 

effective, the Nation would tentatively 

save 0.098 quads (sum of 0.088 quads 

for Class A machines and 0.010 quads 

for Class B machines) of primary energy. 

These energy savings also would 

tentatively result in significantly 

reduced emissions of air pollutants and 

greenhouse gases associated with 

electricity production by avoiding the 

emission of 5.14 Mt of CO2, up to 0.69 

kt of NOX, and up to 0.085 tons of Hg. 

In addition, DOE expects the standards 

to prevent the construction of 0.046 new 

1,000 MW power plants by 2042. In 

total, DOE tentatively estimates the total 

net present value to the Nation of these 

standards to be $0.105 billion (sum of a 

positive net present value of $0.105 

billion for Class A machines and zero 

[less than $0.5 million] for Class B 

machines) from 2012 to 2042 in 2008$. 

Commercial customers would see 

benefits from the proposed standards. 

Although DOE expects the installed cost 

of the higher efficiency beverage 

vending machine to be approximately 

4.8 percent higher than the average 

price of machines available today, when 

weighted by shipments across 

equipment classes, the energy efficiency 

gains would result in lower energy 

costs, saving customers about 19.8 

percent per year on their energy bills. 

Based on DOE’s LCC analysis for 

equipment with known shipments, DOE 

tentatively estimates that the mean 

payback period for higher efficiency 

beverage vending machines would be 

between 3.8 and 6.0 years depending on 

equipment class. In addition, when the 

net results of these equipment price 

increases and energy cost savings are 

summed over the lifetime of the higher 

efficiency equipment, customers could 

save approximately $49 to $316 

(depending on equipment class) 

compared to their expenditures on 

today’s baseline beverage vending 

machine. 

B. Authority 

Title III of EPCA sets forth a variety 

of provisions designed to improve 

energy efficiency. Part A of Title III (42 

U.S.C. 6291–6309) provides for the 

Energy Conservation Program for 

Consumer Products Other Than 

Automobiles. The amendments to EPCA 

contained in the Energy Policy Act of 

2005 (EPACT 2005), Public Law 109–58, 

include new or amended energy 

conservation standards and test 

procedures for some of these products, 

and direct DOE to undertake 

rulemakings to promulgate such 

requirements. In particular, section 

135(c)(4) of EPACT 2005 amends EPCA 

to direct DOE to prescribe energy 

conservation standards for beverage 

vending machines. (42 U.S.C. 6295(v)) 

Because of its placement in Part A of 

Title III of EPCA, the rulemaking for 

beverage vending machine energy 

conservation standards is bound by the 

requirements of 42 U.S.C. 6295. 

However, since beverage vending 

machines are commercial equipment, 

DOE intends to place the new 

requirements for beverage vending 

machines in Title 10 of the Code of 

Federal Regulations (CFR), Part 431 

(‘‘Energy Efficiency Program for Certain 

Commercial and Industrial 

Equipment’’), which is consistent with 

DOE’s previous action to incorporate the 

EPACT 2005 requirements for 

commercial equipment. The location of 

the provisions within the CFR does not 

affect either their substance or 

applicable procedure, so DOE is placing 

them in the appropriate CFR part based 

on their nature or type and will refer to 

beverage vending machines as 

‘‘equipment’’ throughout the notice.4

The test procedures for beverage 

vending machines appear at Title 10 

CFR 431.293 and 431.294. 

EPCA provides criteria for prescribing 

new or amended standards for covered 

equipment. As indicated above, any 

new or amended standard for beverage 

vending machines 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 (v)) But EPCA 

precludes DOE from adopting any 

standard that would not result in 

significant conservation of energy. (42 

U.S.C. 6295(o)(3) and (v)) Moreover, 

DOE may not prescribe a standard for 

certain equipment if no test procedure 

has been established for that equipment. 

(42 U.S.C. 6295(o)(3) and (v)) EPCA also 

provides that, in deciding whether a 

standard is economically justified, DOE 

must determine whether the benefits of 

the standard exceed its burdens after 

receiving comments on the proposed 

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

(v)) To the greatest extent practicable, 

DOE must consider 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, or in 

the initial charges for, or maintenance 

expenses of, the equipment likely to result 

from the imposition of the standard; 

3. The total projected amount of energy 

savings likely to result directly from the 

imposition of the standard; 

4. Any lessening of the utility or the 

performance of the covered 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 

conservation; and 

7. Other factors the Secretary considers 

relevant. 

Id. 

Further, the Secretary may not 

prescribe an amended or new standard 

if interested parties have established by 

a preponderance of the evidence that 

the standard is likely to result in the 

unavailability in the United States of 

any equipment type (or class) with 

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 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26023 

5The relevant statutory provisions were 

renumbered pursuant to section 316 of the Energy 

Independence and Security Act of 2007, Public Law 

110–140. 

6This definition reads as follows: 

‘‘(9)(A) The term ‘commercial refrigerator, freezer, 

and refrigerator-freezer’ means refrigeration 

equipment that— 

(i) Is not a consumer product (as defined in 

section 321 [of EPCA; 42 U.S.C. 6291(1)]); 

(ii) Is not designed and marketed exclusively for 

medical, scientific, or research purposes; 

(iii) Operates at a chilled, frozen, combination 

chilled and frozen, or variable temperature; 

(iv) Displays or stores merchandise and other 

perishable materials horizontally, semivertically, or 

vertically; 

(v) Has transparent or solid doors, sliding or 

hinged doors, a combination of hinged, sliding, 

transparent, or solid doors, or no doors; 

(vi) Is designed for pull-down temperature 

applications or holding temperature applications; 

and 

(vii) Is connected to a self-contained condensing 

unit or to a remote condensing unit.’’ 

(42 U.S.C. 6311(9)(A)) 

7See http://www1.eere.energy.gov/buildings/ 

appliance_standards/commercial/beverage_

machines_tsd.html. 

8A notation in the form ‘‘Dixie-Narco, No. 36 at 

p. 3’’ identifies a written comment that DOE has 

received and has included in the docket of this 

rulemaking. This particular notation refers to (1) A 

comment submitted by Dixie-Narco, (2) in 

document number 36 in the docket of this 

rulemaking, and (3) appearing on page 3 of 

document number 36. 

(v)) In addition, EPCA, as amended (42 

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

establishes a rebuttable presumption 

that any standard for covered products 

is economically justified if the Secretary 

finds that ‘‘the additional cost to the 

consumer of purchasing a product 

complying with an energy conservation 

standard level will be less than three 

times the value of the energy (and as 

applicable, water) savings during the 

first year that the consumer will receive 

as a result of the standard,’’ as 

calculated under the test procedure in 

place for that standard. See section 

III.D.2. 

C. Background 

1. History of Standards Rulemaking for 

Beverage Vending Machines 

On August 8, 2005, section 135(c)(4) 

of EPACT 2005 amended section 325 of 

EPCA, in part, to direct DOE to issue 

energy conservation standards for the 

equipment covered by this rulemaking, 

which would apply to equipment 

manufactured 3 years after publication 

of the final rule establishing the energy 

conservation standards. (42 U.S.C. 

6295(v)(1), (2) and (3) 5) The energy use 

of this equipment has never been 

regulated at the Federal level. 

Section 135(a)(3) of EPACT 2005 also 

amended section 321 of EPCA, in part, 

by adding definitions for terms relevant 

to this equipment. (42 U.S.C. 6291(40)) 

EPCA defines ‘‘refrigerated bottled or 

canned beverage vending machine’’ as 

‘‘a commercial refrigerator that cools 

bottled or canned beverages and 

dispenses the bottled or canned 

beverages on payment.’’ (42 U.S.C. 

6291(40)) Section 136(a)(3) of EPACT 

2005 amended section 340 of EPCA in 

part by adding a definition for 

‘‘commercial refrigerator, freezer, and 

refrigerator-freezer.’’ 6

During the course of this rulemaking, 

Congress passed the Energy 

Independence Security Act of 2007 

(EISA 2007), which the President signed 

on December 19, 2007 (Pub. L. 110– 

140). Section 310(3) of EISA 2007 

amended section 325 of EPCA in part by 

adding subsection 325(gg) (42 U.S.C. 

6295(gg)). This subsection requires any 

new or amended energy conservation 

standards adopted after July 1, 2010, to 

incorporate ‘‘standby mode and off 

mode energy use.’’ (42 U.S.C. 

6295(gg)(3)(A)) Because any standards 

associated with this rulemaking are 

required by August 2009, the energy use 

calculations will not include ‘‘standby 

mode and off mode energy use.’’ To 

include standby mode and off mode 

energy use requirements for this 

rulemaking would take considerable 

analytical effort and would likely 

require changes to the test procedure. 

Given the statutory deadline, DOE has 

decided to address this requirement 

when the energy conservation standards 

for beverage vending machines are 

reviewed in August 2015. At that time, 

DOE will consider the need for possible 

amendment in accordance with 42 

U.S.C. 6295(m). 

As an initial step to comply with 

EPCA’s mandate to issue standards for 

beverage vending machines and to 

commence this rulemaking, on June 28, 

2006, DOE published a notice of a 

public meeting and of the availability of 

its framework document for this 

rulemaking. 71 FR 36715. The 

framework document described the 

procedural and analytical approaches 

that DOE anticipated using to evaluate 

energy conservation standards for 

beverage vending machines and 

identified various issues to be resolved 

in conducting the rulemaking. DOE held 

a public meeting on July 11, 2006, to 

present the contents of the framework 

document, describe the analyses it 

planned to conduct during the 

rulemaking, obtain public comment on 

these subjects, and inform and facilitate 

interested parties’ involvement in the 

rulemaking. DOE also gave interested 

parties an opportunity after the public 

meeting to submit written statements in 

response to the framework document. 

On June 16, 2008, DOE published an 

advance notice of proposed rulemaking 

(ANOPR) concerning energy 

conservation standards for beverage 

vending machines. 72 FR 34094. In the 

ANOPR, DOE described and sought 

comment on its proposed equipment 

classes for this rulemaking and on the 

analytical framework, models, and tools 

(e.g., LCC and national energy savings 

(NES) spreadsheets) that DOE used to 

analyze the impacts of energy 

conservation standards for beverage 

vending machines. In conjunction with 

the ANOPR, DOE also published on its 

Web site the complete ANOPR technical 

support document (TSD),7 which 

included the results of DOE’s 

preliminary (1) Engineering analysis, (2) 

markups analysis to determine 

equipment price, (3) energy use 

characterization, (4) LCC and payback 

period (PBP) analyses, (5) NES and 

national impact analyses (NIA), and (6) 

manufacturer impact analysis (MIA). In 

the ANOPR, DOE requested comment 

on these results and on a range of other 

issues including equipment classes, 

operating hours of compressors and 

lighting, refurbishment cycles, LCC 

baseline levels, base and standards case 

forecasts, differential impacts of new 

standards on future shipments by 

equipment class, selection of candidate 

standard levels, and the approach to 

characterizing energy conservation 

standards for beverage vending 

machines. 

DOE held a public meeting in 

Washington, DC, on June 26, 2008, to 

present the methodology and results of 

the ANOPR analyses and solicit oral and 

written comments. Public comments 

focused on DOE’s assumptions and 

approach and are addressed in detail in 

this NOPR. 

2. Miscellaneous Rulemaking Issues 

a. Consensus Agreement 

After the ANOPR, Dixie-Narco stated 

that it would like the National 

Automatic Merchandising Association 

(NAMA) to facilitate and submit a 

consensus recommendation on behalf of 

the industry no later than December 15, 

2008. Dixie-Narco stated that it would 

also like the new standards to take effect 

no later than January 1, 2010. (DixieNarco, No. 36 at p. 3) 8

DOE supports efforts by interested 

parties to work together to develop and 

present to DOE recommendations on 

equipment categories and standard 

levels. Such recommendations are 

welcome throughout the standards 

rulemaking process. However, DOE did 

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26024 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

9A notation in the form ‘‘NPCC, Public Meeting 

Transcript, No. 29 at p. 83’’ identifies an oral 

comment that DOE received during the June 26, 

2008, ANOPR Public Meeting. This comment was 

recorded in the public meeting transcript in the 

docket for this rulemaking (Docket No. EERE–2006– 

STD–0125). This particular notation refers to a 

comment (1) Made during the public meeting by 

NPCC; (2) recorded in document number 29, which 

is the public meeting transcript filed in the docket 

of this rulemaking; and (3) appearing on page 83 of 

document number 29. 

10Beverage vending machines are not one of the 

specified equipment for which EPCA allows a 

standard to consist of a design requirement. (42 

U.S.C. 6291(6)(B), 6292(a)) 

not receive any consensus 

recommendations before publication of 

this NOPR. While DOE still encourages 

a consensus recommendation and will 

attempt to incorporate it into this 

rulemaking, any recommendation 

submitted to DOE during the NOPR 

comment period will be considered as a 

public comment. 

b. Design Requirements 

At the ANOPR public meeting, the 

Northwest Power and Conservation 

Council (NPCC) stated that under EISA, 

the Federal Government can regulate 

more than one characteristic of 

equipment, perhaps as a performance 

standard as well as a prescriptive 

standard. (NPCC, Public Meeting 

Transcript, No. 29 at p. 83) 9

EPCA provides that an ‘‘energy 

conservation standard’’ must be either 

(A) ‘‘a * * * level of energy efficiency’’ 

or ‘‘a * * * maximum quantity of 

energy use,’’ or (B) for certain specified 

equipment, ‘‘a design requirement.’’ (42 

U.S.C. 6291(6)) Thus, an ‘‘energy 

conservation standard’’ cannot consist 

of both a design requirement and a level 

of efficiency or energy use. Id.10

Moreover, item (A) above indicates that 

a single energy conservation standard 

cannot have measures of both energy 

efficiency and energy use. Furthermore, 

EPCA specifically requires DOE to base 

its test procedure for this equipment on 

American National Standards Institute 

(ANSI)/American Society of Heating, 

Refrigerating and Air-Conditioning 

Engineers (ASHRAE) Standard 32.1– 

2004, ‘‘Methods of Testing for Rating 

Vending Machines for Bottled, Canned 

or Other Sealed Beverages.’’ (42 U.S.C. 

6293(b)(15)) The test methods in ANSI/ 

ASHRAE Standard 32.1–2004 consist of 

means to measure energy consumption, 

not energy efficiency. 

For the reasons stated above, DOE 

does not intend to develop efficiency 

standards or design requirements for 

this equipment. Instead, DOE intends to 

develop standards for maximum levels 

of energy use for beverage vending 

machines, and manufacturers could 

meet these standards with their own 

design methods. 

c. Combination Vending Machines 

Combination vending machines have 

a refrigerated volume for the purpose of 

cooling and vending ‘‘beverages in a 

sealed container,’’ and are therefore 

covered by this rule. However, beverage 

vending is not their sole function. 

Combination machines also have nonrefrigerated volumes for the purpose of 

vending other, non-‘‘sealed beverage’’ 

merchandise. In the ANOPR, DOE 

addressed several comments from 

interested parties regarding combination 

vending machines. Specifically, these 

parties were concerned that regulating 

vending machines that contain both 

refrigerated and non-refrigerated 

products could result in confusion 

about what this rulemaking covers, or 

could result in manufacturers taking 

advantage of loopholes to produce 

equipment that does not meet the 

standards. In response, DOE stated that 

that the language used in EPCA to 

define beverage vending machines is 

broad enough to include any vending 

machine, including a combination 

machine, as long as some portion of that 

machine cools bottled or canned 

beverages and dispenses them upon 

payment. (42 U.S.C. 6291(40)) DOE 

interprets this language to cover any 

vending machine that can dispense at 

least one type of refrigerated bottled or 

canned beverage, regardless of the other 

types of vended products (some of 

which may not be refrigerated). 73 FR 

34105–06. 

III. General Discussion 

A. Test Procedures 

On December 8, 2006, DOE published 

a final rule in the Federal Register that 

incorporated by reference ANSI/ 

ASHRAE Standard 32.1–2004, with two 

modifications, as the DOE test 

procedure for this equipment. (71 FR 

71340, 71375; 10 CFR 431.294) The first 

modification specified that in section 

6.2, Voltage and Frequency, equipment 

with dual nameplate voltages must be 

tested at the lower of the two voltages 

only. 71 FR 71340, 71355 The second 

modification specified that (1) any 

measurement of ‘‘vendible capacity’’ of 

refrigerated bottled or canned beverage 

vending machines must be in 

accordance with the second paragraph 

of section 5 of ANSI/ASHRAE Standard 

32.1–2004, Vending Machine Capacity; 

and (2) any measurement of 

‘‘refrigerated volume’’ of refrigerated 

bottled or canned beverage vending 

machines must be in accordance with 

the methodology specified in section 

5.2, Total Refrigerated Volume 

(excluding subsections 5.2.2.2 through 

5.2.2.4) of ANSI/Association of Home 

Appliance Manufacturers (AHAM) 

HRF–1–2004, ‘‘Energy, Performance and 

Capacity of Household Refrigerators, 

Refrigerator-Freezers and Freezers.’’ Id. 

B. Technological Feasibility 

1. General 

DOE considers design options 

technologically feasible if they exist in 

the marketplace or if research has 

progressed to the development of a 

working prototype. ‘‘Technologies 

incorporated in commercially available 

equipment or in working prototypes 

will be considered technologically 

feasible.’’ 10 CFR part 430, subpart C, 

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

In each standards rulemaking, DOE 

conducts a screening analysis based on 

information it has gathered regarding all 

current technology options and 

prototype designs. In consultation with 

interested parties, DOE develops a list of 

design options for consideration in the 

rulemaking. All technologically feasible 

design options are candidates in this 

initial assessment. Early in the process, 

DOE eliminates from consideration any 

design option (a) that is not 

technologically feasible; (b) that is not 

practicable to manufacture, install, or 

service; (c) that will have adverse 

impacts on equipment utility or 

availability; or (d) for which there are 

health or safety concerns that cannot be 

resolved. Chapter 4 of the TSD 

accompanying this notice contains a 

description of the screening analysis for 

this rulemaking. 

In the ANOPR, DOE eliminated seven 

of the technologies considered in the 

market and technology assessment. 

Higher efficiency evaporator and 

condenser fan blades, low-pressure 

differential evaporators, and defrost 

mechanisms were eliminated because 

they are not expected to improve energy 

efficiency. (73 FR 34108–09) 

Thermoacoustic refrigeration, magnetic 

refrigeration, electro-hydrodynamic heat 

exchangers, and copper rotor motors 

were eliminated because they are in the 

research stage. Therefore, they would 

not be practicable to manufacture, 

install, or service on the scale necessary 

to serve the relevant market at the time 

of the effective date of the standard. 

Because these technologies are in the 

research stage, there are also no working 

prototypes that allow DOE to assess 

whether they would have any adverse 

impacts on utility to significant 

subgroups of customers, result in the 

unavailability of any types of 

equipment, or present any significant 

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adverse impacts on health or safety. (73 

FR 34109) DOE believes that all the 

efficiency levels discussed in today’s 

notice are technologically feasible 

because there is equipment on the 

market or there are working prototypes 

at all of the efficiency levels analyzed. 

Chapter 4 of the TSD includes a 

discussion of the technological 

feasibility of the design options 

considered in the screening analysis. 

2. Maximum Technologically Feasible 

Levels 

In considering whether to adopt new 

standards for a type or class of beverage 

vending machines, DOE 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) and 

(v)) If the standards are not designed to 

achieve such efficiency or use, the 

Secretary shall state the reasons for this 

in the proposed rule. Id. The values in 

Table III–1 represent the energy use 

levels that would achieve the maximum 

reductions in energy use that are 

technologically feasible at this time for 

beverage vending machines. DOE 

identified these maximum 

technologically feasible (‘‘max-tech’’) 

levels for the equipment classes 

analyzed as part of the engineering 

analysis (chapter 5 of the TSD). For both 

equipment classes, DOE applied the 

most efficient design options available 

for energy-consuming components. 

TABLE III–1—MAX-TECH ENERGY USE

LEVELS

Equipment class Max-tech level 

kWh/day 

A MDEC = 0.045 × V + 2.42 

B MDEC = 0.068 × V + 2.63 

‘‘V’’ is the refrigerated volume of the refrigerated bottled or canned beverage vending 

machine, as measured by ANSI/AHAM HRF– 

1–2004, ‘‘Energy, Performance and Capacity 

of Household Refrigerators, RefrigeratorFreezers and Freezers.’’ 

C. Energy Savings 

1. Determination of Savings 

DOE used the NES spreadsheet to 

estimate energy savings. The 

spreadsheet forecasts energy savings 

over the period of analysis for TSLs 

relative to the base case. DOE quantified 

the energy savings attributable to an 

energy conservation standard as the 

difference in energy consumption 

between the trial standards case and the 

base case. The base case represents the 

forecast of energy consumption in the 

absence of new mandatory efficiency 

standards. The NES spreadsheet model 

is described in section IV.G of this 

notice and in chapter 11 of the TSD 

accompanying this notice. 

The NES spreadsheet model 

calculates the energy savings in site 

energy or kilowatt hours (kWh). Site 

energy is the energy directly consumed 

at building sites by beverage vending 

machines. DOE expresses national 

energy savings in terms of the source 

energy savings, which are the energy 

savings used to generate and transmit 

the energy consumed at the site. Chapter 

11 of the TSD contains a table of factors 

used to convert kWh to Btu. DOE 

derives these conversion factors, which 

change with time, from EIA’s AEO2009. 

2. Significance of Savings 

EPCA prohibits DOE from adopting a 

standard that would not result in 

significant additional energy savings. 

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

the term ‘‘significant’’ is not defined in 

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

Natural Resources Defense Council v. 

Herrington, 768 F.2d 1355, 1373 (D.C. 

Cir. 1985), indicated that Congress 

intended significant energy savings to 

be savings that were not ‘‘genuinely 

trivial.’’ The estimated energy savings 

for the trial standard levels considered 

in this rulemaking range from 0.001 to 

0.107 quadrillion Btu (quads); therefore, 

DOE considers them significant within 

the meaning of section 325 of the Act. 

D. Economic Justification 

1. Specific Criteria 

As noted earlier, EPCA provides 

seven factors to be evaluated in 

determining whether an energy 

conservation standard is economically 

justified. The following sections discuss 

how DOE has addressed each factor thus 

far in this rulemaking. (42 U.S.C. 

6295(o)(2)(B)(i) and (v)) 

a. Economic Impact on Manufacturers 

and Commercial Customers 

DOE uses an annual cash-flow 

approach in determining the 

quantitative impacts of a new or 

amended standard on manufacturers. 

This includes both a short-term 

assessment based on the cost and capital 

requirements between the 

announcement of a regulation and when 

the regulation comes into effect, and a 

long-term assessment. Impacts analyzed 

include INPV, cash flows by year, and 

changes in revenue and income. Next, 

DOE analyzes and reports the impacts 

on different types of manufacturers, 

paying particular attention to impacts 

on small manufacturers. DOE then 

considers the impact of standards on 

domestic manufacturer employment, 

manufacturing capacity, plant closures, 

and loss of capital investment. Finally, 

DOE takes into account the cumulative 

impact of regulations on manufacturers. 

For a more detailed discussion of the 

MIA, see chapter 13 of the TSD. 

For customers, measures of economic 

impact are generally the changes in 

installed price and annual operating 

costs (i.e., the LCC). Chapter 8 of the 

TSD presents the LCC of the equipment 

at each TSL. The LCC is one of the 

seven factors to be considered in 

determining the economic justification 

for a new or amended standard. (42 

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

b. Life-Cycle Costs 

The LCC is the total customer expense 

for a piece of equipment over the life of 

the equipment (i.e., purchase price plus 

maintenance and operating costs). The 

LCC analysis compares the life-cycle 

costs of equipment designed to meet 

new or amended energy conservation 

standards with the life-cycle cost of the 

equipment likely to be installed in the 

absence of such standards. DOE 

determines these costs by considering 

(1) total installed price to the purchaser 

(including manufacturer selling price 

(MSP), sales taxes, distribution channel 

markups as shown in Table IV–3, and 

installation cost), (2) the operating 

expenses of the equipment (energy cost 

and maintenance and repair cost), (3) 

equipment lifetime, and (4) a discount 

rate that reflects the real cost of capital 

and puts the LCC in present value 

terms. 

Recognizing that each type of 

commercial customer who uses a 

beverage vending machine is unique, 

DOE analyzed variability and 

uncertainty by performing the LCC and 

PBP calculations for seven types of 

businesses. Six of these typically 

purchase and install beverage vending 

machines in their buildings: office/ 

healthcare (including a large number of 

firms engaged in financial and other 

services, medical and dental offices, and 

nursing homes); retail (including all 

types of retail stores and food and 

beverage service facilities); schools 

(including colleges, universities and 

large groups of housing facilities owned 

by State governments, such as prisons); 

manufacturing facilities and military 

bases (typically large utility customers 

that pay industrial rates for their 

electricity consumption); and ‘‘other’’ 

(including warehouses, hotels/motels, 

and assembly buildings). The seventh 

business type, which is the most 

common purchaser of the equipment, is 

a local bottler or vending machine 

operator that typically has the machine 

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26026 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

11 http://www.eia.doe.gov/oiaf/aeo/overview. 

12EIA approves use of the name NEMS to 

describe only an AEO version of the model without 

any modification to code or data. Because the 

present analysis entails some minor code 

modifications and runs the model under various 

policy scenarios that deviate from AEO 

assumptions, the name NEMS–BT refers to the 

model used here. For more information on NEMS, 

refer to The National Energy Modeling System: An 

Overview 1998. DOE/EIA–0581 (98), February 1998. 

BT is DOE’s Building Technologies Program. 

NEMS–BT was formerly called NEMS–BRS. 

installed in one of the other six business 

types, provides vending services, and 

splits the coin box receipts through a 

contractual arrangement with the site 

owner. For a more detailed discussion 

of the LCC analysis, see chapter 8 of the 

TSD. 

c. Energy Savings 

While significant energy conservation 

is a separate statutory requirement for 

imposing an energy conservation 

standard, EPCA requires DOE to 

consider the total projected energy 

savings that are expected to result 

directly from the standard in 

determining the economic justification 

of such a standard. (42 U.S.C. 6295(o) 

(2)(B)(i)(III), and (3), and (v)) DOE used 

the NES spreadsheet results in its 

consideration of total projected savings. 

Section IV.G.1 of this notice discusses 

the savings figures. 

d. Lessening of Utility or Performance of 

Equipment 

In establishing equipment classes, 

evaluating design options, and assessing 

the impact of potential standard levels, 

DOE tried to avoid having new 

standards for beverage vending 

machines lessen the utility or 

performance of the equipment under 

consideration in this rulemaking. (42 

U.S.C. 6295(o)(2)(B)(i)(IV) and (v)) None 

of the proposed trial standard levels 

considered in this rulemaking involves 

changes in equipment design or unusual 

installation requirements that would 

reduce the utility or performance of the 

equipment. See chapter 4 and chapter 

16 of the TSD for more detail. 

e. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition likely to result 

from standards. It directs the Attorney 

General to determine in writing the 

impact, if any, of any lessening of 

competition likely to result from 

imposition of a proposed standard. (42 

U.S.C. 6295(o)(2)(B)(i)(V) and (ii), and 

(v)) DOE has transmitted a written 

request to the Attorney General 

soliciting a written determination on 

this issue. 

f. Need of the Nation To Conserve 

Energy 

The non-monetary benefits of the 

proposed standards are likely to be 

reflected in improvements to the 

security and reliability of the Nation’s 

energy system, and in reduced reliance 

on foreign sources of energy. Reductions 

in the overall demand for energy will 

reduce the Nation’s reliance on foreign 

sources of energy and increase 

reliability of the Nation’s electricity 

system. DOE conducted a utility impact 

analysis to show the reduction in 

installed generation capacity. Reduced 

power demand (including peak power 

demand) generally improves the 

security and reliability of the energy 

system. 

The proposed standards are likely to 

result in improvements to the 

environment. In quantifying these 

improvements, DOE has defined a range 

of primary energy conversion factors 

and associated emission reductions 

based on the generation that energy 

conservation standards displaced. DOE 

reports the environmental effects from 

each trial standard level for this 

equipment in the draft environmental 

assessment in chapter 16 of the TSD. (42 

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

g. Other Factors 

EPCA allows the Secretary of Energy, 

in determining whether a standard is 

economically justified, to consider any 

other factors the Secretary deems to be 

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

and (v)) Under this provision, DOE 

considered LCC impacts on identifiable 

groups of customers, such as customers 

of different business types who may be 

disproportionately affected by any 

national energy conservation standard. 

In particular, DOE examined the LCC 

impact on small businesses (i.e., those 

with low annual income) that may not 

be able to afford a significant increase in 

the purchase price (‘‘first cost’’) of 

beverage vending machines. Some of 

these customers may retain equipment 

past its useful life. Large increases in 

first cost also could preclude the 

purchase and use of equipment 

altogether. 

2. Rebuttable Presumption 

Section 325(o)(2)(B)(iii) of EPCA 

states that there is a rebuttable 

presumption that an energy 

conservation standard is economically 

justified if the additional cost to the 

consumer of a product that meets the 

standard level is less than three times 

the value of the first-year energy (and, 

as applicable, water) savings resulting 

from the standard, as calculated under 

the applicable DOE test procedure. (42 

U.S.C. 6295(o)(2)(B)(iii)) DOE’s LCC and 

PBP analyses generate values that 

indicate the cost-effectiveness of 

products meeting potential energy 

conservation standards. These values 

include, but are not limited to, the 3- 

year payback period contemplated 

under the rebuttable presumption test 

discussed above. (See chapter 8 of the 

TSD that accompanies this notice.) 

However, DOE routinely conducts a full 

economic analysis that considers the 

full range of impacts, including those to 

the consumer, manufacturer, Nation, 

and environment, as required under 42 

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

this full analysis serve as the basis for 

DOE to definitively determine the 

economic justification for a potential 

standard level (thereby supporting or 

rebutting the results of any preliminary 

determination of economic 

justification). 

IV. Methodology and Discussion of 

Comments 

DOE used two spreadsheet tools to 

determine the impact of energy 

conservation standards on the Nation. 

The first spreadsheet calculates LCCs 

and PBPs of potential new energy 

conservation standards. The second 

spreadsheet provides shipments 

forecasts and then calculates NES and 

NPV impacts of potential new energy 

conservation standards. DOE also 

assessed manufacturer impacts, largely 

through use of the Government 

Regulatory Impact Model (GRIM). 

Additionally, DOE estimated the 

impacts that energy conservation 

standards for beverage vending 

machines have on utilities and the 

environment. DOE used a version of 

EIA’s National Energy Modeling System 

(NEMS) for the utility and 

environmental analyses. The NEMS 

model simulates the energy economy of 

the United States and has been 

developed over several years by EIA 

primarily to prepare the Annual Energy 

Outlook (AEO). NEMS produces a 

widely known baseline forecast for the 

Nation through 2025 and is available on 

the DOE Web site.11 The version of 

NEMS used for efficiency standards 

analysis is called NEMS–BT12 and is 

based on the AEO2008 version with 

minor modifications. NEMS offers a 

sophisticated picture of the effect of 

standards, since it measures the 

interactions between the various energy 

supply and demand sectors and the 

economy as a whole. 

A. Market and Technology Assessment 

When beginning an energy 

conservation standards rulemaking, 

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DOE develops information that provides 

an overall picture of the market for the 

equipment concerned, including the 

purpose of the equipment, the industry 

structure, and market characteristics. 

This activity includes both quantitative 

and qualitative assessments based 

primarily on publicly available 

information. The subjects addressed in 

the market and technology assessment 

for this rulemaking include equipment 

classes, manufacturers, quantities, and 

types of equipment sold and offered for 

sale; retail market trends; and regulatory 

and non-regulatory programs. See 

chapter 3 of the TSD for further 

discussion of the market and technology 

assessment. 

1. Definition of Beverage Vending 

Machine 

EPCA defines the term ‘‘refrigerated 

bottled or canned beverage vending 

machine’’ as ‘‘a commercial refrigerator 

that cools bottled or canned beverages 

and dispenses the bottled or canned 

beverages on payment.’’ (42 U.S.C. 

6291(40)) Thus, coverage of equipment 

under EPCA as a beverage vending 

machine in part depends on whether it 

cools and dispenses ‘‘bottled beverages’’ 

and/or ‘‘canned beverages.’’ Based on 

comments on the framework document, 

DOE tentatively decided to consider a 

broader definition for the terms 

‘‘bottled’’ and ‘‘canned’’ as they apply to 

beverage vending machines. Such a 

definition would avoid unnecessary 

complications regarding the material 

composition of the container and 

eliminate the need to determine 

whether a particular container is a bottle 

or a can. A bottle or can in this context 

refers to ‘‘a sealed container for 

beverages,’’ so a bottled or canned 

beverage is ‘‘a beverage in a sealed 

container.’’ In the ANOPR, DOE sought 

comment on this broader definition and 

on whether it is consistent with the 

intent of EPCA. DOE did not receive any 

comments on this definition. Therefore, 

DOE is proposing to define a bottled or 

canned beverage as ‘‘a beverage in a 

sealed container.’’ 

2. Equipment Classes 

When evaluating and establishing 

energy conservation standards, DOE 

generally divides covered equipment 

into equipment classes by the type of 

energy used, capacity, or other 

performance-related features that affect 

efficiency and factors such as the utility 

of such feature(s). (42 U.S.C. 6295(q)) 

DOE routinely establishes different 

energy conservation standards for 

different equipment classes based on 

these criteria. 

Certain characteristics of beverage 

vending machines have the potential to 

affect their energy use and efficiency. 

Accordingly, these characteristics could 

be the basis for separate equipment 

classes for these machines. DOE 

determined that the most significant 

criterion affecting beverage vending 

machine energy use is the method used 

to cool beverages. DOE divided covered 

equipment into two equipment classes, 

Class A and Class B. DOE defines these 

terms as follows: 

• Class A means a refrigerated bottled 

or canned beverage vending machine 

that is fully cooled. 

• Class B means any refrigerated 

bottled or canned beverage vending 

machine not considered to be Class A. 

The Class A beverage vending 

machine equipment class comprises 

machines that cool product throughout 

the entire refrigerated volume. Class A 

machines generally use ‘‘shelf-style’’ 

vending mechanisms and a transparent 

(glass or polymer) front. Because the 

next-to-be-vended product is visible to 

the customer and any product can be 

selected by the customer off the shelf, 

all bottled or canned beverage 

containers are necessarily enclosed 

within the refrigerated volume. 

In Class B beverage vending 

machines, cold, refrigerated air is 

directed at a fraction (or zone) of the 

refrigerated volume. This cooling 

method is used to assure that the nextto-be-vended product will be the coolest 

product in the machine. These 

machines typically have an opaque front 

and use a ‘‘stack-style’’ vending 

mechanism. 

B. Engineering Analysis 

The engineering analysis develops 

cost-efficiency relationships to show the 

manufacturing costs of achieving 

increased efficiency. DOE has identified 

the following three methodologies to 

generate the manufacturing costs 

needed for the engineering analysis: (1) 

The design-option approach, which 

calculates the incremental costs of 

adding design options to a baseline 

model that will improve its efficiency; 

(2) the efficiency-level approach, which 

provides the relative costs of achieving 

increases in energy efficiency levels 

without regard to the particular design 

options used to achieve such increases; 

and (3) the cost-assessment (or reverse 

engineering) approach, which provides 

‘‘bottom-up’’ manufacturing cost 

assessments for achieving various levels 

of increased efficiency based on detailed 

cost data for parts and material, labor, 

shipping/packaging, and investment for 

models that operate at particular 

efficiency levels. 

1. Approach 

In this rulemaking, DOE is adopting a 

design-option approach, which 

calculates the incremental costs of 

adding specific design options to a 

baseline model. DOE decided on this 

approach after receiving no response to 

its ANOPR request for the manufacturer 

data needed to execute an efficiencylevel, approach-based analysis. The 

design-option approach allows DOE to 

make its engineering analysis 

methodologies, assumptions, and results 

publicly available, allowing advocates, 

manufacturers, and other interested 

parties the opportunity to review and 

comment on this information. Using the 

design-option approach, cost-efficiency 

relationship estimates are based on 

manufacturer or component supplier 

data or derived from engineering 

computer simulation models. Chapter 5 

of the TSD contains a detailed 

description of the equipment classes 

analyzed and analytical models used to 

conduct the beverage vending machine 

engineering analysis based on the 

design-option approach. 

2. Equipment Analyzed in the 

Engineering Analysis 

DOE analyzed three beverage vending 

machines of different sizes for both 

equipment classes to assess how energy 

use varies with size. DOE chose a small, 

medium, and large machine for Class A 

and Class B beverage vending machines, 

based on current market offerings. See 

chapter 3 of the TSD for a detailed 

description of the Class A and Class B 

equipment classes. 

In the ANOPR, DOE responded to 

several comments and presented a 

detailed discussion of its equipment 

class selection methodology. 73 FR 

34103. For the NOPR, DOE increased 

the physical case dimensions based on 

a reevaluation of equipment currently 

on the market, even though the 

equipment classification methodology 

has not changed since the ANOPR. The 

case dimension increases affected the 

engineering parameters that are a 

function of case dimension, including 

wall area, vendible capacity, and 

refrigerated volume. The changes to 

refrigerated volume and assumed 

vendible capacity are summarized in 

Table IV–1. All changes are described in 

detail in chapter 5 of the TSD. 

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13See http://www.eere.energy.gov/buildings/ 

appliance_standards/commercial/ 

refrigeration_equipment.html for further detail on 

and validation of the commercial refrigeration 

equipment cost model. 

14EPA is phasing out the production and 

importation of certain HCFC refrigerants (i.e., 

HCFC–142b and HCFC–22) in new equipment in 

the United States by January 1, 2010. EPA is 

phasing out the production and importation of all 

HCFC refrigerants in new equipment in the United 

States by January 1, 2015. (42 U.S.C. 7671(d)) 

TABLE IV–1—CONFIGURATIONS OF THE BEVERAGE VENDING MACHINES ANALYZED

Class A Class B 

Small Medium Large Small Medium Large 

Vendible Capacity number of cans .......... 300 400 500 450 650 800 

Refrigerated Volume ft3 ........................... 17 22 34 17 22 26 

3. Analytical Models 

DOE’s design-option-based 

engineering analysis relies on four 

analytical models to develop the 

relationship between cost and increased 

efficiency: the cost model, baseline 

model, design-options analysis, and 

energy consumption model. The cost 

model estimates the core case cost of a 

beverage vending machine for each 

equipment class. The core case cost is 

the fully absorbed production cost of 

components that do not consume 

energy. The baseline model, which 

defines baseline specifications and 

incorporates energy consuming 

components for each equipment class, 

estimates the energy-consumption and 

cost of the typical equipment (i.e., units 

of typical efficiency) on the market 

today. The design-options analysis 

develops cost-efficiency input data for a 

list of potential energy-saving 

technologies that can be integrated into 

the baseline model to increase 

efficiency. The energy consumption 

model calculates the daily energy 

consumption (DEC) of beverage vending 

machines at the various performance 

levels achieved by implementing these 

design options. Chapter 5 of the TSD 

includes a detailed description of each 

analytical model and its role in 

calculating the cost-efficiency data 

results of the engineering analysis. 

a. Cost Model 

DOE used a cost model to estimate the 

core case cost (i.e., the fully absorbed 

production cost of the structure, walls, 

doors, shelving and fascia of the case, 

but not the cost of any energy-using 

components) of beverage vending 

machines. This model was adapted from 

a cost model developed for DOE’s 

rulemaking on commercial refrigeration 

equipment.13 The approach for 

commercial refrigeration equipment 

involved disassembling a self-contained 

refrigerator, analyzing the materials and 

manufacturing processes for each 

component, and developing a 

parametric spreadsheet to model the 

cost to fabricate (or purchase) each 

component and the cost of assembly. 

