[Federal Register Volume 74, Number 102 (Friday, May 29, 2009)]
[Proposed Rules]
[Pages 26020-26075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-12410]



[[Page 26019]]

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Part IV





Department of Energy





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10 CFR Part 431



Energy Conservation Program: Energy Conservation Standards for 
Refrigerated Bottled or Canned Beverage Vending Machines; Proposed Rule

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

[[Page 26020]]


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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.

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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:
    <bullet> Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
    <bullet> E-mail: <a href="/cdn-cgi/l/email-protection#33515645564152545645565d575a5d541d41465f565e52585a5d547356561d575c561d545c45"><span class="__cf_email__" data-cfemail="9efcfbe8fbecfff9fbe8fbf0faf7f0f9b0ecebf2fbf3fff5f7f0f9defbfbb0faf1fbb0f9f1e8">[email protected]</span></a>. Include 
docket number EERE-2006-STD-0125 and/or RIN 1904-AB58 in the subject 
line of the message.
    <bullet> 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.
    <bullet> 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, 
<a href="/cdn-cgi/l/email-protection#eead868f9c828b9dc0a2828b80948fae8b8bc08a818bc0898198"><span class="__cf_email__" data-cfemail="30735851425c55431e7c5c555e4a517055551e545f551e575f46">[email protected]</span></a> 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, 
<a href="/cdn-cgi/l/email-protection#e0a692818e83898e85ceb0898e948fa08891ce848f85ce878f96"><span class="__cf_email__" data-cfemail="541226353a373d3a317a043d3a203b143c257a303b317a333b22">[email protected]</span></a>.

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

[[Page 26021]]

    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\
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    \1\ This provision was redesignated by EISA, section 316(d)(1), 
as 42 U.S.C. 6295(v)(3).

                   Table I-1--Proposed Standard Levels
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                                 Proposed standard level** Maximum Daily
        Equipment class*            Energy Consumption (MDEC)  kWh/day
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                     A                  0.055 x V + 2.56[dagger]
                     B           0.073 x V + 3.16[dagger][dagger]
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* See section IV.A.2 of this notice for a discussion of equipment
  classes.
** ``V'' is the refrigerated volume (ft\3\) 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.''
[dagger] Trial Standard Level (TSL) 6.
[dagger][dagger] 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 (CO<INF>2</INF>) 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 CO<INF>2</INF> 
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 (NO<INF>X</INF>) 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.
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    \2\ Additionally, the standards would result in emissions 
reductions for nitrogen oxides (NO<INF>X</INF>) or generate a 
similar amount of NO<INF>X</INF> 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.
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    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

[[Page 26022]]

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 
CO<INF>2</INF>, up to 0.69 kt of NO<INF>X</INF>, 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.
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    \4\ Because of their placement into 10 CFR 431, beverage vending 
machines will be referred to as ``equipment'' throughout this 
notice.
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    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

[[Page 26023]]

(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.
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    \5\ The relevant statutory provisions were renumbered pursuant 
to section 316 of the Energy Independence and Security Act of 2007, 
Public Law 110-140.
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    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\
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    \6\ This 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))
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    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.
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    \7\ See http://www1.eere.energy.gov/buildings/appliance_standards/commercial/beverage_machines_tsd.html.
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    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. (Dixie-Narco, 
No. 36 at p. 3) \8\
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    \8\ A 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.
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    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

[[Page 26024]]

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

    \9\ A 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.
---------------------------------------------------------------------------

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

    \10\ Beverage 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))
---------------------------------------------------------------------------

    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 non-refrigerated 
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

[[Page 26025]]

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 x V + 2.42
                     B                                       MDEC = 0.068 x 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,
  Refrigerator-Freezers 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

[[Page 26026]]

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-BT \12\ 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.
---------------------------------------------------------------------------

    \11\  http://www.eia.doe.gov/oiaf/aeo/overview.
    \12\ EIA 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.
---------------------------------------------------------------------------

A. Market and Technology Assessment

    When beginning an energy conservation standards rulemaking,

[[Page 26027]]

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:
    <bullet> Class A means a refrigerated bottled or canned beverage 
vending machine that is fully cooled.
    <bullet> 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 next-to-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 efficiency-level, 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.

[[Page 26028]]



                                          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 ft\3\...............................              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 self-contained 
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.
---------------------------------------------------------------------------

    \13\ See 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.
---------------------------------------------------------------------------

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

    \14\ EPA 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))
---------------------------------------------------------------------------

    While DOE acknowledges the use of some alternative refrigerants 
(i.e., HCs and CO<INF>2</INF>) 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

[[Page 26029]]

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

    \15\ See 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.
---------------------------------------------------------------------------

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 controlled-environment 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.
---------------------------------------------------------------------------

    \16\ These test procedures are incorporated by reference at 10 
CFR 431.294.
---------------------------------------------------------------------------

    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.
BILLING CODE 6450-01-P

[[Page 26030]]

[GRAPHIC] [TIFF OMITTED] TP29MY09.004

    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 <greek-i>1), manufacturer/wholesaler/
operator (distribution channel <greek-i>2), and manufacturer/
wholesaler/site owner (distribution channel <greek-i>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 <greek-i>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 
<greek-i>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 <greek-i>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.