Because of the similarities in 

manufacturing processes between selfcontained commercial refrigeration 

equipment and beverage vending 

machines, DOE was able to adapt the 

commercial refrigeration equipment cost 

model for beverage vending machines 

by maintaining many of the 

assumptions about materials and 

manufacturing processes but modifying 

the dimensions and types of 

components specific to beverage 

vending machines. To confirm the 

accuracy of the cost model, DOE 

obtained input from interested parties 

on beverage vending machine 

production cost estimates and on other 

assumptions DOE used in the model. 

Chapter 5 of the TSD provides details of 

the cost model. 

Following the ANOPR, DOE received 

no comments regarding its cost model; 

therefore, no significant changes were 

made to the methodology used in the 

NOPR analysis. Since the ANOPR, all 

dollar amounts have been updated to 

2008$ using the producer price index. 

b. Baseline Models 

As mentioned above, the engineering 

analysis calculates the incremental costs 

for equipment with efficiency levels 

above a baseline model in each 

equipment class. DOE defined baseline 

specifications for each equipment class, 

including dimensions, numbers of 

components, operating temperatures, 

nominal power ratings, and other 

features needed to calculate energy 

consumption. The baseline 

specifications define the energy 

consumption and cost of the typical 

equipment (i.e., units of typical 

efficiency) on the market today, namely 

beverage vending machines meeting the 

ENERGY STAR Tier 1 efficiency level. 

(See chapter 3 of the TSD for further 

details on the ENERGY STAR criteria.) 

DOE established baseline 

specifications for each equipment class 

modeled in the engineering analysis by 

reviewing available manufacturer data, 

selecting several representative units 

based on that data, and then aggregating 

the physical characteristics of the 

selected units. This process created a 

representative unit for each equipment 

class with average characteristics for 

physical parameters (e.g., volume, wall 

area), and typical performance for 

energy-consuming components (e.g., 

fans, lighting). See chapter 5 of the TSD 

for these specifications. 

DOE received one comment regarding 

the baseline refrigerant. In the ANOPR, 

DOE stated that hydrofluorocarbon 

(HFC) refrigerants would be the basis of 

its analyses because of the phaseout of 

hydrochlorofluorocarbons (HCFCs) in 

2010,14 and the volatility and 

availability issues associated with 

hydrocarbon (HC) refrigerants and CO2. 

Coca-Cola commented that it is phasing 

out HFCs and that it should not have 

any refrigeration equipment with HFC 

refrigerants by 2012. (Coca-Cola, Public 

Meeting Transcript, No. 29 at pp. 179– 

180) The Joint Comment stated that 

while manufacturers and customers are 

interested in alternatives to HFC 

refrigerants, it considers the use of HFC 

refrigerants a good default assumption 

with respect to costs and performance. 

(Joint Comment, No. 34 at p. 2) 

While DOE acknowledges the use of 

some alternative refrigerants (i.e., HCs 

and CO2) elsewhere in the world, the 

majority of the U.S. beverage vending 

machine industry uses HFC refrigerants. 

Since the analysis should be based on 

the refrigerant most widely used in 

beverage vending machines, DOE will 

continue to use HFC refrigerants as the 

basis for its technical analysis in this 

rulemaking. 

c. Design Options 

In the market and technology 

assessment for the ANOPR, DOE 

defined an initial list of technologies 

that could reduce the energy 

consumption of beverage vending 

machines. In the screening analysis for 

the ANOPR, DOE screened out four of 

these technologies based on four 

screening criteria: technological 

feasibility; practicability to 

manufacture, install and service; 

impacts on equipment utility or 

availability; and impacts on health or 

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15See http://www.eere.energy.gov/buildings/ 

appliance_standards/commercial/ 

refrigeration_equipment.html for further detail on 

and validation of the commercial refrigeration 

equipment LED price and usage data. 

16These test procedures are incorporated by 

reference at 10 CFR 431.294. 

safety. 73 FR 34108–09. The remaining 

technologies became inputs to the 

ANOPR engineering analysis as design 

options. 

For the NOPR, DOE did not receive 

any comments suggesting revisions to 

the list of ANOPR design options. 

Therefore, the design option inputs 

remain the same for the NOPR 

engineering analysis. However, the Joint 

Comment stated that DOE must 

document that the energy savings 

potential of light-emitting diode (LED) 

lighting has received adequate 

consideration (Joint Comment, No. 34 at 

p. 2). 

DOE’s consideration of LED lighting 

technology is documented in the 

Engineering Analysis Spreadsheet and 

chapter 5 of the TSD. Since the issuance 

of the ANOPR, DOE has carefully 

reviewed the LED technology design 

option and revised the cost and energy 

usage data for the NOPR. The LED price 

and energy use updates are adapted 

from the commercial refrigeration 

rulemaking.15 These changes are based 

on conversations with LED 

manufacturers and information gathered 

on existing LED systems for beverage 

vending machines. As a result of these 

conversations, DOE better understands 

how LED lighting can be configured to 

replace fluorescent systems in order to 

save energy without sacrificing utility. 

In certain applications, the focused light 

from LED systems delivers the same 

amount of light to the space being 

illuminated as fluorescent systems and 

allows for a reduction in the wattage 

consumed. As a result, overall energy 

consumption for lighting decreases. 

Implemented across the installed base of 

beverage vending machines, LED 

systems could result in considerable 

energy savings. Estimates of these 

savings can be found in chapter 5 of the 

TSD. 

d. Energy Consumption Model 

The energy consumption model 

estimates the DEC of beverage vending 

machines at various performance levels 

using a design-option approach. The 

model is specific to the categories of 

equipment covered under this 

rulemaking, but is sufficiently 

generalized to model the energy 

consumption of both covered equipment 

classes. For a given equipment class, the 

model estimates the DEC for the 

baseline and the energy consumption of 

several levels of performance above the 

baseline. The model is used to calculate 

each performance level separately. 

In developing the energy 

consumption model, DOE made certain 

assumptions, including general 

assumptions about the analytical 

methodology and specific assumptions 

regarding load components and design 

options. DOE based its energy 

consumption estimates on new 

equipment tested in a controlledenvironment chamber under the 

procedures and conditions specified in 

ANSI/ASHRAE Standard 32.1–2004, 

‘‘Methods of Testing for Bottled, 

Canned, and Other Sealed 

Beverages.’’ 16 Manufacturers of 

beverage vending machines must certify 

that their equipment complies with 

Federal standards using this test 

method, which specifies a certain 

ambient temperature, humidity, and 

other requirements. One relevant 

specification that is absent from ANSI/ 

ASHRAE Standard 32.1–2004 is the 

operating hours of the display case 

lighting during a 24-hour period. DOE 

assumes the operating time to be 24 

hours (i.e., that display case lighting is 

on throughout the 24-hour period) when 

conducting the analyses for this 

rulemaking. Chapter 5 of the TSD 

details these and other beverage vending 

machine considerations. 

The energy consumption model 

calculates DEC from two major 

components: (1) Component energy 

consumption, and (2) compressor 

energy consumption (expressed as kWh/ 

day). Component energy consumption is 

a sum of the direct electrical energy 

consumption of fan motors, lighting, 

vend mechanisms, control systems, and 

coin and bill validators. Compressor 

energy consumption is calculated from 

the total refrigeration load, expressed as 

Btu/h, and a compressor model based 

on the 10-coefficient compressor model 

in American Refrigeration Institute 

(ARI) Standard 540–2004, ‘‘Performance 

Rating of Positive Displacement 

Refrigerant Compressors and 

Compressor Units.’’ The total 

refrigeration load is a sum of the 

component heat load and non-electric 

load. The component heat load is a sum 

of the heat emitted by evaporator fan 

motors and lighting affecting 

refrigerated space. (Condenser fan 

motors are outside the refrigerated space 

of a beverage vending machine and do 

not contribute to the component heat 

load.) The non-electric load is the sum 

of: the heat contributed by radiation 

through glass doors in Class A 

machines; heat conducted through walls 

and doors; and sensible and latent loads 

from warm, moist air infiltration 

through vend doors and cracks. Chapter 

5 of the TSD provides details on 

component energy consumption, 

compressor energy consumption, and 

heat load models. 

During the framework public meeting, 

DOE asked for comments on which 

normalization metric, vendible capacity, 

or refrigerated volume would be most 

appropriate for setting standards for 

beverage vending machines. Based on 

public comments, DOE decided to use 

refrigerated volume in the ANOPR. 73 

FR 34105. Following the ANOPR, a 

comment submitted by the American 

Council for an Energy-Efficient 

Economy (ACEEE), Appliance 

Standards Awareness Project (ASAP), 

Natural Resources Defense Council 

(NRDC), and NPCC (hereafter ‘‘Joint 

Comment’’) stated that using internal 

refrigerated volume instead of a 12- 

ounce can count for rating beverage 

vending machines is appropriate. (Joint 

Comment, No. 34 at p. 3). 

4. Engineering Analysis Results 

The results of the engineering analysis 

are reported as cost-efficiency data (or 

‘‘curves’’) in the form of DEC (in kWh) 

versus MSP (in dollars). DOE developed 

six curves representing the two 

equipment classes and three 

representative sizes analyzed in each 

equipment class. The methodology for 

developing the curves started with 

determining the energy consumption for 

baseline equipment and the full cost of 

production for this equipment. Above 

the baseline, DOE implemented design 

options using the ratio of cost to 

savings, and implemented only one 

design option at each engineering level 

analyzed. Design options were 

implemented until all available 

technologies were employed (i.e., at a 

max-tech level). Table IV–2 shows the 

engineering analysis results. See TSD 

chapter 5 for additional detail on the 

engineering analysis and TSD appendix 

B for complete cost-efficiency results. 

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In addition to the design-option 

efficiency levels above, DOE calculated 

intermediate efficiency levels to bridge 

large performance level gaps created by 

certain design options. For instance, in 

a representative, medium-sized Class A 

machine, the LED design option leads to 

a considerable decrease in energy 

consumption between efficiency levels 

5 and 6. Intermediate efficiency levels 

are necessary to create an even 

distribution of performance levels that 

are achievable without using a specified 

combination of design options. Chapter 

5 of the TSD discusses these 

intermediate efficiency levels and the 

methodology behind their selection in 

more detail. 

C. Markups To Determine Equipment 

Price 

This section explains how DOE 

developed the distribution channel 

(supply chain) markups to determine 

installed costs for beverage vending 

machines (chapter 6 of the TSD). DOE 

used the supply chain markups it 

developed (including sales taxes and 

installation costs), along with the MSPs 

developed from the engineering 

analysis, to arrive at the final installed 

equipment prices for baseline and 

higher-efficiency beverage vending 

machines. As explained in the ANOPR, 

73 FR 34113, DOE defined three 

distribution channels for beverage 

vending machines to describe how the 

equipment passes from the 

manufacturer to the customer. For the 

ANOPR analysis, DOE estimated market 

shares of 68 percent, 27 percent, and 5 

percent for the manufacturer/beverage 

bottler (distribution channel #1), 

manufacturer/wholesaler/operator 

(distribution channel #2), and 

manufacturer/wholesaler/site owner 

(distribution channel #3) channels, 

respectively, for all beverage vending 

machines, based on market estimates 

from consultants. That is, 68 percent of 

all sales were estimated to pass from the 

manufacturer directly to a bottler; 27 

percent were estimated to pass from the 

manufacturer through a wholesaler to a 

beverage machine operator; and 5 

percent were estimated to pass from the 

manufacturer through a wholesaler to 

the owner of the premises where the 

machine operated. In the latter case, the 

owner of the premises also owned the 

beverage vending machine. 73 FR 

34113. 

Regarding distribution channels for 

vending machines and the calculation of 

the overall cost markups, Royal Vendors 

commented that distribution channel #1 

(direct sales to major bottlers) will be 

around 85 percent to 90 percent (Royal 

Vendors, No. 29 at p. 39). Dixie-Narco 

stated its sales percentages through the 

three distribution channels would be 85 

percent, 12 percent and 3 percent, 

respectively. (Dixie-Narco, No. 29 at p. 

40) Both comments gave increased 

importance to direct sales to major 

bottlers and deemphasized sales 

through wholesalers to vending 

operators and site owners. NPCC asked 

if the markups would be lower if DOE 

increased the market share of channel 

#1 from 68 percent to 80 or 85 percent. 

(NPCC, No. 29 at p. 52) 

For the NOPR, DOE updated its 

assumptions regarding the percentage 

breakdown of market distribution 

through the different channels to 

determine customer markups for 

purchasing beverage vending machines. 

These updates were to increase the 

fraction of the market through 

distribution channel #1 to 85 percent 

and reduce the fraction of the market 

distribution through other channels in 

line with manufacturer comments. 

Table IV–3 provides the revised 

estimated distribution channel shares 

(in percentage of total sales) through 

each of the three distribution channels. 


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17Class A and Class B vending machines are 

described in section II.A.2 of the ANOPR. 73 FR 

34103–34104. 

18 DOE incorporated ANSI/ASHRAE Standard 

32.1–2004 by reference, with two modifications, as 

the DOE test procedure for the beverage vending 

machines. 71 FR 71340, 71375 (Dec. 8, 2006); 10 

CFR 431.294. 

For each step in the distribution 

channels presented above, DOE 

estimated a baseline markup and an 

incremental markup, which are 

additional amounts added when 

equipment is sold and installed. A 

baseline markup is applied for the 

purchase of baseline equipment. An 

incremental markup is applied to the 

incremental increase in MSP for the 

purchase of higher efficiency 

equipment. 

DOE developed markups for each step 

of a given distribution channel based on 

available financial data as described in 

the ANOPR analysis. 73 FR 34113–14. 

DOE continued to use the same sources 

of data for the NOPR analysis, but 

updated the input assumptions to the 

most recent data where possible. 

Average overall markups in each 

distribution channel can be calculated 

using estimates of the shipments of 

beverage vending machines by 

distribution of State population. Since 

markups are not uniform among 

wholesalers, DOE used the Excel 

spreadsheet-based Crystal Ball program, 

which employs Monte Carlo analysis, to 

reflect this uncertainty in the LCC 

analysis. Table IV–4 and Table IV–5 

show overall baseline and incremental 

markups for sales within each 

distribution channel. Chapter 6 of the 

TSD provides additional detail on 

markups. 

TABLE IV–4—OVERALL AVERAGE BASELINE MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX

Manufacturer 

direct 

Wholesaler/ 

Distributor 

Overall weighted average 

Markup ......................................................................................................................................... 1.000 1.460 1.069 

Sales Tax ..................................................................................................................................... 1.070 1.070 1.070 

Overall Markup ............................................................................................................................ 1.070 1.562 1.144 

TABLE IV–5—OVERALL AVERAGE INCREMENTAL MARKUPS BY DISTRIBUTION CHANNEL INCLUDING SALES TAX

Manufacturer 

direct 

Wholesaler/ 

Distributor 

Overall weighted average 

Markup ......................................................................................................................................... 1.000 1.200 1.030 

Sales Tax ..................................................................................................................................... 1.070 1.070 1.070 

Overall Markup ............................................................................................................................ 1.070 1.284 1.102 

D. Energy Use Characterization 

The energy use characterization 

estimates the annual energy 

consumption of beverage vending 

machines. This estimate is used in the 

subsequent LCC and PBP analyses 

(chapter 8 of the TSD) and NIA (chapter 

11 of the TSD). DOE estimated the 

energy use for machines in the two 

equipment classes analyzed 17 in the 

engineering analysis (chapter 5 of the 

TSD) based on the DOE test 

procedure.18 DOE assumed all Class A 

machines to be installed indoors and 

subject to a constant air temperature of 

75 °F and relative humidity of 45 

percent, matching test conditions in the 

DOE test procedure. 73 FR 34114–15. 

Based on market data and discussions 

with several beverage vending machine 

distributors, DOE assumed that 25 

percent of Class B machines are placed 

outdoors and the remaining 75 percent 

are installed indoors. DOE sought but 

did not receive comment on this 

distribution. Thus, DOE maintained the 

distribution for the NOPR analysis of 

Class B machines. 

In response to the ANOPR, the Edison 

Electric Institute (EEI) commented that 

it would be helpful for interested parties 

if DOE would provide the annual energy 

usage of Class B machines located 

outdoors versus machines located 

indoors (EEI, No. 37 at p. 2). EEI also 

commented that it would be helpful if 

DOE collected data on peak kW 

demands for machines located both 

indoors and outdoors. Such data would 

help determine if the new energy 

conservation standards will have any 

impact on the peak kW demands based 

on DEC, especially for equipment 

located outdoors on hot summer days 

(EEI, No. 37 at p. 2). EEI further 

commented that DOE should calculate 

energy savings separately for indoor and 

outdoor machines based on actual 

estimated ambient conditions for the 

machines (test procedure for indoor 

machines, climate data for outdoor 

machines). Also, for outdoor machines, 

DOE should estimate a percentage of 

machines that will be affected by solar 

heat gain because of southern or western 

exposures (EEI, No. 37 at p. 4). 

In response to the EEI request, DOE is 

including the annual energy usage of 

Class B machines located outdoors 

versus machines located indoors in the 

TSD of today’s NOPR. However, DOE 

does not plan to obtain peak demand 

data for indoor and outdoor machines. 

During the ANOPR public meeting, DOE 

presented the statement that 100 percent 

of Class A machines were intended to be 

installed indoors and that, based on 


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19As an example, this position was taken and 

discussed in the distribution transformers final rule, 

72 FR 58203. 

inquiries to distributors, 75 percent of 

Class B machines appeared to be 

installed indoors (DOE, No. 29 at pp. 

53–54). Interested parties discussed the 

implications of that assumption, but 

made no challenge to the assumption 

itself. Therefore, the vast majority of all 

beverage vending machines appear to be 

in conditioned environments. As a 

result, DOE does not believe that 

outdoor beverage vending machines will 

have a significant impact on peak loads 

for utilities. 

During the ANOPR public meeting, 

participants discussed the impact of 

refurbished machines, their energy use 

profile, and energy efficiency upgrades 

to existing machines based on 

accounting demands (Coca-Cola, No. 29 

at pp. 88–89). Dixie-Narco commented 

that it has kits listed on the U.S. 

Environmental Protection Agency (EPA) 

Web site that upgrade existing machines 

to meet ENERGY STAR Tier 2 (DixieNarco, No. 29 at pp. 90–91). 

DOE acknowledges this information, 

but it does not have the authority to 

regulate refurbished vending machines. 

DOE has carefully considered its 

authority to establish energy 

conservation standards for rebuilt and 

refurbished beverage vending machines 

in light of these comments, and has 

tentatively concluded that its authority 

does not extend to rebuilt and 

refurbished equipment. 

Throughout the history of the energy 

conservation standards program, DOE 

has not regulated used consumer 

products or commercial equipment that 

has been refurbished, rebuilt, or 

undergone major repairs, since EPCA 

only covers new covered equipment 

distributed in commerce.19 DOE 

concludes that rebuilt or refurbished 

beverage vending machines are not new 

covered equipment under EPCA and, 

therefore, are not subject to DOE’s 

energy conservation standards or test 

procedures. 

Regarding the energy consumption 

model, Coca-Cola commented that 

moisture removal could account for 

nearly 12 percent of vending machine 

energy consumption in a reload 

situation, which is an intermittent 

occurrence. (Coca-Cola, No. 29 at p. 32 

and No. 29 at p. 65) DOE accounts for 

the effect of ambient humidity changes 

on the hourly energy consumption 

calculation through use of weather files. 

However, DOE has not modeled a 

product reload situation because it is an 

intermittent occurrence and DOE has no 

information about total reload times or 

schedules in actual use. A reload of 

product is not part of the daily energy 

consumption test required by ASHRAE 

Standard 32.1–2004, which DOE used as 

the basis for the energy consumption 

calculations. 

Several commenters discussed the use 

of lighting controls and their impact on 

beverage vending machine energy use. 

Several manufacturers and other 

interested parties commented that 

having lighting and/or occupancy 

controls will help reduce energy 

consumption, especially when these 

machines go into ‘‘sleep mode.’’ (CocaCola, No. 29 at p. 78; Dixie-Narco, No. 

29 at pp. 69–71; EEI, No. 37 at p. 3; 

Dixie-Narco, No. 36 at pp. 1, 2; PepsiCo, 

No. 29 at pp. 20–21; and Naval Facilities 

Engineering Service Center (NFESC), 

No. 41 at p. 1). PepsiCo stated that it is 

difficult to determine an average 

lighting operation time, but that turning 

the lights off should be encouraged. 

(PepsiCo, Public Meeting Transcript, 

No. 29 at p. 74) Coca-Cola stated that 

beverage vending machines may not 

incorporate lighting in the near future. 

(Coca-Cola, Public Meeting Transcript, 

No. 29 at p. 78) Royal Vendors stated 

that although automated refrigeration 

and lighting controls may become more 

popular, the current methodology is 

reasonable and consistent for the 

purposes of this analysis. 

Having lighting controls and setting 

them properly at the factory does reduce 

beverage vending machine energy 

consumption when the machine goes 

into sleep mode. However, DOE does 

not have the authority to mandate 

lighting controls and/or occupancy 

sensors as a design requirement 

simultaneously with an energy 

conservation standard due to the 

definition of ‘‘energy conservation 

standard’’ in 42 U.S.C. 6291(6). See 

section II.C.2.c for further detail. Also, 

the current DOE test procedure does not 

provide a mechanism to account for the 

reduction in DEC resulting from lighting 

controls and/or occupancy sensors in 

the machines. However, EPCA as 

amended by EISA 2007 states that ‘‘at 

least once every 7 years, the Secretary 

shall review test procedures for all 

covered products * * *.’’ 42 U.S.C. 

6293(b)(1)(A). DOE may consider 

incorporating a mechanism to account 

for the reduction in DEC resulting from 

lighting controls and/or occupancy 

sensors during its review of the test 

procedure for beverage vending 

machines. DOE has not included the 

impact of these lighting controls as part 

of the engineering or energy use 

characterization analyses for this 

rulemaking and is retaining the 

assumption of a 24-hour lighting 

operation period. 

NFESC commented that the DOE 

analysis should not neglect the added 

electricity load on air-conditioned 

buildings. (NFESC, No. 41 at p. 3) 

Specifically, the comment stated that 

the appropriate question to ask is 

whether the added electricity required 

(as building cooling load) represents a 

significant percentage of the electricity 

required to operate the beverage 

vending machine. NEFSC calculations 

indicated that the added building 

cooling load electric demand represents 

an annual addition most probably on 

the order of 15% to the basic load 

imposed by operating the vending 

machine. 

DOE acknowledges that it did not 

account for the additional cooling load 

imposed by the BVM on the whole 

building cooling load, and 

correspondingly, any space cooling 

energy benefits that come from the 

reduction of the BVM’s electrical load. 

DOE accepts that such a cooling energy 

use reduction will likely occur. At the 

same time, any reduction in BVM 

energy use will also result in an increase 

in heating energy use within the 

buildings. This impact on building 

heating and cooling loads would only 

occur for those BVMs located indoors. 

The relative cooling-energy-use benefit 

to heating-energy-use penalty is a 

function of the climate location, 

building type and size, and the 

placement of the BVMs within the 

building. The BVM could be located in 

uncooled portions of an industrial 

building, in the entering vestibules in a 

grocery store or in a supermarket, or in 

the core of an office building. The 

relative monetary benefits are also a 

function of the relative heating and 

cooling fuel costs. The quantification of 

the relative benefits impact would have 

required an extensive whole-building 

heating and cooling energy use analysis. 

Such studies of the impacts coming 

from lighting energy use within 

buildings have been done in the past. 

However, lighting tends to have a load 

profile that correlates with the cooling 

energy use in buildings. This is less true 

for BVMs since they operate on a 24- 

hour basis. Considering both the cooling 

benefits and the heating penalties from 

reductions in BVM energy use, DOE 

believes, that the 15% figure suggested 

by the NFESC comment overstates the 

likely benefits. Therefore, DOE 

determined that an extensive wholebuilding analysis was not warranted. 

As discussed in the engineering 

analysis above, DOE analyzed the three 

typical sizes (small, medium, and large 

vendible capacities), each with a 

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different refrigerated volume as 

measured by ANSI/AHAM HRF–1–2004 

and shown in Table IV–1. 

DOE used the same methodology to 

calculate the annual energy 

consumption for Class A and Class B 

vending machines as described in the 

ANOPR analysis. 73 FR 34115–16. For 

Class A vending machines, DOE 

calculated the annual energy 

consumption as the product of the 

average DEC (from the DOE test 

procedure indoor test condition of 75 

°F, 45 percent relative humidity), times 

365 days per year, which did not vary 

by State. For Class B vending machines, 

DOE used a weighted average between 

the annual average energy consumption 

for an outdoor machine and an indoor 

machine. To calculate a weighted 

energy use of all Class B machines, DOE 

added aggregated State-by-State results 

using data from each of the 237 Typical 

Meteorological Year 2 (TMY2) weather 

stations to the annual energy 

consumption of the remaining 75 

percent of Class B machines located 

indoors. 

DOE developed the annual energy 

consumption for each equipment class 

at each efficiency level for every State 

as inputs to the LCC and PBP analyses. 

Chapter 7 of the TSD shows the annual 

average energy consumption estimates 

by equipment class and efficiency level. 

E. Life-Cycle Cost and Payback Period 

Analyses 

In response to the requirements of 

section 325(o)(2)(B)(i) of EPCA (42 

U.S.C. 6295(o)(2)(B)(i)), DOE conducted 

LCC and PBP analyses to evaluate the 

economic impacts of possible new 

beverage vending machine standards on 

individual customers. This section 

describes the analyses and the 

spreadsheet model DOE used. TSD 

chapter 8 provides details of the model 

and of all inputs to the LCC and PBP 

analyses. 

The effects of standards on individual 

commercial customers include changes 

in operating expenses (usually lower) 

and total installed price (usually 

higher). The LCC is the total cost for a 

unit of beverage vending machines, over 

the life of the equipment, including 

purchase and installation expense and 

operating costs (energy expenditures 

and maintenance). To compute the LCC, 

DOE summed the installed cost of the 

equipment and its lifetime operating 

costs discounted to the time of 

purchase. The PBP is the change in 

purchase expense due to a given energy 

conservation standard divided by the 

change in first-year operating costs 

resulting from the standard. Otherwise 

stated, the PBP is the number of years 

it would take for the customer to recover 

the increased costs of a more efficient 

product through energy savings. DOE 

measures the changes in LCC and PBP 

associated with a given energy use 

standard level relative to a base case 

forecast of equipment energy use. The 

base case forecast reflects the market 

absent mandatory energy conservation 

standards. DOE believes LCC is a better 

indicator of economic impacts on 

consumers. 

DOE also analyzed the effect of 

changes in operating expenses and 

installed price by calculating the PBP of 

potential standards relative to a base 

case. The PBP estimates the amount of 

time it would take the commercial 

customer to recover the anticipated, 

incrementally higher purchase expense 

of more energy efficient equipment 

through lower operating costs. The data 

inputs to the PBP calculation are the 

purchase expense (otherwise known as 

the total installed cost or first cost) and 

the annual operating costs for each 

selected design. The inputs to the 

equipment purchase expense were the 

equipment purchase price and 

installation price, with appropriate 

markups. The inputs to the operating 

costs were the annual energy 

consumption, electricity price, and 

repair and maintenance costs. The PBP 

calculation uses the same inputs as the 

LCC analysis but, since it is a simple 

payback, the operating cost is for the 

year the standards take effect, assumed 

to be 2012. For each efficiency level 

analyzed, the LCC analysis required 

input data for the total installed price of 

the equipment, operating cost, and 

discount rate. 

DOE calculated the LCC for all 

customers as if each would purchase a 

new beverage vending machine in the 

year the standards take effect for newly 

manufactured equipment. Section 

135(c)(4) of EPACT 2005 amended 

EPCA to add new subsections 325(v)(2), 

(3), and (4) (42 U.S.C. 6295(v)(1), (2), 

and (3)), which directs the Secretary to 

issue a final rule for refrigerated bottled 

or canned beverage vending machines 

no later than August 8, 2009. The energy 

conservation standard levels in the rule 

apply to all equipment manufactured 3 

years after publication of the final rule. 

Consistent with EPCA, DOE used these 

dates in the NOPR analyses. 

At the ANOPR public meeting, DixieNarco suggested that the industry has 

made great strides in partnership with 

the bottlers to reduce the energy 

consumption by over 50 percent in the 

last 5 years for both Class A and Class 

B beverage vending machines. DixieNarco stated that a vast majority of the 

machines will meet ENERGY STAR 

levels when the new DOE standards go 

into effect in 2012. (Dixie-Narco, No. 29 

at pp. 17–19) The Joint Comment stated 

that provided DOE can confirm 

industry’s assertion that the market has 

already shifted to ENERGY STAR Tier 2, 

DOE should take that level as the 

baseline rather than ENERGY STAR Tier 

1. (Joint Comment, No. 34 at p. 3) 

DOE does not agree that it should use 

ENERGY STAR Tier 2 as the baseline for 

the present analysis, because not all 

new products are expected to meet the 

Tier 2 level by 2012. (PepsiCo, No. 29 

at p. 152), though most are expected to 

meet Tier 2 even without a minimum 

standard at Tier 2 (Dixie Narco, No. 29 

at pp. 150–151; Coca-Cola, No. 29 at p. 

149; PepsiCo, No. 29 at p. 149). In other 

rules, DOE has consistently based the 

baseline levels for the LCC analysis on 

products available in the marketplace. 

DOE used a distribution of efficiency 

levels based on its assessment of the 

future market for beverage vending 

machines when establishing the base 

case for the NIA. This distribution in the 

2012 baseline market includes 10 

percent of shipments at approximately 

the ENERGY STAR Tier 1 efficiency 

level and 90 percent of shipments at 

approximately the ENERGY STAR Tier 

2 efficiency level. Thus, the baseline 

market includes efficiency levels at and 

above the LCC baseline efficiency, 

which is approximately ENERGY STAR 

Tier 1. 

Regarding equipment lifetime, DixieNarco stated that it believes that the life 

expectancy of beverage vending 

machines will be 10 to 12 years by 2012. 

(Dixie-Narco, No. 29 at pp. 17–19) CocaCola commented that the lifetime has 

gone down from 13 years to about 10 

years, and that the machine typically 

undergoes one refurbishment cycle 

during its life. Coca-Cola uses a 

financial model to replace or upgrade 

components or subsystems that need to 

be changed, which may or may not 

result in a change in energy profile. 

(Coca-Cola, No. 29 at pp. 86–87) CocaCola further commented that the 

lifetimes of legacy machines may be 

extended because of refurbishment and 

that it upgrades the energy efficiency of 

existing machines based on account 

needs and account demands. (CocaCola, No. 29 at pp. 88–89) Dixie-Narco 

stated that it currently has kits listed on 

the EPA Web site to upgrade existing 

machines to meet ENERGY STAR Tier 

2 level. (Dixie-Narco, No. 29 at pp. 90– 

91) 

Based on the information provided by 

the manufacturers in this discussion, 

DOE has changed the input assumptions 

for the life-cycle cost analysis and the 

shipment analysis model to reflect the 

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26034 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

20EIA high and low price cases are based on 

EIA’s assumed average world price for oil and the 

adjustments of the economy and the energy sector 

to that key assumption. In the high price case in 

AEO2008, the average electricity price in 2030 was 

about 2.2 percent higher than in the reference case. 

Since the supplemental tables for the AEO 2009 

were not yet available, DOE used the ratio of high 

and low price cases from AEO2008 to scale the 

AEO2009 reference case. See chapter 8 of the TSD 

for additional information. 

revised equipment life estimates to 10 

years with one refurbishment cycle. The 

DOE analysis of proposed standard 

levels does not account for future, 

unknown energy impacts from 

refurbishments that may or may not 

occur during the 10-year equipment life 

or that provide energy benefits in 

conjunction with life extension. See 

chapter 8 of the TSD for further 

information. 

Regarding the electricity prices and 

forecasts DOE used in the LCC analysis, 

EEI asked if DOE used Manufacturing 

Energy Consumption Survey (MECS) 

data for the beverage vending machines 

installed in the manufacturing sector. 

(EEI, No. 29 at p. 104) EEI recommended 

that DOE use EIA data for industrial 

electricity prices, as a large number of 

beverage vending machines are located 

in industrial facilities. 

During the ANOPR public meeting, 

EEI asked if DOE considered separately 

the summer and winter energy usage of 

some of the outdoor machines, as 

summer use may be greater and at a 

higher commercial rate than winter use 

in certain climates. (EEI, No. 29 at p. 

106) In its written comment, EEI 

recommended that DOE use seasonal 

rates and MECS data. (EEI, No. 37 at p. 

3) 

DOE used the EIA industrial 

electricity prices for averaging State-byState electricity prices for the 

percentage of machines located in 

industrial, manufacturing, and 

government facilities for the ANOPR 

and NOPR analyses. DOE did not use 

seasonal variation in commercial 

electricity rates in its LCC analysis 

because seasonal variation in electricity 

rates differs throughout the country and 

even by utility, significantly 

complicating the analysis. The impact of 

higher energy consumption on the 

relatively small fraction of beverage 

vending machines located outdoors in 

the summer compared to winter was 

deemed to be of little impact on Class 

B equipment and of no impact on Class 

A equipment. 

Regarding electricity price forecasts, 

the Joint Comment suggested that DOE 

use the most recent EIA AEO high price 

case for energy price forecasts 20 and 

include the cost and value of peak 

electricity demand in the analysis. (Joint 

Comment, No. 34 at p. 3) ACEEE asked 

DOE to review EIA AEO price 

applicability and offered to provide a 

list of alternative price forecasts. 

(ACEEE, No. 29 at pp. 107–108) 

DOE updated its NOPR analysis to use 

the AEO2009 reference case scenario for 

the base electricity price and electricity 

price forecasts into the future. The 

NOPR provides a sensitivity analysis 

based on the AEO high and low price 

scenarios. DOE continued to use the 

AEO forecasts, as it has done for other 

rules, and did not explore alternative 

electricity price forecasts. DOE believes 

that analyzing the results using the 

high-price and low-price scenarios 

provides sufficient insight into the 

likely range of electricity price impacts. 

DOE has no evidence that alternative 

scenarios are better predictors of future 

electricity costs. 

Regarding future climate change 

legislation and its impact on the price 

of electricity, the Joint Comment 

suggested including the value of carbon 

emissions in the LCC and NPV analyses. 

(Joint Comment, No. 34 at p. 3) 

The intent of Federal carbon control 

legislation, and the ensuing cost of 

carbon mitigation to electricity 

generators, is as yet too uncertain to 

incorporate into the energy price 

forecasts that DOE uses. The costs of 

carbon mitigation to electricity 

generators resulting from the regional 

programs are also very uncertain over 

the forecast period for this rulemaking. 

Even so, EIA did include the effect of 

the Northeast Regional Greenhouse Gas 

Initiative (RGGI) in its AEO2009 Early 

Release energy price forecasts. Western 

Climate Initiative (WCI) did not provide 

sufficient detail for EIA to model the 

impact of the WCI on energy price 

forecasts. Therefore, the energy price 

forecasts used in today’s final rule do 

include the impact of one of the two 

regional cap-and-trade programs to the 

extent possible. In addition, the Nation 

will benefit from reduction of carbon 

emissions as part of a national impact. 

Because of the range of possible values 

of emissions reductions, DOE shows 

them separately in order to take the 

impact into consideration. Putting the 

values into the overall NPV calculation 

will bury the effects. DOE believes it is 

important for the decision maker to be 

fully aware of the economic impacts of 

a proposed energy conservation 

standard. For these reasons, DOE will 

continue to report the results of the 

monetization of the value of carbon 

emissions in the Environmental 

Assessment (section V.B.6). 

In the discussion of discount rates, 

Royal Vendors commented that CocaCola and PepsiCo purchase 

approximately 90 percent of all beverage 

vending machines. (Royal Vendors, No. 

32 at p. 1) Royal Vendors and DixieNarco made similar remarks about the 

size of the market purchases by these 

two entities in a discussion of 

distribution channels. (Royal Vendors 

and Dixie-Narco, Public Meeting 

Transcript, No. 29 at pp. 39–40) In 

accordance with the comments 

regarding distribution channels, DOE 

modified the mix of commercial 

customers so that bottlers represent 85 

percent of commercial customers. DOE 

also used the same 85 percent weight of 

bottlers to develop the discount rate 

distribution among beverage vending 

machine purchasers. 

During the ANOPR public meeting, 

Coca-Cola commented that beverage 

vending machine maintenance costs are 

approximately $90 per year, energy 

upgrade costs vary based on the kit 

used, and a remanufacturing cycle costs 

around $500 to $600. (Coca-Cola, No. 29 

at pp. 113–116) DOE received no other 

comments on this issue. 

DOE has updated its maintenance cost 

assumptions to more closely reflect 

Coca-Cola’s comments. This resulted in 

a minor decrease in assumed annual 

maintenance cost from $165 in the 

ANOPR analysis to $154 in the NOPR 

analysis. 

Also during the ANOPR public 

meeting, participants discussed how the 

energy cost benefits should be reflected 

in the LCC analysis. Coca-Cola stated 

that energy subsidy contracts are prenegotiated as part of the location 

contract based on considerations such 

as volume of throughput and length of 

the contract. (Coca-Cola, No. 29 at pp. 

125–126) Any kind of energy subsidy 

machine owners pay to locate their 

machines on-site is pre-negotiated as 

part of the location contract. Also, 

energy cost reductions due to the use of 

higher efficiency equipment would be 

reflected in a reduced subsidy paid to 

the site. However, no market data have 

been provided to DOE that would allow 

computation of the actual allocation of 

energy cost benefits for the site owner 

and the vending machine owner. To 

account for such energy cost benefits for 

purposes of computing life cycle cost 

and payback period, DOE assumes that 

operating cost savings due to energy 

cost savings are transferred to the 

owner/operator of the beverage vending 

machine through the location contract. 

This is analytically equivalent to 

assuming that energy subsidies are 

reduced by the amount of the energy 

cost reductions. 

Table IV–6 summarizes the inputs 

and key assumptions DOE used to 

calculate the economic impacts of 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26035 

various energy consumption levels on 

customers. Equipment price (which 

includes Manufacturer’s Selling Price, 

markups, and sales taxes), installation 

price, and baseline and higher efficiency 

all affect the installed cost of the 

equipment. Annual equipment energy 

consumption, electricity prices, 

electricity price trends, and repair and 

maintenance costs affect the operating 

cost. The effective date of the standard, 

discount rate, and lifetime of equipment 

all affect the calculation of the present 

value of annual operating cost savings 

from a proposed standard. Table IV–6 

also shows how DOE modified these 

inputs and key assumptions for the 

NOPR analysis. 