[[Page 26031]]

[GRAPHIC] [TIFF OMITTED] TP29MY09.005

    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
----------------------------------------------------------------------------------------------------------------
                                                                                                      Overall
                                                                   Manufacturer     Wholesaler/      weighted
                                                                      direct        Distributor       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
----------------------------------------------------------------------------------------------------------------
                                                                                                      Overall
                                                                   Manufacturer     Wholesaler/      weighted
                                                                      direct        Distributor       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 [deg]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.
---------------------------------------------------------------------------

    \17\ Class 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.
---------------------------------------------------------------------------

    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

[[Page 26032]]

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 (Dixie-Narco, 
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.
---------------------------------------------------------------------------

    \19\ As an example, this position was taken and discussed in the 
distribution transformers final rule, 72 FR 58203.
---------------------------------------------------------------------------

    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.'' (Coca-Cola, 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 whole-building 
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

[[Page 26033]]

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 [deg]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, Dixie-Narco 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. Dixie-Narco 
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, Dixie-Narco 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) Coca-Cola 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) Coca-Cola 
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. (Coca-
Cola, 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

[[Page 26034]]

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-
by-State 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)
---------------------------------------------------------------------------

    \20\ EIA 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.
---------------------------------------------------------------------------

    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 
Coca-Cola and PepsiCo purchase approximately 90 percent of all beverage 
vending machines. (Royal Vendors, No. 32 at p. 1) Royal Vendors and 
Dixie-Narco 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 pre-negotiated 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

[[Page 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      No changes.
                                   (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.
Higher Efficiency Levels........  A certain number    No changes.
                                   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.
Baseline Manufacturer Selling     Price charged by    No changes.
 Price.                            manufacturer to
                                   either a
                                   wholesaler or
                                   large customer
                                   for baseline
                                   equipment.
Standard-Level Manufacturer       Incremental change  No changes.
 Selling Price Increases.          in manufacturer
                                   selling price for
                                   equipment at each
                                   of the higher
                                   efficiency levels.
Markups and Sales Tax...........  Associated with     Distribution of
                                   converting the      sales among
                                   manufacturer        market channels
                                   selling price to    changed based on
                                   a customer price    comments on the
                                   (chapter 6 of       ANOPR. Sales tax
                                   TSD).               rates updated to
                                                       January 2009.
Installation Price..............  Cost to the         Installation price
                                   customer of         updated to 2008$.
                                   installing the
                                   equipment
                                   including labor,
                                   overhead, and any
                                   miscellaneous
                                   materials and
                                   parts. The total
                                   installed cost
                                   equals the
                                   customer
                                   equipment price
                                   plus the
                                   installation
                                   price.
Equipment Energy Consumption....  Site energy use     Updated to reflect
                                   associated with     results of the
                                   the use of          energy analysis.
                                   beverage vending
                                   machines, which
                                   includes only the
                                   use of
                                   electricity by
                                   the equipment
                                   itself.
Electricity Prices..............  Average commercial  Average commercial
                                   electricity price   electricity price
                                   ($/kWh) in each     ($/kWh) in each
                                   State and for       State and for
                                   seven classes of    seven classes of
                                   commercial and      commercial and
                                   industrial          industrial
                                   customers, as       customers, as
                                   determined from     determined from
                                   EIA data for 2003   EIA data for
                                   converted to        2003, updated to
                                   2007$.              2008 prices.
Electricity Price Trends........  Reflects the        Reflects the
                                   AEO2007 reference   AEO2009 reference
                                   case forecast       case to forecast
                                   future              future
                                   electricity         electricity
                                   prices.             prices.
Maintenance Costs...............  Labor and material  Updated basic
                                   costs associated    maintenance cost
                                   with maintaining    to 2008$. Based
                                   the beverage        on industry
                                   vending machines    comment on the
                                   (e.g., cleaning     ANOPR, included
                                   heat exchanger      an updated
                                   coils, checking     annualized cost
                                   refrigerant         of one
                                   charge levels,      refurbishment/
                                   lamp replacement)   remanufacturing
                                   included            cycle.
                                   annualized costs
                                   of two
                                   refurbishment
                                   cycles.
Repair Costs....................  Labor and material  Updated costs to
                                   costs associated    2008$.
                                   with repairing or
                                   replacing
                                   components that
                                   have failed.
Equipment Lifetime..............  Age at which the    Based on industry
                                   beverage vending    comment on the
                                   machine is          ANOPR, reduced
                                   retired from        average service
                                   service             life to 10 years,
                                   (estimated to be    with 15 years as
                                   14 years).          a maximum.
Discount Rate...................  Rate at which       Updated discount
                                   future costs are    rates for all
                                   discounted to       classes of
                                   establish their     purchasers based
                                   present value to    on weighted
                                   beverage vending    average cost of
                                   machine             capital figures
                                   purchasers.         from 2008.
Rebound Effect..................  Rebound effect was  No change.
                                   not taken into
                                   account in the
                                   LCC analysis.
Analysis Period.................  The time span over  No change.
                                   which DOE
                                   calculated the
                                   LCC (i.e., 2012-
                                   2042).
------------------------------------------------------------------------