TABLE IV—6 SUMMARY OF INPUTS AND KEY ASSUMPTIONS USED IN THE LCC AND PBP ANALYSES

Input ANOPR description Changes for NOPR 

Baseline Efficiency Level ................................... Energy savings (changes in equipment energy 

consumption) and energy cost savings are 

compared to a pre-selected baseline efficiency level (in this case Level 1). Baseline 

MSP and equipment energy consumption 

depend on the baseline efficiency level.

No changes. 

Higher Efficiency Levels .................................... A certain number of higher efficiency levels 

are pre-selected up to the max-tech level 

for LCC and PBP analyses. These higher 

efficiency levels affect MSP and equipment 

energy consumption.

No changes. 

Baseline Manufacturer Selling Price ................. Price charged by manufacturer to either a 

wholesaler or large customer for baseline 

equipment.

No changes. 

Standard-Level Manufacturer Selling Price Increases.Incremental change in manufacturer selling 

price for equipment at each of the higher efficiency levels.

No changes. 

Markups and Sales Tax ..................................... Associated with converting the manufacturer 

selling price to a customer price (chapter 6 

of TSD).

Distribution of sales among market channels 

changed based on comments on the 

ANOPR. Sales tax rates updated to January 

2009. 

Installation Price ................................................ Cost to the customer of installing the equipment including labor, overhead, and any 

miscellaneous materials and parts. The total 

installed cost equals the customer equipment price plus the installation price.

Installation price updated to 2008$. 

Equipment Energy Consumption ....................... Site energy use associated with the use of 

beverage vending machines, which includes 

only the use of electricity by the equipment 

itself.

Updated to reflect results of the energy analysis. 

Electricity Prices ................................................ Average commercial electricity price ($/kWh) 

in each State and for seven classes of commercial and industrial customers, as determined from EIA data for 2003 converted to 

2007$.

Average commercial electricity price ($/kWh) 

in each State and for seven classes of commercial and industrial customers, as determined from EIA data for 2003, updated to 

2008 prices. 

Electricity Price Trends ...................................... Reflects the AEO2007 reference case forecast 

future electricity prices.

Reflects the AEO2009 reference case to forecast future electricity prices. 

Maintenance Costs ............................................ Labor and material costs associated with 

maintaining the beverage vending machines 

(e.g., cleaning heat exchanger coils, checking refrigerant charge levels, lamp replacement) included annualized costs of two refurbishment cycles.

Updated basic maintenance cost to 2008$. 

Based on industry comment on the ANOPR, 

included an updated annualized cost of one 

refurbishment/remanufacturing cycle. 

Repair Costs ...................................................... Labor and material costs associated with repairing or replacing components that have 

failed.

Updated costs to 2008$. 

Equipment Lifetime ............................................ Age at which the beverage vending machine 

is retired from service (estimated to be 14 

years).

Based on industry comment on the ANOPR, 

reduced average service life to 10 years, 

with 15 years as a maximum. 

Discount Rate .................................................... Rate at which future costs are discounted to 

establish their present value to beverage 

vending machine purchasers.

Updated discount rates for all classes of purchasers based on weighted average cost of 

capital figures from 2008. 

Rebound Effect .................................................. Rebound effect was not taken into account in 

the LCC analysis.

No change. 

Analysis Period .................................................. The time span over which DOE calculated the 

LCC (i.e., 2012–2042).

No change. 

The following sections contain brief 

discussions of the methods underlying 

each input and key assumption in the 

LCC analysis. 

1. Manufacturer Selling Price 

The ‘‘baseline MSP’’ is the price 

manufacturers charge to either a 

wholesaler/distributor or very large 

customer for beverage vending 

machines meeting baseline efficiency 

levels. DOE developed the baseline 

MSPs using a cost model (detailed in 

chapter 5 of the TSD). DOE used the 

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26036 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

21Comments received at the ANOPR stage from 

interested parties indicated that small volume 

machines were never more than about 10 percent 

of the total (Royal Vendors, No. 29, p. 141); that 

small machines are financially unattractive (CocaCola, No. 29, p. 141); and that shipments range from 

10 percent medium to 100 percent medium 

machines, depending on the manufacturer, with the 

rest being large (Royal Vendors, No. 29, pp. 141– 

142). 

22Bureau of Labor Statistics, Occupational 

Employment and Wage Estimates (May 2007). 

Available at http://www.bls.gov/oes/oes_dl.htm. 

23Foster-Miller, Inc. ‘‘Vending Machine Service 

Call Reduction Using the VendingMiser.’’ Report 

BAY–01197. Foster-Miller, Inc., Waltham, MA. 

February 18,2002. 

24The Monte-Carlo analysis is a numerical 

simulation approach using random values from 

known statistical distributions. 

25http://www.eia.doe.gov/emeu/states/ 

_seds.html. 

efficiency level closest to ENERGY 

STAR Tier 1 as the baseline in the 

NOPR analysis. The baseline efficiency 

level represents the least efficient 

equipment likely to be sold in 2012. 

DOE developed MSPs for the two 

equipment classes consisting of three 

possible equipment sizes. Not all 

covered equipment sizes have 

shipments of more than a few percent of 

the total.21 (See chapter 10 of the TSD.) 

DOE estimated the MSPs for Class A 

and Class B equipment at the three 

representative rated volumes between 

the baseline efficiency level and up to 

seven more efficient levels. See chapter 

5 of the TSD for details. 

2. Increase in Selling Price 

The standard level MSP increase is 

the change in MSP associated with 

producing equipment at lower energy 

consumption levels to meet higher 

standards. DOE developed MSP 

increases associated with decreasing 

equipment energy consumption (or 

higher efficiency) levels in the 

engineering analysis. See chapter 5 of 

the TSD for details. DOE developed 

MSP increases as a function of 

equipment energy consumption for each 

equipment class. 

3. Markups 

As discussed earlier, overall markups 

are based on one of three distribution 

channels for beverage vending 

machines. The distribution channels 

defined in the ANOPR were also used 

for the NOPR analysis, but DOE 

modified the relative fractions of 

shipments through each distribution 

channel based on input from interested 

parties. Based on input received by 

DOE, site owners purchase 

approximately 5 percent of equipment 

from wholesaler/distributors, vending 

machine operators purchase 10 percent 

of equipment from wholesaler/ 

distributors, and beverage bottler/ 

distributors purchase 85 percent of 

equipment directly from manufacturers. 

See chapter 10 of the TSD for details. 

4. Installation Costs 

DOE derived installation costs for 

beverage vending machines from the 

U.S. Bureau of Labor Statistics (BLS) 

data.22 BLS provides median wage rates 

for installation, maintenance, and repair 

occupations that reflect the labor rates 

for each State. These data allow DOE to 

compute State labor cost indices relative 

to the national average for these 

occupations. DOE incorporated these 

cost indices into the analysis to capture 

variations in installation cost by 

location. DOE calculated the installation 

cost by multiplying the number of 

person-hours by the corresponding labor 

rate as reported by Foster-Miller, Inc.23

Foster-Miller data are more specific to 

the beverage vending machine industry 

and service calls, and were used 

whenever possible. DOE decided that 

the installation costs (including 

overhead and profit) represent the total 

installation costs for baseline 

equipment. Because data were not 

available to indicate how installation 

costs vary by class or efficiency, DOE 

considered installation costs to be fixed 

and independent of equipment cost or 

efficiency. Although the LCC 

spreadsheet allows for alternative 

scenarios, DOE did not find a 

compelling reason to change its basic 

premise for the NOPR analysis. See 

chapter 8 of the TSD for details. 

As described earlier, the total 

installed cost is the sum of the 

equipment purchase price and 

installation price. DOE derived the 

customer equipment purchase price for 

any given efficiency level by 

multiplying the baseline MSP by the 

baseline markup and adding to it the 

product of the incremental MSP and 

incremental markup. Because MSPs, 

markups, and sales taxes can differ 

depending on location, the resulting 

total installed cost for a particular 

efficiency level will not be a singlepoint value, but a distribution of values. 

DOE used a Monte-Carlo analysis 24 to 

determine this distribution of values. 

See chapter 8 of the TSD for details. 

5. Energy Consumption 

DOE based its estimate of the annual 

electricity consumption of beverage 

vending machines on the energy use 

characterization described in section 

IV.D. DOE did not change the ANOPR 

methodology. See chapters 7 and 8 of 

the TSD for details. 

6. Electricity Prices 

Electricity prices are necessary to 

convert the electric energy savings into 

energy cost savings. Because of the wide 

variation in electricity consumption 

patterns, wholesale costs, and retail 

rates across the country, it is important 

to consider regional differences in 

electricity prices. DOE divided the 

continental United States into the 50 

States and the District of Columbia. DOE 

used reported average effective 

commercial electricity prices which are 

the average commercial prices in each 

state, multiplied times a factor that 

adjusts the price to account for the fact 

that different types of commercial 

customers historically have higher or 

lower prices than average. (See chapter 

8 of the TSD for details.) Effective 

commercial prices were estimated for 

four of the six building types. Lower 

industrial electricity prices were 

assumed to apply to the manufacturing 

plants and Federal facilities. State level 

commercial and industrial prices were 

collected from the EIA publication, 

‘‘State Energy Consumption, Price, and 

Expenditure Estimates (SEDS).’’ 25 The 

latest available prices from this source 

are for 2008. See chapter 8 of the TSD 

for details. 

Different kinds of businesses use 

electricity in different amounts at 

different times of the day, week, and 

year, and therefore face different 

effective prices. To make this 

adjustment, DOE used the 2003 CBECS 

data set to identify the average prices 

that the four kinds of commercial 

businesses in this analysis pay 

compared with the average prices all 

commercial customers pay. (DOE 

assumed manufacturing and Federal 

facilities pay the average industrial 

price.) Once the building type prices are 

adjusted, the resulting estimated prices 

paid become the electricity prices used 

in the analysis. To obtain a weighted 

average national price, the prices paid 

by each building in each state are 

weighted by the estimated sales of 

beverage vending machines in each state 

to each prototype building type (U.S. 

Census Bureau 2002, 2004a–2004c). The 

state/building type weights are the 

probabilities that a given beverage 

vending machine shipped will be 

operated within a given price. For 

evaluation purposes, the prices and 

weights can be depicted as a cumulative 

probability distribution. The effective 

prices range from approximately 5 cents 

per kWh to approximately 30 cents per 

kWh. This approach includes regional 

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26Foster-Miller, Inc. ‘‘Vending Machine Service 

Call Reduction Using the VendingMiser.’’ Report 

BAY–01197. Foster-Miller, Inc. Waltham, MA. 

February 18, 2002. 

27Aswath Damodaran, Leonard N. Stern School 

of Business, New York University. Available at 

http://www.stern.nyu.edu/∼adamodar/ 

New_Home_Page/data.html. Accessed December 

15, 2008. See also the Investopedia Web site 

definition of Beta, the measure of such volatility: 

http://www.investopedia.com/terms/b/beta.asp. 

Accessed April 1, 2009. 

28Aswath Damodaran, Leonard N. Stern School 

of Business, New York University. Available at 

http://www.stern.nyu.edu/∼adamodar/ 

New_Home_Page/data.html. Accessed December 

15, 2008. 

variations in energy prices and provides 

for estimated electricity prices suitable 

for the target market, yet reduces the 

overall complexity of the analysis. 

Chapter 8 of the TSD describes the 

development and use of State-average 

electricity prices by building type in 

more detail. 

7. Electricity Price Trends 

The electricity price trend provides 

the relative change in electricity prices 

until 2030. Estimating future electricity 

prices is difficult, especially considering 

that many States are attempting to 

restructure the electricity supply 

industry. DOE uses the most recent AEO 

reference case to forecast energy prices 

for standards rulemakings. DOE applied 

the AEO2009 reference case as the 

default scenario and extrapolated the 

trend in values from 2020 to 2030 of the 

forecast to establish prices for 2030 to 

2042. This method of extrapolation is in 

line with methods the EIA uses to 

forecast fuel prices for the Federal 

Energy Management Program (FEMP). 

DOE intends to update its analysis for 

the final rule to reflect the AEO2009 

electricity price forecasts when final 

versions are available. 

8. Repair Costs 

The repair cost is the cost to the 

customer of replacing or repairing 

beverage vending machine components 

that have failed. DOE based the 

annualized repair cost for baseline 

efficiency equipment on the report 

‘‘Vending Machine Service Call 

Reduction Using the VendingMiser,’’ 26

and adjusted the cost to 2008 prices. 

Because data were not available to 

indicate how repair costs vary with 

equipment efficiency, DOE considered 

two scenarios: (1) repair costs that 

varied in direct proportion with the 

manufacturer price of the equipment, 

and (2) repair costs that did not increase 

with efficiency. 

DOE used the first scenario as the 

default annualized repair cost scenario 

in the LCC and PBP analyses. 

Spreadsheets can be used to calculate 

LCC and PBP based on the second 

scenario as well. See chapter 8 of the 

TSD for details. 

9. Maintenance Costs 

DOE estimated annualized 

maintenance costs for beverage vending 

machines from data provided by CocaCola at the ANOPR public meeting. 

Coca-Cola estimated that average 

equipment maintenance costs are $98.20 

(2008$) for preventive maintenance for 

both beverage vending machine classes. 

In addition to routine maintenance, 

industry contacts stated that most 

beverage vending machines are fully 

refurbished every 5 years at an average 

cost of approximately $550. DOE 

calculated the annual cost of 

refurbishment by assuming one 

refurbishment (in year five), and then 

annualizing the present value of the cost 

using the discount rate that applied to 

the business type owning the beverage 

vending machine. DOE added the two 

maintenance cost components to 

produce an overall annual maintenance 

cost of approximately $154 (2008$). 

Because data are not available on how 

maintenance costs vary with equipment 

efficiency, DOE held maintenance costs 

constant even as equipment efficiency 

increased. See chapter 8 of the TSD for 

details. 

10. Lifetime 

DOE defined lifetime as the age when 

a beverage vending machine unit is 

retired from service. DOE based the 

lifetime on comments it received during 

the ANOPR. DOE concluded that a 

typical lifetime is 10 years and a 

maximum lifetime is 15 years. Beverage 

vending machine equipment is typically 

replaced when buildings are renovated 

about every 10 years, which is before 

the equipment would have physically 

worn out. As a result, there is a usedequipment market for these products. 

Because the salvage value to the original 

purchaser is very low, DOE did not take 

this value into account in the LCC 

analysis. Chapter 3 of the TSD contains 

a discussion of equipment life. 

11. Discount Rate 

The discount rate is the rate at which 

future expenditures are discounted to 

establish their present value. DOE 

derived discount rates for the LCC 

analysis by estimating the cost of capital 

for companies that purchase beverage 

vending machines. 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. For most companies, the 

cost of capital is the weighted average 

of the cost to the company of equity and 

debt financing. DOE estimated the cost 

of equity financing with the Capital 

Asset Pricing Model (CAPM), which is 

among the most widely used models to 

estimate such costs. CAPM considers 

the cost of equity to be proportional to 

the amount of systematic risk for a 

company. The cost of equity financing 

tends to be high when a company faces 

a large degree of systematic risk and low 

when the company faces a small degree 

of systematic risk.27

To estimate the weighted average cost 

of capital (WACC; defined as the 

weighted average cost of debt and equity 

financing) of purchasers, DOE used a 

sample of companies involved in the six 

ownership categories, according to their 

type of activity. DOE sought financial 

information for all firms in the full 

sample involved in the seven types of 

businesses drawn from a database of 

7,460 U.S. companies on the Damodaran 

Online Web site.28 In cases where one 

or more of the variables needed to 

estimate the discount rate was missing 

or could not be obtained, DOE discarded 

the firm from the analysis. Overall, it 

discarded about 36 percent of the firms 

in the full database for this reason, 

resulting in a final count of 4,139 firms. 

This WACC approach for determining 

discount rates accounts for the current 

tax status of individual firms on an 

overall corporate basis. DOE did not 

evaluate the marginal effects of 

increased costs, and thus depreciation 

due to more expensive equipment, on 

the overall tax status. See chapter 8 of 

the TSD for details. 

DOE used the final sample of 4,139 

companies to represent beverage 

vending machine purchasers. For each 

company in the sample, DOE derived 

the cost of debt, percent debt financing, 

and systematic company risk from 

information on the Damodaran Online 

Web site. Damodaran estimated the cost 

of debt financing from the long-term 

government bond rate (4.39 percent) and 

the standard deviation of the stock 

price. DOE then determined the 

weighted average values for the cost of 

debt, range of values, and standard 

deviation of WACC for each category of 

the sample companies. Deducting 

expected inflation from the cost of 

capital provided estimates of real 

discount rate by ownership category. 

The above methodology yielded the 

following average after-tax discount 

rates, weighted by the percentage shares 

of total purchases of beverage vending 

machines: (1) 5.54 percent for bottlers 

and distributors, (2) 6.25 percent for 

manufacturing facilities, (3) 4.81 percent 

for office and health care businesses, (4) 

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26038 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

29These discount rates are what private 

companies pay as beverage vending machine 

purchasers. Government agencies use 3-percent and 

7-percent discount rates for economic calculations. 

30Cadmus Group. 2006. ‘‘Saving Energy in 

Vending Machines: Opportunities for the Regional 

Technical Forum.’’ Presentation for the Northwest 

Power Conservation Council. Available at http:// 

www.nwcouncil.org/energy/rtf/meetings/2006/ 

2006_09. Accessed on January 5, 2009. 

6.00 percent for retail stores, (5) 2.35 

percent for schools and colleges, (6) 3.03 

percent for military bases, and (7) 5.23 

percent for all other types of 

businesses.29 See chapter 8 of the TSD 

for details. 

12. Payback Period 

The PBP is the amount of time it takes 

the customer to recover the 

incrementally higher purchase cost of 

more energy efficient equipment as a 

result of lower operating costs. 

Numerically, the PBP is the ratio of the 

increase in purchase cost (i.e., from a 

less efficient design to a more efficient 

design) to the decrease in annual 

operating expenditures. This type of 

calculation is known as a ‘‘simple’’ PBP 

because it does not take into account 

changes in operating cost over time or 

the time value of money; that is, the 

calculation is done at an effective 

discount rate of 0 percent. 

The equation for PBP is 

PBP = DIC/DOC 

Where: 

PBP = payback period in years, 

DIC = difference in the total installed cost 

between the more efficient standard level 

equipment (energy consumption levels 2, 

3, etc.) and the baseline (energy 

consumption level 1) equipment, and 

DOC = difference in annual operating costs. 

The data inputs to the PBP analysis 

are the total installed cost of the 

equipment to the customer for each 

energy consumption level and the 

annual (first-year) operating costs for 

each energy consumption level. The 

inputs to the total installed cost are the 

equipment price and installation cost. 

The inputs to the operating costs are the 

annual energy cost, annual repair cost, 

and annual maintenance cost. The PBP 

uses the same inputs as the LCC 

analysis, except that electricity price 

trends and discount rates are not 

required. Since the PBP is a ‘‘simple’’ 

(undiscounted) payback, the required 

electricity cost is only for the year in 

which new energy conservation 

standards take effect—in this case, 2012. 

The electricity price used in the PBP 

calculation of electricity cost was the 

price projected for 2012, expressed in 

2008$, but not discounted to 2008. 

Discount rates are not used in the PBP 

calculation. 

As discussed in section III.D.2, 

section 325(o)(2)(B)(iii) of EPCA states 

that there is a rebuttable presumption 

that an energy conservation standard is 

economically justified if the additional 

cost to the consumer of a product that 

meets the standard level is less than 

three times the value of the first-year 

energy (and, as applicable, water) 

savings resulting from the standard, as 

calculated under the applicable DOE 

test procedure. However, as stated in 

section III.D.2, DOE does not rely on the 

rebuttable presumption payback criteria 

when examining potential standard 

levels, but does consider it as part of a 

full analysis that includes all seven 

relevant statutory criteria under 42 

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

F. Shipments Analysis 

DOE developed forecasts of the 

number of units shipped for the base 

case and standards cases and included 

those forecasts in the NES spreadsheet. 

The shipments portion of the 

spreadsheet forecasts shipments of 

beverage vending machines from 2012 

to 2042. DOE developed shipments 

forecasts for the two equipment classes 

by accounting for the shipments 

replacing the existing stock of beverage 

vending machines in new commercial 

floor spaces and old equipment 

removed through demolitions. Chapter 

10 of the TSD provides additional 

details on shipments forecasts. 

The shipments analysis is a 

description of beverage vending 

machine stock flows as a function of 

year and age. The shipment analysis 

treats each of the two classes of 

equipment independently, such that 

future shipments in any one class are 

unaffected by shipments in the other 

equipment class. In addition, the 

relative fraction of shipments in each 

equipment class compared to all 

beverage vending machine shipments is 

assumed to be constant over time. DOE 

recognizes that a business or a beverage 

vending machine owner can choose to 

use different classes of beverage vending 

machines to sell the same product if the 

equipment is in the required 

temperature range and is suitable for the 

environment in which the equipment 

will be placed. The decision to adopt 

one equipment class over another 

within the same temperature range will 

depend on first costs, operating costs, 

machine location (e.g., outdoors versus 

indoors), and the perceived ability to 

merchandise product. 

DOE received many comments on the 

shipment analysis and assumptions in 

the ANOPR. Many comments addressed 

the declining size of the beverage 

vending machine market. Royal Vendors 

estimate that the current beverage 

vending machine stock is about 2.3 or 

2.5 million units. Further, Royal 

Vendors commented that the population 

of machines is decreasing and that 

replacements purchased are less than 

‘‘normal shrinkage.’’ (Royal Vendors, 

No. 32 at p. 1) Dixie-Narco stated that 

a significant number of machines are 

being pulled out of the marketplace, 

partly because of the number of 

locations (particularly schools) that no 

longer allow vending machines. (DixieNarco, No. 29 at p. 44) Coca-Cola said 

that it has removed between 200,000 

and 250,000 beverage vending machines 

since 2006 and that future shipments 

will only be replacements. (Coca-Cola, 

No. 29 at p. 140) PepsiCo agreed that the 

number of machines is decreasing and 

it doesn’t see this trend reversing 

anytime soon. (PepsiCo, No. 29 at pp. 

43–44) It attributed this, in part, to the 

‘‘very high cost’’ of vandalism. NAMA 

also noted that there has been a decline 

in beverage vending machine sales over 

the last 5 or 6 years. NAMA attributed 

this to the removal of vending machines 

from school districts. (NAMA, No. 29 at 

pp. 48–49) The Joint Comment 

recommended that DOE conduct an 

independent annual sales forecast of 

equipment, stating that it was not clear 

why school district soda bans would 

result in the removal of vending 

machines rather than replacing sodas 

with healthier beverages in existing 

machines. (Joint Comment, No. 34 at p. 

2) EEI suggested that DOE obtain data to 

monitor the downward trend in 

shipments and incorporate any observed 

reductions of the market into the 

analysis. (EEI, No. 37 at p. 2) EPA 

offered to share aggregated shipment 

data of ENERGY STAR qualified 

equipment with DOE. (EPA, No. 29 at p. 

48) 

DOE also received input on sales of 

new and replacement equipment. Royal 

Vendors stated that the overall current 

stock is approximately 90 percent Class 

B machines and 10 percent Class A 

machines, of which it builds large and 

medium Class A machines. However, 

trends are changing. In the future, the 

overall stock will more closely resemble 

ratios of 60/40 or 50/50 between Class 

A and Class B machines. (Royal 

Vendors, No. 29 at p. 139 and No. 29 at 

pp. 163–167). This data was also 

confirmed by data from The Cadmus 

Group (2006).30

DOE has updated its shipments model 

for the NPV analysis to reflect the 

comments it received. The model now 

reflects that there is zero growth in the 

number of vending machines and that 

new machines will only replace old and 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26039 

retired machines. DOE also updated its 

shipments analysis model to reflect 

more closely comments on the 

breakdown of shipments between 

equipment classes as well as the 

different sizes. 

Dixie-Narco commented that it 

currently has kits listed on the EPA Web 

site to upgrade existing machines to 

meet ENERGY STAR Tier 2. (DixieNarco, No. 29 at pp. 90–91) DOE accepts 

the comment and has assumed that a 

high percentage of the machines 

shipped in 2012 in the base case 

shipment forecast will meet ENERGY 

STAR Tier 2 levels even without energy 

conservation standards. 

The results of the shipments analysis 

are driven primarily by historical 

shipments data for the two equipment 

classes of beverage vending machines 

under consideration. The model 

estimates that, in each year, the existing 

stock of beverage vending machines 

either ages by one year or is worn out 

and replaced. In addition, new 

equipment can be shipped into new 

commercial building floor space and old 

equipment can be removed through 

demolitions. DOE chose to analyze all 

efficiency levels analyzed in the LCC in 

the NIA. DOE determined shipments 

forecasts for all levels analyzed in the 

NIA and NPV analysis. 

Because several different types of 

businesses own beverage vending 

machines and use them in a variety of 

locations, machines are divided into 

several market segments. Table IV–7 

gives the business locations and the 

approximate size of the market segments 

from 2002 to 2005. 

TABLE IV—7 MARKET SEGMENTS FOR

THE BEVERAGE VENDING MACHINES

(2004–2007) 

Percent of 

machines 

Business Location: 

Manufacturing ....................... 36.2 

Offices ................................... 19.5 

Retail ..................................... 8.0 

Schools/Colleges .................. 13.0 

Health Care ........................... 6.2 

Hotels/Motels ........................ 3.6 

Restaurants/Bars/Clubs ........ 0.7 

Correctional Facilities ............ 2.1 

Military Bases ........................ 3.0 

Other ..................................... 7.8 

Total ............................... 100.0 

Ownership: 

Bottlers and Vendors ............ 95.0 

Business Owned ................... 5.0 

—Manufacturing .................... 1.5 

—Offices and Health Care .... 1.4 

—Retail/Restaurants/Bars/ 

Clubs ................................. 0.8 

—Schools, Colleges, and 

Public Facilities (including 

Correctional) ...................... 0.8 

—Military Bases .................... 0.4 

—Other (including hotels/motels) .................................... 0.1 

—Site Owned ........................ 5.0 

Total ............................... 100.0 

Table IV–8 shows the forecasted 

shipments of the three typical sizes of 

beverage vending machines for Class A 

and Class B units for selected years and 

cumulatively between 2012 and 2042. 

As equipment purchase price increases 

with higher efficiency levels, a drop in 

shipments could occur relative to the 

base case. On the other hand, as annual 

energy consumption is reduced, 

equipment sales could increase due to 

more frequent installations and use of 

beverage vending machines by retailers. 

DOE has no information to calibrate 

either relationship. Therefore, although 

the spreadsheet allows for changes in 

projected shipments in response to 

efficiency increases or energy 

consumption decreases, DOE presumed 

for the NOPR analysis that shipments 

would not change in response to the 

changing TSLs. Table IV–8 also shows 

the cumulative shipments for the 31- 

year period between 2012 and 2042 for 

all beverage vending machines. 

Comments from the ANOPR public 

meeting indicated that there has been a 

substantial decrease in shipments since 

2000 and that future shipments are not 

expected to increase for the foreseeable 

future. These shipments are entirely for 

replacements, but the stock of beverage 

vending machines has also been 

declining at a significant rate. DOE has 

estimated a current level of shipments 

of about 90,000 units per year. This rate 

is consistent with observed declines in 

stock, expected retirement rates based 

on stated stock lifetimes, and extra 

removals due to vandalism and other 

causes, as stated by interested parties. 

Consistent with public comment, these 

shipment rates (which equals 

replacements) are assumed to be 

constant through 2042, which results in 

a continuing decline in the stock of 

beverage vending machines from recent 

levels of about 2.4 million units to a 

level of about 944,000 units by 2020, at 

which point the stock stabilizes. 

Chapter 10 of the TSD provides 

additional details on the shipments 

analysis. 

TABLE IV—8 FORECASTED SHIPMENTS FOR BEVERAGE VENDING MACHINES (BASELINE EFFICIENCY, LEVEL 1) FOR

SELECTED YEARS

[Thousands of units shipped] 

Equip. class Size 

Thousands of units shipped 

2012 2015 2020 2025 2030 2035 2040 2042 

Cumulative 

shipments* 

2012–2042 

A ............................ L ............................ 12.4 12.4 12.4 12.4 12.4 12.4 12.4 12.4 383.6 

A ............................ M ........................... 37.1 37.1 37.1 37.1 37.1 37.1 37.1 37.1 1,150.9 

A ............................ S ........................... .............. .............. .............. .............. .............. .............. .............. .............. ....................

B ............................ L ............................ 10.1 10.1 10.1 10.1 10.1 10.1 10.1 10.1 313.9 

B ............................ M ........................... 30.4 30.4 30.4 30.4 30.4 30.4 30.4 30.4 941.6 

B ............................ S ........................... .............. .............. .............. .............. .............. .............. .............. .............. ....................

* The cumulative shipments do not equal the totals across each row because all years from 2012 to 2042 are included in the calculation. 

G. National Impact Analysis 

The NIA assesses future NES and the 

national economic impacts of different 

efficiency levels of beverage vending 

machines. The analysis measures 

economic impacts using the NPV metric 

(i.e., future amounts discounted to the 

present) of total commercial customer 

costs and savings expected to result 

from new standards at specific 

efficiency levels. For the NOPR analysis, 

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26040 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

31Refrigerators have an average lifetime of 19 

years, and, based on industry data (Technical 

Support Document: Energy Efficiency Standards for 

Consumer Products: Refrigerators, Refrigeratorfreezers, & Freezers, July 1995) on when 

refrigerators are retired, DOE estimates the 

refrigerators are retired as early as 13 years and as 

late as 24 years (i.e., vintaging). DOE rounded up 

24 years to 30 years in order to end the analysis on 

a decade. 

DOE used the same spreadsheet model 

used in the ANOPR to calculate the 

energy savings and the national 

economic costs and savings from new 

standards, but with updates to specific 

input data. 

Unlike the LCC analysis, the NES 

spreadsheet does not use distributions 

for inputs or outputs. DOE examined 

sensitivities by applying different 

scenarios. DOE used the NES 

spreadsheet to calculate national energy 

savings and NPV using the annual 

energy consumption and total installed 

cost data from the LCC analysis and 

estimates of national shipments for the 

two equipment classes. DOE forecasted 

the energy savings, energy cost savings, 

equipment costs, and NPV of benefits 

for both beverage vending machine 

classes from 2012 to 2057. The forecasts 

provided annual and cumulative values 

for all four output parameters. 

DOE calculated the NES by 

subtracting energy use under a 

standards scenario from energy use in a 

base case (no new standards) scenario. 

Energy use is reduced when a unit of 

beverage vending machine in the base 

case efficiency distribution is replaced 

by a more efficient unit. Energy savings 

from this replacement for each 

equipment class are the same national 

average values as calculated in the LCC 

and PBP spreadsheet on a per-unit basis. 

Table IV–9 shows key inputs to the NIA. 

In the NIA analysis for the NOPR, DOE 

did not include a rebound effect. As the 

ANOPR discussed, a rebound effect 

occurs when a piece of equipment that 

is made more efficient is used more 

intensively, so that the expected energy 

savings from the efficiency 

improvement do not fully materialize. 

Because beverage vending machines 

operate on a 24-hour basis to maintain 

adequate conditions for the 

merchandise being retailed, a rebound 

effect resulting from increased 

refrigeration energy consumption 

seemed unlikely. Thus, DOE did not 

account for a rebound effect in the LCC 

analysis. There were no comments on 

this issue. Chapter 11 of the TSD 

provides additional information about 

the NES spreadsheet. 

On the topic of shipments by 

efficiency levels, Coca-Cola commented 

that, essentially, all machines will be in 

the same efficiency class, which is the 

optimal point between price and 

performance. (Coca-Cola, No. 29 at p. 

148) PepsiCo stated that every machine 

it approves for purchase must meet 

ENERGY STAR Tier 2. This includes 

purchases by PepsiCo bottlers as well. 

(PepsiCo, No. 29 at p. 149) Dixie-Narco 

stated that vending distributors (or 

operators and independent bottlers) do 

not mandate ENERGY STAR Tier 2, but 

that they are only a small part of the 

business. (Dixie-Narco, No. 29 at pp. 

150–152) USA Technologies 

commented that much of the industry is 

already meeting Tier 2 and that 80 to 90 

percent of the machines sold are 

probably at the Tier 2 levels (USA 

Technologies, No. 29 at pp. 101–102). 

DOE understands that the major 

bottlers that purchase over 85 percent of 

the new machines require ENERGY 

STAR Tier 2, which went into effect on 

July 1, 2007. Therefore, most of the 

machines that will be purchased in 2012 

when the new standards take effect are 

expected to meet Tier 2 levels. In 

response to the input received, DOE has 

changed the distribution of efficiency 

levels to reflect an estimate of 90 

percent of the market meeting ENERGY 

STAR Tier 2 levels by 2012 in the base 

case market efficiency distribution. DOE 

does not have information on how the 

distribution of efficiency levels might 

change over the analysis period (2012 to 

2042) and therefore assumed that the 

distribution in 2012 remained constant. 

See section IV.G.1 for more details. 

Regarding the period of the 

rulemaking analysis, EEI commented 

that DOE should consider using a 20- 

year analytical timeframe if typical 

machines only have a 10-year lifetime 

and the analysis covers ‘‘two lifetimes.’’ 

The Department of Energy’s appliance 

standards program is conducted 

pursuant to Title III, Parts A and A–1 of 

EPCA (42 U.S.C. 6291–6317). The 

program includes consumer products, 

such as refrigerators and freezers, 

central air conditioners and central air 

conditioning heat pumps, furnaces and 

water heaters, and certain commercial 

and industrial equipment, including 

electric motors and commercial heating 

and air conditioning equipment and 

water heaters. 

EPCA directs DOE to conduct a series 

of rulemakings to consider whether to 

amend the existing energy conservation 

standards. EPCA also directs DOE to set 

any new standard such that the 

maximum improvement in energy 

efficiency is achieved that is 

technologically feasible and 

economically justified. In addition, the 

amount of energy saved must be 

significant. (42 U.S.C. 6296(o)(2)) DOE 

calculates the net present value (NPV) of 

new or amended standards to estimate 

the impacts of standards on the nation. 

In performing the NPV analysis for the 

first energy conservation standards 

rulemakings, DOE selected a 30-year 

analysis period, beginning on the 

effective date of the standard, because it 

closely matched the lifetime of the 

longest lived products among the 

products being considered for 

standards. Matching the lifetime of the 

longest lived products allows for a full 

turnover of the stock.31 In subsequent 

years, for the next few rulemakings, 

DOE used the same analysis end-date as 

the initial rulemakings, but with the 

appropriate start-of-standard date, 

resulting in a shorter analysis period. 

Then, in the 1990’s rulemakings, DOE 

found that using the same end-date of 

the analysis would result in analyses 

that could not capture the full impact of 

amended standards. As a result, DOE 

determined it was necessary to change 

the end-date of the analyses. DOE 

settled on the 30-year analysis period, 

which allows DOE to capture the full 

life of any product that was shipped in 

the first year in which that standard 

became effective. Because products have 

varying lifetimes, DOE uses a 30-year 

analysis period to maintain a consistent 

time frame to compare the energy 

savings and economic impacts from all 

the standards rulemakings. For 

consistency and for ease in comparing 

results across rulemakings, DOE settled 

on a 30-year analysis period for 

subsequent rulemakings. 

DOE believes that using a 30-year 

analysis period is appropriate. In order 

to compare energy savings for 

residential product classes or 

commercial equipment classes across 

appliance rulemakings where the 

various products and equipment classes 

have different lifetimes, DOE must use 

at least the lifetime of the longest-lived 

product or equipment type for 

assessment, since the annual energy 

consequences of improving the longestlived residential products or 

commercial equipment would not be 

known until all of the market for such 

product or equipment consisted of 

improved units. That would not happen 

until the last of the pre-standard 

equipment is retired. Thirty years is a 

practical estimate for that event for 

short- and long-lived equipment. 

To compare economic costs and 

savings for products or equipment using 

discounted present value, it is common 

in economics to use the stream of 

benefits and costs over the lifetime of 

the equipment. In DOE energy 

conservation standards rulemakings, the 

outer limit for economic benefits and 

costs is established at the last year of life 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26041 

32 DOE is committed to using the latest AEO 

forecast that is appropriate for its analysis. For 

example, if an updated AEO forecast is available for 

the final rule analysis, DOE will use that forecast. 

However, if an updated AEO forecast is published 

after the final rule analysis is completed, but before 

the final rule is published, the analysis will remain 

unchanged. DOE may conduct some sensitivity 

analyses, if appropriate, to determine if its 

conclusions would change based on the updated 

AEO forecast. 

of the oldest equipment purchased 

during the 30-year period used for 

energy savings comparisons. 

There are also economic 

consequences for choosing different 

time periods over which to compare 

rules. As an example, consider two 

different time periods that could be 

used to compare two rules, one for 30- 

year equipment and one for 20-year 

equipment with identical costs and 

savings, but a shorter 20-year lifetime. If 

the 30-year period comparison period 

were shortened to 20 years to compare 

the two rules there would be significant 

consequences for NPV. Approximately 

one-third of the (undiscounted) savings 

from equipment with a 30-year life 

would be not counted, and the value of 

the savings would be reduced by about 

15 percent at a 7 percent discount rate 

and by about 24 percent at a 3 percent 

discount rate. In addition, the 

investment required for shorter-life 

equipment that would have been 

required with a 30-year comparison 

would be ignored if the lifetime of the 

shorter-lived equipment is used to 

compare rulemakings. Therefore, DOE 

believes the 30-year analytical period 

enables it to fully capture the impacts of 

standards on the nation as well as to 

compare the relative economic impacts 

of different rulemakings. DOE will 

continue to use the 30-year analytical 

timeframe for this rulemaking. DOE will 

consider changes to the analytical 

period in other rulemakings, where 

appropriate; such as rulemakings for 

products with significantly shorter 

lifetimes (both average life and the life 

of the oldest product when retired). 

On the topic of site-to-source energy 

conversion factor, EEI commented that 

DOE should account for the fact that 

more than 29 States now have 

renewable portfolio standards that will 

increase the amount of zero emissions 

and zero Btu electricity production 

sources by 2010, 2015, 2020, or 2025. 

These factors will reduce the overall 

heat rate faster than the AEO forecast, 

and DOE should not use fossil fuel 

power plant heat rates as a ‘‘proxy’’ for 

renewable electricity generation stations 

(EEI, No. 37 at p. 3). 

DOE will continue to use AEO2009 

base electricity price and the price 

projections as long as no other credible 

and publicly available data that could 

be used to generate or revise the site-tosource energy conversion factors are 

made available to DOE.32

TABLE IV–9—SUMMARY OF NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE INPUT

Input ANOPR Description Changes for NOPR 

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

(chapter 9 of the ANOPR TSD, Shipments 

Analysis).

No growth in shipments; based on industry 

comments on the ANOPR, all shipments 

are replacements. 

Effective Date of Standard ................................. 2012 ................................................................. No change. 

Base Case Efficiencies ...................................... Distribution of base case shipments by efficiency level.Efficiency mix changed based on industry 

comment. 

Standards Case Efficiencies .............................. Distribution of shipments by efficiency level for 

each standards case. Standards case annual market shares by efficiency level remain constant over time for the base case 

and each standards case.

No change. 

Annual Energy Consumption per Unit ............... Annual weighted-average values are a function of energy consumption level per unit, 

which are established in chapter 7 of the 

ANOPR TSD, Energy Use Characterization.

No change. 

Total Installed Cost per Unit .............................. Annual weighted-average values are a function of energy consumption level (see chapter 8 of the ANOPR TSD).No change. 

Repair Cost per Unit .......................................... Annual weighted-average values increase with 

manufacturer’s cost (chapter 8 of the 

ANOPR TSD).

No change. 

Maintenance Cost per Unit ................................ Annual weighted-average value equals 

$165.44 (chapter 8 of the ANOPR TSD).

Annual weighted-average value equals $154 

(chapter 8 of the TSD). 

Escalation of Electricity Prices ........................... EIA AEO2007 forecasts (to 2030) and extrapolation beyond 2030 (chapter 8 of the 

ANOPR TSD).

Updated to AEO2009 forecasts. 

Electricity Site-to-Source Conversion ................ Conversion varies yearly and is generated by 

DOE/EIA’s NEMS* model (a time-series 

conversion factor that includes electric generation, transmission, and distribution 

losses).

Conversion varies yearly and is generated by 

DOE/EIA’s NEMS model. Calculated marginal rates by year. 

Discount Rate .................................................... 3% and 7% real ............................................... No change. 

Present Year ...................................................... Future costs are discounted to 2008 ............... Future costs are discounted to 2009 

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26042 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

33The U.S. Census Bureau,‘‘2000 Census,’’ 

http://factfinder.census.gov/servlet/ 

GCTTable?_bm=y&-geo_id=01000US&- 

_box_head_nbr=GCT-PH1&-context=gct&- 

ds_name=DEC_2000_SF1_U&-tree_id=4001&- 

format=US-9. Accessed March 25, 2007. 

TABLE IV–9—SUMMARY OF NATIONAL ENERGY SAVINGS AND NET PRESENT VALUE INPUT—Continued 

Input ANOPR Description Changes for NOPR 

Rebound Effect .................................................. As explained in the LCC inputs section, DOE 

does not anticipate unit energy consumption 

to rebound above the levels used in the 

LCC analysis and passed to the NIA analysis. Further, the shipments model develops 

shipment projections to meet historical market saturation levels. The shipment model 

does not adjust shipments as a function of 

unit energy consumption levels, because 

DOE has no information with which to calibrate such a relationship.

No change. 

1. Base Case and Standards Case 

Forecasted Efficiencies 

Components of DOE’s estimates of 

NES and NPV are the energy efficiencies 

of shipped equipment that DOE 

forecasts over time for the base case 

(without new standards) and for each 

standards case. The forecasted 

efficiencies represent the distribution of 

energy efficiency of the equipment 

under consideration that is shipped over 

the forecast period (i.e., from the 

assumed effective date of a new 

standard to 30 years after the standard 

becomes effective). 

The average annual energy 

consumption of the BVMs shipped in a 

given year depends on the per-unit 

energy consumption of BVM equipment 

at each efficiency level and the mix of 

efficiency levels of new units that is 

shipped in each year. Per-unit energy 

consumption at each efficiency level is 

determined in the energy use 

characterization. (See chapter 7 of the 

TSD.) The standards affect the mix of 

annual shipments by efficiency level as 

briefly described below. (See chapter 11 

for details.) 

Because no published data were 

available on market shares broken down 

by efficiency level, DOE developed 

estimates based on comments from 

interested parties at the ANOPR public 

meeting. These comments concerned 

approximate market shares of current 

shipments by equipment class and size, 

and approximate shipments by 

efficiency level for the base case (i.e., 

without new standards). 

DOE developed base case efficiency 

forecasts based on the estimated market 

shares by equipment class and 

efficiency level. Because there are no 

historical data to indicate how 

equipment efficiencies or relative 

equipment class preferences have 

changed over time, DOE assumed that 

forecasted market shares would remain 

frozen at the 2012 efficiency level until 

the end of the forecast period (30 years 

after the effective date or 2042). 

For its estimate of standards case 

forecasted efficiencies, DOE used a 

‘‘roll-up’’ scenario to establish the 

market shares by efficiency level for the 

year that standards become effective 

(i.e., 2012). Information available to 

DOE suggests that equipment shipments 

with efficiencies in the base case that 

did not meet the standard levels under 

consideration would roll up to meet the 

new standard levels. Also, DOE 

assumed that all equipment efficiencies 

in the base case that were above the 

standard levels under consideration 

likely would not be affected. 

2. Annual Energy Consumption, Total 

Installed Cost, Maintenance Cost, and 

Repair Costs 

The difference in shipments by 

equipment efficiency level between the 

base case and standards case was the 

basis for determining the reduction in 

per-unit annual energy consumption 

that could result from new standards. 

The beverage vending machine stock in 

a given year is the total number of 

beverage vending machines shipped 

from earlier years that survive in the 

given year. The NES spreadsheet model 

tracks the number of beverage vending 

machines shipped each year and 

estimates the total beverage vending 

machine stock for each year. The annual 

energy consumption by efficiency level 

for each equipment class comes from 

the LCC analysis on a per-unit basis. 

Similarly, the total installed, 

maintenance, and repair costs for each 

efficiency level for each equipment class 

analyzed in the LCC are on a per-unit 

basis. Using the total estimated 

shipments and total estimated stock by 

equipment class and efficiency level, 

DOE calculates the annual energy 

consumption for the beverage vending 

machine stock in each year, the 

maintenance and repair costs associated 

with the equipment stock, and the total 

installed costs associated with new 

shipments in each year based on the 

standards scenario and associated 

distribution of shipments by efficiency 

level. 

As explained above, DOE assumes 

that all Class A machines and 75 

percent of Class B machines are 

installed indoors and that 25 percent of 

Class B machines are located outdoors. 

To calculate a weighted energy use for 

all Class B machines, DOE added 

aggregated results based on State-byState TMY2 weather station data to the 

annual energy consumption of the 

remaining 75 percent of Class B 

machines that are located indoors. DOE 

further aggregated energy consumption 

at the State level to arrive at the national 

average energy consumption, using the 

2000 Census population data.33 Table 

IV–10 presents the national average 

annual energy consumption figures for 

the three different sizes of Class B 

machines. 

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TABLE IV–10—NATIONAL AVERAGE ANNUAL ENERGY CONSUMPTION FOR CLASS B MACHINES, BY EFFICIENCY LEVELS

Size 

Annual energy consumption (all locations, kWh) 

Level 1 

(Baseline) Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 

Large .................................................... 2019 1890 1842 1760 1746 1561 1526 

Medium ................................................ 1925 1799 1731 1658 1645 1463 1431 

Small .................................................... 1724 1606 1505 1505 1495 1313 1285 

Table IV–11 shows annual energy 

consumption for each size of Class A 

machine. National average energy 

consumption figures are identical to 

State energy consumption figures. These 

national average annual energy 

consumption figures are used in the 

subsequent LCC, PBP, and NES 

analyses. 

TABLE IV–11—ANNUAL ENERGY CONSUMPTION FOR CLASS A MACHINES, ALL SIZES AND ALL LOCATIONS, BY EFFICIENCY

LEVELS

Size 

Average annual energy consumption (all locations, kWh) 

Level 1 

(Baseline) Level 2 Level 3 Level 4 Level 5 Level 6 Level 7 Level 8 

Large ................................ 2464 2267 2099 1916 1785 1679 1610 1438 

Medium ............................ 2383 2011 1916 1734 1529 1442 1383 1252 

Small ................................ 2227 1924 1734 1551 1442 1361 1307 1186 

DOE’s energy use characterization 

assumes that there are no controls 

limiting display lighting or compressor 

operation in a beverage vending 

machine to certain hours of the day. As 

a result, the display lighting or 

compressor operation would not be 

affected by occupancy patterns in the 

building. However, using occupancy 

sensors and other controllers might 

reduce a vending machine’s energy 

requirements during long periods of 

non-use, such as overnight and 

weekends. This occupancy controller 

option is often used when de-lamping a 

vending machine is not advisable (i.e., 

when a vending machine does not have 

a captive audience or when de-lamping 

results in reduced vending sales 

revenues). Controllers can either be 

added on or enabled in certain beverage 

vending machines. See section IV.D for 

additional discussion of lighting 

controls and occupancy sensors. See 

chapter 7 in the TSD. 

3. Escalation of Electricity Prices 

DOE uses the most recent AEO 

reference case to forecast energy prices 

for standard rulemakings. DOE used the 

AEO2009 reference case forecasts for 

future electricity prices, extended out to 

the end of the analysis period. DOE 

extrapolated the trend in values from 

2020 to 2030 of the forecast to establish 

prices for the remainder of the analysis 

period. DOE intends to update its 

analysis for the final rule to reflect the 

AEO2009 electricity price forecasts 

when final versions of these price 

forecasts are available. 

4. Electricity Site-to-Source Conversion 

The site-to-source conversion factor is 

a multiplier used for converting site 

energy, expressed in kWh, into primary 

or source energy, expressed in 

quadrillion Btu (quads). The site-tosource conversion factor accounts for 

losses in electricity generation, 

transmission, and distribution. For the 

ANOPR, DOE used site-to-source 

conversion factors based on U.S. average 

values for the commercial sector, 

calculated from AEO2008, Table A5. 

The average conversion factors vary 

over time because of projected changes 

in electricity generation sources (i.e., the 

power plant types projected to provide 

electricity to the country). For the 

NOPR, DOE developed marginal site-tosource conversion factors that relate the 

national electrical energy savings at the 

point of use to the fuel savings at the 

power plant. These factors use the 

NEMS model and the examination of 

the corresponding energy savings from 

standards scenarios considered in DOE’s 

utility impact analysis (chapter 14 of the 

TSD). The conversion factors vary over 

time because of projected changes in 

electricity generation sources and power 

plant dispatch scenarios. DOE used 

average U.S. conversion factors in the 

ANOPR because the utility impact 

analysis that is used to determine 

marginal conversion factors appropriate 

to efficiency standards for beverage 

vending machines occurs in the NOPR 

stage of the analysis. 

To estimate NPV, DOE calculated the 

net impact each year as the difference 

between total operating cost savings 

(including electricity, repair, and 

maintenance cost savings) and increases 

in total installed costs (including MSP, 

sales taxes, distribution channel 

markups, and installation costs). DOE 

calculated the NPV of each TSL over the 

life of the equipment using three steps. 

First, DOE determined the difference 

between the equipment costs under the 

TSL and the base case to calculate the 

net equipment cost increase resulting 

from the TSL. Second, DOE determined 

the difference between the base case 

operating costs and the TSL operating 

costs to calculate the net operating cost 

savings from the TSL. Third, DOE 

determined the difference between the 

net operating cost savings and the net 

equipment cost increase to calculate the 

net savings (or expense) for each year. 

DOE then discounted the annual net 

savings (or expenses) for beverage 

vending machines purchased on or after 

2012 to the reference year 2009, and 

summed the discounted values to 

determine the NPV of a TSL. An NPV 

greater than zero shows net savings (i.e., 

the TSL would reduce overall customer 

expenditures relative to the base case in 

present value terms). An NPV less than 

zero (i.e., negative value) indicates that 

the TSL would result in a net increase 

in customer expenditures in present 

value terms. 

H. Life-Cycle Cost Subgroup Analysis 

In analyzing the potential impact of 

new or amended standards on 

commercial customers, DOE evaluates 

the impact on identifiable groups (i.e., 

subgroups) of customers, such as 

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26044 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

different types of businesses that may be 

disproportionately affected by an energy 

conservation standard. The subgroup 

used to perform this evaluation was 

manufacturing and/or industrial 

facilities that purchase their own 

vending machines. This customer 

subgroup is likely to include owners of 

high-cost vending machines because 

they have the highest capital costs and 

face the lowest electricity prices of any 

customer subgroup. These two 

conditions make it likely that this 

subgroup will have the lowest life-cycle 

cost savings of any major customer 

group. 

The Joint Comment suggested that 

DOE focus its customer subgroup 

analysis on life-cycle costs rather than 

first-cost impacts. (Joint Comment, No. 

34 at p. 6) DOE agrees with the Joint 

Comment and will continue in this 

rulemaking to focus the customer LCC 

subgroup analysis on examination of the 

life-cycle cost impacts. There will likely 

be first-cost increases with higher 

standard levels but also increased 

energy savings over the lifetime of the 

equipment. By examining LCC, DOE 

considers both impacts simultaneously 

for the designated subgroup in the LCC 

subgroup analysis, just as it does for the 

entire customer base in the LCC 

analysis. 

DOE determined the impact on this 

beverage vending machine customer 

subgroup using the LCC spreadsheet 

model. DOE conducted the LCC and 

PBP analyses for beverage vending 

machine customers. The standard LCC 

and PBP analyses (described in section 

IV.E) include various types of 

businesses that own and use beverage 

vending machines. The LCC spreadsheet 

model allows for the identification of 

one or more subgroups of businesses, 

which can then be analyzed by 

sampling only each subgroup. The 

results of DOE’s LCC subgroup analysis 

are summarized in section V.B.1.b and 

described in detail in chapter 12 of the 

TSD. 

I. Manufacturer Impact Analysis 

1. Overview 

DOE performed an MIA to estimate 

the financial impact of energy 

conservation standards on beverage 

vending machine manufacturers, and to 

calculate the impact of such standards 

on domestic manufacturing employment 

and capacity. The MIA has both 

quantitative and qualitative aspects. The 

quantitative part of the MIA primarily 

relies on the GRIM, an industry-cashflow model customized for this 

rulemaking. The GRIM inputs are data 

characterizing the industry cost 

structure, shipments, and revenues. The 

key output is the INPV. Different sets of 

assumptions (scenarios) will produce 

different results. The qualitative part of 

the MIA addresses factors such as 

equipment characteristics, 

characteristics of particular firms, and 

market and equipment trends, as well as 

an assessment of the impacts of 

standards on manufacturer subgroups. 

The complete MIA is outlined in 

chapter 13 of the TSD. 

DOE conducted the MIA in three 

phases. Phase 1, Industry Profile, 

consisted of preparing an industry 

characterization. Phase 2, Industry Cash 

Flow Analysis, focused on the industry 

as a whole. In this phase, DOE used the 

GRIM to prepare an industry cash-flow 

analysis. DOE used publicly available 

information developed in Phase 1 to 

adapt the GRIM structure to analyze 

refrigerated beverage vending machine 

equipment energy conservation 

standards. In Phase 3, Subgroup Impact 

Analysis, DOE interviewed 

manufacturers representing the majority 

of domestic refrigerated beverage 

vending machine equipment sales. 

During these interviews, DOE discussed 

engineering, manufacturing, 

procurement, and financial topics 

specific to each company, and also 

obtained each manufacturer’s view of 

the industry as a whole. The interviews 

provided valuable information DOE 

used to evaluate the impacts of energy 

conservation standards on manufacturer 

cash flows, manufacturing capacities, 

and employment levels. 

a. Phase 1, Industry Profile 

In Phase 1 of the MIA, DOE prepared 

a profile of the refrigerated beverage 

vending machine equipment industry 

based on the market and technology 

assessment prepared for this 

rulemaking. Before initiating the 

detailed impact studies, DOE collected 

information on the present and past 

structure and market characteristics of 

the refrigerated beverage vending 

machine equipment industry. DOE 

collected such information as market 

share, equipment shipments, markups, 

and cost structure for various 

manufacturers. The industry profile 

includes further detail on the overall 

market, equipment characteristics, 

estimated manufacturer market shares, 

the financial situation of manufacturers, 

and trends in the number of firms of 

refrigerated beverage vending machine 

equipment industry. 

The industry profile included a topdown cost analysis of refrigerated 

beverage vending machine equipment 

manufacturers that DOE used to derive 

equipment cost and preliminary 

financial inputs for the GRIM (e.g., 

revenues; material, labor, overhead, and 

depreciation expenses; selling, general, 

and administrative expenses (SG&A); 

and research and development (R&D) 

expenses). DOE also used public 

information to further calibrate its 

initial characterization of the industry, 

including U.S. Securities and Exchange 

Commission (SEC) 10–K reports, 

Standard & Poor’s (S&P) stock reports, 

and corporate annual reports. 

b. Phase 2, Industry Cash-Flow Analysis 

Phase 2 of the MIA focused on the 

financial impacts of potential energy 

conservation standards on the industry 

as a whole. DOE used the GRIM to 

calculate the financial impacts of energy 

conservation standards on 

manufacturers. In Phase 2, DOE used 

the GRIM to perform a preliminary 

industry cash-flow analysis. In 

performing this analysis, DOE used the 

financial values determined during 

Phase 1 and the shipment scenarios 

used in the NIA analysis. 

c. Phase 3, Subgroup Impact Analysis 

Using average cost assumptions to 

develop an industry cash-flow estimate 

does not adequately assess differential 

impacts among manufacturer subgroups. 

For example, small manufacturers, 

niche players, or manufacturers 

exhibiting a cost structure that largely 

differs from the industry average could 

be more negatively affected. DOE used 

the results of the industry 

characterization analysis (in Phase 1) to 

group manufacturers that exhibit similar 

characteristics. 

DOE established two subgroups for 

the MIA corresponding to large and 

small business manufacturers of 

beverage vending machines. For the 

beverage vending machine 

manufacturing industry, small 

businesses, as defined by the Small 

Business Administration (SBA), are 

manufacturing enterprises with 500 or 

fewer employees. Based on 

identification of these two subgroups, 

DOE prepared one interview guide with 

questions related to beverage vending 

machine manufacturing for large and 

small manufacturers. DOE used the 

interview guide to tailor the GRIM to 

address unique financial characteristics 

of manufacturers of the industry. DOE 

interviewed companies from each 

subgroup, including subsidiaries and 

independent firms and public and 

private corporations. The purpose of the 

interviews was to develop an 

understanding of how manufacturer 

impacts vary by TSL. During the course 

of the MIA, DOE interviewed 

manufacturers representing the vast 

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majority of domestic beverage vending 

machine sales. Many of these same 

companies also participated in 

interviews for the engineering analysis. 

However, the MIA interviews broadened 

the discussion from primarily 

technology-related issues to include 

business-related topics. One objective 

was to obtain feedback from industry on 

the assumptions used in the GRIM and 

to isolate key issues and concerns. See 

chapter 13 of the TSD for details. 

2. Discussion of Comments 

In the ANOPR, DOE reported that 

manufacturers claimed higher energy 

conservation standards could deter 

some customers from buying higher 

margin units with more features. 73 FR 

34130. The Joint Comment disagreed 

with this claim, stating that 

manufacturers have many options 

besides energy use to differentiate 

products. All these features have value 

to customers because they help sell 

more product or cut operating costs. 

(Joint Comment, No. 34 at pp. 6–7) 

For the ANOPR, DOE reported some 

of the preliminary concerns 

manufacturers voiced during the initial 

engineering interviews. For the NOPR, 

DOE interviewed manufacturers and 

major customers and conducted market 

research to understand profitability in 

the beverage vending machine industry. 

DOE learned that the vast majority of 

equipment produced by manufacturers 

meets the same efficiency levels. In 

addition, the energy consumption of 

most equipment sold in the beverage 

vending machine industry is set by the 

specifications of the major purchasers of 

the equipment. Based on manufacturer 

interviews and the information found in 

the MIA, manufacturers design their 

equipment to meet this requirement of 

the large purchasers, but rarely exceed 

it. Because efficiency does not vary and 

the product designs are determined 

mainly by the major purchasers of the 

equipment, manufacturers typically do 

not earn a higher margin for additional 

features. Annual shipments are mainly 

determined by contracts with the major 

customers to replace a portion of 

retiring equipment. Additional features 

are unlikely to stimulate additional 

demand, especially if these features add 

costs to the purchaser or manufacturer. 

Due to split incentives, manufacturers 

may not earn a higher margin for 

equipment that reduces operating costs 

for the end-user, since these benefits are 

not directly conferred on the purchaser. 

The Joint Comment stated that DOE 

provided an estimate for the life cycle 

of a beverage vending machine 

production line during the ANOPR. The 

Joint Comment also stated that the low 

end of this range is shorter than the time 

frame from the beginning of this 

rulemaking to the possible effective date 

of the standard. Thus, a manufacturer 

that chooses to anticipate a standard can 

reduce or eliminate standards-induced 

capital conversion costs. The 

commenters believe that DOE should 

not view capital conversion costs as a 

result of the regulation, but as a result 

of some manufacturers’ failure to plan 

for standards. While manufacturers 

cannot know precise standards levels, 

the ANOPR analysis provides a very 

strong indication that standards at or 

near level 7 should be expected. (Joint 

Comment, No. 34 at p. 7) 

In the ANOPR, DOE stated that a 

beverage vending machine production 

line has a life cycle of approximately 5 

to 10 years in the absence of standards. 

73 FR 34130. However, manufacturers 

would not be able to reduce or eliminate 

standards-induced capital conversion 

costs because a 5-year production line 

life cycle is shorter than the time frame 

between the initiation of this 

rulemaking and the possible effective 

date. In the GRIM, DOE incorporates 

annual research and development costs 

and the capital expenditures 

manufacturers would undertake 

regardless of standards. The INPV 

reported for the beverage vending 

machine industry incorporates the 

impacts due to new energy conservation 

standards. DOE separates recurring 

research and development and capital 

expenditures that occur regardless of 

energy conservation standards from 

equipment and capital conversion costs. 

Capital and equipment conversion costs 

capture the additional costs that 

manufacturers will face due to 

standards and are necessary to 

accurately calculate the impacts 

standards have on INPV. To minimize 

the costs that may be required to convert 

production lines to produce higher 

efficiency equipment, manufacturers 

will usually wait until standards are 

published. Manufacturers will not know 

the stringency of this standard until the 

publication of the final rule, which is 

scheduled for August 8, 2009. Finally, 

the energy conservation standard for 

this rulemaking applies to all equipment 

manufactured on or after 3 years of the 

publication of the final rule (42 U.S.C. 

6295(v)(3)). This allows manufacturers 3 

years after the publication date of the 

energy conservation standard levels to 

make any changes to production lines 

that would be required to comply with 

the new energy conservation standard. 

Since this preparation time is less than 

the lower end of the estimated beverage 

vending machine production line life 

cycle, DOE assumes that one-time 

capital conversion costs can be 

attributed to the new energy 

conservation standard level. 

The Joint Comment questioned the 

assertion that stringent standards could 

cause production to be moved outside 

the United States. The Joint Comment 

noted that sourcing decisions are 

sensitive to the costs of production and 

product distribution, and not to the 

energy efficiency of the unit being 

produced (Joint Comment, No. 34 at p. 

7). 

DOE agrees that sourcing decisions 

are sensitive to the costs of production 

and product distribution. However, 

since the efficiency of equipment sold 

can directly affect production costs, 

DOE believes that the level of the new 

energy conservation standard could 

affect sourcing decisions. However, as 

noted in the Joint Comment, sourcing 

decisions are based on several factors, 

including many outside the scope of 

this rulemaking (e.g., product 

distribution costs). Consequently, DOE 

does not speculate how standards will 

affect sourcing decisions. 

3. Government Regulatory Impact Model 

Analysis 

The GRIM analysis uses a standard 

annual cash-flow analysis that 

incorporates manufacturer selling 

prices, manufacturing production costs, 

shipments, and industry financial 

information as inputs. The analysis 

models changes in costs, distribution of 

shipments, investments, and associated 

margins that would result from new or 

amended regulatory conditions (in this 

case, standard levels). The GRIM 

spreadsheet uses a number of inputs to 

arrive at a series of annual cash flows, 

beginning with the base year of the 

analysis (2008) and continuing to 2042. 

DOE calculated INPVs by summing the 

stream of annual discounted cash flows 

during this period. 

DOE used the GRIM to calculate cash 

flows using standard accounting 

principles and compare changes in 

INPV between a base case and various 

TSLs (the standards cases). Essentially, 

the difference in INPV between the base 

case and a standards case represents the 

financial impact of energy conservation 

standards on manufacturers. DOE 

collected this information from a 

number of sources, including publicly 

available data and interviews with 

manufacturers. See chapter 13 of the 

TSD for details. 

4. Manufacturer Interviews 

As part of the MIA, DOE discussed 

potential impacts of new energy 

conservation standards with 

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26046 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

manufacturers responsible for more than 

65 percent of the beverage vending 

machines on the market. These 

interviews were in addition to those 

DOE conducted as part of the 

engineering analysis. DOE used the 

interviews to evaluate the impacts of 

new energy conservation standards on 

manufacturer cash flows, manufacturing 

capacities, and employment levels. Key 

issues that the manufacturers identified 

for DOE to consider in developing 

energy conservation standards are 

discussed in chapter 13 of the TSD. 

5. Government Regulatory Impact Model 

Key Inputs and Scenarios 

a. Base Case Shipments Forecast 

The GRIM estimates manufacturer 

revenues based on unit shipment 

forecasts and the distribution by 

equipment class and efficiency. Changes 

in the efficiency mix at each standard 

level are a key driver of manufacturer 

finances. Consequently, DOE is seeking 

comment on the shipments forecast 

(section VII.E.2). For this analysis, the 

GRIM used the NES shipments forecasts 

from 2008 to 2042. Total shipments 

forecasted by the NES for the base case 

in 2012 are shown in Table IV–12 and 

further discussed in this section of 

today’s notice and chapter 10 of the 

TSD. Using the equipment class 

shipment assumptions from the NES, 

the GRIM maintains total industry 

shipments consisting of 55 percent Class 

A equipment and 45 percent Class B 

equipment throughout the analysis 

period. 

TABLE IV–12-TOTAL NES– 

FORECASTED SHIPMENTS IN 2012 

[Number of Units] 

Equipment class Total industry shipments 

by equipment class 

Class A ................. 49,500 

Class B ................. 40,500 

In the shipments analysis, DOE also 

estimated the distribution of efficiencies 

in the base case for beverage vending 

machines (chapter 10 of the TSD). Table 

IV–13 and Table IV–14 show examples 

of the distribution of efficiencies in the 

base case for a Class A medium-size and 

a Class B medium-size beverage vending 

machine. 

TABLE IV–13—GRIM DISTRIBUTION OF SHIPMENTS IN THE BASE CASE FOR CLASS A MEDIUM-SIZED BEVERAGE VENDING

MACHINES

TSL 

kWh/day 

Baseline 

6.10 

TSL 1 

5.27 

TSL 2 

4.75 

TSL 3 

4.25 

TSL 4 

3.95 

TSL 5 

3.73 

TSL 6 

3.58 

TSL 7 

3.25 

Distribution of shipments 

percent .......................... 10 90 0 0 0 0 0 0 

TABLE IV–14—GRIM DISTRIBUTION OF SHIPMENTS IN THE BASE CASE FOR CLASS B MEDIUM-SIZED BEVERAGE VENDING

MACHINES

TSL 

kWh/day 

Baseline 

4.96 

TSL 1 

4.62 

TSL 2 

4.31 

TSL 3 

4.31 

TSL 4 

4.28 

TSL 5 

3.78 

TSL 6 

3.69 

Distribution of Shipments percent ............ 10 0 90 0 0 0 0 

b. Standards Case Shipments Forecast 

For each standards case, DOE 

assumed that shipments at efficiencies 

below the projected standard levels 

were most likely to roll up to those 

efficiency levels in response to an 

energy conservation standard. This 

scenario assumes that demand for highefficiency equipment is a function of its 

price without regard to the standard 

level. See chapter 13 of the TSD for 

additional details. 

c. Manufacturing Production Costs 

DOE derived manufacturing 

production costs (MPCs) from 

manufacturing selling prices found in 

the engineering analysis. Using data 

from the U.S. Census Bureau to develop 

an industry cost structure, DOE 

disaggregated the financial components 

that comprise manufacturing selling 

price (production costs, SG&A, R&D, 

and profit). By summing the labor, 

overhead, materials, and depreciation 

portions of the manufacturing selling 

price, DOE estimated the manufacturing 

production costs for the analyzed 

equipment. Further discussion of how 

DOE calculated other GRIM financial 

inputs from publicly available 

information is found in chapter 13 of 

the TSD. 

d. Manufacturing Markup Scenarios 

To understand how baseline and more 

efficient equipment are differentiated, 

DOE reviewed manufacturer catalogs 

and information gathered by 

manufacturers. In the base case, DOE 

used the manufacturer selling prices 

from the engineering analysis. For the 

analysis, DOE considered different 

manufacturer markup scenarios for 

beverage vending machines. Scenarios 

were used to bound the range of 

expected equipment prices following 

new energy conservation standards. For 

each equipment class, DOE used the 

markup scenarios that best 

characterized the prevailing markup 

conditions and captured the range of 

market responses that could result from 

new energy conservation standards. 

DOE learned from interviews with 

manufacturers that the majority only 

offer one equipment line for each 

product class that meets the same 

efficiency level. Similar efficiency levels 

and the small number of product 

offerings in each product class generally 

mean that there is no difference in 

markup used to differentiate baseline 

equipment from premium equipment. 

For the MIA, DOE considered two 

distinct markup scenarios: (1) The 

preservation-of-gross-margin-percentage 

scenario, and (2) the preservation-ofoperating-profit scenario. Under the 

‘‘preservation-of-gross-marginpercentage’’ scenario, DOE applied a 

single, uniform ‘‘gross margin 

percentage’’ markup across all efficiency 

levels. This scenario implies that as 

production cost increases with 

efficiency, the absolute dollar markup 

will increase. For this scenario, DOE 

used a markup that yielded the same 

manufacturer selling prices found in the 

engineering analysis. The implicit 

assumption behind the ‘‘preservation-ofoperating profit’’ scenario is that the 

industry can only maintain its operating 

profit (earnings before interest and 

taxes) from the baseline after 

implementation of the standard (2012). 

The industry impacts occur in this 

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scenario when manufacturers expand 

their capital base and production costs 

to make more expensive equipment, but 

the operating profit does not change 

from current conditions. DOE 

implemented this markup scenario in 

the GRIM by setting the non-production 

cost markups at each TSL to yield 

approximately the same operating profit 

in both the base case and the standard 

case in the year after standard 

implementation (2012). 

e. Equipment and Capital Conversion 

Costs 

Energy conservation standards 

typically cause manufacturers to incur 

one-time conversion costs to bring their 

production facilities and product 

designs into compliance. For the 

purpose of the MIA, DOE classified 

these conversion costs into two major 

groups: (1) Equipment conversion costs, 

and (2) capital conversion costs. 

Equipment conversion costs are onetime investments in research, 

development, testing, and marketing, 

focused on making equipment designs 

comply with the new energy 

conservation standard. Capital 

conversion costs are one-time 

investments in property, plant, and 

equipment to adapt or change existing 

production facilities so that new 

equipment designs can be fabricated 

and assembled. 

DOE assessed the R&D expenditures 

manufacturers would be required to 

make at each TSL. DOE obtained 

financial information through 

manufacturer interviews and aggregated 

the results to mask any proprietary or 

confidential information from any one 

manufacturer. DOE considered a 

number of manufacturer responses for 

beverage vending machines at each TSL. 

DOE estimated the total equipment 

conversion costs by gathering 

manufacturer responses, then weighting 

these responses by market share. 

DOE also evaluated the level of 

capital conversion expenditures 

manufacturers would incur to comply 

with energy conservation standards. 

DOE used the manufacturer interviews 

to gather data on the level of capital 

investment required at each TSL. 

Manufacturers explained how different 

TSLs affected their ability to use 

existing plants, tooling, and equipment. 

From the interviews, DOE was able to 

estimate what portion of existing 

manufacturing assets would need to be 

replaced or reconfigured, and what 

additional manufacturing assets would 

be required to manufacture the higherefficiency products. 

The investment figures used in the 

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

today’s notice. For additional 

information on the estimated product 

conversion and capital conversion costs, 

see chapter 13 of the TSD. 

J. Utility Impact Analysis 

The utility impact analysis estimates 

the effects of reduced energy 

consumption resulting from improved 

equipment efficiency on the utility 

industry. This utility analysis compares 

forecast results for a case comparable to 

the AEO2008 reference case and 

forecasts for policy cases incorporating 

each of the beverage vending machine 

TSLs. 

NPCC asked whether the utility 

impact analysis computes a national 

capital cost savings because of the 

change in new utility capacity from 

each standard level (NPCC, No. 29 at p. 

196). DOE does compute the impact on 

total gigawatts (GW) of generation 

capacity in its utility impact analysis, 

but does not monetize changes in 

capital costs for building power plants. 

DOE analyzed the effects of proposed 

standards on electric utility industry 

generation capacity and fuel 

consumption using a variant of EIA’s 

NEMS. The NEMS–BT is run similarly 

to the AEO2008 NEMS, except that 

beverage vending machine energy usage 

is reduced by the amount of energy (by 

fuel type) saved because of the TSLs. 

DOE obtained the inputs of the NES 

from the NES spreadsheet model. For 

the final rule, DOE intends to report 

utility analysis results using a version of 

NEMS–BT based on the AEO2009 

NEMS. 

DOE conducted the utility analysis as 

policy deviations from the AEO2008, 

applying the same basic set of 

assumptions. In the utility analysis, 

DOE reported the changes in installed 

capacity and generation by fuel type 

that result for each TSL, as well as 

changes in end-use electricity sales. 

Chapter 14 of the NOPR TSD provides 

details of the utility analysis methods 

and results. 

K. Employment Impact Analysis 

Employment impact is one factor DOE 

considers in selecting a standard. 

Employment impacts include direct and 

indirect impacts. Direct employment 

impacts are any changes in the number 

of employees for beverage vending 

machine manufacturers, their suppliers, 

and related service firms. Indirect 

impacts are those changes of 

employment in the larger economy that 

occur because of the shift in 

expenditures and capital investment 

caused by the purchase and operation of 

more efficient beverage vending 

machines. The MIA in this rulemaking 

addresses only the direct employment 

impacts on manufacturers of beverage 

vending machines. Chapter 15 of the 

TSD describes other, primarily indirect, 

employment impacts. 

Indirect employment impacts from 

beverage vending machine standards 

consist of the net jobs created or 

eliminated in the national economy, 

other than in the manufacturing sector 

being regulated, as a consequence of (1) 

Reduced spending by end users on 

electricity (offset to some degree by the 

increased spending on maintenance and 

repair), (2) reduced spending on new 

energy supply by the utility industry, (3) 

increased spending on the purchase 

price of new beverage vending 

machines, and (4) the effects of those 

three factors throughout the economy. 

DOE expects the net monetary savings 

from standards to be redirected to other 

forms of economic activity. DOE also 

expects these shifts in spending and 

economic activity to affect the demand 

for labor. 

In developing this notice of proposed 

rulemaking, DOE estimated indirect 

national employment impacts using an 

input/output model of the U.S. 

economy, called ImSET (Impact of 

Sector Energy Technologies) developed 

by DOE’s Building Technologies 

Program. ImSET is a personal-computerbased, economic analysis model that 

characterizes the interconnections 

among 188 sectors of the economy as 

national input/output structural 

matrices using data from the U.S. 

Department of Commerce’s 1997 

Benchmark U.S. input-output table. The 

ImSET model estimates changes in 

employment, industry output, and wage 

income in the overall U.S. economy 

resulting from changes in expenditures 

in various sectors of the economy. DOE 

estimated changes in expenditures using 

the NES spreadsheet. ImSET then 

estimated the net national indirect 

employment impacts of beverage 

vending machine efficiency standards 

on employment by sector. 

The ImSET input/output model 

suggests that the proposed beverage 

vending machine efficiency standards 

could increase the net demand for labor 

in the economy and the gains would 

most likely be very small relative to 

total national employment. DOE 

therefore concludes that the proposed 

beverage vending machine standards are 

not likely to produce employment 

benefits that are sufficient to fully offset 

any adverse impacts on employment in 

the beverage vending machine industry. 

For more details on the employment 

impact analysis and its results, see 

chapter 15 of the TSD and section 

V.B.3.c of this notice. 

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34 531 F.3d 896 (D.C. Cir. 2008). 

35North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 

2008) (remand of vacatur). 

36New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 

2008). 

L. Environmental Assessment 

DOE has prepared a draft 

environmental assessment (EA) 

pursuant to the National Environmental 

Policy Act and the requirements under 

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

6316(a) to determine the environmental 

impacts of the standards being 

established in today’s final rule. 

Specifically, DOE estimated the 

reduction in total emissions of CO2 and 

NOX using the NEMS–BT computer 

model. DOE calculated a range of 

estimates for reduction in Hg emissions 

using current power sector emission 

rates. The EA does not include the 

estimated reduction in power sector 

impacts of sulfur dioxide (SO2), because 

DOE has determined that any such 

reduction resulting from an energy 

conservation standard would not affect 

the overall level of SO2 emissions in the 

United States due to the presence of 

national caps on SO2 emissions. These 

topics are addressed further below; see 

chapter 16 of the TSD for additional 

detail. 

The NEMS–BT is run similarly to the 

AEO2008 NEMS, except the beverage 

vending machine energy use is reduced 

by the amount of energy saved (by fuel 

type) due to the trial standard levels. 

The inputs of national energy savings 

come from the NIA analysis. For the EA, 

the output is the forecasted physical 

emissions. The net benefit of the 

standard is the difference between 

emissions estimated by NEMS–BT and 

the AEO2008 reference case. The 

NEMS–BT tracks CO2 and NOX

emissions using a detailed module that 

provides broad coverage of all sectors 

and includes interactive effects. 

Sulfur Dioxide (SO2) 

The Clean Air Act Amendments of 

1990 set an emissions cap on SO2 for all 

power generation. Attaining this target 

is flexible among generators and is 

enforced through emissions allowances 

and tradable permits. In other words, 

with or without a standard, total 

cumulative SO2 emissions will always 

be at or near the ceiling, while there 

may be some timing differences among 

yearly forecasts. Thus, it is unlikely that 

there will be reduced overall SO2

emissions from standards as long as the 

emissions ceilings are enforced. 

Although there may be no actual 

reduction in SO2 emissions, there still 

may be an economic benefit from 

reduced demand for SO2 emission 

allowances. Electricity savings decrease 

the generation of SO2 emissions from 

power production, which can lessen the 

need to purchase SO2 emissions 

allowance credits, and thereby decrease 

the costs of complying with regulatory 

caps on emissions. 

NOX

NOX emissions from 28 eastern States 

and the District of Columbia (D.C.) are 

limited under the Clean Air Interstate 

Rule (CAIR), published in the Federal 

Register on May 12, 2005. 70 FR 25162 

(May 12, 2005). Although the rule has 

been remanded to EPA by the D.C. 

Circuit, it will remain in effect until it 

is replaced by a rule consistent with the 

Court’s opinion in North Carolina v. 