    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

[[Page 26036]]

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

    \21\ Comments 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 (Coca-Cola, 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).
---------------------------------------------------------------------------

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

    \22\ Bureau of Labor Statistics, Occupational Employment and 
Wage Estimates (May 2007). Available at http://www.bls.gov/oes/oes_dl.htm.
    \23\ Foster-Miller, Inc. ``Vending Machine Service Call 
Reduction Using the VendingMiser.'' Report BAY-01197. Foster-Miller, 
Inc., Waltham, MA. February 18,2002.
---------------------------------------------------------------------------

    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 single-point 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.
---------------------------------------------------------------------------

    \24\ The Monte-Carlo analysis is a numerical simulation approach 
using random values from known statistical distributions.
---------------------------------------------------------------------------

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

    \25\ http://www.eia.doe.gov/emeu/states/_seds.html.
---------------------------------------------------------------------------

    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

[[Page 26037]]

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

    \26\ Foster-Miller, Inc. ``Vending Machine Service Call 
Reduction Using the VendingMiser.'' Report BAY-01197. Foster-Miller, 
Inc. Waltham, MA. February 18, 2002.
---------------------------------------------------------------------------

    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 Coca-Cola 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 used-equipment 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\
---------------------------------------------------------------------------

    \27\ Aswath 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.
---------------------------------------------------------------------------

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

    \28\ Aswath 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.
---------------------------------------------------------------------------

    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)

[[Page 26038]]

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

    \29\ These 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.
---------------------------------------------------------------------------

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 = [Delta]IC/[Delta]OC

Where:
PBP = payback period in years,
[Delta]IC = 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
[Delta]OC = 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. (Dixie-Narco, 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\
---------------------------------------------------------------------------

    \30\ Cadmus 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.
---------------------------------------------------------------------------

    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

[[Page 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. 
(Dixie-Narco, 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              0.8
   Correctional)...........................................
  --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]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Thousands of units shipped
                                                            --------------------------------------------------------------------------------------------
            Equip. class                      Size                                                                                            Cumulative
                                                               2012      2015      2020      2025      2030      2035      2040      2042     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,

[[Page 26040]]

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

    \31\ Refrigerators have an average lifetime of 19 years, and, 
based on industry data (Technical Support Document: Energy 
Efficiency Standards for Consumer Products: Refrigerators, 
Refrigerator-freezers, & 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 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 longest-lived 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

[[Page 26041]]

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-to-source energy 
conversion factors are made available to DOE.\32\
---------------------------------------------------------------------------

    \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.

  Table IV-9--Summary of National Energy Savings and Net Present Value
                                  Input
------------------------------------------------------------------------
              Input                ANOPR Description   Changes for NOPR
------------------------------------------------------------------------
Shipments.......................  Annual shipments    No growth in
                                   from shipments      shipments; based
                                   model (chapter 9    on industry
                                   of the ANOPR TSD,   comments on the
                                   Shipments           ANOPR, all
                                   Analysis).          shipments are
                                                       replacements.
Effective Date of Standard......  2012..............  No change.
Base Case Efficiencies..........  Distribution of     Efficiency mix
                                   base case           changed based on
                                   shipments by        industry comment.
                                   efficiency level.
Standards Case Efficiencies.....  Distribution of     No change.
                                   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.
Annual Energy Consumption per     Annual weighted-    No change.
 Unit.                             average values
                                   are a function of
                                   energy
                                   consumption level
                                   per unit, which
                                   are established
                                   in chapter 7 of
                                   the ANOPR TSD,
                                   Energy Use
                                   Characterization.
Total Installed Cost per Unit...  Annual weighted-    No change.
                                   average values
                                   are a function of
                                   energy
                                   consumption level
                                   (see chapter 8 of
                                   the ANOPR TSD).
Repair Cost per Unit............  Annual weighted-    No change.
                                   average values
                                   increase with
                                   manufacturer's
                                   cost (chapter 8
                                   of the ANOPR TSD).
Maintenance Cost per Unit.......  Annual weighted-    Annual weighted-
                                   average value       average value
                                   equals $165.44      equals $154
                                   (chapter 8 of the   (chapter 8 of the
                                   ANOPR TSD).         TSD).
Escalation of Electricity Prices  EIA AEO2007         Updated to AEO2009
                                   forecasts (to       forecasts.
                                   2030) and
                                   extrapolation
                                   beyond 2030
                                   (chapter 8 of the
                                   ANOPR TSD).
Electricity Site-to-Source        Conversion varies   Conversion varies
 Conversion.                       yearly and is       yearly and is
                                   generated by DOE/   generated by DOE/
                                   EIA's NEMS* model   EIA's NEMS model.
                                   (a time-series      Calculated
                                   conversion factor   marginal rates by
                                   that includes       year.
                                   electric
                                   generation,
                                   transmission, and
                                   distribution
                                   losses).
Discount Rate...................  3% and 7% real....  No change.
Present Year....................  Future costs are    Future costs are
                                   discounted to       discounted to
                                   2008.               2009