EPA. Because all States covered by 

CAIR opted to reduce NOX emissions 

through participation in cap-and-trade 

programs for electric generating units, 

emissions from these sources are capped 

across the CAIR region. As with the SO2

emissions cap, energy conservation 

standards are not likely to have a 

physical effect on NOX emissions in 

those States. However, the standards 

proposed in today’s NOPR might have 

produced an environmentally related 

economic impact in the form of lower 

prices for emissions allowance credits if 

they were large enough. DOE believes 

that such standards would not produce 

such an impact because the estimated 

reduction in NOX emissions or the 

corresponding increase in available 

allowance credits in States covered by 

the CAIR cap would be too small to 

affect allowance prices for NOX. 

In contrast, new or amended energy 

conservation standards would reduce 

NOX emissions in those 22 States that 

are not affected by the CAIR, and these 

emissions could be estimated from 

NEMS–BT. As a result, DOE used the 

NEMS–BT to forecast emission 

reductions from the beverage vending 

machine standards that are considered 

in today’s NOPR. 

Though currently in effect, CAIR has 

been the subject of significant litigation. 

CAIR was vacated by the U.S. Court of 

Appeals for the District of Columbia 

Circuit (D.C. Circuit) in its July 11, 2008, 

decision in North Carolina v. 

Environmental Protection Agency.34

However, on December 23, 2008, the 

D.C. Circuit decided to allow the CAIR 

to remain in effect until it is replaced by 

a rule consistent with the court’s earlier 

opinion.35

Mercury (HG) 

Similar to SO2 and NOX, future 

emissions of Hg would have been 

subject to emissions caps under the 

Clean Air Mercury Rule (CAMR). The 

CAMR would have permanently capped 

emissions of mercury for new and 

existing coal-fired plants in all States by 

2010, but was vacated by the D.C. 

Circuit in its February 8, 2008, decision 

in New Jersey v. Environmental 

Protection Agency.36 DOE typically uses 

the NEMS–BT model to calculate 

emissions from the electrical generation 

sector; however, the 2008 NEMS–BT 

model is not suitable for assessing 

mercury emissions in the absence of a 

CAMR cap. Thus, DOE used a range of 

Hg emissions rates (in tons of Hg per 

energy per TWh produced) based on the 

AEO2008. Because the high end of the 

range of Hg emissions rates attributable 

to electricity generation are from coalfired power plants, DOE based that 

emissions rate on the tons of mercury 

emitted per TWh of coal-generated 

electricity. DOE’s low estimate assumed 

that future standards would displace 

electrical generation from natural gasfired powered power plants. The low 

end of the range of Hg emissions rates 

is zero because natural gas-fired 

powered power plants have virtually no 

Hg emissions associated with their 

operations. To estimate the reduction in 

mercury emissions, DOE multiplied the 

emissions rates by the reduction in 

electricity generation associated with 

the standards proposed in today’s 

NOPR. 

Refrigerant Leaks 

DOE received one comment regarding 

the treatment of refrigerant leaks during 

beverage vending machine production 

and end-use in which DOE was asked 

how it would analyze this issue in the 

environmental assessment. (EEI, No. 37 

at p. 4) In response, DOE notes that it 

has no reliable information on the rates 

of refrigerant leaks during the 

production of and during operational 

life of beverage vending machines, and 

consequently did not conduct a 

quantitative analysis of environmental 

impacts from refrigerant leaks. DOE 

does not anticipate a significant change 

in shipments for beverage vending 

machines, significant changes in 

refrigerant use by the beverage vending 

machine manufacturers, or significant 

changes in refrigerant leakage rates as a 

result of new energy conservation 

standards. DOE does not have any 

information indicating that refrigerant 

leakage rates would vary by energy 

efficiency level. 

M. Monetizing Carbon Dioxide and 

Other Emissions Impacts 

DOE also calculated the possible 

monetary benefit of CO2, NOX, and Hg 

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reductions. Cumulative monetary 

benefits were determined using 

discount rates of 3 and 7 percent. DOE 

monetized reductions in CO2 emissions 

due to the standards proposed in this 

NOPR based on a range of monetary 

values drawn from studies that attempt 

to estimate the present value of the 

marginal economic benefits (based on 

the avoided marginal social costs of 

carbon) likely to result from reducing 

greenhouse gas emissions. The marginal 

social cost of carbon is an estimate of 

the monetary value to society of the 

environmental damages of CO2

emissions. This concept is used rather 

than compliance costs because CO2 is 

not regulated. Several parties provided 

comments on the economic valuation of 

CO2 for the NOPR. 

On the treatment of emissions, 

Earthjustice made the following four 

statements: 

(1) DOE cannot rationally weigh the 

economic benefit of reduced emissions 

unless it actually calculates the 

economic dimension of those emissions 

reductions. (Earthjustice, No. 38 at p. 2) 

(2) DOE must evaluate the impact of 

vending machine standards on NOX

through a two-pronged approach, 

calculating both the effect on allowance 

prices under the NOX SIP Call rule, 

where applicable, and the monetary 

value of avoided NOX emissions. 

(Earthjustice, No. 38 at p. 3) 

(3) Once DOE calculates the projected 

reductions in mercury emission, it must 

assign an appropriate economic value to 

those emissions. (Earthjustice, No. 38 at 

p. 3) 

(4) Excluding CO2 emissions 

reduction benefits from DOE’s NPV 

analysis on the basis of uncertainty 

about their precise measure would be 

arbitrary and capricious. (Earthjustice, 

No. 38 at p. 4) 

In addition, NRDC advocated that DOE 

monetize the value of CO2 emissions 

and take that into account in the LCC 

analysis, using a price for carbon 

emissions based on EIA’s analysis of the 

Lieberman-Warner bill. (NRDC, Public 

Meeting Transcript, No. 29 at p. 107) 

In response to the ANOPR comments 

on monetization of emissions and how 

that is included in the DOE analyses, 

DOE notes that neither EPCA nor NEPA 

requires that the economic value of 

emissions reduction be incorporated in 

the LCC or NPV analysis of energy 

savings. Unlike energy savings, the 

economic value of the emissions 

reductions discussed by commenters is 

not priced in the marketplace. DOE has 

chosen to report these benefits 

separately from the net benefits of 

energy savings. A summary of the 

monetary results is shown in section 

V.B.6 of this notice. DOE will consider 

both values when weighing the benefits 

and burdens of standards. 

With respect to NOX, the proposed 

standards might have produced an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits if they were 

large enough. However, DOE believes 

that in the present case, such standards 

would not produce even an 

environmentally related economic 

impact in the form of lower prices for 

emissions allowance credits because the 

estimated reduction in NOX emissions 

or the corresponding allowance credits 

in States covered by the CAIR cap 

would be too small to affect allowance 

prices for NOX under the CAIR. 

V. Analytical Results 

A. Trial Standard Levels 

DOE analyzed seven energy 

consumption levels for Class A 

equipment and six energy consumption 

levels for Class B equipment in the LCC 

and NIA analyses. For the NOPR, DOE 

determined that each of these levels 

should be presented as a possible TSL 

and correspondingly identified seven 

TSLs for Class A and six TSLs for Class 

B equipment. For each equipment class, 

the range of TSLs selected includes the 

energy consumption level providing the 

maximum NES level for the class, the 

level providing the maximum NES 

while providing a positive NPV, the 

level providing the maximum NPV, and 

the level approximately equivalent to 

ENERGY STAR Tier 2. Many of the 

higher levels selected correspond to 

equipment designs that incorporate 

specific noteworthy technologies that 

can provide energy savings benefits. For 

Class A, DOE also included two 

intermediate efficiency levels to fill in 

significant energy consumption gaps 

between the levels identified above the 

ENERGY STAR Tier 2 equivalent level. 

For Class A equipment, the ENERGY 

STAR Tier 2 equivalent TSL level, TSL 

1, allows for the highest energy 

consumption. For Class B, DOE 

included one trial standard level with 

energy consumption higher than that 

provided by ENERGY STAR Tier 2. 

For the ANOPR, DOE proposed four 

candidate standard levels for each 

equipment class based on the levels that 

provided maximum energy savings, 

maximum efficiency level with positive 

LCC savings, maximum LCC savings, 

and the highest efficiency level with a 

payback of less than 3 years. 

DOE preserved energy consumption 

levels from the ANOPR that met the 

same economic criteria in the NOPR, 

but also included the Tier 2 equivalency 

level and several additional TSLs. These 

additional levels either provide 

additional intermediate efficiency levels 

or include specific noteworthy 

technologies examined in the 

engineering analysis. Table V–1 and 

Table V–2 show the TSL levels DOE 

selected for the equipment classes and 

sizes analyzed. For Class A equipment, 

TSL 7 is the max-tech level for each 

equipment class. TSL 6 is the maximum 

efficiency level with a positive NPV at 

the 7-percent discount rate, achieved by 

incorporating an electronically 

commutated motor (ECM) condenser 

fan. TSL 5 is the efficiency level with 

the maximum NPV and maximum LCC 

savings, achieved by using an advanced 

refrigerant condenser design. TSL 4 is 

the level that first incorporated LED 

lighting as a design feature in the 

engineering analysis. TSL 3 and TSL 2 

were intermediate efficiency levels 

chosen to bridge the gap between TSL 

4, and the ENERGY STAR Tier 2 

equivalent level, TSL 1. 

For Class B equipment, TSL 6 is the 

max-tech level for each equipment size. 

TSL 5 is the level that first incorporated 

LED lighting as a design option in the 

engineering analysis. TSL 4 is the next 

highest efficiency level including 

incorporation of an ECM condenser fan 

motor. TSL 3 was achieved by using an 

advanced refrigerant condenser design. 

This TSL provided an NPV value of 

essentially 0, with total capital 

expenditures for new equipment 

balanced by total operating cost savings 

over the NIA analysis period, based on 

a 7-percent discount rate. TSL 2 is the 

ENERGY STAR Tier 2 level for Class B 

equipment. This TSL provided the 

maximum LCC savings and maximum 

NPV savings at a 7-percent discount 

rate. TSL 1, which provided an energy 

consumption level approximately 4 

percent higher than TSL 2, was also 

included in the analysis. TSL 1 

represented the first level incorporating 

an evaporator fan driven by an ECM in 

the engineering analysis. 

As determined in the ANOPR, DOE 

chose to characterize the proposed TSL 

levels in terms of proposed equations 

that establish a maximum daily energy 

consumption (MDEC) limit through a 

linear equation of the following form: 

MDEC = A × V + B 

Where: 

A is expressed in terms of kWh/day/ft3 of 

measured volume, 

V is the measured refrigerated volume (ft3) 

calculated for the equipment, and 

B is an offset factor expressed in kWh/day. 

Coefficients A and B are uniquely 

derived for each equipment class based 

on a linear equation passing between 

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the daily energy consumption values for 

equipment of different refrigerated 

volumes. For the development of the A 

and B coefficients, DOE used the energy 

consumption values shown in Table V– 

1 and Table V–2 for the medium and 

large equipment sizes within each class 

of beverage vending machine. DOE did 

not use the small equipment sizes in 

each class because information from the 

ANOPR indicated that there are no 

significant shipments of this equipment 

size. However, DOE seeks input from 

interested parties on whether the 

proposed linear equation used to 

describe the maximum daily energy 

consumption standards should be based 

on medium and large equipment (using 

two points); small, medium, and large 

equipment (three points); or some other 

possible weighting strategy. Results for 

using two points and three points are 

described in more details in chapter 9 

of the TSD. 

Chapter 9 of the TSD explains the 

methodology DOE used for selecting 

TSLs and developing the equations 

shown in Table V–3. 

TABLE V–1—TRIAL STANDARD LEVELS FOR CLASS A EQUIPMENT EXPRESSED IN TERMS OF DAILY ENERGY CONSUMPTION

Size Test metric 

Trial standard level in order of efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Engineering level .... ................ 1 5 *n/a *n/a 6 7 9 11 

Small ....................... kWh/day ...... 6 .1 5 .27 4 .75 4 .25 3 .95 3 .73 3 .58 3 .25 

Medium ................... kWh/day ...... 6 .53 5 .51 5 .25 4 .75 4 .19 3 .95 3 .79 3 .43 

Large ....................... kWh/day ...... 6 .75 6 .21 5 .75 5 .25 4 .89 4 .60 4 .41 3 .94 

* Not applicable. These levels established as intermediate points along the engineering cost curves. 

TABLE V–2—TRIAL STANDARD LEVELS FOR CLASS B EQUIPMENT EXPRESSED IN TERMS OF DAILY ENERGY CONSUMPTION

Size Test metric 

Trial standard level in order of efficiency 

Baseline TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Engineering level .............. ..................... 1 2 4 4 5 6 7 

Small ................................. kWh/day ...... 4 .96 4 .62 4 .31 4 .31 4 .28 3 .78 3.69 

Medium ............................. kWh/day ...... 5 .56 5 .2 4 .99 4 .76 4 .72 4 .22 4.12 

Large ................................. kWh/day ...... 5 .85 5 .48 5 .33 5 .07 5 .03 4 .52 4.41 

TABLE V–3—TRIAL STANDARD LEVELS EXPRESSED IN TERMS OF EQUATIONS AND COEFFICIENTS FOR EACH EQUIPMENT

CLASS

Trial standard level Test metric Class A Class B 

Baseline ............................. kWh/day ............................. MDEC = 0.019 × V + 6.09 ............................................. MDEC = 0.068 × V + 4.07. 

TSL 1 ................................. kWh/day ............................. MDEC = 0.062 × V + 4.12 ............................................. MDEC = 0.066 × V + 3.76. 

TSL 2 ................................. kWh/day ............................. MDEC = 0.044 × V + 4.26 ............................................. MDEC = 0.080 × V + 3.24. 

TSL 3 ................................. kWh/day ............................. MDEC = 0.044 × V + 3.76 ............................................. MDEC = 0.073 × V + 3.16. 

TSL 4 ................................. kWh/day ............................. MDEC = 0.062 × V + 2.80 ............................................. MDEC = 0.073 × V + 3.12. 

TSL 5 ................................. kWh/day ............................. MDEC = 0.058 × V + 2.66 ............................................. MDEC = 0.070 × V + 2.68. 

TSL 6 ................................. kWh/day ............................. MDEC = 0.055 × V + 2.56 ............................................. MDEC = 0.068 × V + 2.63. 

TSL 7 ................................. kWh/day ............................. MDEC = 0.045 × V + 2.42 ............................................. n/a*. 

* Not applicable. There is no TSL 7 for Class B machines. 

B. Economic Impacts on Commercial 

Customers 

1. Economic Impacts on Commercial 

Customers 

a. Life-Cycle Cost and Payback Period 

To evaluate the economic impact of 

the TSLs on customers, DOE conducted 

an LCC analysis for each TSL. More 

efficient beverage vending machines are 

expected to affect customers in two 

ways: annual operating expense is 

expected to decrease and purchase price 

is expected to increase. DOE analyzed 

the net effect by calculating the LCC. 

Inputs used for calculating the LCC 

include total installed costs (i.e., 

equipment price plus installation costs), 

annual energy savings, average 

electricity costs by customer, energy 

price trends, repair costs, maintenance 

costs, equipment lifetime, and discount 

rates. 

DOE’s LCC and PBP analyses 

provided five outputs for each TSL that 

are reported in Table V–4 through Table 

V–6 for Class A equipment. The first 

three outputs are the percentages of 

standard-compliant machine purchases 

that would result in (1) A net LCC 

increase, (2) no impact, or (3) a net LCC 

savings for the customer. DOE used the 

estimated distribution of shipments by 

efficiency level for each equipment class 

to determine the affected customers. 

The fourth output is the average net LCC 

savings from standard-compliant 

equipment. The fifth output is the 

average PBP for the customer 

investment in standard-compliant 

equipment. The PBP is the number of 

years it would take for the customer to 

recover, through energy savings, the 

increased costs of higher efficiency 

equipment compared to baseline 

efficiency equipment. 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26051 

TABLE V–4—SUMMARY LCC AND PBP RESULTS FOR CLASS A–LARGE–IN 

Trial Standard Level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % .................... 0 0 0 0 0 7 100 

Equipment with No Change in LCC % .................. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % ..................... 10 100 100 100 100 93 0 

Mean LCC Savings $ ............................................. 91 145 204 246 272 271 (1,419 ) 

Mean Payback Period years .................................. 2 .1 2 .9 3 .2 3 .3 3 .5 3 .9 74.0 

Note: Numbers in parentheses indicate negative values. 

TABLE V–5—SUMMARY LCC AND PBP RESULTS FOR CLASS A–MEDIUM–IN 

Trial Standard Level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % .................... 0 0 0 0 0 0 100 

Equipment with No Change in LCC %) ................. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % ..................... 10 100 100 100 100 100 0 

Mean LCC Savings $ ............................................. 175 223 258 327 339 331 (1,119 ) 

Mean Payback Period years .................................. 2 .0 1 .9 2 .8 3 .0 3 .3 3 .7 59.2 

Note: Numbers in parentheses indicate negative values. 

TABLE V–6—SUMMARY LCC AND PBP RESULTS FOR CLASS A–SMALL–IN 

Trial standard level 

1 2 3 4 5 6 7 

Equipment with Net LCC Increase % .................... 0 0 0 0 0 7 100 

Equipment with No Change in LCC % .................. 90 0 0 0 0 0 0 

Equipment with Net LCC Savings % ..................... 10 100 100 100 100 93 0 

Mean LCC Savings $ ............................................. 141 197 251 284 297 290 (1,090 ) 

Mean Payback Period years .................................. 2 .0 2 .7 3 .1 3 .2 3 .5 3 .9 69.7 

Note: Numbers in parentheses indicate negative values. 

For the Class A equipment, there are 

positive net LCC savings on average 

through TSL 6. Only 10 percent of all 

equipment purchased is expected to 

achieve a net LCC savings at the first 

TSL level, since about 90 percent of the 

equipment on the market in 2012 is 

expected to meet that standard. LCC 

savings consistently peak at TSL 5, but 

for between 93 percent and 100 percent 

of purchasers, Class A equipment is 

projected to achieve LCC savings even at 

TSL 6. Simple average PBPs are 

projected to be less than 3 years for all 

Class A equipment through TSL 2. PBPs 

are less than 4 years through TSL 6. 

DOE’s LCC and PBP analyses 

provided the same five outputs for each 

TSL for Class B equipment. These 

outputs are reported in Table V–7 

through Table V–9. 

TABLE V–7—SUMMARY LCC AND PBP RESULTS FOR CLASS B–LARGE

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % .......................................... 0 9 19 27 100 100 

Equipment with No Change in LCC % ........................................ 90 0 0 0 0 0 

Equipment with Net LCC Savings % ........................................... 10 91 81 73 0 0 

Mean LCC Savings $ ................................................................... 48 53 51 42 (515 ) (2,352 ) 

Mean Payback Period years ........................................................ 3 .0 4 .1 5 .8 6 .6 74.0 100.0 

Note: Numbers in parentheses indicate negative values. 

TABLE V–8—SUMMARY LCC AND PBP RESULTS FOR CLASS B—MEDIUM

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % .......................................... 0 11 21 33 100 100 

Equipment with No Change in LCC % ........................................ 90 0 0 0 0 0 

Equipment with Net LCC Savings % ........................................... 10 89 79 67 0 0 

Mean LCC Savings $ ................................................................... 46 57 48 38 (528 ) (2,170 ) 

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TABLE V–8—SUMMARY LCC AND PBP RESULTS FOR CLASS B—MEDIUM—Continued 

Trial standard level 

1 2 3 4 5 6 

Mean Payback Period years ........................................................ 3 .1 4 .1 6 .1 6 .9 76.9 100.0 

Note: Numbers in parentheses indicate negative values. 

TABLE V–9—SUMMARY LCC AND PBP RESULTS FOR CLASS B—SMALL

Trial standard level 

1 2 3 4 5 6 

Equipment with Net LCC Increase % .......................................... 1 39 39 47 100 100 

Equipment with No Change in LCC % ........................................ 90 0 0 0 0 0 

Equipment with Net LCC Savings % ........................................... 10 61 61 53 0 0 

Mean LCC Savings $ ................................................................... 39 26 26 13 (582 ) (2,070 ) 

Mean Payback Period years ........................................................ 3 .5 7 .5 7 .5 9 .1 86.9 100.0 

Note: Numbers in parentheses indicate negative values. 

For Class B equipment, there are 

positive net LCC savings on average 

through TSL 4. Only 10 percent of all 

equipment purchased is expected to 

achieve a net LCC savings at the first 

TSL level, since about 90 percent of the 

equipment on the market in 2012 is 

expected to meet that standard. LCC 

savings consistently peak at TSL 3, but 

for 53 percent to 74 percent of 

purchasers, Class B equipment is 

projected to achieve LCC savings at TSL 

5. Simple average PBPs are projected to 

be about 3 years for large and medium 

size Class B equipment at TSL 1. PBPs 

are about 4 years for large and medium 

size Class B equipment through TSL 2. 

b. Life-Cycle Cost Subgroup Analysis 

Using the LCC spreadsheet model, 

DOE estimated the impact of the TSLs 

on the following customer subgroup: 

Manufacturing facilities that have 

purchased their own beverage vending 

machines. This is the largest component 

of the 5 percent of site owners who also 

own their own vending machines, and 

comprises about 2 percent of all 

beverage vending machines. About 95 

percent are owned by bottlers and 

vendors. The manufacturing facilities 

subgroup was analyzed because, in 

addition to being the largest 

independent block of owners, it had 

among the highest financing costs 

(based on weighted average cost of 

capital) and faced the lowest energy 

costs of any customer group. The group 

was therefore expected to have the least 

LCC savings and longest PBP of any 

identifiable customer group. 

DOE estimated the LCC and PBP for 

the manufacturing facilities subgroup. 

Table V–10 shows the mean LCC 

savings for equipment that meets the 

proposed energy conservation standards 

for the manufacturing facilities 

subgroup, and Table V–11 shows the 

mean PBP (in years) for this subgroup. 

More detailed discussion on the LCC 

subgroup analysis and results can be 

found in chapter 12 of the TSD. 

TABLE V–10—MEAN LIFE-CYCLE COST SAVINGS FOR REFRIGERATED BEVERAGE VENDING MACHINE EQUIPMENT

PURCHASED BY THE MANUFACTURING FACILITIES LCC SUBGROUP (2008$) 

Equipment Class Size TSL 1 TSL 2 TSL 3 TSL 4 TSL5 TSL6 TSL 7 

A S $94 $123 $150 $166 $168 $153 ¥$1,210 

A M 118 152 160 197 197 181 ¥1,256 

A L 60 89 121 144 153 142 ¥1,537 

B S 22 ¥6 ¥6 ¥19 ¥623 ¥2,072 NA 

B M 27 28 9 ¥2 ¥579 ¥2,183 NA 

B L 29 27 13 2 ¥567 ¥2,361 NA 

TABLE V–11 MEAN PAYBACK PERIOD FOR REFRIGERATED BEVERAGE VENDING MACHINE EQUIPMENT PURCHASED BY THE

MANUFACTURING FACILITIES LCC SUBGROUP (YEARS) 

Equipment Class Size TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

A S 2.4 3.4 3.8 4.0 4.3 4.8 81.0 

A M 2.4 2.3 3.5 3.7 4.1 4.6 74.1 

A L 2.6 3.5 3.9 4.1 4.4 4.9 84.2 

B S 4.4 10.0 10.0 12.4 95.8 100.0 NA 

B M 3.9 5.2 7.9 9.1 88.7 100.0 NA 

B L 3.7 5.1 7.4 8.6 86.1 100.0 NA 

For beverage vending machines, the 

LCC and PBP impacts for manufacturing 

facilities that own their own beverage 

vending machines are less than those of 

all customers. Because they face lower 

energy costs, the lower value of energy 

savings lengthens the period over which 

the original investment is paid back and 

also reduces operating cost savings over 

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the lifetime of more efficient beverage 

vending machines. In addition, because 

they face higher financing costs, these 

sites have a relatively high opportunity 

cost for investment, so the value of 

future electricity savings from higher 

efficiency equipment is further reduced. 

Even so, for this subgroup of Class A 

machines, LCC is still positive for all 

but the TSL 8 level. PBP is lengthened 

by about a year, but is still less than 4 

years at TSL 1 and less than 5 years at 

TSL. 

2. Economic Impacts on Manufacturers 

To assess the lower end of the range 

of potential impacts for the beverage 

vending machine industry, DOE 

considered the preservation-of-grossmargin-percentage scenario. This 

scenario represents the lower end of the 

range of industry profitability because it 

assumes that manufacturers are able to 

pass through increased production costs 

to their customers. However, 

manufacturers indicated during 

interviews that market conditions 

usually do not allow them to fully pass 

costs to their customers. 

To assess the higher end of the range 

of potential impacts for the beverage 

vending machine industry, DOE 

considered the preservation-ofoperating-profit scenario. The 

preservation-of-operating-profit scenario 

models manufacturer concerns about 

the overcapacity of the industry and the 

inability to set the prices they charge 

their customers. In this scenario, 

manufacturers spend the necessary 

investments required to convert their 

facilities to produce standardscompliant equipment. Despite this 

effort, operating profit does not change 

in absolute dollars and decreases as a 

percentage of revenue. 

a. Class A Beverage Vending Machine 

Equipment 

Table V–12 and Table V–13 show the 

MIA results for each TSL using both 

scenarios described above for Class A 

beverage vending machines. 

TABLE V–12—MANUFACTURER IMPACT ANALYSIS FOR CLASS A BEVERAGE VENDING MACHINE EQUIPMENT UNDER THE

PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO

Preservation of Gross Margin Percentage Markup Scenario 

Metric Units Base 

case 

Trial standard level 

1 2 3 4 5 6 7 

INPV ................................. 2008$ millions ..... 35.3 35.3 35.1 33.4 33.2 26.5 22.9 26.8 

Change in INPV ............... 2008$ millions ..... .............. 0.0 (0.2) (1.9) (2.1) (8.8) (12.4) (8.3) 

% ......................... .............. 0.08 ¥0.65 ¥5.47 ¥5.86 ¥24.95 ¥35.09 ¥23.67 

Equipment Conversion 

Costs.

2008$ millions ..... .............. 0.0 0.6 0.6 1.2 2.9 3.5 3.5 

Capital Conversion Costs 2008$ millions ..... .............. 0.0 0.0 2.2 2.2 9.1 13.0 14.1 

Total Investment Required 2008$ millions ..... .............. 0.0 0.6 2.8 3.4 11.9 16.4 17.6 

Note: Numbers in parentheses indicate negative values. 

TABLE V–13—MANUFACTURER IMPACT ANALYSIS FOR CLASS A BEVERAGE VENDING MACHINE EQUIPMENT UNDER THE

PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Preservation of Gross Margin Percentage Markup Scenario 

Metric Units Base 

case 

Trial Standard Level 

1 2 3 4 5 6 7 

INPV ................................. 2008$ millions ..... 35.3 35.3 34.9 32.7 32.2 25.4 21.6 14.1 

Change in INPV ............... 2008$ millions ..... .............. (0.0) (0.4) (2.6) (3.1) (9.9) (13.7) (20.9) 

% ......................... .............. ¥0.04 ¥1.04 ¥7.45 ¥8.83 ¥28.14 ¥38.89 ¥59.74 

Equipment Conversion 

Costs.

2008$ millions ..... .............. 0.0 0.6 0.6 1.2 2.9 3.5 3.5 

Capital Conversion Costs 2008$ millions ..... .............. 0.0 0.0 2.2 2.2 9.1 13.0 14.1 

Total Investment Required 2008$ millions ..... .............. 0.0 0.6 2.8 3.4 11.9 16.4 17.6 

Note: Numbers in parentheses indicate negative values. 

DOE estimates that there are no 

significant impacts on INPV for Class A 

equipment to meet TSL 1. The vast 

majority of equipment for sale today 

meets TSL 1. Therefore, DOE expects 

there will be no equipment or capital 

conversion costs and that industry 

revenue and production costs will not 

be significantly negatively affected. 

At TSL 2, DOE estimated the impacts 

in INPV for Class A equipment to range 

from approximately ¥$0.2 million to 

¥$0.4 million, a change in INPV of 

¥0.65 percent to ¥1.04 percent. At this 

level, the industry cash flow decreases 

by approximately 6.5 percent, to $2.12 

million, compared to the base case value 

of $2.27 million in the year leading up 

to the standards. At TSL 2, 

manufacturers will have to make some 

component switches to comply with the 

standard. However, most manufacturers 

will not have to make significant 

alterations to their production process 

and will only require minimal 

conversion costs. Though standards will 

increase the manufacturing production 

costs, the incremental cost is not 

substantially larger than most 

equipment sold today, resulting in 

minimal impacts on industry value. 

At TSL 3, DOE estimated the impacts 

on INPV for Class A equipment to range 

from approximately ¥$1.9 million to 

¥$2.6 million, a change in INPV of 

¥5.47 percent to ¥7.45 percent. At this 

level, the industry cash flow decreases 

by approximately 46 percent, to $1.23 

million, compared to the base case value 

of $2.27 million in the year leading up 

to the standards. At TSL 3, 

manufacturers will have to make 

additional component switches and 

minor changes to their production lines, 

resulting in minimal equipment and 

capital conversion costs. Standards 

increase production costs, but these 

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additional costs are not enough to 

severely affect INPV even if the dollar 

value of operating profit remains 

unchanged. 

At TSL 4, DOE estimated the impacts 

on INPV for Class A equipment to range 

from ¥$2.1 million to ¥$3.1 million, a 

change in INPV of approximately ¥5.86 

percent to ¥8.83 percent. At this level, 

the industry cash flow decreases by 

approximately 52.4 percent to $1.08 

million, compared to the base case value 

of $2.27 million in the year leading up 

to the standards. At TSL 4, certain 

manufacturers have to make major 

changes to their production lines, while 

others will only have to make minor 

component changes to their existing 

production lines to comply with the 

standard. As a result, DOE believes TSL 

4 may have differential impacts among 

manufacturers. The most significant 

change that must be implemented at this 

TSL is replacing fluorescent lighting 

with LEDs. If profitability remains at 

pre-standard then the impacts on INPV 

are worse. 

At TSL 5, DOE estimated the impacts 

on INPV for Class A equipment to range 

from ¥$8.8 million to ¥$9.9 million, a 

change in INPV of approximately 

¥24.95 percent to ¥28.14 percent. At 

this level, the industry cash flow 

decreases by approximately 191.9 

percent to ¥$2.09 million, compared to 

the base case value of $2.27 million in 

the year leading up to the standards. At 

TSL 5, certain manufacturers have to 

completely redesign all their existing 

equipment, while others only have to 

make costly changes to their existing 

production lines to comply with the 

standard. Therefore, DOE believes TSL 

5 has differential impacts among 

manufacturers. Depending on the 

pathway to meet TSL 5, manufacturers 

may have to alter their existing 

equipment cabinet designs, which 

would greatly increase conversion costs. 

These costly equipment and capital 

conversion costs are the most significant 

driver of INPV. In addition, the higher 

manufacturing costs of standardscompliant equipment could reduce 

profitability. 

At TSL 6, DOE estimated the impacts 

on INPV for Class A equipment to range 

from ¥$12.4 million to ¥$13.7 million, 

a change in INPV of approximately 

¥35.09 percent to ¥38.89 percent. DOE 

seeks comment on the magnitude of this 

estimated decline in INPV. Also, at TSL 

6, the industry cash flow decreases by 

approximately 267.0 percent to ¥$3.79 

million, compared to the base case value 

of $2.27 million in the year leading up 

to the standards. In addition, 

manufacturers have to redesign all their 

existing equipment and make capital 

investments in their production lines to 

comply with the standard. 

Manufacturers will have to make 

additional alterations to the existing 

equipment cabinet designs. In addition, 

the equipment changes necessary to 

meet TSL 6 are more complex, which 

increases the engineering and capital 

resources that must be employed. The 

production costs of equipment that 

meets TSL 6 are higher than at TSL 5. 

The cost to manufacture standardscompliant equipment could have a 

greater impact on profitability if the 

dollar value of operating profit remains 

unchanged. However, at TSL 5, the 

costly equipment and capital conversion 

costs are a more significant driver of 

INPV because the revenues from the 

higher incremental prices do not offset 

the greater conversion expenditures 

even if operating profit increases under 

standards. At TSL 6, DOE believes there 

are no differential impacts among 

manufacturers. 

At TSL 7 (max-tech), DOE estimated 

the impacts on INPV for Class A to 

range from ¥$8.3 million to ¥$20.9 

million, a change in INPV of 

approximately ¥23.67 percent to 

¥59.74 percent. At this level, the 

industry cash flow decreases by 

approximately 287.9 percent to ¥$4.27 

million, compared to the base case value 

of $2.27 million in the year leading up 

to the standards. Similar to TSL 6, TSL 

7 involves additional and more complex 

changes to equipment cabinet designs. 

These additional changes increase 

equipment and capital conversion costs. 

However, the substantial increases in 

production costs to manufacture 

standard-compliant equipment is also a 

significant driver of INPV. If 

profitability does not increase with the 

substantially higher manufacturing 

costs, then the impact on INPV is much 

larger. 

b. Class B Beverage Vending Machine 

Equipment 

Table V–14 and Table V–15 show the 

MIA results for Class B beverage 

vending machines at each TSL using the 

preservation-of-gross-margin-percentage 

and preservation-of-operating-profit 

scenarios described above. 

TABLE V–14—MANUFACTURER IMPACT ANALYSIS FOR CLASS B BEVERAGE VENDING MACHINE EQUIPMENT UNDER THE

PRESERVATION OF GROSS MARGIN PERCENTAGE MARKUP SCENARIO

Preservation of gross margin percentage markup scenario 

Units Base case 

Trial standard level 

1 2 3 4 5 6 

INPV .......................................... 2008$ millions .......... 22.1 22 .1 22 .1 21 .3 20 .9 12 .4 11 .0 

Change in INPV ........................ 2008$ millions .......... .................... 0 .0 0 .0 (0 .8) (1 .3) (9 .7) (11 .2) 

% .............................. .................... 0 .04 0 .07 ¥3 .71 ¥5 .71 ¥44 .01 ¥50 .38 

Equipment Conversion Costs .... 2008$ millions .......... .................... 0 .0 0 .0 1 .7 2 .6 3 .5 6 .9 

Capital Conversion Costs .......... 2008$ millions .......... .................... 0 .0 0 .0 0 .0 0 .0 11 .0 14 .7 

Total Investment Required ........ 2008$ millions .......... .................... 0 .0 0 .0 1 .7 2 .6 14 .5 21 .6 

Note: Numbers in parentheses indicate negative values. 

TABLE V–15—MANUFACTURER IMPACT ANALYSIS FOR CLASS B BEVERAGE VENDING MACHINE EQUIPMENT UNDER THE

PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO

Preservation of gross margin percentage markup scenario 

Units Base case 

Trial standard level 

1 2 3 4 5 6 

INPV .......................................... 2008$ millions .......... 22.1 22 .1 22 .1 21 .2 20 .8 8 .8 (1 .3) 

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37Results of the U.S. Census Bureau’s 2007 

Annual Survey of Manufacturers are not yet 

available. 

TABLE V–15—MANUFACTURER IMPACT ANALYSIS FOR CLASS B BEVERAGE VENDING MACHINE EQUIPMENT UNDER THE

PRESERVATION OF OPERATING PROFIT MARKUP SCENARIO—Continued 

Preservation of gross margin percentage markup scenario 

Units Base case 

Trial standard level 

1 2 3 4 5 6 

Change in INPV ........................ 2008$ millions .......... .................... (0 .0) (0 .0) (0 .9) (1 .3) (13 .4) (23 .4) 

% .............................. .................... ¥0 .05 ¥0 .10 ¥4 .17 ¥6 .07 ¥60 .33 ¥105 .79 

Equipment Conversion Costs .... 2008$ millions .......... .................... 0 .0 0 .0 1 .7 2 .6 3 .5 6 .9 

Capital Conversion Costs .......... 2008$ millions .......... .................... 0 .0 0 .0 0 .0 0 .0 11 .0 14 .7 

Total Investment Required ........ 2008$ millions .......... .................... 0 .0 0 .0 1 .7 2 .6 14 .5 21 .6 

Note: Numbers in parentheses indicate negative values. 

DOE estimates that there are no 

significant impacts on INPV for Class B 

equipment at TSL 1 or TSL 2. The vast 

majority of equipment for sale today 

meets these TSLs. Therefore, DOE 

expects there will be no equipment or 

capital conversion costs and that 

industry revenues and production costs 

will not be significantly negatively 

affected at TSL 1 or TSL 2. 

At TSL 3, DOE estimated the impacts 

in INPV for Class B equipment to range 

from approximately ¥$0.8 million to 

¥$0.9 million, a change in INPV of 

¥3.71 percent to ¥4.17 percent. At this 

level, the industry cash flow decreases 

by approximately 30.9 percent, to $.98 

million, compared to the base case value 

of $1.42 million in the year leading up 

to the standards. At TSL 3, 

manufacturers will have to make some 

component switches to comply with the 

standard. However, most manufacturers 

will not have to significantly alter their 

production process. In addition, these 

minor design changes will not raise the 

production costs beyond the cost of 

most equipment sold today, resulting in 

minimal impacts on industry value. 

At TSL 4, DOE estimated the impacts 

on INPV for Class B equipment to range 

from ¥$1.3 million to ¥$1.3 million, a 

change in INPV of approximately ¥5.71 

percent to ¥6.07 percent. At this level, 

the industry cash flow decreases by 

approximately 46.3 percent to $.76 

million, compared to the base case value 

of $1.42 million in the year leading up 

to the standards. At TSL 4, 

manufacturers will have to make 

additional component switches, 

resulting in minimal equipment 

conversion costs. Standards increase 

production costs, but the cost increases 

are not enough to severely affect INPV 

if profitability remains the same as it 

was before standards. 

At TSL 5, DOE estimated the impacts 

on INPV for Class B equipment to range 

from ¥$9.7 million to ¥$13.4 million, 

a change in INPV of approximately 

¥44.01 percent to ¥60.33 percent. At 

this level, the industry cash flow 

decreases by approximately 371.9 

percent to ¥$3.87 million, compared to 

the base case value of $1.42 million in 

the year leading up to the standards. At 

TSL 5, manufacturers have to redesign 

all their existing equipment and make 

capital investments in their production 

lines to comply with the standard. In 

addition, the equipment designs 

necessary to meet TSL 5 are more 

complex, which increases the 

engineering and capital resources that 

must be employed. Finally, the 

production costs of equipment that 

meets TSL 5 are higher. The cost to 

manufacture standards-compliant 

equipment could have a greater impact 

on the industry if operating profit does 

not increase with production costs. 

At TSL 6 (max-tech), DOE estimated 

the impacts on INPV for Class B to range 

from ¥$11.2 million to ¥$23.4 million, 

a change in INPV of approximately 

¥50.38 percent to ¥105.79 percent. At 

this level, the industry cash flow 

decreases by approximately 549.7 

percent to ¥$6.40 million, compared to 

the base case value of $1.42 million in 

the year leading up to the standards. 

Similar to TSL 5, TSL 6 involves more 

complex changes to existing cabinet 

designs. These additional changes 

increase the equipment and capital 

conversion costs. However, the 

substantial increase in cost of 

manufacturer standards-compliant 

equipment at this TSL is also a 

significant driver of INPV. If 

profitability does not increase with the 

substantially higher manufacturing 

costs, then the impact on INPV is much 

larger. 

c. Cumulative Regulatory Burden 

While any one regulation may not 

impose a significant burden on 

manufacturers, the combined effects of 

several regulations may have serious 

consequences for some manufacturers, 

groups of manufacturers, or an entire 

industry. Assessing the impact of a 

single regulation may overlook this 

cumulative regulatory burden. 

DOE recognizes that each regulation 

can significantly affect manufacturers’ 

financial operations. Multiple 

regulations affecting the same 

manufacturer can quickly reduce 

manufacturers’ profits and possibly 

cause manufacturers to exit from the 

market. However, DOE could not 

identify any other DOE regulations that 

would affect the manufacturers of 

beverage vending machines or their 

parent companies. DOE requested 

information about the cumulative 

regulatory burden during manufacturer 

interviews. In general, manufacturers 

were not greatly concerned about other 

Federal, State, or international 

regulations. The requirements of their 

major customers have a greater impact 

on their business than any of these other 

regulations. For further information 

about the cumulative regulatory burden 

impacts, see chapter 13 of the TSD. 

d. Impacts on Employment 

DOE used the GRIM to assess the 

impacts of energy conservation 

standards on beverage vending machine 

industry employment. DOE used 

statistical data from the U.S. Census 

Bureau’s 2006 Annual Survey of 

Manufacturers, the results of the 

engineering analysis, and interviews 

with manufacturers to estimate the 

inputs necessary to calculate industrywide labor expenditures and 

employment levels.37

The vast majority of beverage vending 

machines are manufactured in the 

United States. Based on results of the 

GRIM, DOE expects that there would be 

slightly positive direct employment 

impacts among domestic beverage 

vending machine manufacturers for TSL 

1 through TSL 6 for Class A equipment 

and TSL 1 through TSL 5 for Class B 

equipment. The GRIM estimates that 

employment would increase by fewer 

than 20 employees for Class A 

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equipment at TSL 1 through TSL 6 and 

fewer than 42 employees for Class B 

equipment at TSL 1 though TSL 5. The 

employment impacts at the max-tech 

levels for both equipment classes are 

positive. The employment impacts are 

more positive at the max-tech levels 

because more labor is required and the 

production costs of the most efficient 

equipment greatly increase. The 

employment impacts calculated in the 

GRIM are shown in Table V–29 and 

Table V–30 in section V.C. 

The results calculated in the GRIM do 

not account for the possible relocation 

of domestic jobs to lower-labor-cost 

countries, which may occur 

independently of new standards or may 

be influenced by the level of 

investments new standards require. 

Manufacturers stated that although there 

are no current plans to relocate 

production facilities, higher TSLs would 

increase pressure to cut costs, which 

could result in relocation. In addition, 

standards could increase pressure to 

consolidate within the industry due to 

the low profitability and existing excess 

capacity. DOE requests comment on 

whether or not the proposed standard 

risks industry consolidation. Because 

the labor impacts in the GRIM do not 

take relocation or consolidation into 

account, the labor impacts would be 

different if manufacturers chose to 

relocate to lower cost countries or if 

manufacturers consolidated. Chapter 13 

of the TSD further discusses how the 

employment impacts are calculated and 

shows the projected changes in 

employment levels by TSL. 

The conclusions in this section are 

independent of any conclusions 

regarding employment impacts from the 

broader U.S. economy estimated in the 

employment impact analysis. Those 

impacts are documented in chapter 15 

of the accompanying TSD. 

e. Impacts on Manufacturing Capacity 

According to the majority of beverage 

vending machine manufacturers, new 

energy conservation standards will not 

affect manufacturers’ production 

capacity. Within the last decade, annual 

shipments of beverage vending 

machines have decreased almost threefold. Due to the decline in shipments, it 

is likely that any of the major 

manufacturers has the capacity to meet 

most of the recent market demand. 

Consequently, the industry has the 

capacity to make many times more units 

than are currently sold each year. Thus, 

DOE believes manufacturers will be able 

to maintain manufacturing capacity 

levels and continue to meet market 

demand under new energy conservation 

standards. 

f. Impacts on Subgroups of 

Manufacturers 

As discussed above, using average 

cost assumptions to develop an industry 

cash-flow estimate is not adequate for 

assessing differential impacts among 

manufacturer subgroups. Small 

manufacturers, niche equipment 

manufacturers, and manufacturers 

exhibiting a cost structure that differs 

largely from the industry average could 

be affected differently. DOE used the 

results of the industry characterization 

to group manufacturers exhibiting 

similar characteristics. 

DOE evaluated the impact of new 

energy conservation standards on small 

manufacturers as defined by the SBA. 

During DOE’s interviews, small business 

manufacturers suggested that the 

impacts of standards would not differ 

from impacts on larger companies. For 

a discussion of the impacts on small 

manufacturers, see chapter 13 of the 

TSD. 

3. National Impact Analysis 

a. Amount and Significance of Energy 

Savings 

Because the pattern and strategies for 

improving the energy performance of 

beverage vending machines is somewhat 

different between Class A and Class B 

equipment, energy savings are reported 

separately for each class of equipment 

by TSL. The national energy savings 

were between 0.001 and 0.107 quads, 

depending on the TSL and equipment 

class, an amount of energy savings that 

DOE considers significant. There is clear 

and convincing evidence that each TSL 

that is more stringent than the baseline 

efficiency level would result in 

significantly more energy savings, 

ranging from 0.001 quads to 0.107 quads 

beyond that achieved in ENERGY STAR 

Tier 1 equipment. 

To estimate the energy savings 

through 2042 due to new energy 

conservation standards, DOE compared 

the energy consumption of beverage 

vending machines under the base case 

to energy consumption under a new 

standard. The energy consumption 

calculated in the NIA is source energy, 

taking into account energy losses in the 

generation and transmission of 

electricity as discussed in section IV.J. 

DOE tentatively determined the 

amount of energy savings at each of the 

seven TSLs being considered for Class A 

equipment and six TSLs for Class B 

equipment, then analyzed and 

aggregated the results across the three 

sizes for each equipment class. 

Table V–16 shows the forecasted 

aggregate national energy savings of 

Class A equipment at each TSL. The 

table also shows the magnitude of the 

estimated energy savings if the savings 

are discounted at the 7-percent and 3- 

percent real discount rates. Each TSL 

considered in this rulemaking would 

result in significant energy savings, and 

the amount of savings increases with 

higher energy conservation standards 

(chapter 11 of the TSD). DOE reports 

both undiscounted and discounted 

values of energy savings. Each TSL 

analyzed results in additional energy 

savings, ranging from an estimated 

0.004 quads to 0.107 quads for TSLs 1 

through 7 (undiscounted). 

TABLE V–16—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS A EQUIPMENT

(Energy Savings for Units Sold from 2012 to 2042) 

Primary National Energy Savings (quads) 

Trial standard level Undiscounted 3% Discounted 

7% Discounted 

1 ................................................................................................................................................... 0.004 0.002 0.001 

2 ................................................................................................................................................... 0.019 0.011 0.006 

3 ................................................................................................................................................... 0.043 0.025 0.013 

4 ................................................................................................................................................... 0.068 0.038 0.020 

5 ................................................................................................................................................... 0.080 0.045 0.024 

6 ................................................................................................................................................... 0.088 0.050 0.026 

7 ................................................................................................................................................... 0.107 0.060 0.031 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26057 

In Table V–17, DOE reports both 

undiscounted and discounted values of 

energy savings for Class B equipment. 

Each higher TSL analyzed results in 

additional energy savings, ranging from 

an estimated 0.001 quads to 0.035 quads 

for TSLs 1 through 6 (undiscounted). 

TABLE V–17—SUMMARY OF CUMULATIVE NATIONAL ENERGY SAVINGS FOR CLASS B EQUIPMENT

(Energy Savings for Units Sold from 2012 to 2042) 

Primary National Energy Savings (quads) 

Trial standard level Undiscounted 3% Discounted 

7% Discounted 

1 ................................................................................................................................................... 0.001 0.001 0.000 

2 ................................................................................................................................................... 0.002 0.001 0.001 

3 ................................................................................................................................................... 0.010 0.006 0.003 

4 ................................................................................................................................................... 0.012 0.007 0.003 

5 ................................................................................................................................................... 0.031 0.018 0.009 

6 ................................................................................................................................................... 0.035 0.020 0.010 

b. Net Present Value 

The NPV analysis is a measure of the 

cumulative benefit or cost of standards 

to the Nation. In accordance with the 

Office of Management and Budget’s 

(OMB) guidelines on regulatory analysis 

(OMB Circular A–4, section E, 

September 17, 2003), DOE calculated an 

estimated NPV using both a 7-percent 

and 3-percent real discount rate. The 7- 

percent rate is an estimate of the average 

before-tax rate of return to private 

capital in the U.S. economy. This rate 

reflects the returns to real estate and 

small business capital as well as 

corporate capital. DOE used this 

discount rate to approximate the 

opportunity cost of capital in the private 

sector, since recent OMB analysis has 

found the average rate of return to 

capital to be near this rate. In addition, 

DOE used the 3-percent discount rate to 

capture the potential effects of standards 

on private consumption (e.g., through 

higher prices for equipment and 

purchase of reduced amounts of energy). 

This rate represents the rate at which 

society discounts future consumption 

flows to their present value. This rate 

can be approximated by the real rate of 

return on long-term Government debt 

(e.g., the yield on Treasury notes minus 

the annual rate of change in the 

Consumer Price Index), which has 

averaged about 3 percent on a pre-tax 

basis for the last 30 years. 

Table V–18 shows the estimated 

cumulative NPV for beverage vending 

machines resulting from the sum of the 

NPV calculated for the Class A 

equipment class. Table V–19 assumes 

the AEO2009 reference case forecast for 

electricity prices. At a 7-percent 

discount rate, TSLs 1 through 6 show 

positive cumulative NPVs. The highest 

NPV is provided by TSL 5 at $0.108 

billion. TSL 6 provided $0.105 billion. 

TSL 7 showed an NPV at ¥$0.719 

billion, the result of negative NPV 

observed in all sizes of this equipment 

class. 

TABLE V–18—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR CLASS A EQUIPMENT (AEO2009 REFERENCE CASE) 

Trial standard level 

NPV* billion 2008$ 

7% Discount 

rate 

3% Discount 

rate 

1 ............................................................................................................................................................................... 0.009 0.020 

2 ............................................................................................................................................................................... 0.038 0.084 

3 ............................................................................................................................................................................... 0.062 0.149 

4 ............................................................................................................................................................................... 0.098 0.235 

5 ............................................................................................................................................................................... 0.108 0.263 

6 ............................................................................................................................................................................... 0.105 0.265 

7 ............................................................................................................................................................................... (0.719) (1.210) 

Note: Numbers in parentheses indicate negative NPV (i.e., net cost). 

At a 3-percent discount rate, all but 

TSL 7 showed a positive NPV, with the 

highest NPV provided at TSL 6 (i.e., 

$0.265 billion). TSL 5 provided a near 

equivalent NPV at $0.263 billion. TSL 7 

provided an NPV of ¥$1.210 billion. 

DOE estimates that all Class A 

equipment at TSL 7 has negative NPVs 

at a 3-percent discount rate. 

Table V–19 shows the estimated 

cumulative NPV for beverage vending 

machines resulting from the sum of the 

NPV calculated for Class B equipment. 

This table assumes the AEO2009 

reference case forecast for electricity 

prices. At a 7-percent discount rate, 

TSLs 1 through 4 show positive 

cumulative NPVs. The highest NPV is 

provided by TSL 2 at $0.003 billion. 

TSL 3 provided zero NPV. TSL 5 and 

TSL 6 show a negative NPV. TSL 5 has 

a ¥$0.256 billion NPV, the result of 

negative NPV observed in all sizes of 

Class B equipment. 

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TABLE V–19—SUMMARY OF CUMULATIVE NET PRESENT VALUE FOR CLASS B EQUIPMENT (AEO2009 REFERENCE CASE) 

Trial standard level 

NPV billion 2008$ 

7% Discount 

rate 

3% Discount 

rate 

1 ............................................................................................................................................................................... 0.002 0.005 

2 ............................................................................................................................................................................... 0.003 0.007 

3 ............................................................................................................................................................................... 0.000 0.008 

4 ............................................................................................................................................................................... (0.004) 0.001 

5 ............................................................................................................................................................................... (0.256) (0.442) 

6 ............................................................................................................................................................................... (1.013) (1.822) 

Note: Numbers in parentheses indicate negative NPV (i.e., net cost). 

At a 3-percent discount rate, TSLs 1 

through 4 showed a positive NPV, with 

the highest NPV provided at TSL 3 

($0.008 billion). TSL 2 provided a near 

equivalent NPV at $0.007 billion. TSL 5 

provided an NPV of ¥$0.442 billion. 

DOE estimated that all Class B 

equipment sizes at TSL 5 have negative 

NPVs at a 3-percent discount rate. 

In addition to the reference case, DOE 

examined the NPV under the AEO2009 

high-growth and low-growth electricity 

price forecasts. The results of this 

examination can be found in chapter 11 

of the TSD. 

c. Impacts on Employment 

Besides the direct impacts on 

manufacturing employment discussed 

in section V.B.2.d, DOE develops 

general estimates of the indirect 

employment impacts of proposed 

standards on the economy. As discussed 

above, DOE expects energy conservation 

standards for beverage vending 

machines to reduce energy bills for 

commercial customers, and the resulting 

net savings to be redirected to other 

forms of economic activity. DOE also 

realizes that these shifts in spending 

and economic activity by vending 

machine operators and site owners 

could affect the demand for labor. The 

impact comes in a variety of businesses 

not directly involved in the decision to 

make, operate, or pay the utility bills for 

beverage vending machines. The 

economic impact is ‘‘indirect.’’ To 

estimate these indirect economic effects, 

DOE used an input/output model of the 

U.S. economy using U.S. Department of 

Commerce, Bureau of Economic 

Analysis (BEA) and Bureau of Labor 

Statistics (BLS) data (as described in 

section IV.K; see chapter 15 of the TSD 

for details). 

In this input/output model, the 

spending of the money saved on utility 

bills when more efficient vending 

machines are deployed is centered in 

economic sectors that create more jobs 

than are lost in electric utilities when 

spending is shifted from electricity to 

other products and services. Thus, the 

proposed beverage vending machine 

energy conservation standards are likely 

to slightly increase the net demand for 

labor in the economy. However, the net 

increase in jobs is so small that it would 

be imperceptible in national labor 

statistics and might be offset by other, 

unanticipated effects on employment. 

Neither the BLS data nor the input/ 

output model used by DOE includes the 

quality of jobs. As shown in Table V– 

20 and Table V–21, DOE estimates that 

net indirect employment impacts from a 

proposed beverage vending machine 

standard are likely to be very small. 

TABLE V–20—NET NATIONAL CHANGE IN INDIRECT EMPLOYMENT FROM CLASS A EQUIPMENT: JOBS IN 2012 TO 2042 

Trial standard level 

Net national change in jobs 

2012 2022 2032 2042 

1 ....................................................................................................................................... 0 10 13 14 

2 ....................................................................................................................................... 3 50 57 64 

3 ....................................................................................................................................... 5 113 132 146 

4 ....................................................................................................................................... 9 173 203 226 

5 ....................................................................................................................................... 9 204 239 265 

6 ....................................................................................................................................... 9 223 262 292 

7 ....................................................................................................................................... (61) 220 267 304 

TABLE V–21—NET NATIONAL CHANGE IN INDIRECT EMPLOYMENT FROM CLASS B EQUIPMENT: JOBS IN 2012 TO 2042 

Trial standard level 

Net national change in jobs 

2012 2022 2032 2042 

1 ....................................................................................................................................... 0 3 4 4 

2 ....................................................................................................................................... 0 5 5 6 

3 ....................................................................................................................................... 0 24 29 33 

4 ....................................................................................................................................... 0 28 34 38 

5 ....................................................................................................................................... (19) 66 80 90 

6 ....................................................................................................................................... (78) 39 56 68 

7 ....................................................................................................................................... NA NA NA NA 

Note: Numbers in parentheses indicate negative values. 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26059 

4. Impact on Utility or Performance of 

Equipment 

In performing the engineering 

analysis, DOE considers design options 

that would not lessen the utility or 

performance of the individual classes of 

equipment (42 U.S.C. 

6295(o)(2)(B)(i)(IV) and 6316(e)(1)). As 

presented in the screening analysis 

(chapter 4 of the TSD), DOE eliminates 

design options that reduce the utility of 

the equipment from consideration. For 

this notice, DOE tentatively concluded 

that none of the efficiency levels 

proposed for beverage vending 

machines reduce the utility or 

performance of the equipment. 

5. Impact of Any Lessening of 

Competition 

EPCA directs DOE to consider any 

lessening of competition likely to result 

from standards. It directs the Attorney 

General to determine in writing the 

impact, if any, of any lessening of 

competition likely to result from a 

proposed standard (42 U.S.C. 

6295(o)(2)(B)(i)(V) and 6316(e)(1)). To 

assist the Attorney General in making 

such a determination, DOE provided the 

Department of Justice (DOJ) with copies 

of this notice and the TSD for review. 

During MIA interviews, domestic 

manufacturers indicated that foreign 

manufacturers have not entered the 

beverage vending machine market for 

the past several years. Manufacturers 

also stated that little or no consolidation 

has occurred among beverage vending 

machine manufacturers in recent years. 

Manufacturers indicated that the 

competitive nature of the industry has 

created pressure to consolidate, but that 

new energy conservation standards 

should not put any one manufacturer at 

a competitive disadvantage. 

Manufacturers have also stated that 

there has been some consolidation 

among bottlers in the industry. DOE 

believes that these trends will continue 

in this market regardless of the 

proposed standard levels chosen. 

DOE does not believe that standards 

would result in domestic firms moving 

their production facilities outside the 

United States. The vast majority of 

beverage vending machines are 

manufactured in the United States and, 

during interviews, manufacturers in 

general indicated they would modify 

their existing facilities to comply with 

energy conservation standards. 

6. Need of the Nation To Conserve 

Energy 

Improving the energy efficiency of 

beverage vending machines, where 

economically justified, would likely 

improve the security of the Nation’s 

energy system by reducing overall 

demand for energy, thus reducing the 

Nation’s reliance on foreign sources of 

energy. Reduced demand would also 

likely improve the reliability of the 

electricity system, particularly during 

peak-load periods. 

Energy savings from higher standards 

for beverage vending machines would 

also produce environmental benefits in 

the form of reduced emissions of air 

pollutants and greenhouse gases 

associated with energy production. 

Table V–22 provides DOE’s estimate of 

cumulative CO2, NOx, and Hg emissions 

reductions that would result from the 

TSLs considered in this rulemaking for 

both Class A and Class B equipment. 

The expected energy savings from the 

proposed standards for beverage 

vending machines may also reduce the 

cost of maintaining nationwide 

emissions standards and constraints. In 

the draft EA (found in chapter 16 of the 

TSD accompanying this notice), DOE 

reports estimated annual changes in 

CO2, NOx, and Hg emissions attributable 

to each TSL. 

TABLE V–22—CUMULATIVE CO2 AND OTHER EMISSIONS REDUCTIONS (CUMULATIVE REDUCTIONS FOR PRODUCTS SOLD

FROM 2012 TO 2042) 

Trial standard levels for Class A 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Emissions Reductions 

CO2 (Mt) ................................................... 0.23 1.01 2.27 3.56 4.19 4.61 5.59 

NOx (kt) .................................................... 0.03 0.14 0.31 0.48 0.57 0.62 0.75 

Hg (tons) 

Low ................................................... 0 0 0 0 0 0 0 

High ................................................... 0.004 0.017 0.038 0.059 0.069 0.076 0.093 

Trial standard levels for Class B 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Emissions Reductions 

CO2 (Mt) ........................................................................... 0.07 0.11 0.53 0.61 1.64 1.83 

NOx (kt) ............................................................................ 0.01 0.01 0.07 0.08 0.22 0.25 

Hg (tons) 

Low ........................................................................... 0 0 0 0 0 0 

High ........................................................................... 0.001 0.002 0.009 0.010 0.027 0.030 

Mt = million metric tons 

kt = thousand tons 

Note: Negative values indicate emission increases. Detail may not sum to total due to rounding. 

As noted in section IV.L, DOE does 

not report SO2 emissions reductions 

from power plants because reductions 

from an energy conservation standard 

would not affect the overall level of U.S. 

SO2 emissions due to emissions caps. 

NOx emissions are currently subject to 

emissions caps under the Clean Air 

Interstate Rule (CAIR) published in the 

Federal Register on May 12, 2005. 70 

FR 25162 (May 12, 2005). The CAIR 

caps emissions in 28 eastern States and 

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26060 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

38 531 F.3d 896 (D.C. Cir. 2008). 

39North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 

2008) (remand of vacatur). 

40 ‘‘Climate Change 2007—Impacts, Adaptation 

and Vulnerability.’’ Contribution of Working Group 

II to the ‘‘Fourth Assessment Report’’ of the IPCC, 

17. Available at http://www.ipcc.ch/ipccreports/ar4- 

wg2.htm (last accessed Aug. 7, 2008). 

the District of Columbia (DC) 

(collectively ‘‘States’’). As with the SO2

emissions cap, energy conservation 

standards are not likely to have a 

physical effect on NOx emissions in 

those States. However, the standards 

proposed in today’s NOPR might have 

produced an environmentally related 

economic impact in the form of lower 

prices for emissions allowance credits if 

they were large enough. DOE believes 

that such standards would not produce 

such an impact because the estimated 

reduction in NOx emissions or the 

corresponding increase in available 

allowance credits in States covered by 

the CAIR cap would be too small to 

affect allowance prices for NOx. 

In contrast, new or amended energy 

conservation standards would reduce 

NOx emissions in those 22 States that 

are not affected by the CAIR, and these 

emissions could be estimated from 

NEMS–BT. As a result, DOE used the 

NEMS–BT to forecast emission 

reductions from the beverage machine 

standards that are considered in today’s 

NOPR. 

Though currently in effect, CAIR has 

been the subject of significant litigation. 

CAIR was vacated by the U.S. Court of 

Appeals for the District of Columbia 

Circuit (D.C. Circuit) in its July 11, 2008, 

decision in North Carolina v. 

Environmental Protection Agency.38

However, on December 23, 2008, the 

D.C. Circuit decided to allow the CAIR 

to remain in effect until it is replaced by 

a rule consistent with the court’s earlier 

opinion.39

DOE established a range of Hg 

emission rates to estimate the Hg 

emissions that could be reduced 

through standards. DOE’s low estimate 

assumed that future standards would 

displace electrical generation only from 

natural gas-fired power plants, thereby 

resulting in an effective emission rate of 

zero. (Under this scenario, coal-fired 

power plant generation would remain 

unaffected.) The low-end emission rate 

is zero because natural gas-fired power 

plants have virtually zero Hg emissions 

associated with their operation. 

DOE’s high estimate, which assumed 

that standards would displace only coalfired power plants, was based on a 

nationwide mercury emission rate from 

AEO2008. (Under this scenario, gasfired power plant generation would 

remain unaffected.) Because power 

plant emission rates are a function of 

local regulation, scrubbers, and the 

mercury content of coal, it is extremely 

difficult to identify a precise high-end 

emission rate. Therefore, the most 

reasonable estimate is based on the 

assumption that all displaced coal 

generation would have been emitting at 

the average emission rate for coal 

generation as specified by AEO2008. As 

noted previously, because virtually all 

mercury emitted from electricity 

generation is from coal-fired power 

plants, DOE based the emission rate on 

the tons of mercury emitted per TWh of 

coal-generated electricity. Based on the 

emission rate for 2006, DOE derived a 

high-end emission rate of 0.0255 tons 

per TWh. To estimate the reduction in 

mercury emissions, DOE multiplied the 

emission rate by the reduction in coalgenerated electricity due to the 

standards considered in the utility 

impact analysis. These changes in Hg 

emissions are extremely small, ranging 

from 0 to 0.02 percent of the national 

base-case emissions forecast by NEMS– 

BT, depending on the TSL. 

DOE has considered the possible 

monetary value of the benefits likely to 

result from the CO2 emission reductions 

associated with standards. To put the 

potential monetary benefits from 

reduced CO2 emissions into a form that 

would likely be most useful to decision 

makers and interested parties, DOE used 

the same methods it used to calculate 

the net present value of consumer cost 

savings. DOE converted the estimated 

yearly reductions in CO2 emissions into 

monetary values, which were then 

discounted over the life of the affected 

equipment to the present using both 3- 

percent and 7-percent discount rates. 

DOE previously proposed using the 

range $0 to $20 per ton for the year 2007 

in 2007$. 73 FR 62034, 62110 (Oct. 17, 

2008). These estimates were based on a 

previous analysis that used a range of no 

benefit to an average benefit value 

reported by the Intergovernmental Panel 

on Climate Change (IPCC). DOE derived 

the IPCC estimate used as the upper 

bound value from an estimate of the 

mean value of worldwide impacts due 

to climate change and not just the 

effects likely to occur within the United 

States. This previous analysis assumed 

that the appropriate value should be 

restricted to a representation of those 

costs and benefits likely to be 

experienced in the United States. DOE 

expects that such domestic values 

would be lower than comparable global 

values; however, there currently are no 

consensus estimates for the U.S. benefits 

likely to result from CO2 emission 

reductions. Because U.S.-specific 

estimates were unavailable and DOE did 

not receive any additional information 

that would help narrow the proposed 

range of domestic benefits, DOE used 

the global mean value as an upper 

bound U.S. value. 

The Department of Energy, together 

with other Federal agencies, is 

reviewing various methodologies for 

estimating the monetary value of 

reductions in CO2 and other greenhouse 

gas emissions. This 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, 

such as whether the appropriate values 

should represent domestic U.S. or global 

benefits (and costs). Given the 

complexity of the many issues involved, 

this review is ongoing. However, 

consistent with DOE’s legal obligations, 

and taking into account the uncertainty 

involved with this particular issue, DOE 

has included in the proposed 

rulemaking the values and analyses 

previously conducted. 

Given the uncertainty surrounding 

estimates of the social cost of carbon, 

DOE previously concluded that relying 

on any single estimate may be 

inadvisable because that estimate will 

depend on many assumptions. Working 

Group II’s contribution to the ‘‘Fourth 

Assessment Report’’ of the IPCC notes 

the following: 

The large ranges of SCC are due in the large 

part to differences in assumptions regarding 

climate sensitivity, response lags, the 

treatment of risk and equity, economic and 

non-economic impacts, the inclusion of 

potentially catastrophic losses, and discount 

rates.40

Because of this uncertainty, DOE 

previously used the SCC value from Tol 

(2005), which was presented in the 

IPCC’s ‘‘Fourth Assessment Report’’ and 

provided a comprehensive metaanalysis of estimates for the value of 

SCC. Tol released an update of his 2005 

meta-analysis in September 2007 that 

reported an increase in the mean 

estimate of SCC from $43 to $71 per ton 

carbon. Although the Tol study was 

updated in 2007, the IPCC has not 

adopted the update. As a result, DOE 

previously decided to continue to rely 

on the study cited by the IPCC. DOE 

notes that the conclusions of Tol in 

2007 are similar to the conclusions of 

Tol in 2005. In 2007, Tol continues to 

indicate that there is no consensus 

regarding the monetary value of 

reducing CO2 emissions by 1 ton. The 

broad range of values in both Tol 

studies are the result of significant 

differences in the methodologies used in 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26061 

the studies Tol summarized. According 

to Tol, all of the studies have 

shortcomings, largely because the 

subject is inherently complex and 

uncertain and requires broad 

multidisciplinary knowledge. Thus, it 

was not certain that the values reported 

in Tol in 2007 are more accurate or 

representative than the values reported 

in Tol in 2005. 

For today’s NOPR, DOE used the 

range of values based on the values 

presented in Tol (2005) as proposed. 

Additionally, DOE applied an annual 

growth rate of 2.4 percent to the value 

of SCC, as suggested by the IPCC 

Working Group II (2007, p. 822). This 

growth rate is based on estimated 

increases in damage from future 

emissions that published studies have 

reported. Because the values in Tol 

(2005) were presented in 1995$, DOE 

calculated more current values, 

assigning a range for SCC of $0 to $20 

(2007$) per ton of CO2 emissions. 

The upper bound of the range DOE 

used is based on Tol (2005), which 

reviewed 103 estimates of SCC from 28 

published studies. Tol concluded that 

when only peer-reviewed studies 

published in recognized journals are 

considered, ‘‘climate change impacts 

may be very uncertain but [it] is 

unlikely that the marginal damage costs 

of carbon dioxide emissions exceed $50 

per ton carbon [comparable to a 2007 

value of $20 per ton carbon dioxide 

when expressed in 2007 U.S. dollars 

with a 2.4 percent growth rate].’’ 

In setting a lower bound, DOE’s 

analysis agreed with the IPCC Working 

Group II (2007) report that ‘‘significant 

warming across the globe and the 

locations of significant observed 

changes in many systems consistent 

with warming is very unlikely to be due 

solely to natural variability of 

temperatures or natural variability of the 

systems’’ (p. 9), and thus tentatively 

concluded that a global value of zero for 

the SCC cannot be justified. However, 

DOE concludes that it is reasonable to 

allow for the possibility that the SCC for 

the United States may be quite low. In 

fact, some of the studies examined by 

Tol (2005) reported negative values for 

the SCC. DOE assumes that it is most 

appropriate to use U.S. benefit values 

rather than world benefit values in its 

analysis, and U.S. values will likely be 

lower than global values. 

Table V–23 and Table V–24 present 

the resulting estimates of the potential 

range of NPV benefits associated with 

reducing CO2 emissions for both Class A 

and Class B equipment based on the 

range of values used by DOE for this 

proposed rule. 

TABLE V–23—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AT A SEVEN-PERCENT

DISCOUNT RATE AND THREE-PERCENT DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated cumulative CO2 emission reductions 

Mt 

Value of estimated 

CO2 emission reductions at 7% 

discount rate 

million 2007$ 

Value of estimated 

CO2 emission reductions at 3% 

discount rate 

million 2007$ 

1 ................................................................................................................................. 0.23 0–2.2 0–4.3 

2 ................................................................................................................................. 1.01 0–9.7 0–18.9 

3 ................................................................................................................................. 2.27 0–21.9 0–42.5 

4 ................................................................................................................................. 3.56 0–34.3 0–66.6 

5 ................................................................................................................................. 4.19 0–40.4 0–78.5 

6 ................................................................................................................................. 4.61 0–44.5 0–86.4 

7 ................................................................................................................................. 5.59 0–53.9 0–104.7 

TABLE V–24—ESTIMATES OF SAVINGS FROM CO2 EMISSIONS REDUCTIONS AT ALL TSLS AT A SEVEN-PERCENT

DISCOUNT RATE AND THREE-PERCENT DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated cumulative CO2 emission reductions 

Mt 

Value of estimated 

CO2 emission reductions at 7% 

discount rate 

million 2007$ 

Value of estimated 

CO2 emission reductions at 3% 

discount rate 

million 2007$ 

1 ................................................................................................................................. 0.07 0–0.7 0–1.3 

2 ................................................................................................................................. 0.11 0–1.0 0–2 

3 ................................................................................................................................. 0.53 0–5.1 0–10 

4 ................................................................................................................................. 0.61 0–5.9 0–11.4 

5 ................................................................................................................................. 1.64 0–15.8 0–30.8 

6 ................................................................................................................................. 1.83 0–17.6 0–34.2 

The Department is well aware that 

scientific and economic knowledge 

about the contribution of CO2 and other 

greenhouse gas emissions (GHG) to 

changes in the future global climate and 

the potential resulting damages to the 

world economy continues to evolve 

rapidly. Thus, any value placed in this 

rulemaking on reducing CO2 emissions 

is subject to likely change. DOE 

recognizes the importance of continuing 

to monitor current research on the 

potential economic damages resulting 

from climate change, and of periodically 

updating estimates of the value of 

reducing CO2 emissions to reflect 

continuing advances in scientific and 

economic knowledge about the nature 

and extent of climate change and the 

threat it poses to world economic 

development. Further, DOE recognizes 

the interest and expertise of other 

federal agencies, particularly the 

Environmental Protection Agency and 

the Department of Transportation, in the 

issue of valuing the reductions in 

climate damages that are likely to result 

from those agencies’ own efforts to 

reduce GHG emissions. DOE will 

continue to work closely with those and 

other federal agencies in the 

development and review of the 

economic values of reducing GHG 

emissions. 

DOE also investigated the potential 

monetary benefit of reduced SO2, NOX, 

and Hg emissions from the TSLs it 

considered. As previously stated, DOE’s 

initial analysis assumed the presence of 

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26062 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

41OMB, Office of Information and Regulatory 

Affairs, ‘‘2006 Report to Congress on the Costs and 

Benefits of Federal Regulations and Unfunded 

Mandates on State, Local, and Tribal Entities,’’ 

Washington, DC (2006). 

42New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 

2008). 

43Trasande, L., et al., ‘‘Applying Cost Analyses to 

Drive Policy that Protects Children,’’ 1076 Ann. 

N.Y. Acad. Sci. 911 (2006). 44Ted Gayer and Robert Hahn, ‘‘Designing 

Environmental Policy: Lessons from the Regulation 

of Mercury Emissions,’’ Regulatory Analysis 05–01, 

AEI–Brookings Joint Center for Regulatory Studies, 

Washington, DC (2004). A version of this paper was 

published in the Journal of Regulatory Economics 

in 2006. The estimate was derived by backcalculating the annual benefits per ton from the net 

present value of benefits reported in the study. 

nationwide emission caps on SO2 and 

Hg, and caps on NOX emissions in the 

28 States covered by the CAIR. In the 

presence of these caps, DOE concluded 

that no physical reductions in power 

sector emissions would occur, but that 

the standards could put downward 

pressure on the prices of emissions 

allowances in cap-and-trade markets. 

Estimating this effect is very difficult 

because of factors such as credit 

banking, which can change the 

trajectory of prices. DOE has concluded 

that the effect from energy conservation 

standards on SO2 allowance prices is 

likely to be negligible based on runs of 

the NEMS–BT model. See chapter 16 of 

the TSD accompanying this notice for 

further details. 

Because the courts have decided to 

allow the CAIR rule to remain in effect, 

projected annual NOX allowances from 

NEMS–BT are relevant. As noted above, 

standards would not produce an 

economic impact in the form of lower 

prices for emissions allowance credits 

in the 28 eastern States and D.C. 

covered by the CAIR cap. New or 

amended energy conservation standards 

would reduce NOX emissions in those 

22 States that are not affected by the 

CAIR. For the area of the United States 

not covered by the CAIR, DOE estimated 

the monetized value of NOX emissions 

reductions resulting from each of the 

TSLs considered for today’s NOPR 

based on environmental damage 

estimates from the literature. Available 

estimates suggest a very wide range of 

monetary values for NOX emissions, 

ranging from $370 per ton to $3,800 per 

ton of NOX from stationary sources, 

measured in 2001$ (equivalent to a 

range of $432 per ton to $4,441 per ton 

in 2007$).41

To estimate the monetary value of Hg 

emission reductions resulting from the 

TSLs considered for today’s NOPR, DOE 

utilized a range of monetary values per 

ton of emissions and a range of physical 

emission reductions for Hg. Similar to 

SO2 and NOX, future emissions of Hg 

would have been subject to emissions 

caps under the Clean Air Mercury Rule 

(CAMR). The CAMR would have 

permanently capped emissions of 

mercury for new and existing coal-fired 

plants in all States by 2010, but was 

vacated by the D.C. Circuit in its 

February 8, 2008, decision in New Jersey 

v. Environmental Protection Agency.42

DOE typically uses the NEMS–BT 

model to calculate emissions from the 

electrical generation sector; however, 

the 2008 NEMS–BT model is not 

suitable for assessing mercury emissions 

in the absence of a CAMR cap. Thus, 

DOE used a range of Hg emissions rates 

(in tons of Hg per energy per TWh 

produced) based on the AEO2008. 

Because the high end of the range of Hg 

emissions rates attributable to electricity 

generation are from coal-fired power 

plants, DOE based that emissions rate 

on the tons of mercury emitted per TWh 

of coal-generated electricity. DOE’s low 

estimate assumed that future standards 

would displace electrical generation 

from natural gas powered power plants. 

The low end of the range of Hg 

emissions rates is zero because natural 

gas powered power plants have virtually 

no Hg emissions associated with their 

operations. To estimate the reduction in 

mercury emissions, DOE multiplied the 

emissions rates by the reduction in 

electricity generation associated with 

the standards proposed in today’s 

NOPR. 

DOE estimated the national 

monetized values per ton based on 

environmental damage estimates from 

the literature. DOE conducted research 

for today’s NOPR and determined that 

the impact of mercury emissions from 

power plants on humans is considered 

highly uncertain. However, DOE 

identified two estimates of the 

environmental damage of mercury based 

on two estimates of the adverse impact 

of childhood exposure to methyl 

mercury on IQ for American children, 

and subsequent loss of lifetime 

economic productivity resulting from 

these IQ losses. The high-end estimate 

is based on an estimate of the current 

aggregate cost of the loss of IQ in 

American children that results from 

exposure to mercury of U.S. power plant 

origin ($1.3 billion per year in year 

2000$), which works out to $32.6 

million per ton emitted per year 

(2007$).43 The low-end estimate is $0.66 

million per ton emitted (in 2004$) or 

$0.739 million per ton in 2007$. DOE 

derived this estimate from a published 

evaluation of mercury control using 

different methods and assumptions from 

the first study, but also based on the 

present value of the lifetime earnings of 

children exposed.44 Tables V–25 

through Table V–28 present the 

resulting estimates of the potential range 

of present value benefits associated with 

reducing national NOX and Hg 

emissions for Class A and B equipment. 