[[Page 26042]]

 
Rebound Effect..................  As explained in     No change.
                                   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.
------------------------------------------------------------------------

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-by-State 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.
---------------------------------------------------------------------------

    \33\ The 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.

[[Page 26043]]



                           Table IV-10--National Average Annual Energy Consumption for Class B Machines, by Efficiency Levels
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   Annual energy consumption (all locations, kWh)
                                                           ---------------------------------------------------------------------------------------------
                           Size                                 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          Average annual energy consumption (all locations, kWh)
                                                 -------------------------------------------------------------------------------------------------------
                      Size                          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-to-source 
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-
to-source 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

[[Page 26044]]

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-cash-flow 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 top-down 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

[[Page 26045]]

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

[[Page 26046]]

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]
------------------------------------------------------------------------
                                                Total industry shipments
                Equipment class                    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                            Baseline
               TSL kWh/day                    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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Baseline
                TSL kWh/day                     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 high-efficiency 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-of-operating-profit scenario. Under the ``preservation-of-
gross-margin-percentage'' 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-of-operating 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

[[Page 26047]]

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 one-time 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 higher-efficiency 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-
computer-based, 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.

[[Page 26048]]

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 
CO<INF>2</INF> and NO<INF>X</INF> 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 
(SO<INF>2</INF>), because DOE has determined that any such reduction 
resulting from an energy conservation standard would not affect the 
overall level of SO<INF>2</INF> emissions in the United States due to 
the presence of national caps on SO<INF>2</INF> 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 CO<INF>2</INF> and 
NO<INF>X</INF> emissions using a detailed module that provides broad 
coverage of all sectors and includes interactive effects.
Sulfur Dioxide (SO<INF>2</INF>)
    The Clean Air Act Amendments of 1990 set an emissions cap on 
SO<INF>2</INF> 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 SO<INF>2</INF> 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 
SO<INF>2</INF> emissions from standards as long as the emissions 
ceilings are enforced. Although there may be no actual reduction in 
SO<INF>2</INF> emissions, there still may be an economic benefit from 
reduced demand for SO<INF>2</INF> emission allowances. Electricity 
savings decrease the generation of SO<INF>2</INF> emissions from power 
production, which can lessen the need to purchase SO<INF>2</INF> 
emissions allowance credits, and thereby decrease the costs of 
complying with regulatory caps on emissions.
NO<INF>X</INF>
    NO<INF>X</INF> 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 NO<INF>X</INF> emissions through 
participation in cap-and-trade programs for electric generating units, 
emissions from these sources are capped across the CAIR region. As with 
the SO<INF>2</INF> emissions cap, energy conservation standards are not 
likely to have a physical effect on NO<INF>X</INF> 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 NO<INF>X</INF> 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 
NO<INF>X</INF>.
    In contrast, new or amended energy conservation standards would 
reduce NO<INF>X</INF> 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\
---------------------------------------------------------------------------

    \34\ 531 F.3d 896 (D.C. Cir. 2008).
    \35\ North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) 
(remand of vacatur).
---------------------------------------------------------------------------

Mercury (HG)
    Similar to SO<INF>2</INF> and NO<INF>X</INF>, 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 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-fired 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.
---------------------------------------------------------------------------

    \36\ New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008).
---------------------------------------------------------------------------

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 
CO<INF>2</INF>, NO<INF>X</INF>, and Hg

[[Page 26049]]

reductions. Cumulative monetary benefits were determined using discount 
rates of 3 and 7 percent. DOE monetized reductions in CO<INF>2</INF> 
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 CO<INF>2</INF> emissions. This concept is used rather than 
compliance costs because CO<INF>2</INF> is not regulated. Several 
parties provided comments on the economic valuation of CO<INF>2</INF> 
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 
NO<INF>X</INF> through a two-pronged approach, calculating both the 
effect on allowance prices under the NO<INF>X</INF> SIP Call rule, 
where applicable, and the monetary value of avoided NO<INF>X</INF> 
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 CO<INF>2</INF> 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 
CO<INF>2</INF> 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 NO<INF>X</INF>, 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 NO<INF>X</INF> emissions or the corresponding allowance 
credits in States covered by the CAIR cap would be too small to affect 
allowance prices for NO<INF>X</INF> under the CAIR.