TABLE V–25—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TSLS AT A SEVEN-PERCENT

DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated cumulative NOX emission reductions 

kt 

Value of estimated 

NOX emission reductions 

thousand 2007$ 

Estimated cumulative Hg emission 

reductions 

tons 

Value of estimated 

Hg emission reductions 

thousand 2007$ 

1 ............................................................................................... 0.03 5–50 0–0.004 0–44 

2 ............................................................................................... 0.14 21–221 0–0.017 0–196 

3 ............................................................................................... 0.31 48–497 0–0.038 0–441 

4 ............................................................................................... 0.48 76–778 0–0.059 0–690 

5 ............................................................................................... 0.57 89–918 0–0.069 0–814 

6 ............................................................................................... 0.62 98–1010 0–0.076 0–896 

7 ............................................................................................... 0.75 119–1224 0–0.093 0–1086 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26063 

TABLE V–26—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TSLS AT A SEVEN-PERCENT

DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated cumulative NOX emission reductions 

kt 

Value of estimated 

NOX emission reductions 

thousand 2007$ 

Estimated cumulative Hg emission 

reductions 

tons 

Value of estimated 

Hg emission reductions 

thousand 2007$ 

1 ............................................................................................... 0.01 2–16 0–0.001 0–14 

2 ............................................................................................... 0.01 2–23 0–0.002 0–21 

3 ............................................................................................... 0.07 11–116 0–0.009 0–103 

4 ............................................................................................... 0.08 13–133 0–0.010 0–118 

5 ............................................................................................... 0.22 35–359 0–0.027 0–319 

6 ............................................................................................... 0.25 39–400 0–0.030 0–355 

TABLE V–27—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TSLS AT A THREE-PERCENT

DISCOUNT RATE FOR CLASS A EQUIPMENT

TSL 

Estimated cumulative NOX emission reductions 

kt 

Value of estimated 

NOX emission reductions 

thousand 2007$ 

Estimated cumulative Hg emission 

reductions 

tons 

Value of estimated 

Hg emission reductions 

thousand 2007$ 

1 ............................................................................................... 0.03 8–85 0–0.004 0–76 

2 ............................................................................................... 0.14 37–377 0–0.017 0–338 

3 ............................................................................................... 0.31 83–849 0–0.038 0–761 

4 ............................................................................................... 0.48 129–1330 0–0.059 0–1192 

5 ............................................................................................... 0.57 153–1568 0–0.069 0–1405 

6 ............................................................................................... 0.62 168–1726 0–0.076 0–1547 

7 ............................................................................................... 0.75 203–2092 0–0.093 0–1874 

TABLE V–28—ESTIMATES OF SAVINGS FROM REDUCING NOX AND HG EMISSIONS AT ALL TSLS AT A THREE-PERCENT

DISCOUNT RATE FOR CLASS B EQUIPMENT

TSL 

Estimated cumulative NOX emission reductions 

kt 

Value of estimated 

NOX emission reductions 

thousand 2007$ 

Estimated cumulative Hg emission 

reductions 

tons 

Value of estimated 

Hg emission reductions 

thousand 2007$ 

1 ............................................................................................... 0.01 3–27 0–0.001 0–24 

2 ............................................................................................... 0.01 4–40 0–0.002 0–36 

3 ............................................................................................... 0.07 19–199 0–0.009 0–178 

4 ............................................................................................... 0.08 22–227 0–0.010 0–204 

5 ............................................................................................... 0.22 60–614 0–0.027 0–550 

6 ............................................................................................... 0.25 67–684 0–0.030 0–613 

7. 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(e)(1)) DOE 

identified no factors other than those 

already considered above for analysis. 

C. Proposed Standard 

EPCA specifies that any new or 

amended energy conservation standard 

for any type (or class) of covered 

equipment shall be designed to achieve 

the maximum improvement in energy 

efficiency that the Secretary determines 

is technologically feasible and 

economically justified. (42 U.S.C. 

6295(o)(2)(A) and 6316(e)(1)) In 

determining whether a standard is 

economically justified, the Secretary 

must determine whether the benefits of 

the standard exceed its burdens. (42 

U.S.C. 6295(o)(2)(B)(i) and 6316(e)(1)) 

The new or amended standard must 

‘‘result in significant conservation of 

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

6316(e)(1)) 

DOE developed trial standard levels 

independently for Class A and Class B 

beverage vending machines. DOE 

considered 7 TSLs for Class A and 6 

TSLs for Class B. In selecting the 

proposed energy conservation standards 

for both classes of beverage vending 

machines for consideration in today’s 

notice of proposed rulemaking, DOE 

started by examining the maximum 

technologically feasible levels, and 

determined whether those levels were 

economically justified. Upon finding the 

maximum technologically feasible 

levels not to be justified, DOE analyzed 

the next lower TSL to determine 

whether that level was economically 

justified. DOE repeated this procedure 

until it identified a TSL that was 

economically justified. 

To aid the reader as DOE discusses 

the benefits and/or burdens of each TSL, 

Table V–29 and Table V–30 present 

summaries of quantitative analysis 

results for each TSL for Class A 

equipment and Class B equipment, 

respectively, based on the assumptions 

and methodology discussed above. 

These tables present the results or, in 

some cases, a range of results, for each 

TSL. The range of values reported in 

these tables for industry impacts 

represents the results for the different 

markup scenarios that DOE used to 

estimate manufacturer impacts. 

1. Class A Equipment 

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TABLE V–29—SUMMARY OF RESULTS FOR CLASS A EQUIPMENT BASED UPON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST* 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 TSL 7 

Primary Energy Saved quads ................................ 0.004 0.019 0.043 0.068 0.080 0.088 0.107 

7% Discount Rate .................................................. 0.001 0.006 0.013 0.020 0.024 0.026 0.031 

3% Discount Rate .................................................. 0.002 0.011 0.025 0.038 0.045 0.050 0.060 

Generation Capacity Reduction GW** ................... 0.002 0.009 0.020 0.031 0.037 0.041 0.049 

NPV 2008$ billion: 

7% Discount Rate ........................................... 0.009 0.038 0.062 0.098 0.108 0.105 (0.719) 

3% Discount Rate ........................................... 0.020 0.084 0.149 0.235 0.263 0.265 (1.210) 

Industry Impacts: 

Industry NPV 2008$ million ............................ 0 (0.2)–(0.4) (1.9)–(2.6) (2.1)–(3.1) (8.8)–(9.9) (12.4)– 

(13.7) 

(8.3)– 

(20.9) 

Industry NPV % change ................................. 0.1 (0.6)–(1.0) (5.5)–(7.4) (5.9)–(8.8) (25.0)– 

(28.1) 

(35.1)– 

(38.9) 

(23.7)– 

(59.7) 

Cumulative Emissions Impacts†: 

CO2 Reductions Mt ......................................... 0.23 1.01 2.27 3.56 4.19 4.61 5.59 

Value of CO2 Reductions at 7% Discount 

Rate million 2007$ ...................................... 0–2.2 0–9.7 0–21.9 0–34.3 0–40.4 0–44.5 0–53.9 

Value of CO2 Reductions at 3% Discount 

Rate million 2007$ ...................................... 0–4.3 0–18.9 0–42.5 0–66.6 0–78.5 0–86.4 0–104.7 

NOX Reductions kt ................................................. 0.03 0.14 0.31 0.48 0.57 0.62 0.75 

Value of NOX Reductions at 7% Discount Rate 

thousand 2007$ .................................................. 5–50 21–221 48–497 76–778 89–918 98–1010 119–1224 

Value of NOX Reductions at 3% Discount Rate 

thousand 2007$ .................................................. 8–85 37–377 83–849 129–1330 153–1568 168–1726 203–2092 

Hg Reductions tons ............................................... 0–0.004 0–0.017 0–0.038 0–0.059 0–0.069 0–0.076 0–0.093 

Value of Hg Reductions at 7% Discount Rate 

thousand 2007$ .................................................. 0–44 0–196 0–441 0–690 0–814 0–896 0–1086 

Value of Hg Reductions at 3% Discount Rate 

thousand 2007$ .................................................. 0–76 0–338 0–761 0–1192 0–1405 0–1547 0–1874 

Life-Cycle Cost:.

Net Savings % ................................................ 10 100 100 100 100 100 98 

Net Increase % ............................................... 0 0 0 0 0 2 100 

No Change % ................................................. 90 0 0 0 0 0 0 

Mean LCC Savings 2008$ ............................. 154 204 245 307 322 316 (1,194) 

Mean PBP years ............................................. 2.0 2.1 2.9 3.1 3.4 3.8 62.9 

Direct Domestic Employment Impacts (2012) jobs 0 2 8 12 15 19 133 

Indirect Employment Impacts (2042) jobs ............. 14 64 146 226 265 292 304 

* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2009 Reference Case. † CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as 

well as production of emissions allowance credits where NOX emissions are subject to emissions caps. 

First, DOE considered TSL 7, the most 

efficient level for Class A beverage 

vending machines. TSL 7 would save an 

estimated 0.107 quads of energy through 

2042, an amount DOE considers 

significant. Discounted at 7 percent, the 

projected energy savings through 2042 

would be 0.031 quads. For the Nation as 

a whole, DOE projects that TSL 7 would 

result in a net decrease of $719 million 

in NPV, using a discount rate of 7 

percent. The emissions reductions at 

TSL 7 are 5.59 Mt of CO2, up to 0.75 kt 

of NOX, and up to 0.093 tons of Hg. 

These reductions have a value of up to 

$53.9 million for CO2, $1.2 million for 

NOX, and $1.1 million for Hg, at a 

discount rate of 7 percent. DOE also 

estimates that at TSL 7, total electric 

generating capacity in 2042 will 

decrease compared to the base case by 

0.049 GW. 

At TSL 7, DOE projects that the 

average Class A beverage vending 

machine customer will experience an 

increase in LCC of $1,194 compared to 

the baseline. At TSL 7, DOE estimates 

the fraction of customers experiencing 

LCC increases will be 100 percent. The 

mean PBP for the average Class A 

beverage vending machine customer at 

TSL 7 compared to the baseline level is 

projected to be 62.9 years. 

At higher TSLs, manufacturers have a 

more difficult time maintaining current 

operating profit levels with larger 

increases in manufacturing production 

costs, as standards increase recurring 

operating costs like capital 

expenditures, purchased materials, and 

carrying inventory. Therefore, it is more 

likely that the higher end of the range 

of impacts will be reached at TSL 7 (i.e., 

a drop of 59.7 percent in INPV). 

Manufacturers expressed great concern 

about high capital and equipment 

conversion costs necessary to convert 

production into standards-compliant 

equipment. At TSL 7, there is the risk 

of very large negative impacts on the 

industry if manufacturers’ operating 

profits levels are reduced. See section 

IV.I for additional manufacturer 

concerns. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 7, DOE finds that the 

benefits to the Nation of TSL 7 (i.e., 

energy savings and emissions 

reductions (including environmental 

and monetary benefits)) do not outweigh 

the burdens (i.e., a decrease of $719 

million in NPV and a decrease of 59.7 

percent in INPV). Because the burdens 

of TSL 7 outweigh the benefits, TSL 7 

is not economically justified. Therefore, 

DOE proposes to reject TSL 7 for Class 

A equipment. 

DOE then considered TSL 6, which 

provides for Class A equipment the 

maximum efficiency level that the 

analysis showed to have positive NPV to 

the Nation. TSL 6 would likely save an 

estimated 0.088 quads of energy through 

2042, an amount DOE considers 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26065 

significant. Discounted at 7 percent, the 

projected energy savings through 2042 

would be 0.026 quads. For the Nation as 

a whole, DOE projects that TSL 6 would 

result in a net increase of $105 million 

in NPV, using a discount rate of 7 

percent. The estimated emissions 

reductions at TSL 6 are 4.61 Mt of CO2, 

up to 0.62 kt of NOx, and up to 0.076 

tons of Hg. These reductions have a 

value of up to $44.5 million for CO2, 

$1.0 million for NOx, and $896,000 for 

Hg, at a discount rate of 7 percent. Total 

electric generating capacity in 2042 is 

estimated to decrease compared to the 

base case by 0.041 GW under TSL 6. 

At TSL 6, DOE projects that the 

average beverage vending machine 

customer will experience a reduction in 

LCC of $316 compared to the baseline. 

The mean PBP for the average beverage 

vending machine customer at TSL 6 is 

projected to be 3.8 years compared to 

the purchase of baseline equipment. 

As is the case with TSL 7, DOE 

believes the majority of manufacturers 

would need to completely redesign all 

Class A equipment offered for sale. 

Therefore, DOE expects beverage 

vending machine manufacturers would 

have some difficulty maintaining 

current operating profit levels with 

higher production costs. Similar to TSL 

7, it is more likely that the higher end 

of the range of impacts would be 

reached at TSL 6 (i.e., a decrease of 38.9 

percent in INPV). However, compared to 

the baseline, Class A equipment showed 

significant positive LCC savings on a 

national average basis and customers 

did not experience an increase in LCC 

with a standard at TSL 6 compared with 

purchasing baseline equipment. The 

PBP calculated for Class A equipment 

was lower than the life of the 

equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 6, DOE proposes that for 

Class A equipment, TSL 6 represents the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. TSL 

6 is technologically feasible because the 

technologies required to achieve these 

levels are already in existence. TSL 6 is 

economically justified because the 

benefits to the Nation (i.e., increased 

energy savings of 0.088 quads, 

emissions reductions including 

environmental and monetary benefits of, 

for example, 4.61 Mt of carbon dioxide 

emissions reduction with an associated 

value of up to $44.5 million at a 

discount rate of 7 percent, and an 

increase of $105 million in NPV) 

outweigh the costs (i.e., a decrease of 

38.9 percent in INPV). There is also the 

added benefit in terms of a reduction in 

total electrical generating capacity in 

2042 compared to the base case of 0.041 

GW under the TSL 6 scenario. 

Therefore, DOE proposes TSL 6 as the 

energy conservation standard for Class 

A beverage vending machines in this 

NOPR. DOE seeks comment and further 

data or information on the magnitude of 

the estimated decline in INPV at TSL 6, 

and what impact this level could have 

on industry parties, including small 

businesses. DOE also requests comment 

on whether the energy savings and 

related benefits of TSL 6 outweigh the 

costs, including potential manufacturer 

impacts. DOE is particularly interested 

in receiving comments, views, and 

further data or information from 

interested parties concerning: (1) Why 

the private market has not been able to 

capture the energy benefits proposed in 

TSL 6; (2) whether and to what extent 

parties estimate they will be able to 

transfer costs of implementing TSL 6 on 

to consumers; (3) whether and to what 

extent parties estimate distributional 

chain intermediaries (such as 

wholesalers or bottlers) will be able to 

absorb TSL 6 implementation costs and 

in turn transfer these costs to on-site 

consumers, who ultimately benefit from 

the energy gains associated with the 

proposed standard. 

2. Class B Equipment 

TABLE V–30—SUMMARY OF RESULTS FOR CLASS B EQUIPMENT BASED ON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST* 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Primary Energy Saved (quads) ....................................... 0.001 0.002 0.010 0.012 0.031 0.035 

7% Discount Rate ............................................................ 0.000 0.001 0.003 0.003 0.009 0.010 

3% Discount Rate ............................................................ 0.001 0.001 0.006 0.007 0.018 0.020 

Generation Capacity Reduction (GW)** .......................... 0.001 0.001 0.005 0.005 0.014 0.016 

NPV (2008$ billion): 

7% Discount Rate ..................................................... 0.002 0.003 0.000 (0.004) (0.256) (1.013) 

3% Discount Rate ..................................................... 0.005 0.007 0.008 0.001 (0.442) (1.822) 

Industry Impacts 

Industry NPV (2008$ million) .................................... 0 0 (0.8)–(0.9) (1.3)–(1.3) (9.7)–(13.4) (11.2)–(23.4) 

Industry NPV (% Change) ........................................ 0–(0.1) 0.1–(0.1) (3.7)–(4.2) (5.7)–(6.1) (44.0)–(60.3) (50.4)–(105.8) 

Cumulative Emissions Impacts†: 

CO2 Reductions (Mt) ................................................ 0.07 0.11 0.53 0.61 1.64 1.83 

Value of CO2 reductions at 7% discount rate (million 2007$) ............................................................ 0–0.7 0–1 0–5.1 0–5.9 0–15.8 0–17.6 

Value of CO2 reductions at 3% discount rate (million 2007$) ............................................................ 0–1.3 0–2 0–10 0–11.4 0–30.8 0–34.2 

NOX Reductions (kt) ........................................................ 0.01 0.01 0.07 0.08 0.22 0.25 

Value of NOX reductions at 7% discount rate (thousand 

2007$) .......................................................................... 2–16 2–23 11–116 13–133 35–359 39–400 

Value of NOX reductions at 3% discount rate (thousand 

2007$) .......................................................................... 3–27 4–40 19–199 22–227 60–614 67–684 

Hg Reductions (t) ............................................................. 0–0.001 0–0.002 0–0.009 0–0.010 0–0.027 0–0.030 

Value of Hg reductions at 7% discount rate (thousand 

2007$) .......................................................................... 0–14 0–21 0–103 0–118 0–319 0–355 

Value of Hg reductions at 3% discount rate (thousand 

2007$) .......................................................................... 0–24 0–36 0–178 0–204 0–550 0–613 

Life-Cycle Cost 

Net Savings (%) ........................................................ 10 100 90 80 69 0 

Net Increase (%) ....................................................... 0 11 21 32 100 100 

No Change (%) ......................................................... 90 0 0 0 0 0 

Mean LCC Savings (2008$) ..................................... 47 56 49 39 (525) (2216) 

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TABLE V–30—SUMMARY OF RESULTS FOR CLASS B EQUIPMENT BASED ON THE AEO2009 REFERENCE CASE ENERGY

PRICE FORECAST*—Continued 

TSL 1 TSL 2 TSL 3 TSL 4 TSL 5 TSL 6 

Mean PBP (years) .................................................... 3.1 4.1 6.0 6.9 76.2 100 

Direct Domestic Employment Impacts (2012) (jobs) ....... 0 0 3 4 41 134 

Indirect Employment Impacts (2042) (jobs) ..................... 4 6 33 38 90 68 

* Parentheses indicate negative (¥) values. For LCCs, a negative value means an increase in LCC by the amount indicated. 

** Change in installed generation capacity by the year 2042 based on AEO2008 Reference Case. † CO2 emissions impacts include physical reductions at power plants. NOX emissions impacts include physical reductions at power plants as 

well as production of emissions allowance credits where NOX emissions are subject to emissions caps. 

First, DOE considered TSL 6, the most 

efficient level for Class B beverage 

vending machines. TSL 6 would likely 

save an estimated 0.035 quads of energy 

through 2042, an amount DOE considers 

significant. Discounted at 7 percent, the 

projected energy savings through 2042 

would be 0.01 quads. For the Nation as 

a whole, DOE projects that TSL 6 would 

result in a net decrease of $1.013 billion 

in NPV, using a discount rate of 7 

percent. The emissions reductions at 

TSL 6 are 1.83 Mt of CO2, up to 0.25 kt 

of NOX, and up to 0.03 tons of Hg. These 

reductions have a value of up to $17.6 

million for CO2, $400,000 for NOX, and 

$355,000 for Hg, at a discount rate of 7 

percent. DOE also estimates that at TSL 

6, total electric generating capacity in 

2042 will decrease compared to the base 

case by 0.016 GW. 

At TSL 6, DOE projects that for the 

average customer, the LCC of Class B 

beverage vending machines will 

increase by $2,216 compared to the 

baseline. At TSL 6, DOE estimates the 

fraction of customers experiencing LCC 

increases will be 100 percent. The mean 

PBP for the average Class B beverage 

vending machine customer at TSL 6 

compared to the baseline level is 

projected to be 100 years. 

At higher TSLs, manufacturers have a 

more difficult time maintaining 

operating profit with large increases in 

production costs. Therefore, it is more 

likely that the higher end of the range 

of impacts would be reached at TSL 6 

(i.e., a decrease of 105.8 percent in 

INPV). At TSL 6, there is the risk of very 

large negative impacts on the industry if 

manufacturers’ operating profit levels 

are reduced. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 6, DOE finds that the 

benefits to the Nation of TSL 6 (i.e., 

energy savings and emissions 

reductions including environmental and 

monetary benefits) do not outweigh the 

burdens (i.e., a decrease of $1.013 

billion in NPV, a decrease of 105.8 

percent in INPV, and an economic 

burden on customers). Therefore, DOE 

proposes that the burdens of TSL 6 

outweigh the benefits and TSL 6 is not 

economically justified. Therefore, DOE 

proposes to reject TSL 6 for Class B 

equipment. 

TSL 5 offers the maximum efficiency 

levels for Class B equipment that 

provide positive NPV to the Nation. TSL 

5 would likely save an estimated 0.031 

quads of energy through 2042, an 

amount DOE considers significant. 

Discounted at 7 percent, the projected 

energy savings through 2042 would be 

0.009 quads. For the Nation as a whole, 

DOE projects that TSL 5 would result in 

a net decrease of $256 million in NPV, 

using a discount rate of 7 percent. The 

estimated emissions reductions at TSL 5 

are 1.64 Mt of CO2, up to 0.22 kt of NOX, 

and up to 0.027 tons of Hg. These 

reductions have a value of up to $15.8 

million for CO2, $359,000 for NOX, and 

$319,000 for Hg at a discount rate of 7 

percent. Total electric generating 

capacity in 2042 is estimated to 

decrease compared to the base case by 

0.014 GW at TSL 5. 

At TSL 5, DOE projects that the 

average Class B beverage vending 

machine customers will experience an 

increase in LCC of $525 compared to the 

baseline. The mean PBP for the average 

Class B beverage vending machine 

customer at TSL 5 is projected to be 76.2 

years compared to the purchase of 

baseline equipment. 

As with TSL 6, DOE believes the 

majority of manufacturers would need 

to completely redesign all Class B 

equipment offered for sale at TSL 5. 

Therefore, DOE expects that 

manufacturers will have difficulty 

maintaining operating profit with larger 

MPC increases. Similar to TSL 6, 

manufacturers expect the higher end of 

the range of impacts to be reached at 

TSL 5 (i.e., a decrease of 60.3 percent in 

INPV). 

After carefully considering the 

analysis and evaluating the benefits and 

burdens of TSL 5, DOE finds that the 

benefits to the Nation of TSL 5 (i.e., 

energy savings and emissions 

reductions, including environmental 

and monetary benefits) do not outweigh 

the burdens (i.e., a decrease of $256 

million in NPV and a decrease of 60.3 

percent in INPV, as well as the 

economic burden on customers). 

Therefore, DOE proposes that the 

burdens of TSL 5 outweigh the benefits 

and TSL 5 is not economically justified. 

Therefore, DOE proposes to reject TSL 

5 for Class B equipment. 

TSL 4 would likely save an estimated 

0.012 quads of energy through 2042, an 

amount DOE considers significant. 

Discounted at 7 percent, the projected 

energy savings through 2042 would be 

0.003 quads. For the Nation as a whole, 

DOE projects that TSL 4 would result in 

a net decrease of $4 million in NPV, 

using a discount rate of 7 percent. 

However, using a 3-percent discount 

rate, DOE projects that TSL 4 would 

result in a net increase of $1 million in 

NPV. The estimated emissions 

reductions at TSL 4 are 0.61 Mt of CO2, 

up to 0.08 kt of NOX, and up to 0.01 

tons of Hg. Based on previously 

developed estimates, these reductions 

could have a value of up to $5.9 million 

for CO2, $133,000 for NOX, and 

$118,000 for Hg at a discount rate of 7 

percent. Total electric generating 

capacity in 2042 is estimated to 

decrease compared to the base case by 

0.005 GW at TSL 4. 

At TSL 4, DOE projects that the 

average Class B beverage vending 

machine customer will experience a 

reduction in LCC of $39 compared to 

the baseline. The mean PBP for the 

average Class B beverage vending 

machine customer at TSL 4 is projected 

to be 6.9 years compared to the 

purchase of baseline equipment. 

At TSL 4, DOE believes manufacturers 

would need to redesign most existing 

Class B equipment offered for sale. 

Therefore, DOE expects that 

manufacturers will have difficulty 

maintaining operating profit with high 

increases in production costs. Similar to 

TSL 5, it is more likely that the higher 

end of the range of impacts would be 

reached at TSL 4 (i.e., a decrease of 6.1 

percent in INPV). However, compared to 

the baseline, Class B equipment showed 

significant positive LCC savings on a 

national average and customers did not 

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experience an increase in LCC at TSL 4. 

The PBP calculated for Class B 

equipment was less than the lifetime of 

the equipment. 

After carefully considering the 

analysis and evaluating the benefits and 

burdens of TSL 4, DOE finds that the 

benefits to the Nation of TSL 4 (i.e., 

energy savings and emissions 

reductions, including environmental 

and monetary benefits) do not outweigh 

the burdens (i.e., a decrease of $4 

million in NPV and a decrease of up to 

6.1 percent in INPV). DOE proposes that 

the burdens of TSL 4 outweigh the 

benefits and TSL 4 is not economically 

justified. Therefore, DOE proposes to 

reject TSL 4 for Class B equipment. 

TSL 3 would likely save an estimated 

0.010 quads of energy through 2042, an 

amount DOE considers significant. 

Discounted at 7 percent, the projected 

energy savings through 2042 would be 

0.003 quads. For the Nation as a whole, 

DOE projects that TSL 3 would result in 

no change in NPV (less than $0.5 

million) using a discount rate of 7 

percent. However, using a 3-percent 

discount rate, DOE projects that TSL 3 

would result in a net increase of $8 

million in NPV. The estimated 

emissions reductions at TSL 3 are 0.53 

Mt of CO2, up to 0.07 kt of NOX, and up 

to 0.009 tons of Hg. Based on previously 

developed estimates, these reductions 

could have a value of up to $5.1 million 

for CO2, $116,000 for NOX, and 

$103,000 for Hg at a discount rate of 7 

percent. Total electric generating 

capacity in 2042 is estimated to 

decrease compared to the base case by 

0.005 GW at TSL 3. 

At TSL 3, DOE projects that the 

average Class B beverage vending 

machine customer will experience a 

reduction in LCC of $49 compared to 

the baseline. The mean PBP for the 

average Class B beverage vending 

machine customer at TSL 3 is projected 

to be 6.0 years compared to the 

purchase of baseline equipment. 

At TSL 3, DOE believes manufacturers 

would have to make some component 

switches to comply with the standard, 

but most manufacturers will not have to 

significantly alter their production 

process. These minor design changes 

would not raise the production costs 

beyond the cost of most equipment sold 

today, resulting in minimal impacts on 

industry value. Compared to the 

baseline, Class B equipment showed 

significant positive LCC savings on a 

national average and customers did not 

experience an increase in LCC at TSL 3. 

The PBP calculated for Class B 

equipment was less than the lifetime of 

the equipment. 

After carefully considering the 

analysis and weighing the benefits and 

burdens of TSL 3, DOE proposes that for 

Class B equipment, TSL 3 represents the 

maximum improvement in energy 

efficiency that is technologically 

feasible and economically justified. TSL 

3 is technologically feasible because the 

technologies required to achieve these 

levels are already in existence. TSL 3 is 

economically justified because the 

benefits to the Nation (i.e., an increase 

of $8 million in NPV using a 3-percent 

discount rate, energy savings, and 

emissions reductions, including the 

estimated monetary value of certain 

environmental benefits) outweigh the 

costs (i.e., a decrease of 4.2 percent in 

INPV). Therefore, DOE is proposing TSL 

3 as the energy conservation standard 

for Class B beverage vending machines 

in this NOPR. 

For the reasons discussed above, DOE 

also requests comments on whether it 

should adopt a different TSL for Class 

B beverage vending machines. 

VI. Procedural Issues and Regulatory 

Review 

A. Review Under Executive Order 12866 

Today’s proposal has been 

determined to be a significant regulatory 

action under Executive Order 12866, 

‘‘Regulatory Planning and Review.’’ 58 

FR 51735 (October 4, 1993). 

Accordingly, this proposed rule was 

subject to review by OMB under the 

Executive Order. However, DOE has 

also determined that today’s regulatory 

action is not an ‘‘economically 

significant’’ action under section 3(f)(1) 

of the Executive Order 

Executive Order 12866 requires that 

each agency identify in writing the 

specific market failure or other problem 

that warrants new agency action, as well 

as assess the significance of that 

problem to determine whether any new 

regulation is necessary. Executive Order 

12866, § 1(b)(1). 

In the ANOPR for this rulemaking, 

DOE requested feedback and data on a 

number of issues related to Executive 

Order 12866 and the existence of a 

market failure in the beverage vending 

machine industry. In the ANOPR, DOE 

sought (1) Data on the efficiency levels 

of existing beverage vending machines 

in use by owner (i.e., site owner or 

machine operator), electricity price, 

equipment class (Class A or Class B 

machines) and installation type (i.e., 

indoors or outdoors); (2) comment on 

the availability of energy efficiency 

information to end users and the extent 

to which the information leads to 

informed choices, specifically given 

how such equipment is purchased; (3) 

detailed data on the distribution of 

energy efficiency levels for both the new 

site owner and equipment operator 

markets; (4) data on and suggestions for 

the existence and extent of potential 

market failures to complete an 

assessment of the significance of these 

failures and, thus, the net benefits of 

regulation; and (5) comments on the 

weight that should be given to 

‘‘external’’ benefits resulting from 

improved energy efficiency of beverage 

vending machines that are not captured 

by the users of such equipment. These 

benefits include both environmental 

and energy security-related externalities 

that are not reflected in energy prices, 

such as reduced emissions of 

greenhouse gases and reduced use of 

natural gas and oil for electricity 

generation. 

DOE prepared a regulatory impact 

analysis (RIA) for this rulemaking, 

which is contained in the TSD. The RIA 

is subject to review by the Office of 

Information and Regulatory Affairs 

(OIRA) in the OMB. The RIA consists of 

(1) A statement of the problem 

addressed by this regulation and the 

mandate for Government action, (2) a 

description and analysis of policy 

alternatives to this regulation, (3) a 

qualitative review of the potential 

impacts of the alternatives, and (4) the 

national economic impacts of the 

proposed standard. 

The RIA assesses the effects of 

feasible policy alternatives to beverage 

vending machine standards and 

provides a comparison of the impacts of 

the alternatives. DOE evaluated the 

alternatives in terms of their ability to 

achieve significant energy savings at 

reasonable cost, and compared them to 

the effectiveness of the proposed rule. 

DOE analyzed these alternatives 

qualitatively with reference to the 

particular market dynamics of the 

beverage vending industry. 

DOE identified the following major 

policy alternatives for achieving 

increased beverage vending machine 

energy efficiency: 

• No new regulatory action 

• Financial incentives, including tax 

credits and rebates 

• Revisions to voluntary energy 

efficiency targets (e.g., ENERGY STAR 

program criteria) 

• Early replacement 

• Bulk government purchases 

• Prescriptive standards that would 

mandate design requirements (e.g., 

lighting and refrigeration controls) 

DOE qualitatively evaluated each 

alternative’s ability to achieve 

significant energy savings at reasonable 

cost and compared it to the effectiveness 

of the proposed rule. The following 

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paragraphs discuss each policy 

alternative. (See chapter 17 of the TSD, 

Regulatory Impact Analysis, for further 

details.) 

No new regulatory action. The case in 

which no regulatory action is taken for 

beverage vending machines constitutes 

the base case (or no action) scenario. By 

definition, no new regulatory action 

yields zero energy savings and a net 

present value of zero dollars. 

Tax credits, rebates, and other 

financial incentives. DOE considered 

the impact of various financial 

incentives at both the ENERGY STAR 

Tier 2 level and higher efficiency levels, 

and examined the likelihood of an 

increase in customers purchasing highefficiency equipment due to these 

financial incentives. 

In considering the impact of financial 

incentives, DOE reviewed existing 

rebate programs for beverage vending 

machines. The majority are utilitysponsored rebate programs that provide 

incentives for incorporating lighting and 

temperature controllers. Also, similar 

rebates for other technologies (e.g., ECM 

motors for evaporator fans) are provided 

in other industries, such as in the food 

sales industry for commercial 

refrigerated display cases, and could 

theoretically be adapted for beverage 

vending machines. However, utility 

rebate programs are aimed at the site of 

installation and not at the purchasers of 

the machines (as most of the controllers 

covered by the rebate are add-on 

devices), and utility rebates are only 

provided for reducing electricity at sites 

served by the utility. Because beverage 

vending machines purchased by largescale bottlers may not remain on a given 

site, tracking the location of rebated 

equipment could be an issue for 

utilities. Also, because most utility 

rebate programs are not aimed at 

purchasers, these programs do not 

provide incentives for large bottlers to 

choose high-efficiency equipment. 

Besides utility-sponsored rebate 

programs, other possibilities for 

programs include national manufacturer 

rebates, purchaser rebates, or tax 

incentives. Typically, these programs 

are advocated as a means to encourage 

households or organizations that are 

sensitive to the first cost of equipment 

to purchase or manufacture more costly 

efficient equipment that ultimately has 

a favorable payoff either to the 

purchaser, to society, or both. The 

incentive can be given to the buyer of 

the equipment, the rate payer, or the 

manufacturer, depending on which 

method is considered to be most 

administratively effective. However, the 

nature of the beverage vending machine 

industry and market makes this 

approach largely ineffective. At least 75 

percent of beverage vending machines 

are purchased by two companies (CocaCola and PepsiCo) and their affiliated 

bottlers and distributors. In the ANOPR 

public meeting, PepsiCo stated that all 

beverage vending machines purchased 

by the company are required to meet 

ENERGY STAR Tier 2 levels. (PepsiCo, 

Public Meeting Transcript, No. 29 at p. 

149) Coca-Cola stated that by 2010, the 

beverage vending machines purchased 

by the company would use half as much 

energy as they do now, which would 

meet at least ENERGY STAR Tier 1 

levels. 73 FR 34104. These companies 

purchase ENERGY STAR equipment 

despite the first-cost increase because it 

improves their public image, which 

results in higher sales in the long run. 

(Coca-Cola, Public Meeting Transcript, 

No. 29 at pp. 154–56) Direct 

compensation for the energy savings is 

not assured but comes only through a 

negotiation with the site. Because the 

driving economic force for these 

companies is product sales, not 

equipment purchases, lowering the 

purchase price of equipment would 

make no significant difference in market 

behavior, and the program would 

simply transfer the amount of tax credit 

or rebate to the rebated entity without 

having induced extra purchases of 

efficient beverage vending machines. 

Regarding the use of rebates or other 

incentives beyond Tier 2 efficiency 

levels, it is not clear how the buying 

policy of Coca-Cola and PepsiCo would 

be influenced by tax credits or rebates. 

However, the companies are large 

enough to successfully finance the 

higher costs of beverage vending 

machines more efficient than Tier 2 

with or without tax credits or rebates. 

While rebates or tax credits may affect 

small purchasers, their influence over 

the market for beverage vending 

machines is marginal. In addition, 

because of the existing market 

dynamics, a significant portion of any 

economic incentive paid for the 

purchase of Tier 2 efficiency equipment 

could be free riders, those that would 

purchase Tier 2 equipment absent 

incentives. This is particularly true of 

rebates paid to manufacturers. Rebates 

to purchasers would have to be limited 

to small volumes of purchases by 

individual rebatees and target nonbottler, site-owned equipment. Tax 

credits to purchasers face similar issues. 

Currently, no national manufacturer 

rebates, purchaser rebates, or tax 

incentives are available for 

enhancement of beverage vending 

machine efficiency. 

DOE sees value in the continued use 

of rebates for lighting and temperature 

controller technologies even under the 

standards proposed in this notice of 

proposed rulemaking. Because the 

impact of these technologies is not 

captured in the DOE test procedure for 

beverage vending machines, employing 

these technologies in the field will 

continue to provide reductions in 

energy consumption beyond those that 

can be achieved by the standards 

proposed for beverage vending 

machines. The reductions will continue 

to accrue at the site of installation; 

therefore, these rebates, primarily for 

the purchase of aftermarket controller 

equipment, should continue to be 

provided to the installation site directly. 

Revisions to voluntary energy 

efficiency targets (e.g., ENERGY STAR). 

ENERGY STAR currently has two levels 

of efficiency targets: Tier 1 and Tier 2. 

The current program appears to have 

been effective at inducing large-scale 

adoption of ENERGY STAR Tier 1 

equipment. Furthermore, the beverage 

vending industry expects that ENERGY 

STAR will be highly effective in 

securing purchases of Tier 2 equipment 

due to the favorable response of the two 

purchasers who essentially define the 

market, Coca-Cola and PepsiCo. While it 

is possible that voluntary programs for 

equipment more efficient than Tier 2 

would also be effective, DOE lacks a 

quantitative basis to determine how 

effective such a program might be. As 

noted previously, broader economic and 

social considerations are in play than 

simple economic return to the 

equipment purchaser. DOE lacks the 

data necessary to quantitatively project 

the degree to which such voluntary 

programs for more expensive, higher 

efficiency equipment would modify the 

market. 

Bulk Government purchases and early 

replacement incentive programs: DOE 

also considered, but did not analyze, the 

potential of bulk Government purchases 

and early replacement incentive 

programs as alternatives to the proposed 

standards. Bulk purchases would have 

very limited impact on improving the 

overall market efficiency of beverage 

vending machines because they are a 

small part of the total market and the 

volume of high-efficiency equipment 

purchases that the Federal Government 

might make directly (versus equipment 

installed by bottlers at Federal 

Government sites). In the case of 

replacement incentives, several policy 

options exist to promote early 

replacement, including a direct national 

program of customer incentives, 

incentives paid to utilities to promote 

an early replacement program, market 

promotions through equipment 

manufacturers, and replacement of 

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45For information on DOE’s efficiency standards 

rulemaking for beverage vending machines, visit the 

following Web site: http://www1.eere.energy.gov/ 

buildings/appliance_standards/commercial/ 

beverage_machines.html. 

46 ‘‘Class A’’ refers to a beverage vending machine 

that cools the entire internal volume. Class A 

machines are also referred to as ‘‘fully-cooled’’ 

machines. 

47 ‘‘Class B’’ refers to any beverage vending 

machine not considered to be Class A. Class B 

machines are often ‘‘zone-cooled’’ machines, in that 

they typically cool only a fraction of the volume of 

the machine. 

48Tier I: Energy Consumption ≤0.55 [8.66 + 

(0.009 × Vendible Capacity)]. 

49Tier II: Energy Consumption ≤0.45 [8.66 + 

(0.009 × Vendible Capacity)]. 

Federally owned equipment. In 

considering early replacements, DOE 

estimates that the energy savings 

realized through a one-time early 

replacement of existing stock equipment 

does not result in energy savings 

commensurate to the cost to administer 

the program. Consequently, DOE did not 

analyze this option in detail. 

Prescriptive standards that would 

mandate design requirements (e.g., 

lighting and refrigeration controls). 

EPCA provides that standards regulating 

the energy use of certain equipment may 

be design standards, which require 

specific features in the design of the 

equipment; or performance standards, 

which describe a required level of 

equipment performance (e.g., maximum 

kWh/year energy consumption) and 

provide a manufacturer with discretion 

in determining how best to meet that 

performance level. (42 U.S.C. 6291(6)) 

However, EPCA does not include 

beverage vending machines in the list of 

equipment for which a design 

requirement is acceptable. (42 U.S.C. 

6291(6)(B), 6292(a)) Furthermore, EPCA 

specifically requires DOE to base its test 

procedure for this equipment on ANSI/ 

ASHRAE Standard 32.1–2004, 

‘‘Methods of Testing for Rating Vending 

Machines for Bottled, Canned or Other 

Sealed Beverages.’’ (42 U.S.C. 

6293(b)(15)) The test methods in ANSI/ 

ASHRAE Standard 32.1–2004 consist of 

means to measure energy consumption. 

For these reasons, DOE does not 

intend to develop design requirements 

for this equipment. Instead, DOE 

intends to develop standards that allow 

a maximum level of energy use for each 

beverage vending machine, and 

manufacturers could meet these 

standards with their own choice of 

design methods. 

Performance standards. The difficulty 

in using these non-regulatory 

alternatives must be gauged against the 

more direct benefits calculated for the 

performance standards DOE is 

proposing in this NOPR. Based on its 

qualitative review, DOE is not confident 

that any of the alternatives it examined 

would save as much energy as today’s 

proposed rule, and the financial 

incentives in particular may engender 

significant free ridership issues. Also, 

several of the alternatives would require 

new enabling legislation, since authority 

to carry out those alternatives does not 

exist. 