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 x V + B

Where:
A is expressed in terms of kWh/day/ft\3\ of measured volume,
V is the measured refrigerated volume (ft\3\) 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

[[Page 26050]]

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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                    Trial standard level in order of efficiency
               Size                     Test metric      -----------------------------------------------------------------------------------------------
                                                           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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       Trial standard level in order of efficiency
                 Size                        Test metric       -----------------------------------------------------------------------------------------
                                                                  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 x V +   MDEC = 0.068 x V + 4.07.
                                                        6.09.
TSL 1...........................  kWh/day............  MDEC = 0.062 x V +   MDEC = 0.066 x V + 3.76.
                                                        4.12.
TSL 2...........................  kWh/day............  MDEC = 0.044 x V +   MDEC = 0.080 x V + 3.24.
                                                        4.26.
TSL 3...........................  kWh/day............  MDEC = 0.044 x V +   MDEC = 0.073 x V + 3.16.
                                                        3.76.
TSL 4...........................  kWh/day............  MDEC = 0.062 x V +   MDEC = 0.073 x V + 3.12.
                                                        2.80.
TSL 5...........................  kWh/day............  MDEC = 0.058 x V +   MDEC = 0.070 x V + 2.68.
                                                        2.66.
TSL 6...........................  kWh/day............  MDEC = 0.055 x V +   MDEC = 0.068 x V + 2.63.
                                                        2.56.
TSL 7...........................  kWh/day............  MDEC = 0.045 x V +   n/a*.
                                                        2.42.
----------------------------------------------------------------------------------------------------------------
* 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.

[[Page 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               0           0           0           0           0           7          100
 Increase %.................
Equipment with No Change in         90           0           0           0           0           0            0
 LCC %......................
Equipment with Net LCC              10         100         100         100         100          93            0
 Savings %..................
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               0           0           0           0           0           0          100
 Increase %.................
Equipment with No Change in         90           0           0           0           0           0            0
 LCC %).....................
Equipment with Net LCC              10         100         100         100         100         100            0
 Savings %..................
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               0           0           0           0           0           7          100
 Increase %.................
Equipment with No Change in         90           0           0           0           0           0            0
 LCC %......................
Equipment with Net LCC              10         100         100         100         100          93            0
 Savings %..................
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)

[[Page 26052]]

 
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

[[Page 26053]]

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-
gross-margin-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-of-
operating-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 standards-
compliant 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Trial standard level
                Metric                            Units              Base   ----------------------------------------------------------------------------
                                                                     case        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
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                         Trial Standard Level
                Metric                            Units              Base   ----------------------------------------------------------------------------
                                                                     case        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

[[Page 26054]]

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 
standards-compliant 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 standards-compliant 
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
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                                                        Units               Base case  -----------------------------------------------------------------
                                                                                            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
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Trial standard level
                                                        Units               Base case  -----------------------------------------------------------------
                                                                                            1          2          3          4          5          6
--------------------------------------------------------------------------------------------------------------------------------------------------------
INPV......................................  2008$ millions...............         22.1      22.1       22.1       21.2       20.8        8.8       (1.3)

[[Page 26055]]

 
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 
industry-wide labor expenditures and employment levels.\37\
---------------------------------------------------------------------------

    \37\ Results of the U.S. Census Bureau's 2007 Annual Survey of 
Manufacturers are not yet available.
---------------------------------------------------------------------------

    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

[[Page 26056]]

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 three-
fold. 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
----------------------------------------------------------------------------------------------------------------


[[Page 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)
------------------------------------------------------------------------
                                               NPV\*\ billion 2008$
                                         -------------------------------
          Trial standard level              7% Discount     3% Discount
                                               rate            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.

[[Page 26058]]



     Table V-19--Summary of Cumulative Net Present Value for Class B
                   Equipment (AEO2009 Reference Case)
------------------------------------------------------------------------
                                                 NPV billion 2008$
                                         -------------------------------
          Trial standard level              7% Discount     3% Discount
                                               rate            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
----------------------------------------------------------------------------------------------------------------
                                                                          Net national change in jobs
                    Trial standard level                     ---------------------------------------------------
                                                                  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
----------------------------------------------------------------------------------------------------------------
                                                                          Net national change in jobs
                    Trial standard level                     ---------------------------------------------------
                                                                  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.


[[Page 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 
CO<INF>2</INF>, NO<INF>x</INF>, 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 CO<INF>2</INF>, NO<INF>x</INF>, and 
Hg emissions attributable to each TSL.

               Table V-22--Cumulative CO[ihel2] 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
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO[ihel2] (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 SO<INF>2</INF> 
emissions reductions from power plants because reductions from an 
energy conservation standard would not affect the overall level of U.S. 
SO<INF>2</INF> emissions due to emissions caps.
    NO<INF>x</INF> 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

[[Page 26060]]

the District of Columbia (DC) (collectively ``States''). As with the 
SO<INF>2</INF> emissions cap, energy conservation standards are not 
likely to have a physical effect on NO<INF>x</INF> 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 NO<INF>x</INF> 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 
NO<INF>x</INF>.
    In contrast, new or amended energy conservation standards would 
reduce NO<INF>x</INF> 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\
---------------------------------------------------------------------------

    \38\ 531 F.3d 896 (D.C. Cir. 2008).
    \39\ North Carolina v. EPA, 550 F.3d 1176 (D.C. Cir. 2008) 
(remand of vacatur).
---------------------------------------------------------------------------

    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 coal-fired power plants, was based on a nationwide mercury 
emission rate from AEO2008. (Under this scenario, gas-fired 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 coal-generated 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 CO<INF>2</INF> emission reductions associated 
with standards. To put the potential monetary benefits from reduced 
CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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 CO<INF>2</INF> 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\
---------------------------------------------------------------------------

    \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).

    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 meta-analysis 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 CO<INF>2</INF> 
emissions by 1 ton. The broad range of values in both Tol studies are 
the result of significant differences in the methodologies used in

[[Page 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 CO<INF>2</INF> 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 CO<INF>2</INF> 
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
----------------------------------------------------------------------------------------------------------------
                                                                                 Value of           Value of
                                                             Estimated        estimated CO2      estimated CO2
                                                           cumulative CO2        emission           emission
                          TSL                                 emission       reductions at 7%   reductions at 3%
                                                          reductions   Mt     discount rate      discount rate
                                                                              million 2007$      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
----------------------------------------------------------------------------------------------------------------
                                                                                 Value of           Value of
                                                             Estimated        estimated CO2      estimated CO2
                                                           cumulative CO2        emission           emission
                          TSL                                 emission       reductions at 7%   reductions at 3%
                                                           reductions  Mt     discount rate      discount rate
                                                                              million 2007$      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 CO<INF>2</INF> 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 
CO<INF>2</INF> 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 CO<INF>2</INF> 
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 
SO<INF>2</INF>, NO<INF>X</INF>, and Hg emissions from the TSLs it 
considered. As previously stated, DOE's initial analysis assumed the 
presence of

[[Page 26062]]

nationwide emission caps on SO<INF>2</INF> and Hg, and caps on 
NO<INF>X</INF> 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 SO<INF>2</INF> 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 NO<INF>X</INF> 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 NO<INF>X</INF> 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 NO<INF>X</INF> 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 NO<INF>X</INF> emissions, ranging from 
$370 per ton to $3,800 per ton of NO<INF>X</INF> from stationary 
sources, measured in 2001$ (equivalent to a range of $432 per ton to 
$4,441 per ton in 2007$).\41\
---------------------------------------------------------------------------

    \41\ OMB, Office of Information and Regulatory Affairs, ``2006 
Report to Congress on the Costs and Benefits of Federal Regulations 
and Unfunded Mandates on State, Local, and Tribal Entities,'' 
Washington, DC (2006).
---------------------------------------------------------------------------

    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 SO<INF>2</INF> and NO<INF>X</INF>, 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.
---------------------------------------------------------------------------

    \42\ New Jersey v. EPA, 517 F.3d 574 (D.C. Cir. 2008).
---------------------------------------------------------------------------

    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 
NO<INF>X</INF> and Hg emissions for Class A and B equipment.
---------------------------------------------------------------------------

    \43\ Trasande, L., et al., ``Applying Cost Analyses to Drive 
Policy that Protects Children,'' 1076 Ann. N.Y. Acad. Sci. 911 
(2006).
    \44\ Ted 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 back-calculating the annual benefits per ton 
from the net present value of benefits reported in the study.

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
----------------------------------------------------------------------------------------------------------------
                                                              Value of                              Value of
                                          Estimated        estimated NOX        Estimated         estimated Hg
                 TSL                    cumulative NOX        emission        cumulative Hg         emission
                                           emission          reductions          emission          reductions
                                        reductions  kt     thousand 2007$    reductions  tons    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
----------------------------------------------------------------------------------------------------------------