B. Review Under the Regulatory 

Flexibility Act/Initial Regulatory 

Flexibility Analysis 

The Regulatory Flexibility Act (5 

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

of an initial regulatory flexibility 

analysis (IRFA) for any rule that by law 

must be proposed for public comment, 

unless the agency certifies that the rule, 

if promulgated, will not have a 

significant economic impact on a 

substantial number of small entities. As 

required by Executive Order 13272, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking’’ 67 FR 53461 

(August 16, 2002), DOE published 

procedures and policies on February 19, 

2003, to ensure that the potential 

impacts of its rules on small entities are 

properly considered during the 

rulemaking process. 68 FR 7990. DOE 

has made its procedures and policies 

available on the Office of General 

Counsel’s Web site, http:// 

www.gc.doe.gov. 

For the beverage vending machine 

manufacturing industry, small 

businesses, as defined by the SBA, are 

manufacturing enterprises with 500 or 

fewer employees. DOE used the small 

business size standards published on 

August 28, 2008, as amended, by the 

SBA to determine whether any small 

entities would be required to comply 

with the rule. (61 FR 3286 and codified 

at 13 CFR Part 121.) The size standards 

are listed by North American Industry 

Classification System (NAICS) code and 

industry description. Beverage vending 

machine manufacturing is classified 

under NAICS 333311. 

The beverage vending machine 

industry is characterized by both large 

and small manufacturers that service a 

wide range of customers, including large 

bottlers and direct end-users. Almost all 

beverage vending machines sold in the 

United States are manufactured 

domestically. Three major companies 

supply roughly 90 percent of all 

equipment sales. Most of the sales for 

these companies are made to a few 

major bottlers. One of the major 

manufacturers with significant market 

share is considered a small business. 

The remaining 10 percent of industry 

shipments is believed to be supplied by 

five manufacturers. All of these 

companies that do not supply the major 

bottlers are considered to be small 

businesses. 

Before issuing this notice of proposed 

rulemaking, DOE, through its contractor, 

contacted all identified small business 

manufacturers. These manufacturers 

were provided a questionnaire seeking 

information to better understand the 

impacts of the proposed standards on 

small businesses and how these impacts 

differ between large and small 

manufacturers. The small business 

interview questionnaire is a condensed 

version of the manufacturer interview 

guide described in the manufacturer 

impact analysis, chapter 13 of the TSD, 

and includes the following questions: 

• Are you aware of the US 

Department of Energy’s (DOE’s) ongoing 

rulemaking to establish national 

minimum energy conservation 

standards for refrigerated beverage 

vending machines? 45 Would you like to 

be added to DOE’s e-mail database for 

updates relating to this rulemaking? 

• We are assessing the impacts of a 

potential energy conservation standard 

on small businesses. Is your company a 

small business (defined as less than 500 

employees by the US Small Business 

Administration (SBA), including all 

subsidiaries and parent companies, and 

employees in all countries where you 

operate)? 

• What are the key issues for your 

company regarding energy conservation 

standards for refrigerated beverage 

vending machines and this rulemaking? 

• DOE would like to understand the 

small-business beverage vending 

machine industry in general and your 

company in particular. Could you 

please provide information on the 

following: 

• Is your company a domestic or 

international company? 

• What types of refrigerated beverage 

vending machines do you manufacture? 

Do you manufacture Class A or Class B 

refrigerated beverage vending machines, 

or both? 46 47 What sizes of refrigerated 

beverage vending machines do you 

manufacture, measured in vendible 

capacity and/or refrigerated volume? 

Could you provide energy efficiency 

figures for those identified models? 

Does your equipment meet ENERGY 

STAR Tier I, Tier II, or any level above 

those energy efficiency levels? 48 49

• Do you manufacture equipment 

other than refrigerated beverage vending 

machines? Do you manufacture any 

niche or specialty type refrigerated 

beverage vending machines that do not 

easily fall in the categories from the 

previous question? 

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50This part was originally titled Part B; however, 

it was redesignated Part A, after Part B of Title III 

was repealed by Public Law 109–58. Similarly, Part 

C, Certain Industrial Equipment, was redesignated 

Part A–1. 

51Because of its placement in Part A of Title III 

of EPCA, the rulemaking for beverage vending 

machine energy conservation standards is bound by 

the requirements of 42 U.S.C. 6295. However, since 

beverage vending machines are commercial 

equipment, DOE intends to place the new 

requirements for beverage vending machines in 

Title 10 of the Code of Federal Regulations (CFR), 

Part 431 (‘‘Energy Efficiency Program for Certain 

Commercial and Industrial Equipment’’), which is 

consistent with DOE’s previous action to 

incorporate the EPACT 2005 requirements for 

commercial equipment. The location of the 

provisions within the CFR does not affect either 

their substance or applicable procedure, so DOE is 

placing them in the appropriate CFR part based on 

their nature or type. 

• What are the types of customers you 

serve in the refrigerated beverage 

vending machine market? 

• Would a new energy conservation 

standard for refrigerated beverage 

vending machines (whereby all your 

competitors are also required to meet 

the same minimum level of energy 

consumption for their machines) cause 

any burdens on your business? If so, 

please explain. Please consider costs 

such as new designs, capital investment, 

prototype testing, and marketing that 

might be required. 

• DOE would like to understand your 

company’s employment impacts as a 

result of standards. Would your 

company consider relocating 

manufacturing to outside the United 

States as a result of new energy 

conservation standards? If not, would 

standards cause your domestic 

employment level to change (increase or 

decrease)? 

• Are there any reasons that a small 

business such as yours might be at a 

disadvantage relative to a larger 

business under mandatory energy 

conservation standards? Please consider 

such factors as technical expertise, 

access to capital, bulk purchasing power 

for materials, etc. If so, would you be 

willing to participate in a full 

manufacturer interview where DOE will 

request detailed information about your 

business and possible impacts due to 

energy conservation standards? 

DOE reviewed the standard levels 

considered in this notice of proposed 

rulemaking under the provisions of the 

Regulatory Flexibility Act and the 

procedures and policies published on 

February 19, 2003. Based on this review, 

DOE has prepared an IRFA for this 

rulemaking. The IRFA describes 

potential impacts on small businesses 

associated with beverage vending 

machine design and manufacturing. 

The potential impacts on beverage 

vending machine manufacturers are 

discussed in the following sections of 

this IRFA. DOE has transmitted a copy 

of this IRFA to the Chief Counsel for 

Advocacy of the Small Business 

Administration for review. 

1. Reasons for the Proposed Rule 

Part A of subchapter III (42 U.S.C. 

6291–6309) provides for the Energy 

Conservation Program for Consumer 

Products Other Than Automobiles.50

The amendments to EPCA contained in 

the Energy Policy Act of 2005 (EPACT 

2005), Public Law 109–58, include new 

or amended energy conservation 

standards and test procedures for some 

of these products, and direct DOE to 

undertake rulemakings to promulgate 

such requirements. In particular, section 

135(c)(4) of EPACT 2005 amends EPCA 

to direct DOE to prescribe energy 

conservation standards for beverage 

vending machines (42 U.S.C. 6295(v)). 

Hence, DOE is proposing energy 

conservation standards for refrigerated 

bottle or canned beverage vending 

machines.51

2. Objectives of and Legal Basis for the 

Proposed Rule 

EPCA provides that any new or 

amended standard for beverage vending 

machines 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 (v)). EPCA 

precludes DOE from adopting any 

standard that would not result in 

significant conservation of energy (42 

U.S.C. 6295(o)(3)(B) and (v)). Moreover, 

DOE may not prescribe a standard for 

certain equipment if no test procedure 

has been established for that equipment, 

or if DOE determines by rule that the 

standard is not technologically feasible 

or economically justified and will not 

result in significant conservation of 

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

(v)). To determine whether economic 

justification exists, DOE reviews 

comments received and conducts 

analysis to determine whether the 

economic benefits of the proposed 

standard exceed the burdens to the 

greatest extent practicable, taking into 

consideration seven factors set forth in 

42 U.S.C. 6295(o)(2)(B) and (v). (See 

section II.B of this preamble.) 

EPCA also states that the Secretary 

may not prescribe an amended or new 

standard if interested parties have 

established by a preponderance of the 

evidence that the standard is likely to 

result in the unavailability in the United 

States of any equipment type (or class) 

with 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 (v)). Further information 

concerning the background of this 

rulemaking is provided in chapter 1 of 

the TSD. 

3. Description and Estimated Number of 

Small Entities Regulated 

To establish a list of small beverage 

vending machine manufacturers, DOE 

examined publicly available data and 

contacted manufacturers to determine if 

they meet the SBA’s definition of a 

small manufacturing facility and if their 

manufacturing facilities are located 

within the United States. Based on this 

analysis, DOE confirmed that there are 

six small manufacturers of beverage 

vending machines. 

One of these six small manufacturers 

is one of the top three major 

manufacturers, who supply roughly 90 

percent of all equipment sales. The full 

line of products offered by this small 

manufacturer and the remaining two 

major manufacturers, which are 

considered large businesses, are covered 

under this rulemaking (i.e., equipment 

that dispenses refrigerated bottled or 

canned beverages). The remaining five 

small manufacturers comprise 

approximately 10 percent of industry 

shipments for covered equipment. See 

chapter 3 of the TSD for further details 

on the beverage vending machine 

market. In its examination of the 

beverage vending machine industry, 

DOE has determined that these small 

business manufactures with small 

market shares differ significantly from 

the large manufacturers. The primary 

difference between these small business 

manufacturers and the large business 

manufacturers is that these five small 

business manufacturers produce a wide 

variety of specialty and niche 

equipment that are not covered under 

this rulemaking. The specialty and 

niche equipment that these small 

manufacturers produce include 

machines that dispense a wide range of 

items including snacks, heated drinks, 

electronic goods, DVDs, bowling 

supplies, and medical products. 

Furthermore, unlike the major 

manufacturers, these small business 

manufacturers do not sell equipment to 

the major bottlers because they do not 

produce covered equipment in the 

necessary volumes. Instead, these 

manufacturers rely on providing 

customized equipment in much smaller 

volumes. 

Requests for interviews were 

delivered electronically to the six 

manufacturers that met the small 

business criteria. DOE received 

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responses from fewer than half and 

conducted an on-site interview with 

only one. In the questionnaire and 

during the interview, DOE requested 

information that would determine if 

there are differential impacts on small 

manufacturers that may result from new 

energy conservation standards. See 

chapter 13 of the TSD for further 

discussion about the methodology DOE 

used in its analysis of manufacturer 

impacts to include small manufacturers. 

4. Description and Estimate of 

Compliance Requirements 

Potential impacts on manufacturers 

include impacts associated with 

beverage vending machine design and 

manufacturing. The level of research 

and development needed to meet energy 

conservation standards increases with 

more stringent standards. As mentioned 

previously, DOE examined the level of 

impacts that small manufacturers would 

incur by identifying small business 

manufacturers and, through its 

contractor, sending them a short 

questionnaire seeking information to 

better understand the impacts of the 

proposed standard that are unique to 

small manufacturers. Since not all of the 

small business manufacturers 

responded to the questionnaire, it is 

difficult to specifically quantify how the 

impacts of the proposed standards differ 

between large and small manufacturers. 

However, DOE found that, for the small 

business manufacturer with a major 

market share, the impacts of the 

proposed standard would not differ 

greatly from those of its larger 

competitors, and, for the remaining 

small business manufacturers, the 

impacts would not be significant. 

Small Business Manufacturer With a 

Major Market Share 

The small business manufacturer that 

has a major market share in covered 

equipment will not be 

disproportionately disadvantaged by the 

proposed standard. It has a large 

shipment volume as a major supplier to 

the large bottlers and its access to 

capital is nearly identical to its larger 

competitors. Its large shipment volume 

allows it to distribute the added cost of 

compliance across its products, similar 

to the large manufacturers. 

Correspondingly, it echoed the large 

manufacturers’ concerns about new 

energy conservation standards, 

including conversion costs needed to 

meet standards, meeting customer 

needs, and current market conditions. 

DOE found no significant differences in 

the R&D emphasis or marketing 

strategies between this small business 

manufacturer with a major market share 

and large manufacturers. As a result, 

DOE does not believe the impacts of the 

proposed standard will be significantly 

different for the small business 

manufacturer with a large market share 

when compared to those expected for 

the large business manufacturers. 

Small Business Manufacturers With 

Small Market Shares 

DOE does not expect the small 

businesses with small market shares to 

be compromised by the proposed energy 

conservation standard. DOE estimates 

that only approximately 40 percent of 

their offered vending equipment is 

covered by the proposed standard. The 

majority of equipment offered is 

specialty or niche equipment. As a 

result, the primary source of revenue for 

these small manufacturers comes from 

supplying a market underserved by the 

major manufacturers of covered 

equipment. Any cost disadvantage 

experienced by these small 

manufacturers as a result of the 

proposed standard can be balanced by 

the relatively larger profit margins 

achievable by charging premium prices 

for niche equipment. As a result, DOE 

believes the proposed standard will not 

affect the competitive position of the 

small business manufacturers with 

small market shares in covered 

equipment. 

To estimate a portion of the 

differential impacts of the proposed 

standard on the small manufacturers 

with small market shares, DOE 

compared their cost of compliance for 

testing and certifying covered 

equipment with that of the major 

manufacturers (the two large and one 

small business manufacturers that 

account for 90 percent of industry 

shipments). Manufacturers must test the 

energy performance of each basic model 

it manufacturers in order to determine 

compliance with energy conservation 

standards and testing requirements. 

Therefore, DOE examined the number of 

basic models available from each 

manufacturer to determine an estimate 

for the differential in overall compliance 

costs. The number of basic models 

attributed to each manufacturer is based 

on an examination of the different 

models advertised by each. DOE 

estimates the cost of testing a piece of 

covered equipment to be approximately 

$2,000. A typical major manufacturer 

has approximately 23 basic models, 

approximately 85 percent of which are 

covered and would require separate 

standards compliance certifications. 

Therefore, DOE estimates that a typical 

major manufacturer will incur 

approximately $44,013 in annual costs 

for standards compliance certifications. 

DOE estimates that a typical small 

manufacturer with small market share 

has approximately 27 basic models, 44 

percent of which are covered and would 

require separate standards compliance 

certifications. DOE estimates that a 

typical small manufacturer will incur 

approximately $14,380 in annual costs 

for standards compliance certifications. 

According to this comparison, the cost 

of certification for a small manufacturer 

with small market share is significantly 

lower than that of a major manufacturer. 

As stated above, DOE expects that 

there will be some differential impacts 

associated with beverage vending 

machine design and manufacturing on 

small manufacturers. DOE requests 

comments on how small business 

manufacturers will be affected due to 

new energy conversation standards. 

Specifically, DOE requests comments on 

the compliance costs and other impacts 

to small manufacturers that do not 

supply the high-volume customers of 

beverage vending machines. 

5. Duplication, Overlap, and Conflict 

With Other Rules and Regulations 

DOE is not aware of any rules or 

regulations that duplicate, overlap, or 

conflict with the rule being considered 

today. 

6. Significant Alternatives to the Rule 

The primary alternatives to the 

proposed rule considered by DOE are 

the other TSLs besides the ones being 

proposed today, TSL 6 for Class A and 

TSL 3 for Class B. As discussed in 

section VI.B subsection 6, DOE expects 

that the differential impact on small 

beverage vending machine 

manufacturers would be less severe in 

moving from TSL 5 to proposed TSL 6 

for Class A than it would be in moving 

from TSL 6 to TSL 7. For Class B 

machines, DOE expects that the 

differential impact on small beverage 

vending machine manufacturers would 

be less significant in moving from TSL 

2 to proposed TSL 3 than it would be 

in moving from TSL 4 to TSL 5. While 

lower TSLs (i.e., TSLs 1–5 for Class A 

and TSLs 1 and 2 for Class B) would 

have less impact on all manufacturers 

affected by this rulemaking, including 

the small manufacturers, these TSLs do 

not meet the statutory requirement that 

DOE implement the standard that is 

designed to achieve the maximum 

improvement in energy efficiency that is 

technologically feasible and 

economically justified. 

In addition, the TSD includes a 

regulatory impact analysis (RIA) 

(chapter 17 of the TSD), which 

discusses the following policy 

alternatives: (1) No new regulatory 

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26072 Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 

52 Id. at 36. 

53Note that the relevant statutory provisions were 

renumbered pursuant to section 316(d)(1) of EISA, 

Public Law 110–140. 

54This provision was redesignated by EISA, 

section 316(d)(1), as 42 U.S.C. 6295(v)(3). 

action, (2) financial incentives including 

rebates or tax credits, (3) revisions to 

voluntary energy efficiency targets such 

as ENERGY STAR program criteria, (4) 

bulk government purchases, (5) early 

replacement incentive programs, and (6) 

prescriptive standards that would 

mandate design requirements (e.g., 

lighting and refrigeration controls). DOE 

does not intend to consider these 

alternatives further because they are 

either not feasible to implement, or not 

expected to result in energy savings as 

large as those that would be achieved by 

the standard levels under consideration. 

Section 603(c) of the RFA lists the 

following as alternatives that agencies 

should consider in an IRFA: (1) 

Establishment of different compliance 

or reporting requirements for small 

entities or timetables that take into 

account the resources available to small 

entities, (2) clarification, consolidation, 

or simplification of compliance and 

reporting requirements for small 

entities, (3) use of performance rather 

than design standards, and (4) 

exemption for certain small entities 

from coverage of the rule, in whole or 

in part.52

For alternatives (1) and (2) above, 

testing and reporting of certification and 

compliance with the proposed energy 

conservation standards are expected to 

be a relatively minor component of 

compliance compared with 

manufacturers’ other actions to meet the 

standard. In addition, as explained 

further in the discussion of alternative 

(4), DOE is not authorized to delay the 

setting of the standard past August 9, 

2009, and the standard must apply to 

products manufactured 3 years after the 

date of publication of the final rule. (42 

U.S.C. 6295(v)(2) and (3). Therefore, 

DOE cannot establish different energy 

standards or a different timetable for 

small entities, as contemplated by 

alternative (1). The proposed rule is a 

performance standard rather than a 

prescriptive standard, so alternative (3) 

is not applicable to the proposed rule. 

Alternative (4) considers exemptions 

for small entities in whole or in part. 

The authority granted to DOE to 

promulgate the proposed rule under the 

Energy Policy Act of 2005 (EPACT 2005) 

does not allow for exemptions in whole 

or in part. EPACT 2005 amended the 

Energy Policy and Conservation Act by 

adding new subsections 325(v)(2), (3) 

and (4), which direct the Secretary of 

Energy to issue, by rule, energy 

conservation standards for refrigerated 

bottled or canned beverage vending 

machines. (42 U.S.C. 6295(v) (1), (2), 

and (3)) 53 The proposed standards 

apply to all beverage vending machines 

manufactured 3 years after publication 

of the final rule establishing the energy 

conservation standards and offered for 

sale in the United States (42 U.S.C. 

6295(v)(4)) [emphasis added].54

However, a manufacturer can petition 

DOE’s Office of Hearing and Appeals 

(OHA) for exception relief from the 

energy conservation standard pursuant 

to OHA’s authority under section 504 of 

the DOE Organization Act (42 U.S.C. 

7194), as implemented at subpart B of 

10 CFR part 1003. OHA grants such 

relief on a case-by-case basis if it 

determines that a manufacturer has 

demonstrated that meeting the standard 

would cause hardship, inequity, or 

unfair distributions of burdens. 

Chapter 13 of the TSD contains 

additional information about the impact 

of this rulemaking on manufacturers. As 

mentioned above, the other policy 

alternatives are described in section 

VI.A of the preamble and in the 

Regulatory Impact Analysis (chapter 17 

of the TSD). Since the impacts of these 

policy alternatives are less than the 

impacts described above for TSL 6 for 

Class A and TSL 3 for Class B, DOE 

expects that the impacts on small 

manufacturers of these alternatives 

would also be less than the impacts 

described above for the proposed 

standard levels. DOE requests comment 

on the impacts on small manufacturers 

for these and any other possible 

alternatives to the proposed rule. DOE 

will consider any comments received 

regarding impacts on small 

manufacturers for all the alternatives 

identified, including those in the RIA, 

for the final rule. 

C. Review Under the Paperwork 

Reduction Act 

This rulemaking will impose no new 

information or record keeping 

requirements. Accordingly, OMB 

clearance is not required under the 

Paperwork Reduction Act. (44 U.S.C. 

3501 et seq.) 

D. Review Under the National 

Environmental Policy Act 

DOE is preparing a draft 

environmental assessment of the 

impacts of the potential standards. The 

assessment will include an examination 

of the potential effects of emission 

reductions likely to result from the rule 

in the context of global climate change 

as well as other types of environmental 

impacts. DOE anticipates completing a 

Finding of No Significant Impact 

(FONSI) before publishing the final rule 

on beverage vending machines, 

pursuant to the National Environmental 

Policy Act of 1969 (NEPA) (42 U.S.C. 

4321 et seq.), the regulations of the 

Council on Environmental Quality (40 

CFR parts 1500–1508), and DOE’s 

regulations for compliance with the 

NEPA (10 CFR part 1021). The draft EA 

can be found in chapter 16 of the TSD. 

E. Review Under Executive Order 13132 

Executive Order 13132, ‘‘Federalism,’’ 

64 FR 43255 (August 4, 1999) imposes 

certain requirements on agencies 

formulating and implementing policies 

or regulations that preempt State law or 

have federalism implications. Agencies 

are required to examine the 

constitutional and statutory authority 

supporting any action that would limit 

the policymaking discretion of the 

States and 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.) DOE has examined today’s 

proposed rule and has determined that 

it would not have a substantial direct 

effect on the States, on the relationship 

between the Federal Government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government. EPCA 

governs and prescribes Federal 

preemption of State regulations on 

energy conservation for the equipment 

that is the subject of today’s proposed 

rule. Specifically, EPCA provides that 

States are preempted from adopting new 

standards once DOE publishes a final 

rule. Once the final rule takes effect, 

State standards that were in effect at the 

time of the publication of the final rule 

are preempted. (42 U.S.C. 6295(ii)) 

States can petition DOE for waiver from 

such preemption to the extent, and 

based on criteria, set forth in EPCA. (42 

U.S.C. 6297(d) and 6316(b)(2)(D)) 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,’’ 61 FR 4729 (February 7, 1996), 

imposes on Executive agencies the 

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general duty to adhere to the following 

requirements: (1) Eliminate drafting 

errors and ambiguity, (2) write 

regulations to minimize litigation, and 

(3) provide a clear legal standard for 

affected conduct rather than a general 

standard and promote simplification 

and burden reduction. With regard to 

the review required by section 3(a), 

section 3(b) of Executive Order 12988 

specifically requires that Executive 

agencies make every reasonable effort to 

ensure that the regulation (1) clearly 

specifies the preemptive effect, if any; 

(2) clearly specifies any effect on 

existing Federal law or regulation; (3) 

provides a clear legal standard for 

affected conduct while promoting 

simplification and burden reduction; (4) 

specifies the retroactive effect, if any; (5) 

adequately defines key terms; and (6) 

addresses other important issues 

affecting clarity and general 

draftsmanship under any guidelines 

issued by the Attorney General. Section 

3(c) of Executive Order 12988 requires 

Executive agencies to review regulations 

in light of applicable standards in 

section 3(a) and section 3(b) to 

determine whether they are met or it is 

unreasonable to meet one or more of 

them. DOE has completed the required 

review and determined that this 

proposed rule meets the relevant 

standards of Executive Order 12988 to 

the extent permitted by law. 

G. Review Under the Unfunded 

Mandates Reform Act of 1995 

Title II of the Unfunded Mandates 

Reform Act of 1995 (Pub. L. 104–4) 

(UMRA), requires each Federal agency 

to assess the effects of Federal 

regulatory actions on State, local and 

Tribal governments and the private 

sector. For a proposed regulatory action 

likely to result in a rule that may cause 

the expenditure by State, local, and 

Tribal governments, in the aggregate, or 

by the private sector of $100 million or 

more in any one year (adjusted annually 

for inflation), section 202 of UMRA 

requires a Federal agency to publish a 

written statement that estimates the 

resulting costs, benefits, and other 

effects on the national economy. (2 

U.S.C. 1532(a), (b)). UMRA also requires 

a Federal agency to develop an effective 

process to permit timely input by 

elected officers of State, local, and 

Tribal governments on a proposed 

‘‘significant intergovernmental 

mandate,’’ and requires an agency plan 

for giving notice and opportunity for 

timely input to potentially affected 

small governments before establishing 

any requirements that might 

significantly or uniquely affect small 

governments. On March 18, 1997, DOE 

published a statement of policy on its 

process for intergovernmental 

consultation under UMRA, (62 FR 

12820) (also available at http:// 

www.gc.doe.gov). Today’s proposed rule 

does not impose expenditures of $100 

million or more on the private sector. It 

does not contain a Federal 

intergovernmental mandate. 

Section 202 of UMRA authorizes an 

agency to respond to the content 

requirements of UMRA in any other 

statement or analysis that accompanies 

the proposed rule. 2 U.S.C. 1532(c). The 

content requirements of section 202(b) 

of UMRA relevant to a private sector 

mandate substantially overlap the 

economic analysis requirements that 

apply under section 325(o) of EPCA and 

Executive Order 12866. The 

Supplementary Information section of 

this notice of proposed rulemaking and 

the Regulatory Impact Analysis section 

of the TSD respond to those 

requirements. 

Under section 205 of UMRA, DOE is 

obligated to identify and consider a 

reasonable number of regulatory 

alternatives before promulgating a rule 

for which a written statement under 

section 202 is required. DOE is required 

to select from those alternatives the 

most cost-effective and least 

burdensome alternative that achieves 

the objectives of the rule unless DOE 

publishes an explanation for doing 

otherwise or the selection of such an 

alternative is inconsistent with law. As 

required by sections 325(o), 345(a) and 

342(c)(4)(A) of EPCA (42 U.S.C. 6295(o), 

6316(a) and 6313(c)(4)(A)), today’s 

proposed rule would establish energy 

conservation standards for beverage 

vending machines that are designed to 

achieve the maximum improvement in 

energy efficiency that DOE has 

determined to be both technologically 

feasible and economically justified. A 

full discussion of the alternatives 

considered by DOE is presented in the 

Regulatory Impact Analysis in the TSD. 

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 

proposed rule that may affect family 

well-being. This proposed rule would 

not have any impact on the autonomy 

or integrity of the family as an 

institution. Accordingly, DOE has 

concluded that it is not necessary to 

prepare a Family Policymaking 

Assessment. 

I. Review Under Executive Order 12630 

DOE has determined, under Executive 

Order 12630, Governmental Actions and 

Interference with Constitutionally 

Protected Property Rights, 53 FR 8859 

(March 18, 1988), that this regulation 

would not result in any takings that 

might require compensation under the 

Fifth Amendment to the U.S. 

Constitution. 

J. Review Under the Treasury and 

General Government Appropriations 

Act, 2001 

The Treasury and General 

Government Appropriations Act, 2001 

(44 U.S.C. 3516 note) provides for 

agencies to review most disseminations 

of information to the public under 

guidelines established by each agency 

pursuant to general guidelines issued by 

OMB. The OMB’s guidelines were 

published at 67 FR 8452 (February 22, 

2002), and DOE’s guidelines were 

published at 67 FR 62446 (October 7, 

2002). DOE has reviewed today’s notice 

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 OMB a Statement 

of Energy Effects for any proposed 

significant energy action. A ‘‘significant 

energy action’’ is defined as any action 

by an agency that promulgated 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 proposed 

significant energy action, the agency 

must give a detailed statement of any 

adverse effects on energy supply, 

distribution, or use should the proposal 

be implemented, and of reasonable 

alternatives to the action and their 

expected benefits on energy supply, 

distribution, and use. 

Today’s regulatory action would not 

have a significant adverse effect on the 

supply, distribution, or use of energy 

and, therefore, is not a significant 

energy action. Accordingly, DOE has not 

prepared a Statement of Energy Effects. 

L. Review Under the Information 

Quality Bulletin for Peer Review 

On December 16, 2004, OMB, in 

consultation with the Office of Science 

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and Technology (OSTP), issued its Final 

Information Quality Bulletin for Peer 

Review (Bulletin). 70 FR 2664, (January 

14, 2005) The Bulletin establishes that 

certain scientific information shall be 

peer reviewed by qualified specialists 

before it is disseminated by the Federal 

Government, including influential 

scientific information related to agency 

regulatory actions. The purpose of the 

bulletin is to enhance the quality and 

credibility of the Government’s 

scientific information. Under the 

Bulletin, the energy conservation 

standards rulemakings analyses are 

‘‘influential scientific information.’’ The 

Bulletin defines ‘‘influential scientific 

information’’ 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 (January 14, 2005) 

In response to OMB’s Bulletin, DOE 

conducted a formal peer review of the 

energy conservation standards 

development process and analyses and 

has prepared a Peer Review Report 

pertaining to the energy conservation 

standards rulemaking analyses. The 

Energy Conservation Standards 

Rulemaking Peer Review Report dated 

February 2007 has been disseminated 

and is available at http:// 

www.eere.energy.gov/buildings/ 

appliance_standards/peer_review.html. 

VII. Public Participation 

A. Attendance at Public Meeting 

The time, date and location of the 

public meeting are provided in the 

DATES and ADDRESSES sections at the 

beginning of this document. To attend 

the public meeting, please notify Ms. 

Brenda Edwards at (202) 586–2945. As 

explained in the ADDRESSES section, 

foreign nationals visiting DOE 

headquarters are subject to advance 

security screening procedures. Any 

foreign national wishing to participate 

in the meeting should advise DOE of 

this fact as soon as possible by 

contacting Ms. Brenda Edwards to 

initiate the necessary procedures. 

B. Procedure for Submitting Requests To 

Speak 

Any person who has an interest in 

today’s notice, or who is a 

representative of a group or class of 

persons that has an interest in these 

issues, may request an opportunity to 

make an oral presentation. Please handdeliver requests to speak to the address 

shown under the heading ‘‘Hand 

Delivery/Courier’’ in the ADDRESSES

section of this NOPR, between 9 a.m. 

and 4 p.m., Monday through Friday, 

except Federal holidays. Also, requests 

may be sent by mail to the address 

shown under the heading ‘‘Postal Mail’’ 

in the ADDRESSES section of this NOPR, 

or by e-mail to 

Brenda.Edwards@ee.doe.gov. 

Parties requesting to speak should 

briefly describe the nature of their 

interest in this rulemaking and provide 

a telephone number for contact. DOE 

asks parties selected to be heard to 

submit a copy of their statements at 

least two weeks before the public 

meeting, either in person, by postal 

mail, or by e-mail as described in the 

preceding paragraph. Please include an 

electronic copy of your statement on a 

computer diskette or compact disk 

when delivery is by postal mail or in 

person. Electronic copies must be in 

WordPerfect, Microsoft Word, Portable 

Document Format (PDF), or text 

(American Standard Code for 

Information Interchange (ASCII)) file 

format. At its discretion, DOE may 

permit any person who cannot supply 

an advance copy of his or her statement 

to participate, if that person has made 

alternative arrangements with the 

Building Technologies Program. In such 

situations, the request to give an oral 

presentation should ask for alternative 

arrangements. 

C. Conduct of Public Meeting 

DOE will designate a DOE official to 

preside at the public meeting and may 

also use a professional facilitator to aid 

discussion. The meeting will not be a 

judicial or evidentiary-type public 

hearing, but DOE will conduct it in 

accordance with 5 U.S.C. 553 and 

section 336 of EPCA (42 U.S.C. 6306). A 

court reporter will be present to record 

and transcribe the proceedings. DOE 

reserves the right to schedule the order 

of presentations and to establish the 

procedures governing the conduct of the 

public meeting. After the public 

meeting, interested parties may submit 

further comments about the 

proceedings, and any other aspect of the 

proposed rulemaking, until the end of 

the comment period. 

The public meeting will be conducted 

in an informal, conference style. DOE 

will present summaries of comments 

received before the public meeting, 

allow time for presentations by 

participants, and encourage all 

interested parties to share their views on 

issues affecting this rulemaking. Each 

participant will be allowed to make a 

prepared general statement (within time 

limits determined by DOE) before 

discussion of a particular topic. DOE 

will permit other participants to 

comment briefly on any general 

statements. 

At the end of all prepared statements 

on a topic, DOE will permit participants 

to clarify their statements briefly and 

comment on statements made by others. 

Participants should be prepared to 

answer questions by DOE and by other 

participants concerning these issues. 

DOE representatives may also ask 

questions of participants concerning 

other matters relevant to the proposed 

rulemaking. The official conducting the 

public meeting will accept additional 

comments or questions from those 

attending, as time permits. The 

presiding official will announce any 

further procedural rules or modification 

of the above procedures that may be 

needed for proper conduct of the public 

meeting. 

DOE will include the entire record of 

this proposed rulemaking, including the 

transcript from the public meeting, in 

the docket for this rulemaking. For 

access to the docket to read the 

transcript, visit the U.S. Department of 

Energy, Resource Room of the Building 

Technologies Program, 950 L’Enfant 

Plaza, SW., 6th Floor, Washington, DC, 

20024, (202) 586–2945, between 9 a.m. 

and 4 p.m., Monday through Friday, 

except Federal holidays. Please call Ms. 

Brenda Edwards at the above telephone 

number for additional information 

regarding visiting the Resource Room. 

Any person may purchase a copy of the 

transcript from the transcribing reporter. 

D. Submission of Comments 

DOE will accept comments, data, and 

information regarding all aspects of this 

NOPR before or after the public meeting, 

but no later than the date provided at 

the beginning of this notice of proposed 

rulemaking. Please submit comments, 

data, and information electronically to 

the following e-mail address: 

beveragevending.rulemaking@

ee.doe.gov. Submit electronic comments 

in WordPerfect, Microsoft Word, PDF, 

or ASCII file format and avoid the use 

of special characters or any form of 

encryption. Comments in electronic 

format should be identified by the 

docket number EERE–2006–STD–0125 

and/or RIN 1904–AB58, and whenever 

possible carry the electronic signature of 

the author. Absent an electronic 

signature, comments submitted 

electronically must be followed and 

authenticated by submitting a signed 

original paper document. No faxes will 

be accepted. 

Under 10 CFR 1004.11, any person 

submitting information that he or she 

believes to be confidential and exempt 

by law from public disclosure should 

submit two copies: One copy of the 

document including all the information 

believed to be confidential, and one 

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Federal Register / Vol. 74, No. 102 / Friday, May 29, 2009 / Proposed Rules 26075 

copy of the document with the 

information believed to be confidential 

deleted. DOE will make its own 

determination about the confidential 

status of the information and treat it 

according to its determination. 

Factors of interest to DOE when 

evaluating requests to treat submitted 

information as confidential include (1) 

A description of the items, (2) whether 

and why such items are customarily 

treated as confidential within the 

industry, (3) whether the information is 

generally known by or available from 

other sources, (4) whether the 

information has previously been made 

available to others without obligation 

concerning its confidentiality, (5) an 

explanation of the competitive injury to 

the submitting person which would 

result from public disclosure, (6) when 

such information might lose its 

confidential character due to the 

passage of time, and (7) why disclosure 

of the information would be contrary to 

the interest. 

VIII. Approval of the Office of the 

Secretary 

The Secretary of Energy has approved 

publication of this proposed rule. 

List of Subjects in 10 CFR Part 431 

Administrative practice and 

procedure, Confidential business 

information, Energy conservation. 

Issued in Washington, DC, on May 22, 

2009. 

Steven G. Chalk, 

Principal Deputy Assistant Secretary, Energy 

Efficiency and Renewable Energy. 

For the reasons set forth in the 

preamble, DOE proposes to amend 

Chapter II of Title 10, Code of Federal 

Regulations, Part 431 to read as set forth 

below. 

PART 431—ENERGY EFFICIENCY 

PROGRAM FOR CERTAIN 

COMMERCIAL AND INDUSTRIAL 

EQUIPMENT 

1. The authority citation for part 431 

continues to read as follows: 

Authority: 42 U.S.C. 6291–6317. 

2. In § 431.292 add, in alphabetical 

order, new definitions for ‘‘bottled or 

canned beverage’’, ‘‘Class A’’, ‘‘Class B’’, 

and ‘‘V’’ to read as follows: 

§ 431.292 Definitions concerning 

refrigerated bottled or canned beverage 

vending machines. 

* * * * * 

Bottled or canned beverage means a 

beverage in a sealed container. 

Class A means a refrigerated bottled 

or canned beverage vending machine 

that is fully cooled. 

Class B means any refrigerated bottled 

or canned beverage vending machine 

not considered to be Class A. 

* * * * * 

V means the refrigerated volume (ft3) 

of the refrigerated bottled or canned 

beverage vending machine, as measured 

by AHAM HRF–1–2004 (incorporated 

by reference, see § 431.293). 

3. Section 431.293 is revised to read 

as follows: 

§ 431.293 Materials incorporated by 

reference. 

(a) General. DOE incorporates by 

reference the following standards into 

subpart Q of part 431. The material 

listed has been approved for 

incorporation by reference by the 

Director of the Federal Register in 

accordance with 5 U.S.C. 552(a) and 1 

CFR part 51. Any subsequent 

amendment to a standard by the 

standard-setting organization will not 

affect the DOE regulations unless and 

until amended by DOE. Material is 

incorporated as it exists on the date of 

the approval and a notice of any change 

in the material will be published in the 

Federal Register. All approved material 

is available for inspection at the 

National Archives and Records 

Administration (NARA). For 

information on the availability of this 

material at NARA, call 202–741–6030 or 

visit http://www.archives.gov/federal_

register/code_of_federal_regulations/

ibr_locations.html. This material is also 

available for inspection at U.S. 

Department of Energy, Office of Energy 

Efficiency and Renewable Energy, 

Building Technologies Program, 6th 

Floor, 950 L’Enfant Plaza, SW., 

Washington, DC 20024, 202–586–2945, 

or visit http://www.eere.energy.gov/

buildings/appliance_standards. 

Standards can be obtained from the 

sources listed below. 

(b) ANSI. American National 

Standards Institute, 25 W. 43rd Street, 

4th Floor, New York, NY 10036, 212– 

642–4900, or visit http://www.ansi.org. 

(1) ANSI/AHAM HRF–1–2004, 

Energy, Performance and Capacity of 

Household Refrigerators, RefrigeratorFreezers and Freezers, approved July 7, 

2004, IBR approved for § 431.294. 

(2) ANSI/ASHRAE Standard 32.1– 

2004, Methods of Testing for Rating 

Vending Machines for Bottled, Canned, 

and Other Sealed Beverages, approved 

December 2, 2004, IBR approved for 

§ 431.294. 

4. In subpart Q, add an undesignated 

center heading and § 431.296 to read as 

follows: 

Energy Conservation Standards 

§ 431.296 Energy conservation standards 

and their effective dates. 

Each refrigerated bottled or canned 

beverage vending machine 

manufactured on or after 3 years from 

the date of publication of the final rule, 

shall have a daily energy consumption 

(in kilowatt hours per day) that does not 

exceed the following: 

Equipment class 

Maximum daily 

energy consumption 

kilowatt hours per 

day 

Class A ......................... 0.055 × V + 2.56 

Class B ......................... 0.073 × V + 3.16 

[FR Doc. E9–12410 Filed 5–26–09; 4:15 pm] 

BILLING CODE 6450–01–P 

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