[[Page 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
----------------------------------------------------------------------------------------------------------------
                                                              Value of                              Value of
                                          Estimated        estimated NOX        Estimated         estimated Hg
                 TSL                    cumulative NOX        emission        cumulative Hg         emission
                                           emission          reductions          emission          reductions
                                        reductions  kt     thousand 2007$    reductions  tons    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
----------------------------------------------------------------------------------------------------------------
                                                              Value of                              Value of
                                          Estimated        estimated NOX        Estimated         estimated Hg
                 TSL                    cumulative NOX        emission        cumulative Hg         emission
                                           emission          reductions          emission          reductions
                                        reductions  kt     thousand 2007$    reductions  tons    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
----------------------------------------------------------------------------------------------------------------
                                                              Value of                              Value of
                                          Estimated        estimated NOX        Estimated         estimated Hg
                 TSL                    cumulative NOX        emission        cumulative Hg         emission
                                           emission          reductions          emission          reductions
                                        reductions  kt     thousand 2007$    reductions  tons    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

[[Page 26064]]



     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                0.002       0.009       0.020       0.031       0.037       0.041       0.049
 Reduction GW**.............
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$                 0  (0.2)-(0.4  (1.9)-(2.6  (2.1)-(3.1  (8.8)-(9.9  (12.4)-(13  (8.3)-(20.
     million................                       )           )           )           )         .7)          9)
    Industry NPV % change...         0.1   (0.6)-(1.  (5.5)-(7.4  (5.9)-(8.8  (25.0)-(28  (35.1)-(38  (23.7)-(59
                                                  0)           )           )         .1)         .9)         .7)
Cumulative Emissions
 Impacts[dagger]:
    CO2 Reductions Mt.......        0.23        1.01        2.27        3.56        4.19        4.61        5.59
    Value of CO2 Reductions        0-2.2       0-9.7      0-21.9      0-34.3      0-40.4      0-44.5      0-53.9
     at 7% Discount Rate
     million 2007$..........
    Value of CO2 Reductions        0-4.3      0-18.9      0-42.5      0-66.6      0-78.5      0-86.4     0-104.7
     at 3% Discount Rate
     million 2007$..........
NOX Reductions kt...........        0.03        0.14        0.31        0.48        0.57        0.62        0.75
Value of NOX Reductions at          5-50      21-221      48-497      76-778      89-918     98-1010    119-1224
 7% Discount Rate thousand
 2007$......................
Value of NOX Reductions at          8-85      37-377      83-849    129-1330    153-1568    168-1726    203-2092
 3% Discount Rate thousand
 2007$......................
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%        0-44       0-196       0-441       0-690       0-814       0-896      0-1086
 Discount Rate thousand
 2007$......................
Value of Hg Reductions at 3%        0-76       0-338       0-761      0-1192      0-1405      0-1547      0-1874
 Discount Rate thousand
 2007$......................
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             0           2           8          12          15          19         133
 Impacts (2012) jobs........
Indirect Employment Impacts           14          64         146         226         265         292         304
 (2042) jobs................
----------------------------------------------------------------------------------------------------------------
* 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.
[dagger] 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 
CO<INF>2</INF>, up to 0.75 kt of NO<INF>X</INF>, and up to 0.093 tons 
of Hg. These reductions have a value of up to $53.9 million for 
CO<INF>2</INF>, $1.2 million for NO<INF>X</INF>, 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

[[Page 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 CO<INF>2</INF>, up to 0.62 kt of 
NO<INF>x</INF>, and up to 0.076 tons of Hg. These reductions have a 
value of up to $44.5 million for CO<INF>2</INF>, $1.0 million for 
NO<INF>x</INF>, 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           0.001       0.001       0.005       0.005         0.014            0.016
 (GW)**..........................
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[dagger]:
    CO2 Reductions (Mt)..........        0.07        0.11        0.53        0.61          1.64             1.83
    Value of CO2 reductions at 7%       0-0.7         0-1       0-5.1       0-5.9        0-15.8           0-17.6
     discount rate (million
     2007$)......................
    Value of CO2 reductions at 3%       0-1.3         0-2        0-10      0-11.4        0-30.8           0-34.2
     discount rate (million
     2007$)......................
NOX Reductions (kt)..............        0.01        0.01        0.07        0.08          0.22             0.25
Value of NOX reductions at 7%            2-16        2-23      11-116      13-133        35-359           39-400
 discount rate (thousand 2007$)..
Value of NOX reductions at 3%            3-27        4-40      19-199      22-227        60-614           67-684
 discount rate (thousand 2007$)..
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%             0-14        0-21       0-103       0-118         0-319            0-355
 discount rate (thousand 2007$)..
Value of Hg reductions at 3%             0-24        0-36       0-178       0-204         0-550            0-613
 discount rate (thousand 2007$)..
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)

[[Page 26066]]

 
    Mean PBP (years).............         3.1         4.1         6.0         6.9          76.2              100
Direct Domestic Employment                  0           0           3           4            41              134
 Impacts (2012) (jobs)...........
Indirect Employment Impacts                 4           6          33          38            90               68
 (2042) (jobs)...................
----------------------------------------------------------------------------------------------------------------
* 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.
[dagger] 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 CO<INF>2</INF>, up to 0.25 kt of NO<INF>X</INF>, and up to 0.03 
tons of Hg. These reductions have a value of up to $17.6 million for 
CO<INF>2</INF>, $400,000 for NO<INF>X</INF>, 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 CO<INF>2</INF>, up to 0.22 kt of 
NO<INF>X</INF>, and up to 0.027 tons of Hg. These reductions have a 
value of up to $15.8 million for CO<INF>2</INF>, $359,000 for 
NO<INF>X</INF>, 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 CO<INF>2</INF>, up to 0.08 kt of 
NO<INF>X</INF>, 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 CO<INF>2</INF>, $133,000 for NO<INF>X</INF>, 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

[[Page 26067]]

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 CO<INF>2</INF>, up to 0.07 kt of 
NO<INF>X</INF>, 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 CO<INF>2</INF>, $116,000 for NO<INF>X</INF>, 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, Sec.  
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:
    <bullet> No new regulatory action
    <bullet> Financial incentives, including tax credits and rebates
    <bullet> Revisions to voluntary energy efficiency targets (e.g., 
ENERGY STAR program criteria)
    <bullet> Early replacement
    <bullet> Bulk government purchases
    <bullet> 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

[[Page 26068]]

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 high-efficiency 
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 utility-sponsored 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 large-scale 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 (Coca-Cola 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 
non-bottler, 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

[[Page 26069]]

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:
    <bullet> 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?
---------------------------------------------------------------------------

    \45\ For 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.
---------------------------------------------------------------------------

    <bullet> 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)?
    <bullet> What are the key issues for your company regarding energy 
conservation standards for refrigerated beverage vending machines and 
this rulemaking?
    <bullet> 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:
    <bullet> Is your company a domestic or international company?
    <bullet> What types of refrigerated beverage vending machines do 
you manufacture? Do you manufacture Class A or Class B refrigerated 
beverage vending machines, or both? <SUP>46 47</SUP> 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? <SUP>48 49</SUP>
---------------------------------------------------------------------------

    \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.
    \48\ Tier I: Energy Consumption <=0.55 [8.66 + (0.009 x Vendible 
Capacity)].
    \49\ Tier II: Energy Consumption <=0.45 [8.66 + (0.009 x 
Vendible Capacity)].
---------------------------------------------------------------------------

    <bullet> 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?

[[Page 26070]]

    <bullet> What are the types of customers you serve in the 
refrigerated beverage vending machine market?
    <bullet> 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.
    <bullet> 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)?
    <bullet> 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\
---------------------------------------------------------------------------

    \50\ This 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.
    \51\ 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.
---------------------------------------------------------------------------

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

[[Page 26071]]

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

[[Page 26072]]

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

    \52\ Id. at 36.
---------------------------------------------------------------------------

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

    \53\ Note that the relevant statutory provisions were renumbered 
pursuant to section 316(d)(1) of EISA, Public Law 110-140.
    \54\ This provision was redesignated by EISA, section 316(d)(1), 
as 42 U.S.C. 6295(v)(3).
---------------------------------------------------------------------------

    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

[[Page 26073]]

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

[[Page 26074]]

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 hand-deliver 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 <a href="/cdn-cgi/l/email-protection#b9fbcbdcd7ddd897fcddced8cbddcaf9dcdc97ddd6dc97ded6cf"><span class="__cf_email__" data-cfemail="105262757e74713e557467716274635075753e747f753e777f66">[email protected]</span></a>.
    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: 
<a href="/cdn-cgi/l/email-protection#fa989f8c9f889b9d9f8c9f949e93949dd4888f969f979b9193949dba9f9fd49e959fd49d958c"><span class="__cf_email__" data-cfemail="43212635263122242635262d272a2d246d31362f262e22282a2d240326266d272c266d242c35">[email protected]</span></a>. 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

[[Page 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 Sec.  431.292 add, in alphabetical order, new definitions for 
``bottled or canned beverage'', ``Class A'', ``Class B'', and ``V'' to 
read as follows:


Sec.  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 (ft\3\) of the refrigerated bottled 
or canned beverage vending machine, as measured by AHAM HRF-1-2004 
(incorporated by reference, see Sec.  431.293).
    3. Section 431.293 is revised to read as follows:


Sec.  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, Refrigerator-Freezers and Freezers, approved 
July 7, 2004, IBR approved for Sec.  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 Sec.  431.294.
    4. In subpart Q, add an undesignated center heading and Sec.  
431.296 to read as follows:

Energy Conservation Standards


Sec.  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:

------------------------------------------------------------------------
                                       Maximum daily  energy consumption
           Equipment class                   kilowatt hours per day
------------------------------------------------------------------------
Class A..............................  0.055 x V + 2.56
Class B..............................  0.073 x V + 3.16
------------------------------------------------------------------------

[FR Doc. E9-12410 Filed 5-26-09; 4:15 pm]
BILLING CODE 6450-01-P


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